Social Security Disability: SSA Must Hold Itself Accountable for
Continued Improvement in Decision-Making (Chapter Report, 08/12/97,
GAO/HEHS-97-102).

Pursuant to a congressional request, GAO reviewed the Social Security
Administration's (SSA) decision-making process for disability
determinations and efforts to improve the process, focusing on: (1)
factors that contribute to differences between disability determination
services' (DDS) and administrative law judges' (ALJ) decisions; and (2)
SSA's actions to make decisions in initial and appealed cases more
consistent.

GAO noted that: (1) ALJs made nearly 30 percent of all awards in 1996;
(2) because two-thirds of all cases appealed to ALJs have resulted in
awards, questions have arisen about the fairness, integrity, and cost of
SSA disability programs; (3) differences in assessing applicants'
functional capacity and procedural factors, as well as weaknesses in
quality assurance, contribute to inconsistent decisions; (4) ALJs are
far more likely than DDSs to find claimants unable to work on the basis
of their functional capacity; (5) this outcome has occurred even when
ALJ and DDS adjudicators review the same evidence for the same case; (6)
most notably, DDS adjudicators tend to rely on medical evidence such as
the results of laboratory test; ALJs tend to rely more on symptoms such
as pain and fatigue; (7) DDS and ALJ decision-making practices and
procedures also contribute to inconsistent results because they limit
the usefulness of DDS evaluations as bases for ALJ decisions; (8) in
addition, SSA procedures often lead to substantial differences between
the evidentiary records examined by DDS and ALJs; (9) specifically, ALJs
may examine new evidence submitted by a claimant and hear a claimant
testify; (10) as a result, even with a well-explained DDS decision, ALJs
could reach a different decision because the evidence in the case
differs from that reviewed by the DDS; (11) SSA has not used its quality
review systems to identify and reconcile differences in approach and
procedures used by DDSs and ALJs; (12) the quality review systems for
the initial level and appeals levels of the decision-making process
merely reflect the differences between the levels; they do not help
produce more consistent decisions; (13) although SSA has not managed the
decision-making process well in the past, its current process
unification initiatives, when fully implemented, could significantly
help to produce more consistent decisions; (14) competing workload
pressures at all adjudication levels could, however, jeopardize SSA's
efforts; (15) as a result, SSA, in consultation with the Congress, will
need to sort through its many priorities and be more accountable for
meeting its deadlines and establishing explicit measures to assess its
progress in reducing inconsistency; and (16) this may include, for
example, setting a goal, under the Government Performance and Results
Act, to foster consistency in results, set quantitative measures, and
report on its progress in shifting the proportion of cases awarded from
the ALJ to the DDS level.

--------------------------- Indexing Terms -----------------------------

 REPORTNUM:  HEHS-97-102
     TITLE:  Social Security Disability: SSA Must Hold Itself 
             Accountable for Continued Improvement in Decision-Making
      DATE:  08/12/97
   SUBJECT:  Administrative law judges
             Disability benefits
             Hearings
             State-administered programs
             Federal social security programs
             Claims processing
             Administrative remedies
             Social security benefits
             Persons with disabilities
             Eligibility determinations
IDENTIFIER:  Supplemental Security Income Program
             Social Security Disability Insurance Program
             SSA Program Operations Manual System
             SSA Disability Hearings Quality Review Process
             SSA Plan for a New Disability Claim Process
             
******************************************************************
** This file contains an ASCII representation of the text of a  **
** GAO report.  Delineations within the text indicating chapter **
** titles, headings, and bullets are preserved.  Major          **
** divisions and subdivisions of the text, such as Chapters,    **
** Sections, and Appendixes, are identified by double and       **
** single lines.  The numbers on the right end of these lines   **
** indicate the position of each of the subsections in the      **
** document outline.  These numbers do NOT correspond with the  **
** page numbers of the printed product.                         **
**                                                              **
** No attempt has been made to display graphic images, although **
** figure captions are reproduced.  Tables are included, but    **
** may not resemble those in the printed version.               **
**                                                              **
** Please see the PDF (Portable Document Format) file, when     **
** available, for a complete electronic file of the printed     **
** document's contents.                                         **
**                                                              **
** A printed copy of this report may be obtained from the GAO   **
** Document Distribution Center.  For further details, please   **
** send an e-mail message to:                                   **
**                                                              **
**                                            **
**                                                              **
** with the message 'info' in the body.                         **
******************************************************************


Cover
================================================================ COVER


Report to the Chairman, Subcommittee on Social Security, Committee on
Ways and Means, House of Representatives

August 1997

SOCIAL SECURITY DISABILITY - SSA
MUST HOLD ITSELF ACCOUNTABLE FOR
CONTINUED IMPROVEMENT IN
DECISION-MAKING

GAO/HEHS-97-102

SSA Accountability for Decisions

(106507)


Abbreviations
=============================================================== ABBREV

  ALJ - administrative law judge
  APA - Administrative Procedure Act
  CDR - continuing disability review
  DDS - disability determination service
  DHQRP - Disability Hearings Quality Review Process
  DI - Disability Insurance
  HALLEX - Hearings, Appeals, and Law Litigation Manual
  IG - Office of the Inspector General
  OHA - Office of Hearings and Appeals
  OPIR - Office of Program and Integrity Reviews
  PER - pre-effectuation review
  POMS - Program Operations Manual System
  RFC - residual functional capacity
  SSA - Social Security Administration
  SSI - Supplemental Security Income
  SSR - Social Security Ruling

Letter
=============================================================== LETTER


B-270669

August 12, 1997

The Honorable Jim Bunning
Chairman, Subcommittee on Social Security
Committee on Ways and Means
House of Representatives

Dear Mr.  Chairman: 

This report, prepared at your request, evaluates the Social Security
Administration's decision-making process for disability
determinations and assesses its efforts to improve the process. 

As agreed with your office, we are sending copies of this report to
the Commissioner of the Social Security Administration and the
Director of the Office of Management and Budget.  We will also make
copies available to others on request. 

If you have any questions about this report, please call me at (202)
512-7215.  Other major contributors to this report are listed in
appendix IV. 

Sincerely yours,

Jane L.  Ross
Director, Income Security Issues


EXECUTIVE SUMMARY
============================================================ Chapter 0


   PURPOSE
---------------------------------------------------------- Chapter 0:1

Each year, about 2.5 million people apply to the Social Security
Administration (SSA) for disability benefits.  Disability
determination services (DDS), which are state agencies that conduct
disability determinations on behalf of SSA, award benefits to about
35 out of every 100 of these initial applicants.  Of the 65 denied
applicants, about 43 abandon their claims, and about 22 appeal to
administrative law judges (ALJ).  On appeal, 14 of 22 claimants, or
almost two-thirds, are subsequently awarded benefits.  This rate of
ALJ benefit awards raises concerns in the Congress and elsewhere
about the accuracy of disability DDS and ALJ decisions, length of
time claimants must wait for a decision if they appeal, and
costliness of deciding cases on appeal rather than upon initial
application. 

In 1995 testimony before the Social Security Subcommittee of the
House Committee on Ways and Means, GAO reported on the timeliness and
consistency of SSA's disability decisions.\1 On the basis of that
testimony, the Chairman asked GAO to report on (1) factors that
contribute to differences between DDS and ALJ decisions and (2) SSA's
actions to make decisions in initial and appealed cases more
consistent.  This report details GAO's findings, which were reported
in testimony earlier this year.\2


--------------------
\1 Social Security Disability:  Management Action and Program
Redesign Needed to Address Long-Standing Problems (GAO/T-HEHS-95-233,
Aug.  3, 1995). 

\2 Social Security Disability:  SSA Actions to Reduce Backlogs and
Achieve More Consistent Decisions Deserve High Priority
(GAO/T-HEHS-97-118, Apr.  24, 1997). 


   BACKGROUND
---------------------------------------------------------- Chapter 0:2

SSA operates the Disability Insurance (DI) and Supplemental Security
Income (SSI) programs--the two largest federal programs providing
cash benefits to people with disabilities.  The law defines
disability for both programs as the inability to engage in any
substantial gainful activity by reason of a severe physical or mental
impairment that is medically determinable and is expected to last at
least 12 months or result in death.  The programs have grown in the
last 10 years, and today over 7 million working-age adults are on the
rolls.  These and other beneficiaries receive cash benefits totaling
about $61 billion a year.\3

Disability determinations begin at the DDSs, where a disability
examiner and a medical or psychological consultant, working as a
team, analyze an applicant's documentation, gather additional
evidence as appropriate, and make a disability determination.  Denied
applicants may ask the DDS to reconsider its finding, and if denied
again, may appeal to an ALJ.  The ALJ usually conducts a hearing and
must consider the findings of the DDS medical consultant but is not
legally bound by them.  In addition, claimants may testify before an
ALJ and present new evidence.  Claimants whose appeals are denied may
request review by SSA's Appeals Council and then may file suit in
federal court.  The average initial DDS decision in DI cases costs
about $540, though a hearing can cost an additional $1,200.  In
addition, appeals can add an average of 378 days to the length of
time that a claimant must wait for a final decision. 

Both DDS and ALJ adjudicators use a sequential evaluation process
when determining disability.  Under this process, applicants are
awarded benefits when their medical condition meets or equals
criteria in SSA's regulations (commonly referred to as the medical
listings).  For those whose condition does not meet or equal the
listings, the adjudicators focus on the functional consequences of
applicants' medically determined impairments. 

As part of its 1994 plan for redesigning the disability determination
process, SSA set a goal of �making the right decision the first
time." As a first step, SSA has begun an initiative, called process
unification, to improve the consistency of its decisions.  Under
redesign, the agency expects more award decisions to be made by the
DDSs, reducing the need for appeals.  Meanwhile, SSA faces several
other competing demands, including significant increases in
continuing disability reviews and increasing SSI workloads mandated
by recent legislation.\4 Over the longer term, SSA plans to improve
its methods for assessing applicants' capacity to function in the
workplace. 


--------------------
\3 Included in the $61 billion of benefits are payments to all SSI
blind and disabled beneficiaries regardless of age. 

\4 The Social Security Independence and Program Improvements Act of
1994 and the Personal Responsibility and Work Opportunity
Reconciliation Act of 1996 increased claims workloads for drug
addicts and alcoholics, noncitizens, and children on SSI, and both
significantly increased SSA's requirements to conduct continuing
disability reviews. 


   RESULTS IN BRIEF
---------------------------------------------------------- Chapter 0:3

ALJs made nearly 30 percent of all awards in 1996.  Moreover, because
two-thirds of all cases appealed to ALJs have resulted in awards,
questions have arisen about the fairness, integrity, and cost of SSA
disability programs.  Differences in assessing applicants' functional
capacity and procedural factors, as well as weaknesses in quality
assurance, contribute to inconsistent decisions. 

Differences in assessing functional capacity help explain the
inconsistent decisions of ALJs and DDSs.  ALJs are far more likely
than DDSs to find claimants unable to work on the basis of their
functional capacity.  Moreover, this outcome has occurred even when
ALJ and DDS adjudicators review the same evidence for the same case. 
Most notably, DDS adjudicators tend to rely on medical evidence such
as the results of laboratory tests; ALJs tend to rely more on
symptoms such as pain and fatigue.  In addition, the opinions of
claimants' own physicians may more likely influence ALJs than DDSs;
DDSs may give more weight to other medical evidence such as
laboratory findings. 

DDS and ALJ decision-making practices and procedures also contribute
to inconsistent results because they limit the usefulness of DDS
evaluations as bases for ALJ decisions.  For instance, DDSs often do
not ensure that medical consultants write adequate explanations of
their opinions.  SSA regulations require ALJs to consider these
explanations, but this has little practical value if the explanations
are not well documented.  In addition, SSA procedures often lead to
substantial differences between the evidentiary records examined by
DDSs and ALJs.  Specifically, ALJs may examine new evidence submitted
by a claimant and hear a claimant testify.  As a result, even with a
well-explained DDS decision, ALJs could reach a different decision
because the evidence in the case differs from that reviewed by the
DDS. 

Finally, SSA has not used its quality review systems to identify and
reconcile differences in approach and procedures used by DDSs and
ALJs.  In fact, the quality review systems for the initial level and
appeals levels of the decision-making process merely reflect the
differences between the levels; they do not help produce more
consistent decisions. 

Although SSA has not managed the decision-making process well in the
past, its current process unification initiatives, when fully
implemented, could significantly help to produce more consistent
decisions.  Competing workload pressures at all adjudication levels
could, however, jeopardize SSA's efforts.  As a result, SSA, in
consultation with the Congress, will need to sort through its many
priorities and be more accountable for meeting its deadlines and
establishing explicit measures to assess its progress in reducing
inconsistency.  This may include, for example, setting a goal, under
the Government Performance and Results Act, to foster consistency in
results, set quantitative measures, and report on its progress in
shifting the proportion of cases awarded from the ALJ to the DDS
level. 


   PRINCIPAL FINDINGS
---------------------------------------------------------- Chapter 0:4


      DDSS AND ALJS DIFFER MAINLY
      OVER CLAIMANTS' FUNCTIONAL
      ABILITIES
-------------------------------------------------------- Chapter 0:4.1

Differences in assessing claimants' residual functional capacity
(RFC) by DDSs and ALJs are the main reason for most ALJ awards,
according to GAO's analysis.  ALJs are much more likely than DDSs to
find that claimants have severe limitations in functioning in the
workplace, as indicated by an ongoing SSA study of the appeals
process.  For instance, in the view of awarding ALJs, 66 percent of
cases merited an RFC of "less than the full range of sedentary
work"--a classification that often leads to an award.  In contrast,
DSS reviewers found that less than 6 percent of the cases merited
this classification.  DDS and ALJ differences in assessments were
also apparent in a 1982 SSA study that controlled for differences in
evidence.  This study indicated that DDS and ALJ adjudicators often
reach different results even when presented with the same evidence. 
Specifically, DDS reviewers would have awarded benefits in 13 percent
of the cases, while ALJs would have awarded benefits in 48 percent of
the cases. 

The use of medical experts and the application of judgment in
weighing evidence seem to influence the differences in DDS and ALJ
decisions.  For example, at the DDSs, medical or psychological
consultants assess applicants' RFC.  DDSs appear to rely more on
objective medical findings when assessing the impact of symptoms,
such as pain and fatigue, on functional capacity.  In contrast, ALJs
have the sole authority to determine RFC and often rely on a
claimant's testimony and treating physicians' opinions.  Although
ALJs may have independent medical experts testify at hearings, only
about 8 percent of cases in which benefits are awarded have used such
experts, according to our analysis. 

SSA issued rulings in July 1996, which were written to clarify ALJs'
use of DDS medical consultants' findings, treating source opinion,
and assessing RFC.  In addition, SSA plans to issue a regulation to
provide further guidance on assessing RFC for both DDSs and ALJs,
specifically clarifying when a "less-than-sedentary" classification
is appropriate.  SSA expects this classification to be used rarely. 


      DDS EVALUATIONS OF LIMITED
      USE TO ALJS
-------------------------------------------------------- Chapter 0:4.2

Several factors at both the DDS and ALJ levels limit the usefulness
of DDS evaluations as bases for ALJ decisions.  Often, ALJs cannot
rely on DDS evaluations because they lack the supporting evidence and
explanations of the reasons for the denial, laying a weak foundation
for an ALJ decision if an applicant appeals the case.  Moreover,
although SSA requires ALJs to consider the DDS medical consultants'
assessments of RFC, DDS procedures do not ensure that such
assessments are clearly explained.  Without this, an ALJ could
neither effectively consider such assessments nor give them much
weight. 

At the ALJ level, claimants may submit additional evidence and claim
new impairments.  This also affects the consistency of DDS and ALJ
decisions.  Claimants submit additional evidence in about 75 percent
of appealed cases; and, in about 27 percent of hearing allowances,
additional evidence is an important factor in the decision.  In about
10 percent of appealed cases, claimants switch their primary
impairment from a physical to a mental one. 

SSA has acknowledged the need to ensure that DDS decisions are better
explained and based on a more complete record so that they are more
useful if appealed.  The agency plans to issue instructions and
provide additional training for the DDSs on how and where in the case
files to explain their decisions and on explaining the decisions. 
SSA also plans to issue a regulation clarifying the reliance on DDS
medical consultants' opinions at the ALJ level.  To deal with the
possible effect of new evidence, SSA plans to return about 100,000
selected cases a year to the DDSs for further consideration when new
evidence is introduced at the ALJ level.  The DDSs might award
benefits at this point, eliminating the need for costly and
time-consuming ALJ hearings. 


      QUALITY REVIEW SYSTEMS
      NEITHER IDENTIFY NOR
      RECONCILE INCONSISTENCY
      BETWEEN DDS AND ALJ
      DECISIONS
-------------------------------------------------------- Chapter 0:4.3

SSA has several quality review systems for disability decisions, each
with its own specific purpose; none, however, is designed to identify
and reconcile factors that contribute to differences between DDS and
ALJ decisions.  For example, although ALJs must consider as evidence
medical consultants' conclusions about claimants' functional
capacity, DDS quality reviews do not focus adequate attention on
explaining these conclusions in the record.  Moreover, SSA reviews of
ALJ awards are too limited to ascertain whether ALJs appropriately
consider this evidence or whether DDS explanations could be made more
useful to ALJs.  Feedback about both of these issues--DDSs'
explanations of decisions and ALJs' consideration of them--would help
improve SSA's reviews of DDS and ALJ decisions and make DDS decisions
more useful to ALJs. 

SSA has started to focus its quality reviews on achieving greater
consistency between DDS and ALJ decisions.  In late 1996, the agency
started to increase its reviews of ALJ awards, setting a first-year
target of 10,000 cases.  In the longer term, SSA plans to unify its
DDS and ALJ quality review processes, providing systematic review of
decision-making.  The agency hopes this will ensure that the correct
decision is made at the earliest point in the process. 


   RECOMMENDATIONS
---------------------------------------------------------- Chapter 0:5

GAO supports SSA's process unification initiatives and recommends
that SSA, using available systems and data collected so far, move
quickly ahead to implement its quality assurance initiative to
provide consistent feedback to DDS and ALJ adjudicators as soon as
possible.  In addition, SSA should expand its effort to return cases
to DDSs for their review when new evidence is introduced on appeal. 

GAO also recommends that SSA set specific goals for measuring the
effectiveness of process unification in reducing inconsistent
decisions. 


   AGENCY COMMENTS
---------------------------------------------------------- Chapter 0:6

In its written comments on a draft of this report, SSA stated that
the goal of process unification was the linchpin of the agency's
disability redesign efforts and that GAO's findings and suggestions
would help SSA achieve this goal.  SSA generally agreed with GAO's
conclusions and recommendations and provided specific comments and
observations about areas of the report that it believed should be
changed.  Where appropriate, GAO has revised the report.  A number of
SSA's specific comments and GAO's evaluation of these comments appear
in chapter 6; the full text of SSA's comments and GAO's response
appear in appendix III. 


INTRODUCTION
============================================================ Chapter 1

The Social Security Disability Insurance (DI) and Supplemental
Security Income (SSI) programs are the two largest federal programs
providing cash payments to people with long-term disabilities.  The
DI program, authorized in 1956 under title II of the Social Security
Act, provides monthly cash insurance benefits to insured, severely
disabled workers.  The SSI program, authorized in 1972 under title
XVI, provides monthly cash payments to aged, blind, or disabled
people whose income and resources fall below a certain threshold. 
About 2.5 million people apply to the Social Security Administration
(SSA) each year for disability benefits. 

Between 1985 and 1995, the number of DI beneficiaries increased about
53 percent to about 5.0 million, and the number of working-age SSI
recipients increased 81 percent to 2.4 million.  In 1995, SSA
distributed about $61 billion to these and other disability
beneficiaries and spent $3 billion on program administration, which
accounted for more than half of SSA's total administrative
expenses.\5

Both the DI and SSI programs are administered by SSA and state
disability determination services (DDS), which determine benefit
eligibility.  DDSs award benefits to about 35 percent of
applicants.\6 Denied applicants may appeal to an administrative law
judge (ALJ) in SSA's Office of Hearings and Appeals (OHA).  About a
third of all applicants found not disabled by DDSs appeal to an ALJ,
and almost two-thirds of claimants who appeal to an ALJ are
subsequently found disabled. 

Cases appealed to ALJs add considerably to SSA's administrative
expense and increase the time claimants must wait for a decision. 
The average initial DDS decision in DI cases costs about $540, while
a hearing can cost an additional $1,200.  In addition, appeals can
add an average of 378 days to the length of time that an applicant
must wait for a final decision.  Moreover, because ALJs award a high
percentage of appealed cases that have already been denied twice by
the DDS, the integrity of the process is called into question. 


--------------------
\5 Included in the $61 billion of benefits are payments to all SSI
blind and disabled beneficiaries regardless of age. 

\6 DDSs are funded by SSA and make decisions in accordance with SSA's
policies and procedures. 


   CLAIMANTS MAY PURSUE SEVERAL
   LEVELS OF APPEAL
---------------------------------------------------------- Chapter 1:1

Claimants apply for DI and SSI disability benefits in SSA field
offices, which forward these applications, along with any supporting
medical evidence, to the appropriate state DDS.  A DDS adjudication
team, consisting of a disability examiner and a medical or
psychological consultant, makes the initial decision on each claim. 
If the DDS denies a claim, the claimant may ask for reconsideration. 
For the reconsideration review, a new team of DDS adjudicators makes
an independent decision on the basis of its own evaluation of all the
evidence, including any new evidence the claimant might submit. 

If, after reconsideration, a DDS denies benefits, the claimant may
pursue several levels of appeal (see table 1.1) and may introduce new
evidence at almost every level.  First, the claimant has the right to
request a hearing before an ALJ.  Before the hearing, the ALJ may
obtain further medical evidence, for example, from the claimant's own
physician or by hiring a consultative physician to examine the
claimant.  The hearing before the ALJ is the first time that a
claimant has an opportunity for a face-to-face meeting with an
adjudicator.  SSA hearings are informal and nonadversarial; SSA does
not challenge a claimant's case. 



                         Table 1.1
          
           Levels of Appeal and Actions Taken by
                  Disability Adjudicators

Adjudicative action           Adjudicative decisionmakers
----------------------------  ----------------------------
State DDS
----------------------------------------------------------
Make initial decision         Medical consultant and
                              disability examiner team

Reconsider decision to deny   Different medical consultant
benefits                      and disability examiner team


SSA
----------------------------------------------------------
Review appealed DDS denial    ALJ

Review ALJ denial             Appeals Council members


Federal courts
----------------------------------------------------------
Review final agency decision  Federal courts
(by ALJ or Appeals Council)
to deny benefits
----------------------------------------------------------
The claimant and witnesses--who may include medical or vocational
experts--testify at the hearing.  The ALJ asks about the issues,
receives relevant documents into evidence, and allows the claimant or
the claimant's representative to present arguments and examine
witnesses.  If necessary, the ALJ may further update the evidence
after the hearing.  When this is completed, the ALJ assesses the
effects of the claimant's medical impairment on capacity to function
at work.  The ALJ then issues a decision based on his or her
assessment of the evidence in the case and is generally authorized to
do so without seeking input from a medical professional. 

If an ALJ denies an appealed claim, the claimant may request that
SSA's Appeals Council review the case.  The Appeals Council may deny
or dismiss the request, or it may grant the request and either remand
the case to the ALJ for further action or issue a new decision.  The
Appeals Council's decision, or the decision of the ALJ if the Appeals
Council denies or dismisses the request for review, becomes SSA's
final decision.  After a claimant has exhausted all SSA
administrative remedies, the claimant has further appeal rights
within the federal court system, up to and including the Supreme
Court. 

Overall, about 49 percent of all applicants receive benefits, most
(71 percent) from initial or reconsideration decisions made at the
DDS level.  About 22 percent of all applicants appeal their cases to
ALJs; about two-thirds of all claimants whose claims are denied at
the DDS reconsideration level appeal to an ALJ.  Overall, about 29
percent of all claims in 1996 were awarded on appeal.  Figure 1.1
shows an overview of the disability decision-making appeals process. 

   Figure 1.1:  Disability Appeals
   Process and Outcomes

   (See figure in printed
   edition.)

Source:  GAO analysis based on 1996 SSA data. 


   ALJ PROCEDURES FOSTER
   INDEPENDENT DECISION-MAKING
---------------------------------------------------------- Chapter 1:2

ALJs at SSA conduct de novo (or "afresh") hearings; in other words,
they may consider or develop new evidence, and they are not bound by
DDS decisions.  In addition, the Administrative Procedure Act (APA)
protects ALJs' independence by exempting them from certain management
controls. 

Although ALJs are SSA employees and generally subject to the civil
service laws, the APA protects these staffs' independence by
restricting the extent to which management controls them.  For
example, ALJ pay is determined by the Office of Personnel Management
independently of SSA recommendations or ratings, and ALJs are not
subject to statutory performance appraisal requirements.  Such
safeguards help ensure that ALJ judgments are independent and that
ALJs would not be paid, promoted, or discharged arbitrarily or for
political reasons by an agency. 

ALJs operate under rules that differ from those of appellate courts. 
After a DDS denial is appealed, an ALJ at SSA holds a de novo
hearing, entitling the claimant to have all factual issues determined
anew by the ALJ.  In contrast, appellate courts generally review the
findings of lower courts and only consider whether those courts made
errors of law or procedure. 

Under the ALJ de novo process, the claimant receives a full in-person
hearing from an adjudicator who is fully authorized to hear every
aspect of the case.\7 The ALJ hearing is the first time a new
claimant is guaranteed the right to testify before an adjudicator. 

As SSA employees, ALJs make decisions for the Commissioner and are
subject to agency rules and regulations that they must apply in
holding hearings and making decisions.  Review by the Appeals Council
ensures that ALJ decisions follow SSA regulations and rulings.  If
the Council concludes that the ALJ has not followed agency rules and
regulations, the Council can reverse the ALJ decision on its own or
send the case back to the ALJ for further action. 

Although the ALJ's review and analysis of an appealed denial must
include the case file materials developed by the DDS, the ALJ makes
new factual determinations.  For example, even though a DDS concludes
that an individual can perform work, the ALJ is free to conclude that
the individual cannot. 


--------------------
\7 Not every appealed case involves a hearing; some are decided on
the basis of the case record. 


   DIFFERENCES IN DECISION RESULTS
   ARE LONG-STANDING
---------------------------------------------------------- Chapter 1:3

The differences between DDS and ALJ results are a long-standing
problem contributing to the growth in OHA backlogs and increased
case-processing time, according to our 1996 report on SSA's efforts
to reduce backlogs in appealed decisions.\8 Our review of over 40
internal and external studies of the disability determination and
appeals process, several of which were completed more than 20 years
ago, led us to this conclusion.  In the early 1990s, as part of its
efforts to develop a number of strategic priority goals, SSA reviewed
many of the same studies and identified inconsistent decisions as a
critical issue affecting SSA's ability to improve its service to the
public. 

Inconsistent decisions have been evident in program data for many
years.  For example, since 1986, DDS award rates have ranged from 31
to 43 percent, whereas ALJ award rates have ranged from 60 to 75
percent.  As shown in figure 1.2, ALJ awards, as a percentage of
total awards, have ranged from 17 percent in 1986 to 29 percent in
1996.\9

   Figure 1.2:  ALJ Awards as a
   Proportion of All Awards, FYs
   1986-96

   (See figure in printed
   edition.)

Source:  SSA data. 

Concerns about comparatively high ALJ award rates are not new. 
Although many hypotheses for inconsistent decisions have been
discussed, explanations for the high rate of ALJ awards have been
inadequate or unavailable.  In early 1979, congressional hearings
focused on high ALJ award rates, and, in 1980, the Congress passed
legislation aimed at promoting greater consistency and accuracy of
ALJ decision-making.  This legislation required SSA to establish a
system of reviewing ALJ decisions to ensure that they comply with
laws, regulations, and SSA rulings.  In January 1982, SSA submitted
to the Congress the results of a study on progress made in reviewing
ALJ decisions, including the possible causes for ALJ reversals.\10

Soon after SSA started to perform the quality reviews required by
legislation, the Association of ALJs filed suit in federal court. 
The lawsuit challenged SSA's plans to target these reviews to judges
with high award rates on the grounds that such reviews threatened
ALJs' decision-making independence.  The court never ruled on this
issue because SSA decided to rescind targeted reviews.  ALJ award
rates fell temporarily from 62 percent in 1981 to 55 percent in 1983
when SSA was performing its targeted reviews, although other factors
could explain the decline.  When targeted reviews ended in 1984,
however, ALJ award rates started to increase again and have remained
at high levels ever since. 


--------------------
\8 Social Security Disability:  Backlog Reduction Efforts Under Way;
Significant Challenges Remain (GAO/HEHS-96-87, July 11, 1996). 

\9 More recently, in the first quarter of fiscal year 1997, the
proportion dropped to 24 percent. 

\10 Implementation of Section 304 (g) of Public Law 96-265, Social
Security Disability Amendments of 1980 (the Bellmon Report),
Secretary of Health and Human Services (Washington D.C.:  Jan. 
1982). 


   DECISION-MAKING PROCESS YIELDS
   MUCH INCONSISTENCY BETWEEN DDSS
   AND ALJS
---------------------------------------------------------- Chapter 1:4

Not only do award rates between DDSs and ALJs differ, but the rates
also differ by impairment type and other factors.  For example,
although DDS award rates vary by impairment, ALJ award rates are high
regardless of the type of impairment.  As shown in table 1.2, DDS
award rates ranged from 11 percent for back impairments to 54 percent
for mental retardation.  In contrast, ALJ award rates averaged 77
percent for all impairment types with a smaller variation among
impairment types. 



                         Table 1.2
          
              Award Rates by DDSs and ALJs by
                      Impairment Type

                                   DDS award     ALJ award
                                       rates         rates
                                   (percent)     (percent)
------------------------------  ------------  ------------
Physical                                  29            74
Musculoskeletal                           16            75
Back cases                                11            75
Other musculoskeletal                     23            76
Other physical                            36            74
Mental                                    42            87
Illness                                   39            87
Retardation                               54            84
All impairments                           30            77
----------------------------------------------------------
Source:  GAO analysis based on SSA data from Sept.  1, 1992, through
Apr.  30, 1995. 

When age is considered in addition to impairment type, decisions can
vary even more widely.  Table 1.3 illustrates, for example, how
widely DDSs and ALJs can diverge when age is considered in back
impairment cases. 



                         Table 1.3
          
           Back Impairment Award Rates by DDS and
                    ALJs by Claimant Age

                                 Award rates (percentage)
                                --------------------------
Age of claimant                          DDS           ALJ
------------------------------  ------------  ------------
All ages                                  11            75
Under 50                                   2            68
50 and older                              22            83
----------------------------------------------------------
Source:  GAO analysis based on SSA data for Sept.  1, 1992, through
Apr.  30, 1995. 


   RECENT SSA EFFORTS TO REDUCE
   INCONSISTENCY
---------------------------------------------------------- Chapter 1:5

SSA has long known about its inconsistent decisions and the problems
they pose for the disability programs and the agency.  SSA has
studied the problem and taken several steps to address factors known
to contribute to inconsistency between DDS and ALJ adjudicators.  In
May 1992, SSA's Commissioner approved a study of the appeals process,
later called the Disability Hearings Quality Review Process
(DHQRP).\11 This study analyzed the reasons for high ALJ award rates. 
SSA has issued two reports based on this study, which is ongoing.\12

Realizing that the inconsistency between DDS and ALJ decisions and
the length and complexity of the decision-making process compromised
the integrity of disability determinations, SSA began redesigning the
process in 1993.  In late 1994, it released its Plan for a New
Disability Claim Process--
commonly referred to as the "redesign plan"--which represents the
agency's long-term strategy for addressing the systemic problems
contributing to inefficiencies in its disability processes.  To
direct the redesign effort, SSA created a management team assisted by
top SSA management, various task teams, and state and federal
employees involved with disability determinations. 

To address inconsistent decisions as a part of redesign, the agency
established a process unification task team.  This team included a
diverse group of 29 SSA and DDS employees who, in addition to their
own expertise, sought information from other sources and reviewed
data from SSA's DHQRP study of the appeals process.  In November
1995, the task team issued its final report.  SSA established an
intercomponent group to develop specific actions to support
consistent disability decisions and a senior executive group to
enforce needed changes.  In July 1996, the SSA Commissioner approved
the group's recommendations for several initiatives designed to
reduce inconsistent decisions by DDSs and ALJs. 


--------------------
\11 SSA's decision to begin this review of ALJ decisions was prompted
in part by our 1992 report about racial disparities in ALJ allowance
decisions.  See Social Security:  Racial Difference in Disability
Decisions Warrants Further Investigation (GAO/HRD-92-56, Apr.  21,
1992). 

\12 Findings of the Disability Hearings Quality Review Process, SSA,
Office of Program and Integrity Reviews (Washington, D.C.:  Sept. 
1994 and Mar.  1995). 


      SSA FACES SEVERAL COMPETING
      WORKLOADS
-------------------------------------------------------- Chapter 1:5.1

In addition to SSA's recent efforts to address inconsistent DDS and
ALJ decisions, the agency faces significantly increasing workloads at
all levels of adjudication.  In particular, several congressional
mandates will compete for time and resources with process unification
efforts.  For example, the Social Security Independence and Program
Improvements Act of 1994 and the Personal Responsibility and Work
Opportunity Reconciliation Act of 1996 require hundreds of thousands
more continuing disability reviews (CDR) to ensure that beneficiaries
are still eligible for benefits.  By law, SSA must conduct CDRs for
at least 100,000 more SSI beneficiaries annually through fiscal year
1998.  In 1996, the Congress increased CDR requirements for children
on SSI, requiring CDRs at least every 3 years for children under age
18 who are likely to improve and for all low birth weight babies in
the first year of life.  In addition, SSA is required to redetermine,
using criteria for adults, the eligibility of all 18-year-olds on SSI
beginning on their 18th birthdays and to readjudicate 332,000
childhood disability cases by August 1997.  Finally, thousands of
noncitizens and drug addicts and alcoholics could appeal their
benefit terminations, further increasing SSA's workload. 


      SSA INCLUDES PERFORMANCE
      GOALS FOR DISABILITY IN ITS
      GOVERNMENT PERFORMANCE AND
      RESULTS ACT PLAN
-------------------------------------------------------- Chapter 1:5.2

The Government Performance and Results Act (the Results Act) of 1993
requires federal agencies to be more accountable for the results of
their efforts and their stewardship of taxpayer dollars.  The Results
Act shifts the focus of federal agencies from traditional concerns,
such as staffing and activity levels, to results.  Specifically, the
act directs agencies to consult with the Congress and obtain the
views of other stakeholders and to clearly define their missions.  It
also requires them to establish long-term strategic goals as well as
annual goals linked to the strategic goals.  Agencies must then
measure their performance toward these goals and report to the
President and the Congress on their progress.\13

The Results Act's initial implementation involves about 70 pilot
tests during fiscal years 1994 through 1996 to provide agencies with
experience in meeting its requirements before governmentwide
implementation in the fall of 1997.  As a pilot agency, SSA submitted
its fiscal year 1996 annual performance plan to the Office of
Management and Budget in May 1995.  Specifically, the plan includes
the strategic goals of (1) rebuilding confidence in Social Security,
(2) providing world-class service, and (3) creating a supportive
environment for SSA employees.  It also includes a broad range of
measures for disability and appeals-related performance outputs and
outcomes. 


--------------------
\13 For further details, see Executive Guide:  Effectively
Implementing the Government Performance and Results Act
(GAO/GGD-96-118, June 1996). 


   OBJECTIVES, SCOPE, AND
   METHODOLOGY
---------------------------------------------------------- Chapter 1:6

In 1995 testimony before the Subcommittee on Social Security, House
Committee on Ways and Means, we reported on the timeliness and
consistency of DDS and ALJ disability determinations.\14 After our
testimony, the Chairman asked us to examine the differences between
DDS and ALJ decisions in more detail.  Specifically, we agreed to (1)
ascertain the factors contributing to inconsistent decisions by DDSs
and ALJs and (2) identify SSA's efforts to address inconsistent
decisions.  We reported our preliminary findings in testimony earlier
this year.\15

To respond to the first objective, we divided the possible
contributing factors into three types:  (1) factors related to
differences in RFC assessments made by DDSs and ALJs, (2) procedural
factors that contribute to differences in decisions, and (3) use of
quality reviews to manage the process. 

In conducting our review, we examined existing studies, SSA's
regulations and program operations memoranda, and court cases related
to the disability programs.  We also obtained and analyzed program
and statistical data; see appendix I for details.  In addition, we
interviewed DDS and SSA officials, including ALJs and OHA staff.  We
also attended SSA's nationwide process unification training. 

We performed our review at SSA headquarters in Baltimore, Maryland;
OHA headquarters in Falls Church, Virginia; and at SSA and DDS
offices in Atlanta, Boston, and Denver.  We conducted our review
between October 1995 and June 1997 in accordance with generally
accepted government auditing standards except that we did not verify
agency data. 


--------------------
\14 Social Security Disability:  Management Action and Program
Redesign Needed to Address Long-Standing Problems (GAO/T-HEHS-95-233,
Aug.  3, 1995). 

\15 Social Security Disability:  SSA Actions to Reduce Backlogs and
Achieve More Consistent Decisions Deserve High Priority
(GAO/T-HEHS-97-118, Apr.  24, 1997). 


DISABILITY DECISION-MAKING:  A
COMPLEX PROCESS REQUIRING MUCH
JUDGMENT
============================================================ Chapter 2

SSA requires that DDS and ALJ adjudicators follow a standard
approach--
called the sequential evaluation process--for making disability
determinations.  Although standard, the process requires adjudicators
to make several complex judgments.  For example, if adjudicators
cannot allow the claim on the basis of medical evidence only, they
must make judgments on whether claimants can perform prior or other
work available in the national economy despite their disabling
conditions.  Such determinations may involve not only residual
functional capacity (RFC) assessments, but consideration of these
assessments along with the claimant's age, education, and skill
levels. 

To reduce the amount of judgment involved, SSA has developed medical-
vocational rules.  In general, the older, less educated, and less
skilled the claimant, the more likely these rules will direct the
adjudicator to award benefits.  For claimants with functional and
vocational profiles that do not fit the rules, however, adjudicator
decision-making is less prescribed.  In addition, before making any
decision, adjudicators must decide how much weight to give to various
sources of evidence and evaluate the reasonableness and consistency
of any allegations the claimant makes about pain or other symptoms. 


   DDSS AND ALJS USE A STANDARD
   APPROACH, THE SEQUENTIAL
   EVALUATION PROCESS
---------------------------------------------------------- Chapter 2:1

To determine whether applicants meet the Social Security Act's
definition of disability, SSA regulations provide DDS and ALJ
adjudicators with a sequential evaluation process (see table 2.1). 
Although the process provides a standard approach, determining
disability requires a number of complex judgments. 

For people 18 or older, the act defines disability under the DI and
SSI programs as the inability to engage in substantial gainful
activity by reason of a severe physical or mental impairment that is
medically determinable and has lasted or is expected to last at least
1 year or result in death.\16 Moreover, the impairment must be of
such severity that a person not only is unable to do past relevant
work, but, considering age, education, and work experience, is also
unable to engage in any substantial work available in the national
economy. 



                         Table 2.1
          
          Five-Step Sequential Evaluation Process
                 for Determining Disability

                                 Action or decision taken
                                 if answer to question is
                                --------------------------
      Questions asked in the
Step  sequential process        Yes           No
----  ------------------------  ------------  ------------
1     Is the applicant          Stop--        Go to step 2
      engaging in substantial   applicant is
      gainful activity?\a       not disabled

2     Does the applicant have   Go to step 3  Stop--
      an impairment that has                  applicant is
      more than a minimal                     not disabled
      effect on the
      applicant's ability to
      perform basic work
      tasks?\b

3     Does the applicant's      Stop--        Go to step 4
      impairment meet or equal  applicant is
      the medical criteria for  disabled
      an impairment in SSA's
      Listing of
      Impairments?\b

4     Comparing the             Stop--        Go to step 5
      applicant's RFC with the  applicant is
      physical and mental       not disabled
      demands of the
      applicant's past work,
      can the applicant
      perform his or her past
      work?

5     On the basis of the       Applicant is  Applicant is
      applicant's RFC and any   not disabled  disabled
      limitations that may be
      imposed by the
      applicant's age,
      education, and skill
      level, can the applicant
      do work other than his
      or her past work?\b
----------------------------------------------------------
\a Under the sequential evaluation process, SSA's field offices
determine whether the applicant is engaged in substantial gainful
activity. 

\b In addition, the criteria require that the impairment last 12
months or be expected to result in death. 

Applicants are denied benefits at step 1 if they are engaged in
substantial gainful activity.  At step 2, adjudicators further screen
applicants by assessing whether they have a severe impairment,
defined by the regulations as an impairment that has more than a
minimal effect on the applicant's ability to perform basic work
tasks.  For those whose impairments have more than a minimal effect
on ability to work, adjudicators then begin determining whether the
applicant's impairments are severe enough to qualify for disability
benefits. 


--------------------
\16 Regulations currently define substantial gainful activity as
employment that produces countable earnings of more than $500 a month
for disabled people and $1,000 a month for blind people. 


      DOES THE APPLICANT QUALIFY
      UNDER SSA'S LISTING OF
      IMPAIRMENTS? 
-------------------------------------------------------- Chapter 2:1.1

In step 3 of the sequential evaluation process, adjudicators compare
the applicant's medical condition with medical criteria found in
SSA's Listing of Impairments--referred to as "the medical
listings"--which are published in SSA's regulations.  The listings
delineate over 150 categories of medical conditions (physical and
mental) that, according to SSA, are presumed to be severe enough to
ordinarily prevent an individual from engaging in any gainful
activity.  For example, corrected vision of 20/200 or less,
amputation of both hands, or an intelligence quotient of 59 or less
would ordinarily qualify an individual for benefits. 

An applicant may automatically qualify for benefits if the
adjudicator concludes that the laboratory findings, medical signs,
and symptoms of one of the applicant's impairments meet the specific
criteria for medical severity cited in the listings for that
impairment and the applicant is not engaging in substantial gainful
activity.  If an applicant's medical condition does not meet the
listed criteria or if the impairment is not listed, then the
adjudicator must determine whether the applicant's impairment is the
medical equivalent of one in the listings. 

The medical severity criteria for listed mental impairments are
generally more subjective than those for physical impairments.  For
most mental impairments in the listings, many of the severity
criteria are defined by functional limitations.  Determining whether
a mental impairment meets or equals the listed criteria often
requires subjective evaluations about (1) restrictions of daily
activities; (2) difficulties in maintaining social functioning; (3)
deficiencies in concentration, persistence, or pace that result in
failure to complete tasks in a timely manner; and (4) episodes of
deterioration in work settings that cause the individual to withdraw
or have exacerbated signs and symptoms.  For example, adjudicators
must decide whether the impairment has any impact at all on
activities of daily living or on social functioning, and, if so, rate
the impact as slight, moderate, marked, or extreme. 

By contrast, the listed criteria for physical impairments generally
are more objective, relating to medical diagnosis and prognosis,
rather than the assessment of functional limitations in the mental
listings.  Determining whether the medical findings for a physical
impairment meet or equal these criteria is a matter of documentation
and is often more a question of medical fact than opinion.  In some
instances, however, the criteria for physical impairments also
require that adjudicators assess functional limitations.  For
example, for applicants with human immunodeficiency virus,
adjudicators assess their symptoms or signs, such as fatigue, fever,
malaise, weight loss, pain, and night sweats as well as their
subsequent effect on activities of daily living and social
functioning.  For musculoskeletal and other impairments, adjudicators
assess the importance of pain in causing functional loss when it is
associated with relevant abnormal signs and laboratory findings. 
Adjudicators must also carefully determine that the reported
examination findings are consistent with the applicant's daily
activities. 


      CAN THE APPLICANT PERFORM
      PAST RELEVANT WORK? 
-------------------------------------------------------- Chapter 2:1.2

When medical evidence does not show that an applicant's condition
meets or equals the severity criteria in the listings, adjudicators
must determine whether the applicant can perform past work.  To do
this, adjudicators use judgment when they assess an applicant's
RFC--that is, what an applicant can still do, despite physical and
mental limitations, in a regular full-time work setting. 

To assess RFC, adjudicators must consider all relevant medical and
nonmedical evidence, such as statements of lay witnesses about an
individual's symptoms.  In considering medical evidence, adjudicators
must evaluate medical source opinions and judge the weight to be
given to each opinion.  Adjudicators also often evaluate issues
involving pain or other symptoms and judge whether the applicant's
impairment could reasonably be expected to produce the applicant's
symptoms. 

Assessing physical RFC requires adjudicators to judge individuals'
ability to physically exert themselves in activities such as sitting,
standing, walking, lifting, carrying, pushing, and pulling. 
Adjudicators also assess the effect of the individual's physical
impairment on manipulative or postural functions such as reaching,
handling, stooping, or crouching.  Assessing mental RFC requires
adjudicators to judge the individual's functional abilities such as
understanding, remembering, carrying out instructions, and responding
appropriately to supervision, coworkers, and work pressures. 

After assessing an applicant's RFC, the adjudicator compares it with
the demands of the applicant's prior work.  The adjudicator either
concludes that the applicant can perform his or her prior work and
denies the claim or proceeds to the last step (step 5) in the
sequential evaluation process. 


      CAN THE APPLICANT PERFORM
      OTHER WORK IN THE NATIONAL
      ECONOMY? 
-------------------------------------------------------- Chapter 2:1.3

At step 5, adjudicators evaluate whether applicants unable to perform
their previous work can do other jobs that exist in significant
numbers in the national economy.  If the adjudicator concludes that
an applicant can perform other work, the claim is denied.  Again,
adjudicators must apply judgment to determine whether an applicant
can perform other work in the national economy, depending on whether
the applicant's limitations are exertional or nonexertional. 

An applicant has exertional limitations when his or her impairment
limits the ability to perform the physical strength demands of work. 
For this evaluation, SSA places a claimant into one of five
categories of physical exertion--sedentary, light, medium, heavy, and
very heavy--with sedentary work requiring the least physical exertion
of the five levels (see table 2.2).\17 On the basis of an applicant's
RFC, adjudicators must judge which of the five exertional categories
is the most physically demanding work the individual can perform. 
For an applicant whose maximum physical ability matches one of the
five exertional categories of work, SSA provides medical-vocational
rules that direct the adjudicator's decision on the basis of the
claimant's age, education, and skill levels of prior work experience. 



                         Table 2.2
          
          Definition of Five Exertional (Strength)
                     Demand Categories

                         Strength requirements
              --------------------------------------------
Exertional
demand                                  Other strength
category      Requirement for lifting   demands
------------  ------------------------  ------------------
Sedentary     Requires lifting no more  Involves sitting;
              than 10 pounds at a time  walking and
              and occasionally lifting  standing may be
              or carrying articles      required
              like docket files,        occasionally
              ledgers, and small tools

Light         Requires lifting no more  Requires a good
              than 20 pounds at a time  deal of walking or
              or carrying objects       standing or
              weighing up to 10 pounds  involves sitting
                                        most of the time
                                        with some pushing
                                        and pulling of arm
                                        or leg controls

Medium        Requires lifting no more  Requires unlimited
              than 50 pounds at a time  sitting, walking,
              with frequent lifting or  and standing
              carrying of objects       ability
              weighing up to 25 pounds

Heavy         Requires lifting no more  Requires unlimited
              than 100 pounds at a      sitting, walking,
              time with frequent        and standing
              lifting or carrying of    ability
              objects weighing up to
              50 pounds

Very heavy    Requires lifting objects  Requires unlimited
              weighing more than 100    sitting, walking,
              pounds at a time with     and standing
              frequent lifting or       ability
              carrying of objects
              weighing 50 pounds or
              more
----------------------------------------------------------
Table 2.3 shows how the medical-vocational rules direct decisions for
people aged 50 or older who are limited to sedentary work. 



                         Table 2.3
          
             Directed Decisions Under Medical-
          Vocational Rules for Applicants Aged 50
            or Older Whose Exertional Ability Is
                 Limited to Sedentary Work

                    Previous work
Education           experience          Directed decision
------------------  ------------------  ------------------
Limited (grades 7-  Unskilled or none   Disabled
11 or less)

Limited (grades 7-  Skilled or          Disabled
11 or less)         semiskilled--
                    skills not
                    transferable

Limited (grades 7-  Skilled or          Not disabled
11) or less         semiskilled--
                    skills
                    transferable

High school         Unskilled or none   Disabled
graduate or more-
-does not provide
for direct entry
into skilled work

High school         Unskilled or none   Not disabled
graduate or more-
-provides for
direct entry into
skilled work

High school         Skilled or          Disabled
graduate or more-   semiskilled--
-does not provide   skills not
for direct entry    transferable
into skilled work

High school         Skilled or          Not disabled
graduate or more-   semiskilled--
-does not provide   skills
for direct entry    transferable
into skilled work

High school         Skilled or          Not disabled
graduate or more-   semiskilled--
-provides for       skills not
direct entry into   transferable
skilled work
----------------------------------------------------------
In general, the older a person is, the more likely SSA's
medical-vocational rules direct adjudicators to award benefits.  For
example, under the rules for those whose maximum physical capacity
limits them to performing sedentary work, applicants aged 50 or older
qualify for benefits under four of the scenarios shown in table 2.3. 
Those aged 45 through 49, however, qualify under only one scenario;
applicants aged 18 through 44 qualify under no scenario (see table
2.4). 



                         Table 2.4
          
             Directed Decisions Under Medical-
           Vocational Rules for Applicants Under
             Age 50 Whose Exertional Ability Is
          Limited to Full Range of Sedentary Work

                                        Directed decision
                                        ------------------
                          Previous
                          work          Aged 45-  Aged 18-
Education                 experience    49        44
------------------------  ------------  --------  --------
Illiterate or unable to   Unskilled or  Disabled  Not
communicate in English    none                    disabled

Limited (grades 7-11 or   Unskilled or  Not       Not
less)--at least literate  none          disabled  disabled
and able to communicate
in English

Limited (grades 7-11 or   Skilled or    Not       Not
less)                     semiskilled-  disabled  disabled
                          -skills not
                          transferable

Limited (grades 7-11 or   Skilled or    Not       Not
less)                     semiskilled-  disabled  disabled
                          -skills
                          transferable

High school graduate or   Unskilled or  Does not  Not
more                      none          apply     disabled

High school graduate or   Skilled or    Not       Not
more                      semiskilled-  disabled  disabled
                          -skills not
                          transferable

High school graduate or   Skilled or    Not       Not
more                      semiskilled-  disabled  disabled
                          -skills
                          transferable
----------------------------------------------------------
Although SSA's medical-vocational rules reduce the degree of judgment
that adjudicators must use in many cases, SSA has no rules to direct
adjudicators' decisions for other cases.  These include cases in
which (1) the applicant's maximum strength capability does not match
any of the five exertional levels or (2) the applicant's primary
limitations are nonexertional (or unrelated to the physical strength
demands required for sitting, standing, walking, lifting, carrying,
pushing, and pulling).  In such cases, the medical-vocational rules
can provide a guide for evaluating an applicant's ability to do other
work, but the regulations instruct adjudicators to base their
decisions on the principles in the appropriate sections of the
regulations, giving consideration to the medical-vocational rules for
specific case situations.  For example, an applicant may be
restricted to unskilled sedentary jobs because of a severe
cardiovascular impairment.  If a permanent injury of the right hand
also limits the applicant to only those sedentary jobs that do not
require bilateral manual dexterity, then the applicant's work
capacity is limited to less than the full range of sedentary work. 
The ability to do less than the full range of sedentary work is not
one of the five exertional levels defined in SSA's regulations;
therefore, no medical-vocational rules would direct the adjudicator's
decision. 

On the basis of Department of Labor data, SSA estimates that
approximately 200 unskilled occupations exist, each representing many
jobs that can be performed by people whose limitations restrict them
to the full range of sedentary work.  But, if an applicant is limited
to less than the full range of sedentary work, the adjudicator must
determine the extent to which the exertional and nonexertional
limitations reduce the occupational base of jobs, considering the
applicant's age, education, and work experience, including any
transferable skills or education providing for direct entry into
skilled work.  The mere inability to perform all sedentary unskilled
jobs is not sufficient basis for a finding of disability.  The
applicant still may be able to do a wide range of unskilled sedentary
work. 


--------------------
\17 The Department of Labor developed this classification system,
which is in its Dictionary of Occupational Titles. 


      ADJUDICATORS MUST WEIGH
      EVIDENCE AND REASONABLENESS
      OF SYMPTOM ALLEGATIONS
-------------------------------------------------------- Chapter 2:1.4

Before making any decision, an adjudicator must assess the amount of
weight to give to the various sources of evidence and evaluate the
reasonableness and consistency of any allegations from applicants
about pain or other symptoms. 

To provide a basis for determining disability, the adjudicator must
gather existing medical evidence, which includes (1) opinions of
physicians or psychologists who have had an ongoing treatment
relationship with the applicant and (2) hospitals, clinics, and other
medical sources that have treated or evaluated the applicant but not
on an ongoing basis.  In addition, adjudicators may develop new
medical evidence obtained from consulting sources.  Medical evidence
includes (1) medical history; (2) clinical findings, such as the
results of physical or mental status examinations; (3) laboratory
findings, such as blood pressure and X rays; (4) statement of the
diagnosis of the disease or injury based on its signs and symptoms;
and (5) treatment prescribed and prognosis.  Medical evidence also
includes statements from treating physicians or other medical sources
describing work-related activities, such as sitting, standing,
walking, and lifting, that the applicant can still do despite his or
her impairments.  In the case of mental impairments, statements
should describe the applicant's ability to understand, carry out, and
remember instructions and respond appropriately to supervision,
coworkers, and work pressures.  In making a decision, an adjudicator
must assess how much weight to give to each medical source's
statement of opinion.  Table 2.5 describes the factors to be
considered in weighing opinions. 



                         Table 2.5
          
              Factors Adjudicators Consider in
                 Weighing Medical Opinions

                    General effect of each factor on the
                    weight given to a medical source
Factor              opinion
------------------  --------------------------------------
Examining           More weight is given to a source who
relationship        examined the applicant than to a
                    source who did not.

Treatment           More weight is given to the
relationship        applicant's treating physicians
                    because they can provide a detailed,
                    longitudinal picture of the
                    impairments and bring a unique
                    perspective not available from
                    objective medical findings alone or
                    from single examinations or brief
                    hospitalizations. If a treating
                    physician's medical opinion is well
                    supported and is not inconsistent with
                    other medical evidence in the case
                    file, then adjudicators must give it
                    �controlling� weight.

Length, nature,     Weight is commensurate with (1) the
and extent of       length of time a source has treated
treatment           the applicant, (2) the number of times
relationship        the source has seen the applicant, and
                    (3) the source's knowledge based on
                    the kinds and extent of examinations
                    and testing the source has performed
                    or ordered from specialists and
                    independent laboratories.

Supportability      Weight is commensurate with the extent
                    to which the medical source (1)
                    supports the opinion with relevant
                    evidence, such as medical signs and
                    laboratory findings, and (2) provides
                    an explanation for the opinion.

Consistency         The more consistent an opinion is with
                    the record as a whole, the more weight
                    adjudicators must give that opinion.

Specialization      All other factors being equal, more
                    weight is given to the opinion of a
                    specialist on medical issues in his or
                    her area of specialty than to the
                    opinion of a source who is not a
                    specialist.

Other factors       Adjudicators must consider any factors
                    that the applicant or others bring to
                    their attention that tend to support
                    or contradict the opinion.
----------------------------------------------------------
Adjudicators also must evaluate whether an applicant's impairment
could reasonably be expected to produce the reported symptoms--such
as pain, fatigue, shortness of breath, weakness, and nervousness. 
This requires the adjudicator to assess the extent to which an
individual's symptoms are consistent with (1) the objective medical
evidence (medical signs and laboratory findings); (2) evidence, such
as statements from the applicant, medical sources, family, friends,
or employers about the applicant's medical history, diagnosis,
prescribed treatment, activities of daily living, and efforts to
work; (3) information from social welfare agencies, nonmedical
sources, and other practitioners, such as chiropractors and
audiologists; and (4) any other evidence of the applicant's
impairment's effect on his or her ability to work. 

If the adjudicator concludes that the impairment could reasonably be
expected to produce the reported symptoms, the adjudicator must then
evaluate the intensity and persistence of the symptoms to determine
how the symptoms limit the applicant's ability to work.  In making
such an evaluation, adjudicators look for objective medical evidence
obtained through clinical and laboratory diagnostic techniques, such
as evidence of reduced joint motion, muscle spasm, sensory deficit,
or motor disruption.  However, adjudicators cannot reject an
applicant's statements about the intensity and persistence of pain or
other symptoms or about the effect of these symptoms on the ability
to work solely because the available objective medical evidence does
not substantiate the applicant's statements.  Because symptoms
reported by the applicant sometimes suggest a more severe impairment
than can be shown by objective medical evidence alone, adjudicators
must carefully consider any other information provided by the
applicant, treating sources, or other people about the applicant's
pain or other symptoms.  Following are the factors that adjudicators
must consider in assessing pain and other symptoms: 

  -- activities of daily living;

  -- location, direction, frequency, and intensity of the pain or
     other symptoms;

  -- precipitating and aggravating factors;

  -- type, dosage, effectiveness, and side effects of any medication
     the applicant takes or has taken to alleviate pain/symptoms;

  -- treatment, other than medication, the applicant is receiving or
     has received for relief of pain or other symptoms;

  -- any measures the applicant uses or has used to relieve pain or
     other symptoms, such as lying flat on back, standing for 15 or
     20 minutes every hour, and sleeping on a board; and

  -- other factors concerning the applicant's functional limitations
     and restrictions due to pain or other symptoms. 


DDSS AND ALJS DIFFER MOST WHEN
ASSESSING RESIDUAL FUNCTIONAL
CAPACITY
============================================================ Chapter 3

SSA studies show that DDS and ALJ decisions most often differ because
adjudicators make different conclusions about applicants' ability to
function in the workplace.  At the DDS and ALJ levels, two different
types of professional staff perform residual functional capacity
(RFC) assessments.  At the DDS, medical staff perform the
assessments; at the ALJ level, the ALJ performs them.  ALJs may seek
the advice of medical experts, but they do so infrequently.  Study
results also suggest that DDSs and ALJs differ in their assessments
of the opinions of applicants' own physicians. 

SSA has conducted studies of the differences between DDS and ALJ
decisions and has identified key issues.  To improve consistency of
decisions, the agency has recently published policy clarifications,
conducted training for all disability adjudicators, and is now
starting to evaluate the impact of this training.  SSA also plans to
develop a single presentation of policy to be used by both DDSs and
ALJs. 


   MOST ALJ AWARDS RESULT FROM RFC
   ASSESSMENTS THAT DIFFER FROM
   THOSE OF DDSS
---------------------------------------------------------- Chapter 3:1

Differing DDS and ALJ assessments of a claimant's capacity to
function in the workplace are the primary reason for most ALJ awards. 
Under the sequential evaluation process, almost all DDS denial
decisions appealed to ALJs include an RFC assessment.  On appeal,
ALJs also follow the same sequential evaluation process and assess
the claimant's functional ability in most awards they make.  Both the
ongoing Disability Hearings Quality Review Process (DHQRP) study and
a study conducted by SSA in 1982 note the importance of differences
in assessing RFC.\18 (See app.  II for more details on these studies'
results.)

Decisions in cases involving physical impairments clearly reflected
differences in assessing RFC.  Table 3.1 presents data from SSA's
DHQRP study on physical impairment cases in which ALJs made awards on
the basis of RFC assessments.  The table compares the ALJ decisions
with those of reviewers who used the DDS approach and examined the
written evidence available to the ALJ.  These data indicate that ALJs
are significantly more likely than DDS medical consultants to find
that applicants have very limited work capacity. 



                         Table 3.1
          
               DDS and ALJ Differences in RFC
          Assessment Classifications for Physical
                     Impairment Awards

                                     Quality
                                   reviewers      Original
                                   using DDS      awarding
Level of physical exertion          approach          ALJs
determined by an adjudicator     (percentage   (percentage
or reviewer                       of awards)    of awards)
------------------------------  ------------  ------------
Heavy work (or no limiting                 0             0
 effect on physical effort)
Medium work                               22             1
Light work                                56             8
Sedentary work                            15            25
Less than the full range of                6            66
 sedentary work
----------------------------------------------------------
Source:  GAO analysis based on SSA data for ALJ awards made from
Sept.  1992 through Apr.  1995. 

In the view of awarding ALJs, 66 percent of the cases merited a "less
than the full range of sedentary work" assessment--a classification
that often leads to an award.  In contrast, the medical consultants
who performed the RFC assessment using the DDS approach found that
less than 6 percent of cases merited this classification.  The DDS
and ALJ adjudicators also differed in the other classifications. 

In addition, high ALJ award rates for claimants with mental
impairments often reflect different assessments of functional
limitations.  Even ALJ mental impairment awards based on the listings
reflect these differences because most such listings require
adjudicators to assess functional limitations in addition to
determining the claimant's medical condition. 

A study known as the Bellmon Report, which controlled for differences
in evidence, also found that differing RFCs played a role in
differing DDS and ALJ decisions.  This study found that DDS and ALJ
adjudicators reached different results even when presented with the
same evidence.  As part of the study, two groups of reviewers looked
at selected cases.  One group reviewed the cases as ALJs would, and
the other reviewed the cases as DDSs would.  Reviewers using the ALJ
approach concluded that 48 percent of the cases should have received
awards; reviewers using the DDS approach concluded that only 13
percent of those same cases should have received awards. 


--------------------
\18 Findings of the Disability Hearings Quality Review Process, SSA,
Office of Program and Integrity Reviews (Washington, D.C.:  Sept. 
1994) and Implementation of Section 304(g) of Public Law 96-265,
Social Security Disability Amendments of 1980 (the Bellmon Report),
Secretary of Health and Human Services (Washington, D.C.:  Jan. 
1982). 


   DDSS AND ALJS DIFFER IN THEIR
   DECISION-MAKING APPROACHES
---------------------------------------------------------- Chapter 3:2

We identified specific differences in DDSs' and ALJs' approach to
their decisions.  First, medical staff have different roles at the
two levels.  In addition, DDSs and ALJs respond differently to (1)
the opinions of claimants' physicians and (2) claimants' statements
about symptoms such as pain. 


      DDSS AND ALJS USE MEDICAL
      EXPERTISE DIFFERENTLY
-------------------------------------------------------- Chapter 3:2.1

Medical experts play different roles in the DDS and ALJ
decision-making approaches.  At the DDS, medical or psychological
consultants assess RFC of applicants.  In contrast, ALJs may consult
with medical experts but have sole authority to make the RFC finding. 
ALJs sought the advice of medical experts in only 8 percent of cases
resulting in awards, according to our analysis. 

Both the Bellmon and DHQRP studies compared RFC assessments made by
SSA medical staff using the DDS approach with those made by awarding
ALJs.  According to both studies, medical staff tended to find that
claimants had higher capacities to function in the workplace than the
ALJs found. 


      DDSS AND ALJS SEEM TO DIFFER
      IN THEIR RELIANCE ON
      TREATING PHYSICIANS'
      OPINIONS
-------------------------------------------------------- Chapter 3:2.2

Under SSA regulations, adjudicators must consider the opinions of
treating physicians who have an ongoing treatment relationship with
the claimant.  Such an opinion might include, for example, a
statement that a claimant "cannot stand or walk for more than two
hours total in a day." In the disability determination, adjudicators
must give controlling weight to these treating source opinions
provided they are (1) well supported by medically acceptable clinical
and laboratory diagnostic techniques and (2) consistent with the
other substantial evidence in the record.  A treating physician's
statement, however, that a claimant is "disabled" or "unable to work"
does not bind adjudicators. 

Treating physicians' opinions, however, seem to influence DDSs and
ALJs differently.  The DHQRP study found that the treating
physician's report was one of the five most frequent reasons for ALJ
awards.  This implies that ALJs tended to give controlling weight to
the treating physician's opinion, while DDS adjudicators were more
likely to focus on assessing that opinion in conjunction with other
medical evidence in the case file. 


      REPORTS OF SYMPTOMS AND
      CLAIMANTS' CREDIBILITY ALSO
      AFFECT DIFFERENCES, BUT
      EXTENT IS UNKNOWN
-------------------------------------------------------- Chapter 3:2.3

A second factor contributing to differing DDS and ALJ decisions is
the impact of symptoms (for example, pain, fatigue, or shortness of
breath) reported by the claimant but not identifiable in laboratory
tests or confirmable by medical observation.  Like the opinions of
the claimant's own physician, assessment of symptoms is important in
the disability decision.  Adjudicators must assess symptoms by
determining (1) whether the medically determinable impairments could
reasonably be expected to produce such symptoms and (2) the
intensity, persistence, and functionally limiting effects of the
symptoms.  According to SSA, adjudicators must assess the claimant's
credibility on the basis of the entire case record to make a
determination about these symptoms' effects.  DDSs generally make
such assessments on the basis of the case file (for example,
statements made by applicants on the application or reports from
medical sources that record applicants' comments).  ALJs have
additional evidence because they have the opportunity to consider the
claimant's testimony in a hearing.  Moreover, claimant credibility
has a significant impact on ALJ decisions. 

The DHQRP study identified the credibility of the claimant and
claimants' allegations about pain as two of the top five reasons for
an ALJ allowance decision.  The impact of these reasons on DDS
decisions is more difficult to assess.  However, during the DHQRP
study, reviewers using the DDS approach listened to tapes of claimant
testimony in a small sample of 50 cases.  The study concluded that
claimant testimony had no or minimal impact on those adjudicators. 


   EFFECT OF DIFFERENCES IN POLICY
   DOCUMENTS DIFFICULT TO ASSESS
---------------------------------------------------------- Chapter 3:3

SSA adjudicators use two different sets of documents as criteria for
disability decisions, which some believe contributes to inconsistent
decisions.  DDS adjudicators must follow a detailed set of policy
guidelines, called the Program Operations Manual System (POMS).  The
POMS for disability contains detailed interpretations of laws,
regulations, and rulings as well as procedural instructions on
deciding cases.  ALJs, on the other hand, rely directly on the laws,
regulations, and Social Security Rulings (SSR) for guidance in making
disability decisions.  The latter documents are generally shorter and
much less prescriptive than the POMS. 

This difference in policy documents, along with the difference in
decisions between the DDSs and ALJs has led to the belief by some
that there are two standards--or at least two different
interpretations of policy.  A 1994 Inspector General survey of DDS
and ALJ opinion found that the DDSs' strict application of POMS--as
opposed to the ALJs' direct application of disability law and
regulations--was considered to have a strong effect on allowance
rates by over half of those surveyed.  Similarly, the Bellmon Report
stated that, "SSA has long recognized that the standards and
procedures governing decisions by DDSs and ALJs are not entirely
consistent."

The type and extent of these differences have proven difficult to
quantify, however.  For example, the Bellmon Report identified
significant differences in DDS and ALJ decisions based on impairments
considered not severe.  The study then identified differences in the
regulations and POMS on this issue.  The study concluded, however,
that the two written standards, "while different, (were) not widely
divergent." As such, it remains unclear whether the differences
derive from the standards or from their differing application. 
Nevertheless, although their relative impact has not been quantified,
policy differences cannot be discounted as a potential reason for
inconsistent decisions. 


   SSA IS TAKING ACTIONS TO
   IMPROVE CONSISTENCY OF
   DECISIONS
---------------------------------------------------------- Chapter 3:4

SSA has taken or planned several initiatives to make disability
decisions more consistent.  In July 1996, SSA issued nine SSRs to
address several of the factors we identified as contributing to
inconsistent decisions.  For example, one of the new rulings reminds
ALJs that they must obtain expert medical opinion in certain types of
cases.\19 Another ruling clarifies when adjudicators must give the
opinion of a treating physician special consideration.  A third
ruling states that an RFC of less than the full range of sedentary
work is expected to be relatively rare.  SSA also plans to issue a
regulation to provide additional guidance on assessing RFC for both
DDSs and ALJs, specifically clarifying when a less-than-sedentary
classification is appropriate.\20

In addition, partly on the basis of the nine rulings, SSA completed
nationwide process unification training between July 10, 1996, and
February 26, 1997.  SSA officials pointed out that this training was
the first time that the agency had brought together DDS and ALJ staff
to share their views.  The training represented a major
effort--15,000 adjudicators and quality reviewers received 2 full
days of training, coordinated by facilitators in SSA headquarters
using a broadcast system.  SSA has also started to evaluate the
impact of the new rulings and training by collecting data before and
after the new rulings and training. 

Furthermore, SSA recently compared the policy language in the POMS
with disability law, regulations, and SSRs and concluded that no
substantive differences in policy existed.  SSA did find some
differences in wording and detail, however, that could lead to a
perception of differences.  To address this matter, SSA plans to
develop a single policy presentation to be used by both DDSs and
ALJs.  To this end, the agency is using exactly the same words in any
new regulation, ruling, and POMS publication.  It has already done
this, for example, for the SSRs on which the process unification
training was based.  SSA eventually plans to have all adjudication
policy in the form of regulations or SSRs so that they are binding on
ALJs as well as DDS adjudicators. 

In the longer term, SSA also plans under redesign to develop new,
more valid, and reliable functional assessment/evaluation instruments
relevant to today's work environment.  Because current differences in
RFC assessments are the main reason for inconsistent decisions,
however, SSA should proceed cautiously and test any new
decision-making methods to determine their effect on consistency as
well as on award rates before widespread implementation. 


--------------------
\19 The ruling reinstates a previous SSA policy that an ALJ or
Appeals Council member must obtain expert medical opinion before
determining that an impairment or group of impairments that do not
meet a specific listing are equivalent to the level of severity
implied by the listings. 

\20 In April 1997, SSA told us that the notice of proposed rulemaking
on the less-than-sedentary regulation is ready for release but did
not provide a date when it would be issued. 


DDS EVALUATIONS OF LIMITED USE TO
ALJS
============================================================ Chapter 4

ALJs often cannot fully understand how DDS denial decisions have been
made because DDS written evaluations provide neither clear
explanations nor justifications for the findings and conclusions
reached.  Therefore, the evaluations often do not lay a solid
foundation for subsequent appeals.  For instance, the basis of the
DDS' residual functional capacity (RFC) assessment is often unclear,
leaving the ALJ without full understanding of the reasoning that led
to the DDS denial.  Furthermore, explanations of how the DDS
considered evidence that ALJs might later rely on, such as the
opinions of the claimants' own physicians, may often be missing from
the case file or are not fully developed.  As a result, ALJs often
cannot rely on the evaluations as developed by the DDSs. 

SSA has plans to change the process to improve the documentation of
DDS evaluations so they can better serve as a foundation for ALJ
decisions.  These plans include requiring clear DDS explanations of
the reasoning used to support reconsideration denials and improving
development of evidence at the DDS.  SSA also plans to return a
selected number of cases involving new evidence from the ALJ level to
DDSs for their reconsideration.  Together, these changes in
procedures will better serve as a foundation for appeals, improving
the consistency of DDS and ALJ decisions. 


   DDS MEDICAL CONSULTANTS OFTEN
   INADEQUATELY EXPLAIN RFC
   ASSESSMENTS
---------------------------------------------------------- Chapter 4:1

As discussed in chapter 3, inconsistent decisions between DDSs and
ALJs are due mainly to differences in RFC assessments.  Studies show
that DDS medical consultants often inadequately explain their
conclusions, including those about an applicant's RFC.  Such
explanations, if improved, could be more useful in ALJ
decision-making.  In fact, SSA's policy is that an ALJ, when making
an RFC assessment, must consider the opinion of the DDS medical
consultant. 

To this end, SSA requires DDS medical consultants to record
explanations of their reasoning.  In particular, the agency asks
medical consultants to fully describe how they used the medical
evidence to draw their conclusions about an applicant's RFC.  RFC
forms and procedures require that medical consultants discuss in
writing how the medical evidence in the case file supports or refutes
an applicant's allegations of pain or other symptoms.  Finally, the
RFC forms also require medical consultants to explain how conflicts
among treating physician opinion and other medical evidence in the
case file were resolved. 

Disability Hearings Quality Review Process (DHQRP) data, however,
indicate that existing SSA procedures do not ensure that DDS
decisions are well documented.  Specifically, procedures require the
disability examiner to prepare supplementary explanations when the
resolution of key issues is not well documented elsewhere in the case
file.  The DHQRP study of appealed reconsideration denials found that
in about half the cases that hinged on complex issues--such as
conflicts with the treating physician's opinion, assessment of RFC,
and weighing of allegations regarding pain or other symptoms--DDS
documentation failed to explain how these issues were resolved.  The
insufficient documentation of the underlying medical analyses limited
their usefulness during the appeal process. 


   ALJ AWARDS ARE OFTEN BASED ON
   INFORMATION NOT AVAILABLE TO
   DDSS
---------------------------------------------------------- Chapter 4:2

Although ALJs use the medical evidence assembled by DDSs, they often
base their decisions on additional documentary or testimonial
evidence.  This both contributes to inconsistent decisions and makes
it difficult to reconcile those differences.  Procedures at the
hearings level, such as longer time frames for evidentiary
development and permitting the introduction of new information,
result in the availability of new documentary evidence for appeal
cases.  In addition, testimony during the face-to-face hearing and
the opportunity it provides for further assessing the claimant's
credibility provide new information not in DDS case files. 


      ADDITIONAL MEDICAL EVIDENCE
      RESULTS IN ALJ AWARDS
-------------------------------------------------------- Chapter 4:2.1

SSA studies show that in many instances introducing additional
documentary evidence at the hearing level results in an ALJ's
awarding benefits.  DHQRP data show that about three-quarters of the
appealed cases sampled contained new evidence.  The study estimated
that 27 percent of the hearing awards hinged on additional evidence,
resulting in an assessment of a more severe impairment or a more
restrictive RFC.  In addition, the Bellmon Report found that when new
evidence was removed from the case file, the ALJ award rate decreased
from 46 to 31 percent.  This study also found that approximately
three-quarters of new documentary evidence was medical in nature
rather than, for example, statements of friends and associates. 

One reason that appeals cases have additional evidence is that ALJ
procedures allow for more time to be spent on evidence development. 
Although SSA regulations stipulate that "every reasonable effort" be
made to obtain necessary evidence, DDS guidelines state that evidence
should generally be gathered within 30 calendar days.  ALJ
guidelines, however, provide a time frame for evidence gathering that
is almost twice as long and can be extended if necessary. 

In addition, ALJs responding to an Inspector General (IG) survey
believed that DDSs often fail to adequately develop evidence to show
the true nature and extent of an applicant's disability.  The ALJs
attributed some of this to a lack of adequate resources at the DDSs
and pressures to dispose of cases.\21 Also, surveyed ALJs said that
DDS problems with developing evidence, particularly medical evidence,
contribute to their reversals of DDS denials.  In an earlier survey
we conducted of DDS administrators, almost two-thirds responded that
workload and staffing pressures had affected the accuracy of denial
decisions.\22 Seven DDS administrators (14 percent) said the harmful
effect on the accuracy of denial decisions was great or very great. 

Finally, the presence of attorneys or others who represent the
claimant's interests may also result in the presentation of new
evidence during an appeal.  Because attorneys are generally paid only
when decisions favor their clients, they are motivated to find and
present additional evidence.  Although few claimants hire attorneys
or other representatives at the DDS level, DHQRP data showed that
representatives attended 81 percent of ALJ hearings. 


--------------------
\21 The Disability Appeals Process:  Administrative Law Judge
Perspectives, Department of Health and Human Services Office of the
IG (Washington, D.C.:  May 1994). 

\22 Social Security:  Increasing Number of Disability Claims and
Deteriorating Service (GAO/HRD-94-11, Nov.  10, 1993). 


      CLAIMANT TESTIMONY APPEARS
      TO RESULT IN ALJ AWARDS
-------------------------------------------------------- Chapter 4:2.2

With few exceptions, ALJ hearings present a claimant's first
opportunity for face-to-face contact with a disability adjudicator. 
Studies show that face-
to-face encounters with claimants appear to account for a significant
number of ALJ reversals.  Specifically, in the DHQRP study, reviewing
ALJs believed that a favorable assessment of the claimant's
credibility is a factor in 34 percent of sampled hearing allowances. 
Although DDSs and ALJs also assess credibility from case file
information, testimony received at a hearing appears to especially
influence ALJs when assessing the credibility of a claimant's
subjective allegations such as the effect of pain on functioning. 

The IG's 1994 report showed that nearly 60 percent of ALJs surveyed
believed that the claimant's appearance before an ALJ strongly
affects awards; 90 percent believed it has a moderate to strong
effect.  Furthermore, the Bellmon Report found that the ALJ award
rate decreased by about 17 percentage points when evidence from the
claimant's record of testimony was removed from the case file. 


      NEW IMPAIRMENT CLAIMS ALSO
      RESULT IN ALJ AWARDS
-------------------------------------------------------- Chapter 4:2.3

Because claimants may offer new documentary and testimonial evidence
at an ALJ hearing, they can also change their impairment type or add
a new, secondary impairment, which also affects consistency of DDS
and ALJ decisions.  Moreover, in about 10 percent of cases appealed
to the ALJ level, claimants switch the basis of their primary
impairment from a physical claim to a mental claim.  Under current
procedures, the DDS lacks the opportunity to routinely consider these
switched claims, then incorporate this consideration in their
analysis, thus providing the ALJ with a basis for confirming or
rejecting the new impairment claim. 


   EFFECT OF OTHER FACTORS DOES
   NOT APPEAR MAJOR OR IS MORE
   DIFFICULT TO SUBSTANTIATE
---------------------------------------------------------- Chapter 4:3

In addition to inadequately explained RFC assessments and new
evidence submitted on appeal, we examined other factors that could
affect inconsistent decisions.  We could not attribute any
significant effect, however, to other factors, such as worsening
condition of claimants and the lack of government representation at
hearings. 


      CLAIMANT'S WORSENING
      CONDITION DOES NOT APPEAR TO
      BE A MAJOR CONTRIBUTOR
-------------------------------------------------------- Chapter 4:3.1

Because claimants must often wait several months--on average almost a
year--for an ALJ hearing, it seems reasonable to conclude that some
ALJ awards could be explained by the claimants' condition
deteriorating during that time.  Worsening conditions, however, are
not a major contributor to ALJ awards, according to our examination
of program data.  About 93 percent of ALJ awards had onset
dates--dates on which the ALJ had determined the individual had
become disabled--that preceded the DDS decision, suggesting that the
ALJ had decided the individual had been disabled when the DDS denied
the case.  If worsening conditions were a major factor contributing
to ALJs awarding benefits, we might expect to see ALJ-determined
onset dates coming after the date of the final DDS denial.  Because
such onset dates are relatively rare, however, little basis seems to
exist for concluding that worsening conditions influence many ALJ
awards.  Moreover, neither the Bellmon Report nor the DHQRP study
discussed worsening conditions as a key factor influencing ALJ
awards. 

An ALJ award based on a worsening condition may have also followed a
DDS denial based on the assumption that a claimant's impairment would
improve within 12 months (individuals are not disabled if their
impairment is expected to last less than 1 year), SSA officials
noted.  If expected improvement did not, in fact, occur, then the ALJ
award would have correctly been based on the original alleged date of
onset.  About 10 percent of ALJ awards are made to individuals whose
claim the DDS had denied on the basis of the duration requirement,
according to our analysis of program data.  This 10 percent, however,
represents a maximum amount because available program data did not
allow us to isolate the impact of other factors--such as new
information introduced at the ALJ level--which could have been the
main reason for the ALJ award. 


      LACK OF GOVERNMENT
      REPRESENTATION AT HEARINGS
      NOT FULLY EVALUATED
-------------------------------------------------------- Chapter 4:3.2

Although the ALJ is expected to consider SSA's interests during the
hearing, the agency is not formally represented.  The presence of a
government attorney or other advocate to represent SSA at hearings
has been discussed over the years as a way of improving the ALJ
hearing process.  Although claimants have the right to
representation, SSA relies on the ALJ to fully document the case,
considering the claimant's as well as the government's best
interests. 

In the early 1980s, SSA initiated a pilot project at selected hearing
offices to test the effect of SSA representation at hearings.  At a
1985 congressional hearing, SSA released preliminary information from
the pilot that suggested that ALJ awards made in error could be cut
by 50 percent if SSA were represented at appeal hearings.\23

Acting under a July 1986 court injunction, however, SSA halted the
pilot project.  The court concluded that the entire notion of SSA
representation, as implemented, violated procedural due process.  In
May 1987, SSA decided to end the project, stating that the
administrative resources committed to it could be better used
elsewhere.  As a result, the preliminary results were never verified,
and a final report was never issued. 


--------------------
\23 Hearing before the Select Committee on Aging, House of
Representatives, 99th Congress, 1st session, Mar.  18, 1985. 


   SSA'S PLANNED IMPROVEMENTS IN
   PROCEDURES
---------------------------------------------------------- Chapter 4:4

SSA plans to take several actions so that DDS and ALJ procedures
better ensure decision-making consistency, including requiring more
detailed DDS rationales, returning selected appealed cases to the DDS
for consideration of new evidence introduced at ALJ hearings, and
using a "predecision interview" by a disability examiner. 

To improve explanations of DDS decisions, SSA plans to require more
detailed DDS rationales.  New guidelines for all reconsideration
denials are to require DDS adjudicators to write rationales
explaining how they made their decisions, especially how the medical
consultants assessed RFC, treating physician opinion, pain, and other
factors.  On the basis of feedback from the process unification
training, SSA plans further instructions and training for the DDSs on
the bases for their decisions and where in the case files this
information should go.  SSA issued a ruling in July 1996 clarifying
that ALJs consider the findings of fact made by DDS medical and
psychological consultants as expert opinion evidence of nonexamining
sources and plans to issue a regulation to further clarify the weight
given by ALJs to the DDS medical consultants' opinions.\24

To ensure that DDSs have an opportunity to review all relevant
evidence before an ALJ hearing, SSA plans to return selected appealed
cases to the DDS for consideration of new documentary evidence
introduced at ALJ hearings.  This would avoid the need for a more
costly and time-consuming ALJ decision in cases where the DDS would
award benefits.  If the DDS cannot allow the returned claim, however,
the DDS medical consultant must provide a revised assessment of the
case's medical facts.  SSA plans to implement this project in May
1997, at which time it would begin selecting about 100,000 of the
roughly 500,000 appealed cases per year for such claims.\25 Moreover,
SSA's decision to limit such claims to about 100,000 cases may need
to be reassessed in light of the possible benefits that could accrue
from this initiative. 

SSA also plans to test the use of a "predecision interview" by a
disability examiner with the claimant before denying a claim.  This
interview would provide an opportunity for the DDS to routinely
obtain and consider testimonial evidence.  It would also allow the
DDS the chance to better ensure that claimants understand how
decisions about their cases are made and what evidence might be
relevant.  This could improve the claimants' ability to provide
complete and relevant information and make all relevant disability
claims earlier in the disability determination process. 


--------------------
\24 In April 1997, SSA told us, the notice of proposed rulemaking on
the DDS medical consultants' opinions was in final clearance within
SSA. 

\25 DHQRP data show that 76 percent of appealed cases contain new
evidence. 


QUALITY REVIEWS DO NOT FOCUS ON
INCONSISTENCY BETWEEN DDS AND ALJ
DECISIONS
============================================================ Chapter 5

SSA could use its ongoing quality reviews to better focus on
differences in DDSs' and ALJs' assessments of functional capacity and
of procedures to improve its management of the decision-making
process and reduce inconsistent decisions between DDSs and ALJs. 
Current quality reviews, however, focus on the DDS and ALJ
decision-making processes in isolation from one another and do not
reconcile differences between them.  In addition, to better manage
the process and reduce inconsistencies, SSA also needs a quality
review system that focuses on the overall process and provides
feedback to all adjudicators on factors that cause differences in
decisions.  SSA has data and mechanisms in place that it could use to
begin integrating its quality reviews and to provide feedback to DDSs
and ALJs.  In the longer term, SSA plans to systematically review
decision-making at all levels through a new quality review system. 


   QUALITY REVIEWS NOT DESIGNED TO
   ADDRESS DIFFERENCES
---------------------------------------------------------- Chapter 5:1

SSA has several quality review systems that review disability DDS and
ALJ decisions.  As shown in table 4.1, each of the reviews has a
different purpose.  None was developed to identify and remedy the
factors that contribute to differences in DDS and ALJ decisions. 



                         Table 4.1
          
             SSA Reviews Differ by Organization
                    Reviewed and Purpose

                                         Fiscal year 1996
                                          cases reviewed
                                          (approximate)
                                        ------------------
Type of review      Purpose             Award     Denial
------------------  ------------------  --------  --------
DDS level
----------------------------------------------------------
Quality assurance   Determine whether   27,000    33,000
                    DDS decisions
                    comply with
                    written standards
                    and criteria,
                    including
                    performance
                    standards

Pre-                Protect the         235,000   Not
effectuation\a      solvency of the DI            applicab
review (PER)        trust fund by                 le
                    intercepting DDS
                    award errors
                    before payment


ALJ level
----------------------------------------------------------
Own-motion\a        Review ALJ award    4,000\b   \b
                    decisions before
                    payment

Appealed ALJ        Ensure              Not       57,000
denials             supportability of   applicab
                    ALJ denial before   le
                    possible court
                    appeal by
                    applicant
----------------------------------------------------------
\a The PERs cover DI and DI/SSI concurrent cases; own-motion reviews
cover cases involving DI only. 

\b Excludes reviews of "bureau protests," which are generally cases
with technical problems related to insured status, but includes a
small number of denials, which are being phased out. 

At the DDS level, staff who report to SSA's Office of Program and
Integrity Reviews (OPIR) perform a quality assurance review to
promote the accuracy and consistency of DDS determinations.  The
review uses continuous random samples of completed award and denial
actions.  On the basis of errors found during this review, SSA
computes accuracy rates for each DDS, which it compares with
performance standards.  DDSs that fall below standards for two
consecutive quarters are subject to increased SSA oversight and may
be removed from making disability decisions.  In addition, DDS staff
also perform a pre-effectuation review or PER (that is, a review
before benefits payments are paid) of awards to protect the solvency
of the DI trust fund.  Under this review, staff review 50 percent of
DI awards (not SSI-only cases) to prevent payment of erroneous
awards. 

At the ALJ level, quality review heavily focuses on the review of
claims denied by ALJs and appealed to SSA's Appeals Council. 
Claimants whose claims are denied by an ALJ and want to appeal the
denial must apply to the Appeals Council before bringing their claim
to a federal court.  The purpose of this final agency review is to
ensure that the case file fully supports the ALJ denial decision
before possible court appeal by the claimant.  On the basis of this
review, the Appeals Council may, among other things, reverse the
denial decision or remand the case to the ALJ for further action.  In
addition, like the PER at the DDS level, the Appeals Council performs
a PER of ALJ awards.  Unlike the 50-percent sample used for the PER,
however, this Appeals Council review samples only a portion of
DI-only awards totaling about 3 percent of all ALJ DI awards to
people under age 59. 


      REVIEW OF AWARDS AND DENIALS
      IS IMBALANCED, BUT EFFECT ON
      DECISION BIAS NOT EVIDENT
-------------------------------------------------------- Chapter 5:1.1

As shown in table 4.1, DDS reviews emphasize awards; the ALJ reviews,
however, emphasize denials.  This may inappropriately give DDSs an
incentive to deny claims and ALJs an incentive to award claims in
both instances to avoid scrutiny by quality reviewers.  Available
evidence, however, does not support this conclusion. 

Before SSA instituted the PER of DDS award determinations in fiscal
year 1981, national accuracy rates were generally higher for initial
denials than for awards.  After the PER was instituted, this
situation reversed.  By 1983, award rates were more likely to be
accurate than denial rates.  This trend may suggest that instituting
the review caused a decline in the accuracy of denials, while
increasing the accuracy of awards.  Other factors could have
influenced these accuracy trends, however, including workload
pressures and program changes.  In addition, the difference between
the denial and award accuracy rates is slight.  In fiscal year 1996,
the denial accuracy rate was only 2.9 percentage points lower than
the award accuracy rate. 

Moreover, data from the DHQRP study suggest that the evidence
supports ALJ awards and denials equally.  As part of that study,
reviewing ALJs assessed 3,000 ALJ awards and 3,000 denials and found
virtually the same support rates for both types of cases:  81 percent
of awards and 82 percent of denials were supported by substantial
evidence. 


   CURRENT QUALITY REVIEWS MIRROR
   DIFFERENCES IN APPROACH AND
   PROCEDURES
---------------------------------------------------------- Chapter 5:2

How DDS and ALJ quality reviews operate reflects the differences in
how decisions are made at the two levels.  First, quality reviewers
use the same decision-making approach as those they are reviewing. 
Therefore, they sustain the differences in approach discussed earlier
rather than reconcile them.  For example, the Appeals Council,
mirroring the approach of the ALJs, infrequently consults with
medical experts.  Second, DDS reviews do not examine the possible
impact at the ALJ level of weaknesses in evidence or the explanation
of the decision.  As a result, SSA misses the opportunity to use
quality reviews to strengthen procedures so that DDS decisions better
serve as a basis for ALJ consideration. 


      DIFFERENCES IN APPROACH NOT
      IDENTIFIED AND RECONCILED
-------------------------------------------------------- Chapter 5:2.1

The staff and approach used in SSA's quality reviews of DDS decisions
mirror those used in the DDS process.  SSA review teams, composed of
disability examiners and physician consultants, assess the quality of
DDS decisions using the same policies and procedures that DDSs use in
making their decisions.  For example, when review staff examine a DDS
decision, a physician consultant on the team has final authority
regarding the correctness of the residual functional capacity (RFC)
assessment made by the DDS medical consultant. 

Likewise, SSA's Office of Hearings and Appeals (OHA) staff perform
ALJ reviews in a manner that mirrors the ALJ process.  Staff at OHA
screen decisions for conformance with the same standards and
procedures used by ALJs, then refer cases that merit further review
to the Appeals Council, which consists of attorneys.  Similar to
ALJs, Appeals Council reviewers have sole authority for assessing a
claimant's RFC, and they seek medical input infrequently.  The
Appeals Council's medical staff and contract physicians consulted in
about 17 percent of the cases reviewed by the Appeals Council,
according to our analysis of available SSA data. 

In addition, although SSA's Office of Disability is responsible for
promulgating a uniform decision-making policy, management control of
reviews is split between OPIR, which reports to the Deputy
Commissioner for Finance, Assessment, and Management, and the Appeals
Council, which reports through OHA to another Deputy Commissioner. 
The two review groups have not routinely met to identify and resolve
issues related to inconsistent decisions.\26


--------------------
\26 Recently, SSA has started such meetings under its process
unification effort. 


      QUALITY REVIEWS DO NOT
      ENSURE THAT DDS DECISION
      BUILDS A SOLID FOUNDATION
      FOR ALJ DECISION
-------------------------------------------------------- Chapter 5:2.2

SSA's quality reviewers examine the evidence gathered by the DDS to
determine if the end result complies with SSA regulations and
guidelines.  Although SSA's reviewers assess the adequacy of the
DDS's explanation of the initial decision, the reviewers consider the
DDS to have made an accurate decision whether it is well explained or
not.  If a DDS medical consultant fails to adequately explain the
basis for the RFC assessment--
but nonetheless the decision appears correct and based on adequate
evidence--the reviewers do not charge DDS with an error affecting its
performance accuracy. 

This approach focuses on performance accuracy; it does not provide
DDSs with routine, systematic feedback on inadequate RFC explanations
because SSA does not return cases to DDSs for correction solely
because RFC explanations are inadequate.  Instead, if reviewers
return a case to a DDS because of other types of errors, such as
inadequate evidence to support the decision, the returned case would
include comments on inadequate RFC explanations by DDS medical
consultants, according to SSA officials.  Otherwise, the only way
that reviewers might provide feedback on inadequate RFC explanations
is during periodic visits to DDSs.  Consequently, SSA lacks a
routine, systematic mechanism for giving DDSs timely information on
the adequacy of their RFC explanations. 

Likewise, Appeals Council reviews have not emphasized ALJs'
consideration of DDS medical consultants' opinions.  First, the
Appeals Council samples few ALJ awards for review.  Such reviews
could identify differences between the DDS medical consultant's
opinion and the ALJ view.  Second, even if the Appeals Council might
want to consider the views of DDS medical consultants, the lack of
explanation gives the Council little to review. 

In addition, SSA's quality reviews of DDSs' performance accuracy do
not focus on weaknesses in DDS evidence gathering from the standpoint
of whether the evidence could later contribute to ALJ reversals. 
Instead, reviewers of DDS decisions focus on whether the evidence in
the file supports the DDS's own decision.  They do not consider
whether gaps in evidence may become significant in a later appeal. 
For example, if the file indicates that the claimant has a treating
physician, but the treating physician's report is missing from the
file, quality reviewers do not automatically cite this as a
performance accuracy error.  Instead, they determine whether the
totality of evidence in the file supports the DDS's decision.  If the
decision is supported adequately--despite the missing evidence--the
reviewers do not charge the DDS with a performance accuracy error,
though this lack of evidence could become significant at the ALJ
level.  Although the DDS decision may be technically accurate, it may
also be vulnerable to reversal on appeal, a factor that the current
quality assurance system does not consider in assessing the overall
quality of DDS decisions. 

In keeping with procedures, DDS reviewers also determine whether the
DDS has made a reasonable effort to obtain the evidence.  In
assessing the reasonableness of the effort, however, the DDS
reviewers again do not focus on the potential impact of the missing
information if the case were to be appealed.  Such a focus would be
necessary for both identifying and reconciling differences in
decisions. 


   SSA HAS PLANS TO IMPROVE
   QUALITY REVIEWS
---------------------------------------------------------- Chapter 5:3

SSA has taken or planned several actions to reduce decisional
inconsistency, including addressing factors that we identified as
important contributors to the inconsistency.  First, the agency has
started to systematically gather information on this subject.  In
1992, SSA established the Disability Hearings and Quality Review
Process (DHQRP), which collects data on ALJ decisions and on the DDS
reconsideration denial decisions that preceded them.  DHQRP provides
a data-driven foundation to identify inconsistency issues and focus
on strategies for resolution.  According to quality reviewers, SSA
has continued this process and anticipates issuing more reports in
the future. 

In addition, SSA is completing work on a notice of proposed
rulemaking, with a target issue date of August 1997 for a final
regulation to establish the basis for reviewing ALJ awards, which
would require ALJs to take corrective action on remand orders from
the Appeals Council before benefits are paid.  As envisioned,
disability examiners and physician consultants as well as reviewing
judges will review ALJ awards.  In November 1996, SSA began an
initial start-up period for this effort and after the regulation is
issued plans to target about 10,000 cases for review during the first
year. 

Unlike existing quality reviews, the new process aims to identify and
reconcile factors that contribute to differences between DDS and ALJ
decisions.  When the reviewers find ALJ awards they believe are
unsupported, they send these cases to the Appeals Council.  If the
Appeals Council disagrees with the conclusions of the quality
reviewers, the case is referred to a panel of SSA disability
adjudicators from various SSA units.  This review process can reveal
significant policy issues because the panel will receive cases in
which the reviewing Appeals Council judge disagrees with the
reviewing examiner and medical consultant.  On the basis of issues
identified, SSA could issue new or clarified policies or provide
adjudicators with additional training.  In addition, SSA's process
unification effort calls for returning certain cases to the DDS when
new evidence is provided at the hearing level. 

In the longer term, SSA envisions instituting a new quality review
system that will systematically review decision-making at all levels. 
One focus of the new system is making the right decision the first
time.  SSA estimates this new system will help reduce the percentage
of awards made by ALJs, while increasing the percentage made by DDSs. 
Under SSA's model, when this redesign is fully implemented, the
percentage of all awards made by ALJs would decline from around 29 to
17 percent, and the percentage made by DDSs would increase from 71 to
83 percent.  The agency has not explicitly established this as a
goal, however. 


CONCLUSIONS, RECOMMENDATIONS,
AGENCY COMMENTS, AND OUR
EVALUATION
============================================================ Chapter 6


   CONCLUSIONS
---------------------------------------------------------- Chapter 6:1

Inconsistent decisions between DDSs and ALJs are a long-standing
problem for SSA management with implications for the fairness,
integrity, and costs of both the decision-making process and the
program overall.  The award rate of appeals raises questions about
the fairness of the process because many claimants are awarded
benefits only after a lengthy appeal.  Moreover, persistent
inconsistencies between the two levels can undermine confidence in
the integrity of the decision-making process.  Furthermore, the later
the case is finally decided in the appeals process, the more
expensive it is to adjudicate. 

SSA can make more progress than it has in the past by unifying the
decision-making process at both the DDS and ALJ levels.  Meanwhile,
reducing inconsistent decisions will be limited to some extent by
factors inherent in the program.  Disability decisions are inherently
complex and require adjudicators to exercise judgment on a range of
issues.  As a result, expectations about the level of agreement
possible in such a program should acknowledge this reality. 
Moreover, the process involves large numbers of decisionmakers with
more than 15,000 adjudicators, quality reviewers, and others,
including over 1,000 ALJs, making these complex decisions nationwide. 

SSA has developed process unification initiatives that, if
implemented, could significantly improve the consistency of
decisions.  Competing workloads at all levels of adjudication,
however, could jeopardize progress in this important area.  SSA
should capitalize on the momentum it has recently gained and give
consistency of decisions the sustained attention it requires as an
essential part of redesign.  For example, the agency has ongoing data
gathering and review mechanisms in place that could produce real
progress in this area.  SSA has not established explicit
outcome-oriented goals or measures, however, to assess its progress
in achieving consistent decisions.  We believe the strategic planning
process required under the Government Performance and Results Act can
be a useful vehicle to help focus management attention on the results
SSA hopes to achieve through process unification and to monitor its
progress toward reaching these results.  In this context, SSA needs
to establish performance goals to measure its progress in shifting
the proportion of cases awarded from the ALJ to the DDS level.  SSA
could then monitor its progress and make corrections if its actions
do not achieve the desired results.  Using quantifiable performance
goals to measure results would place a high priority on this issue
and bolster public confidence in SSA's commitment to achieve more
consistency in DDS and ALJ decision-making. 

Under process unification, SSA plans to ensure that the DDS decisions
are better explained and thus more useful to ALJs.  Workload
pressures at the DDSs, however, may make full and thoughtful
explanations of their decisions difficult.  SSA will need to consider
ways to reduce these pressures if the agency's plans are to be
effective.  At the ALJ level, SSA's plans to return cases to the DDSs
are important, given the significance of new evidence as a possible
reason for awards.  SSA's decision to limit such returns to about 20
percent of cases, however, could reduce the effectiveness of this
initiative. 

In addition, SSA plans to improve its quality reviews but could move
more quickly to implement these plans.  Historically, SSA has never
had a unified system of quality reviews, despite studies documenting
inconsistent decisions.  Specifically, in 1982, the Bellmon Report
identified problems in the consistency of less-than-sedentary
residual functional capacity (RFC) assessments, and the Disability
Hearings Quality Review Process (DHQRP) reinforced this finding in
1994.  However, SSA has not effectively used its quality reviews to
focus on this problem or taken action to resolve it.  Similarly,
DHQRP identified problems with DDS rationales, but no systematic
feedback has been provided on this issue.  The DHQRP results give SSA
an adequate foundation and an ongoing review mechanism to begin
unifying quality reviews between the DDSs and ALJs without further
delay.  SSA could, for example, use the DHQRP findings on
less-than-sedentary awards to sharpen and focus current Appeals
Council reviews.  The agency could also focus on the adequacy of DDS
decision explanations in its unified quality review program. 

We are also concerned that, without adequate planning and evaluation,
some redesign initiatives could have unintended consequences.  For
example, under redesign, SSA intends to develop new, more valid, and
reliable functional assessment/evaluation instruments that are
relevant to today's work environment.  The agency intends to rely
heavily on these instruments in decision-making.  But, because
differences in RFC assessments are the main reason for ALJ awards,
SSA should proceed cautiously.  As such, it should test any new
decision methods to determine their effects on consistency as well as
on award rates before widespread implementation. 


   RECOMMENDATIONS
---------------------------------------------------------- Chapter 6:2

SSA is beginning to implement initiatives to reduce inconsistent
decisions between DDSs and ALJs, realizing that the lengthy and
complicated decision-making process and inconsistent decisions
between adjudicative levels compromise the integrity of disability
determinations.  We support these initiatives and recommend that SSA
take immediate steps and be accountable for ensuring that they are
implemented as quickly as feasible.  For example, using available
quality assurance systems, SSA should move quickly ahead to improve
feedback to adjudicators at all levels.  In addition, to better
ensure that adjudicators review the same record, the agency should
increase the number of cases it plans to return to DDSs when new
evidence is submitted on appeal. 

In addition, we recommend that, given the magnitude and seriousness
of the problem, the Commissioner should, under the Results Act,
articulate the process unification results that the agency hopes to
achieve and establish a performance goal by which it could measure
and report its progress in shifting the proportion of cases awarded
from the ALJ to the DDS level. 


   SSA'S COMMENTS AND OUR
   EVALUATION
---------------------------------------------------------- Chapter 6:3

SSA officials generally agreed with the conclusions and
recommendations in this report and stated that the report would be
useful to SSA in its efforts to reduce inconsistent decisions between
DDSs and ALJs.  SSA agreed with our recommendation that the agency
take immediate steps and be accountable for ensuring that its process
unification initiatives are implemented as quickly as feasible. 

Regarding our other recommendation, SSA said that the goal of making
a greater proportion of awards at the DDS level and fewer on appeal
was laudable and would promote good customer service.  But SSA
disagreed about taking steps to be accountable for attaining this
goal.  Agency officials believed that the natural outcome of SSA's
process unification initiatives would effect an increase in DDS
awards and a decrease in ALJ awards.  Because process unification is
the linchpin of the disability determination process, however, not
just disability redesign, we continue to believe that SSA needs to
establish a performance goal for achieving process unification and
that the Results Act is the appropriate mechanism to do this. 

SSA took exception to our remarks suggesting that its proposal for a
new decision methodology could exacerbate inconsistent decisions.  We
do not agree.  Under redesign, SSA plans to reduce medical
determinations to a relatively small number of claims, while
expanding the functional component of the decision-making process. 
Because it is unlikely that the new decision methodology will
eliminate all adjudicator judgment needed in making functional
determinations, we continue to believe that SSA should proceed
cautiously and test any new decision methods to determine their
effects on consistency as well as award rates.  In its comments, SSA
stated that it is committed to using research results to dictate
which, if any, changes will be made in the decision methodology.  We
support this commitment. 

The full text of SSA's comments and our response appear in appendix
III.  In addition, SSA provided technical comments, which we
incorporated in the report as appropriate. 


DDS AND ALJ DISABILITY DECISIONS
AND OPERATIONS
=========================================================== Appendix I



                                        Table I.1
                         
                          DDS Decisions--September 1992 Through
                                        April 1995

                                                                Percent
                       Perc                                          of  Awards
               Number   ent           Award                     awards-       ,
                   of    of  Number    rate  Listin  Function         -  unknow
Impairment   decision  tota      of  (perce       g        al  function       n
type                s     l  awards     nt)  awards    awards        al   basis    Denied
-----------  --------  ----  ------  ------  ------  --------  --------  ------  --------
All          4,592,59   100  1,396,      30  850,63   541,135        39   4,949  3,195,87
 impairments        5           717               3                                     8
Total        3,148,18    69  919,66      29  570,08   347,470        38   3,424  2,228,51
 physical           6             8               9                                     8
Musculoskel  1,083,43    24  168,95      16  26,277   142,146        84     535   914,479
 etal               7             8
Back          660,747    14  69,663      11   5,330    64,080        92     253   591,084
Under age     387,252     8   8,719       2   2,970     5,685        65      64   378,533
 50
50 and        272,486     6  60,823      22   2,352    58,282        96     189   211,663
 above
Unknown age     1,009     0     121      12       8       113        93       0       888
Other         422,690     9  99,295      23  20,947    78,066        79     282   323,395
 musculoske
 letal
Other        2,064,74    45  750,71      36  543,81   205,324        27   1,524  1,314,03
 physical           9             0               2                                     9
Total        1,066,21    23  450,17      42  272,79   175,856        39   1,525   616,041
 mental             7             6               5
Illness       860,482    19  338,44      39  186,08   151,504        45     858   522,035
                                  7               5
Retardation   205,735     4  111,72      54  86,710    24,352        22     667    94,006
                                  9
Unknown       378,192     8  26,873       7   7,749    17,809        66   1,315   351,319
 impairment
-----------------------------------------------------------------------------------------
Source:  GAO analysis of SSA administrative data. 



                                        Table I.2
                         
                          ALJ Decisions--September 1992 Through
                                        April 1995

                                                                Percent
                       Perc                                          of  Awards
               Number   ent           Award                     awards-       ,
                   of    of  Number    rate  Listin  Function         -  unknow
Impairment   decision  tota      of  (perce       g        al  function       n
type                s     l  awards     nt)  awards    awards        al   basis    Denied
-----------  --------  ----  ------  ------  ------  --------  --------  ------  --------
All           759,999   100  586,82      77  142,26   439,663        75   4,890   173,179
 impairments                      1               7
Total         589,955    78  439,40      74  57,793   377,986        86   3,625   150,551
 physical                         4
Musculoskel   288,795    38  217,15      75  21,464   194,061        89   1,628    71,642
 etal                             3
Back          202,752    27  151,75      75  13,949   136,919        90     890    50,994
                                  8
Under age     111,544    15  76,105      68   8,534    66,989        88     582    35,439
 50
50 and         69,864     9  57,679      83   3,838    53,556        93     285    12,184
 above
Unknown age    21,344     3  17,974      84   1,577    16,374        91      23     3,371
Other          86,043    11  65,395      76   7,515    57,142        87     738    20,647
 musculoske
 letal
Other         301,160    40  222,25      74  36,330   183,924        83   1,996    78,910
 physical                         0
Total         169,353    22  146,89      87  84,467    61,402        42   1,030    22,454
 mental                           9
Illness       137,566    18  120,19      87  63,876    55,482        46     833    17,375
                                  1
Retardation    31,788     4  26,709      84  20,591     5,920        22     198     5,079
Unknown           691     0     518      75       7       276        53     235       173
 impairment
-----------------------------------------------------------------------------------------
Source:  GAO analysis of Disability Hearings Quality Review Process
study data. 



                                                                      Table I.3
                                                       
                                                       DDS and ALJ Operations, FY 1986 Through
                                                                First Quarter, FY 1997

                                                                                                                                                 1997
                                                                                                                                                first
Fiscal year                       1986      1987      1988      1989      1990      1991      1992      1993      1994      1995      1996    quarter
----------------------------  --------  --------  --------  --------  --------  --------  --------  --------  --------  --------  --------  ---------
DDS
-----------------------------------------------------------------------------------------------------------------------------------------------------
Applications received         2,248,43  2,107,22  1,594,83  1,589,65  1,737,53  2,014,19  2,392,64  2,564,16  2,609,49  2,488,87  2,438,49    516,483
                                     2         1         3         2         3         4         4         3         8         8         8
Initial decisions             2,007,13  2,010,99  1,516,87  1,489,53  1,589,31  1,802,89  2,258,98  2,513,70  2,551,21  2,551,95  2,298,80    542,368
                                     0         6         3         4         1         6         0         9         0         3         1
Awards                         757,943   698,324   540,135   547,397   621,223   759,120   981,504   974,868   860,578   787,455   707,204    182,159
Denials                       1,249,18  1,312,67   976,738   942,137   968,088  1,043,77  1,277,47  1,538,84  1,690,63  1,764,49  1,591,59    360,209
                                     7         2                                       6         6         1         2         8         7
Initial award rate (percent)        38        35        36        37        39        42        43        39        34        31        31         34
Reconsideration receipts       533,776   594,698   457,402   472,551   525,689   546,294   627,892   769,948   823,641   864,415   798,668    194,958
Reconsideration appeal rate         43        45        47        50        54        52        49        50        49        49        50         54
Reconsideration decisions      501,631   589,810   438,251   442,218   484,499   502,561   603,681   746,241   793,689   858,999   766,775    185,269
Awards                          82,914    83,846    60,600    67,636    80,988    86,998   102,829   106,787   100,173   112,094   100,107     30,151
Denials                        418,718   505,964   377,651   374,582   403,511   415,563   500,852   639,454   693,516   746,905   666,668    155,118
Reconsideration award rate          17        14        14        15        17        17        17        14        13        13        13         16
 (percent)

ALJ
-----------------------------------------------------------------------------------------------------------------------------------------------------
Appeals received               225,273   270,241   274,779   281,478   297,326   312,892   372,073   488,173   515,148   557,350   497,933    128,690
Appeal rate (percent)               54        53        73        75        74        75        74        76        74        75        75         83
Appeal decisions               170,661   216,916   238,815   251,991   248,237   266,818   302,660   319,789   354,173   444,350   485,737    100,241
Awards                         104,371   130,832   150,744   167,786   177,571   197,758   226,959   238,094   265,776   324,611   323,266     65,424
Denials                         66,290    86,084    88,071    84,205    70,666    69,060    75,701    81,695    88,397   119,739   162,471     34,818
ALJ award rate (percent)            61        60        63        67        72        74        75        74        75        73        67         65
Percent of all awards               11        14        20        21        20        19        17        18        22        27        29         24
-----------------------------------------------------------------------------------------------------------------------------------------------------
Sources:  DDS data from State Operations Reports; ALJ data from the
Office of Hearings and Appeals Key Workload Indicators. 


SSA STUDIES ADDRESSING DIFFERENCES
BETWEEN DDS AND ALJ
DECISION-MAKING
========================================================== Appendix II

Two major SSA studies have found that DDS and ALJ adjudicators
systematically reach different results, even when considering the
same evidence.  In a report known as the Bellmon Report, SSA issued
the results of the first study in January 1982.  The second study,
known as the Disability Hearings Quality Review Process (DHQRP), is
an ongoing quality review of ALJ decisions for which SSA periodically
issues reports on review results.  The most recent DHQRP report was
issued in June 1995. 


   THE BELLMON REPORT
-------------------------------------------------------- Appendix II:1

The Bellmon Report's major finding was that even when reviewing the
same evidence from the same cases, DDSs and ALJs often reach
different conclusions on whether claimants are disabled.  SSA issued
this 1982 report to comply with a provision known as the Bellmon
amendment in the Social Security Disability Amendments of 1980 (P.L. 
96-265).  This provision required SSA to conduct ongoing reviews of
ALJ decisions to ensure that the decisions conform to statute,
regulations, and binding policy.  The requirement grew out of
congressional concerns about (1) the increasing number of DDS denials
being appealed to the ALJ hearing level, (2) the high percentage of
DDS denials being reversed by ALJs, and (3) the accuracy and
consistency of ALJ decisions. 

Initiated in October 1981, SSA's study was designed to examine
whether two separate sets of reviewers--one using the DDS
decision-making approach and the other using the ALJ approach--would
reach different conclusions when considering the same evidence for
the same case (see table II.1).  Under the study, each set of
reviewers reached its own conclusions on each case without knowledge
of the decision by the original ALJ or the other reviewers and
without personal contact with the claimants. 



                         Table II.1
          
               Design of SSA's Bellmon Study

                                             Quality
                                             reviewers'
Two sets of    Review         Decision(s)    responsibilit
reviewers      criteria       reviewed       ies
-------------  -------------  -------------  -------------
SSA medical    SSA's Program  Original ALJ   Evaluate
consultants/   Operations     decision       medical
disability     Manual System                 evidence
examiner       (POMS)
teams                                        Assess
                                             adequacy of
                                             evidence

                                             Determine
                                             impairment
                                             severity

                                             Assess
                                             residual
                                             functional
                                             capacity
                                             (RFC)

                                             Conclude
                                             whether
                                             claimants are
                                             disabled on
                                             the basis of
                                             the same
                                             evidence

Reviewers      The act,       Original ALJ   Conclude
from SSA's     regulations,   decision       whether
Appeals        Social                        claimants are
Council        Security                      disabled on
               Rulings                       the basis of
               (SSR), and                    the same
               guidance                      evidence
               handbooks
----------------------------------------------------------
As shown in table II.1, the first set of reviewers were teams of SSA
medical consultants and disability examiners who applied the
standards and procedures found in SSA's POMS, which governs DDS
decision-making.  According to SSA, POMS contains SSA's official
program policy and program operations guidance, which is binding on
DDSs and all SSA components except ALJs and the Appeals Council. 
POMS is based on, and consistent with, the Social Security Act, SSA's
regulations, and SSRs.  POMS is also consistent with circuit court
case law.  Thus, the conclusions of the SSA medical
consultant/disability examiner teams represented the correct
application of DDS standards. 

The second set of reviewers were from SSA's Appeals Council, which is
SSA's final administrative review authority on all appealed
disability decisions.  These reviewers applied the standards and
procedures governing ALJ decisions.  These governing standards and
procedures consisted of the Social Security Act and SSA's regulations
and rulings, along with guidance provided in various handbooks. 
Because they applied these decision-making criteria, the reviewers'
conclusions from the Appeals Council represented the correct
application of the standards and procedures that apply to ALJs.  The
review was conducted in three phases addressing three different
questions. 


      PHASE I:  DO THE STANDARDS,
      PROCEDURES, AND PRACTICES OF
      DDSS, ALJS, AND THE APPEALS
      COUNCIL RESULT IN DIFFERENT
      DECISIONS FOR THE SAME
      CASES? 
------------------------------------------------------ Appendix II:1.1

To address this question, the medical consultant/disability examiner
teams reviewed a representative random sample of 3,600 recent ALJ
decisions, of which 64 percent had awarded benefits.  The Appeals
Council reviewers then reviewed all cases in which the medical
consultant/disability examiner teams disagreed with the original ALJ
decision, plus an additional 300 cases in which no disagreement
existed, for a total of 2,183 cases.  The Appeals Council--using the
ALJ decision-making approach--awarded benefits in 48 percent of the
cases; the medical consultant/disability examiner teams--using the
DDS approach--awarded benefits in only 13 percent of the cases.  The
report identified three possible causes for the different results. 

First, standards and procedures differed.  The ALJ approach, unlike
the DDS approach, often resulted in a finding that the claimant's RFC
was "less than the full range of sedentary work," which is the most
restrictive RFC possible and usually results in benefits being
awarded.  The Appeals Council reviewers concluded that claimants in 9
percent of the cases had an RFC that restricted them to less than the
full range of sedentary work, while the original ALJs had found that
18 percent--twice as much as the Appeals Council--had that RFC.  In
contrast, the medical consultant/
disability examiner teams concluded that none of the claimants had an
RFC that restricted them to less than the full range of sedentary
work.  ALJs and the Appeals Council also awarded benefits more often
than did medical consultant/disability examiner teams because of
severe pain combined with significant impairments or nonsevere mental
disorders combined with significant physical impairments.  The report
also noted that ALJs apparently gave considerable evidentiary weight
to treating physician conclusions that claimants are medically
disabled. 

Second, standards were inconsistently applied.  Although reviewers
from the Appeals Council applied the same standards and procedures
that ALJs used in making decisions, the Appeals Council denied
benefits in 37 percent of the cases in which the original ALJs had
awarded benefits and awarded benefits in 21 percent of the cases in
which the original ALJs had denied benefits.  These inconsistencies
were even more pronounced than these percentage differences indicate
because even in those cases in which the Appeals Council agreed with
the ALJs on whether benefits should be awarded or denied, they
disagreed on the basis for the decision.  For example, when the
original ALJs based their decisions to award benefits on SSA's
medical listings, the Appeals Council agreed with that basis in only
41 percent of the cases; when the original ALJs based their decisions
to award benefits on vocational criteria, the Appeals Council agreed
with that basis in only 38 percent of the cases.  Agreement on other
criteria for awarding benefits was significantly lower. 

Third, other contributing factors included subjectivity,
organizational trends, and management emphases.  The report noted
historical trends in DDS and ALJ rates of awarding benefits, SSA
program and management focus on certain aspects of the process, and
the subjective judgment inherent in determining whether an individual
can engage in substantial gainful activity.  The report stated that
one manifestation of the subjectivity in the process may be different
decisions produced by different organizational levels. 


      PHASE II:  DO CLAIMANTS'
      IN-PERSON APPEARANCES BEFORE
      ALJS HAVE AN EFFECT ON ALJ
      DECISIONS? 
------------------------------------------------------ Appendix II:1.2

This phase involved selecting a special subsample of 1,000 cases from
the 3,600 cases used in the first phase.  Written transcripts of the
hearings were prepared that retained the testimony of expert
witnesses but excluded any testimony by the claimant or observations
about the claimant's personal appearance.  A representative sample of
48 other ALJs then reviewed the files. 

The reversal rate of the original ALJs had been 63 percent, but the
ALJs who reviewed the sample of cases for this study reversed only 46
percent.  Because information on claimants' in-person appearances was
the only information that had been removed from the file, the report
concluded that claimants' in-person appearances do affect ALJ
decisions.  The study also observed differences in the reversal rates
for claimants with legal representation (61 percent) and those
without representation (48 percent). 


      PHASE III:  DOES THE
      SUBMISSION OF ADDITIONAL
      EVIDENCE AFTER THE DDS
      RECONSIDERATION DECISION
      AFFECT ALJ DECISION-
      MAKING? 
------------------------------------------------------ Appendix II:1.3

This phase used the same sample of 1,000 cases used in phase II.  All
medical and vocational evidence added to the file after the DDS
reconsideration decision was removed from the files.  Another group
of 48 ALJs reviewed the files. 

When the additional evidence submitted after the DDS decision was
removed from the files, the ALJ reviewers' overall reversal rate of
46 percent in phase II declined to 31 percent in phase III.  The
difference was solely attributed, on the basis of a statistical test,
to additional medical evidence that had been submitted in 74 percent
of the cases.  Additional vocational evidence did not affect reversal
rates.  The medical consultant/disability examiner teams also
reviewed these cases with and without the additional medical
evidence.  Their reversal rate was 15 percent when the additional
evidence was present and 12 percent when it was not. 


      DHQRP
------------------------------------------------------ Appendix II:1.4

SSA's DHQRP study found that differences between DDS and ALJ
decisions noted in the Bellmon Report continued into the 1990s.  SSA
instituted DHQRP partly as a result of our 1992 report on disparities
in the ALJ award rates between black and other claimants.\27

Although we did not conclude that racial bias was the factor
responsible for these disparities, we could not rule it out, which
raised questions in many sectors, including the Congress, about the
extent to which SSA has fulfilled its mandate to have a fair,
unbiased ALJ hearing process. 

SSA responded that our report did not draw a meaningful conclusion
about the impartiality of hearing decisions.  SSA stated that it
could not immediately address all of our specific findings, however,
because it did not maintain an ongoing quality review database of ALJ
hearing decisions.  As a result, SSA implemented a series of
initiatives to address questions we raised.  Among the initiatives
was the creation of DHQRP. 

The SSA Commissioner directed DHQRP to examine not only any racial
differences but also program issues through an ongoing quality review
of ALJ hearing decisions.  Implemented in March 1993, DHQRP's
objectives are to promote fair and accurate hearing decisions and to
collect sufficient data to permit analysis of other adjudicative
issues.  From DHQRP results, SSA intends to identify areas of the ALJ
decision-making process that may require some fine tuning through
continuing legal education or program-
specific training for ALJs and other adjudicators.  Thus far, SSA has
issued two reports--in October 1994 and June 1995--covering the
results of reviews conducted through March 25, 1994. 

DHQRP is a three-tier review process involving (1) medical
consultants from SSA's Office of Disability, Office of Medical
Evaluation; (2) disability examiners from SSA's Division of
Disability Hearings Quality; and (3) ALJs from SSA's Office of
Hearings and Appeals (OHA) who serve as reviewing judges (see table
II.2). 



                         Table II.2
          
                      Three-Tier DHQRP

                                             Quality
Quality                                      reviewers'
reviewers at   Review         Decision(s)    responsibilit
each tier      criteria       reviewed       ies
-------------  -------------  -------------  -------------
SSA medical    SSA's POMS     DDS            Evaluate
consultants                   reconsiderati  medical
                              on denial      evidence

                              ALJ decision   Assess
                                             adequacy of
                                             evidence

                                             Determine
                                             impairment
                                             severity

                                             Assess RFC

SSA            SSA's POMS     DDS            Assess
disability                    reconsiderati  whether
examiners                     on denial      reconsiderati
                                             on denial is
                              ALJ decision   supported

                                             Assess
                                             whether ALJ
                                             decision is
                                             supported

Peer reviewer  The act,       ALJ decision   Assess
ALJs from OHA  regulations,   only           whether ALJ
               SSRs, and                     decision is
               Hearings,                     supported by
               Appeals, and                  substantial
               Law                           evidence
               Litigation
               Manual                        Assess
               (HALLEX)                      whether ALJ
                                             decision
                                             meets review
                                             criteria
----------------------------------------------------------
In the DHQRP study, similar to the Bellmon Report, SSA's medical
consultants and disability examiners' reviews represent the DDS
approach to decision-making.  Their reviews are based solely on
criteria found in SSA's POMS, which contains the SSA decision-making
policies and procedures for DDS decision-making. 

The medical consultants evaluate the written evidence available to
(1) the DDS examining team issuing the reconsideration denial that
preceded the sampled hearing decision and (2) the original ALJ who
rendered the sampled hearing decision.  For each review, the medical
consultant evaluates and assesses the adequacy of the file's medical
evidence, determines the level of severity, and if necessary,
assesses the claimant's RFC.  The medical consultants do not listen
to the audiotape of the testimony offered at the hearing. 

After completion of the medical review phase, SSA's disability
examiners use the medical consultants' assessments to review the
DDS's reconsideration denial and the ALJ's hearing decision.  Using
the medical review findings and other evidence in the file, the
disability examiner assesses whether the reconsideration denial and
the hearing decision are supported adequately.  Like the medical
consultants, the disability examiners do not listen to the audiotape
of the testimony offered at the hearing. 

In the last phase of DHQRP, working ALJs serve as peer reviewers who
evaluate only the hearing decision as it was issued by the original
ALJ.  These peer reviewer ALJs measure the degree to which the
original ALJ's hearing decision conforms to the Social Security Act,
SSA's regulations and rulings, and SSA's HALLEX.  In doing so, the
peer reviewer ALJs apply the substantial evidence criterion from
HALLEX, which defines substantial evidence as "that evidence which,
although less than a preponderance, is sufficient to convince a
reasonable mind of the credibility of a position taken on an issue
when no evidence on the opposing side clearly compels another finding
or conclusion."

The DHQRP results reported by SSA demonstrate how DDS and ALJ
decisions differ or reveal reasons why they differ even when
adjudicators base their decisions on the same documentary case file
evidence. 

First, although peer reviewer ALJs have concluded that about 81
percent of the ALJ reversals were supported by substantial evidence,
the SSA medical consultant/disability examiner teams, who used the
DDS decision-making approach, have concluded that only 41 percent of
the ALJ reversals were supported adequately by written evidence in
the case file.  The medical consultant/disability examiner teams have
concluded that (1) the evidence in the file actually supported an
opposite decision in 48 percent of the ALJ reversals and (2) another
11 percent had insufficient evidence to make any decision. 

Second, DHQRP has provided evidence that ALJs generally find
claimants' RFCs to be significantly more restricted than do DDS
medical consultants using POMS criteria.  When peer reviewer ALJs
have reviewed ALJ reversals, they have concluded that 56 percent of
the claimants had RFCs that limited them to less than the full range
of sedentary work, while the medical consultants, who have reviewed
the same written evidence as the peer reviewer ALJs, have concluded
that only 6 percent had such restricted RFCs. 

Third, the peer reviewer ALJs have identified the top factors that
influenced the original ALJs to award benefits.  The reviewing ALJs
have identified these factors as (1) a more restrictive RFC
assessment, (2) symptoms other than pain, (3) claimant credibility,
(4) medical source statements, and (5) the impact of pain. 

Fourth, DHQRP has shown that DDS medical consultants, when assessing
RFC, sometimes have overstated the claimant's capacity to function in
the workplace.  In reviewing DDS reconsideration denial case files,
the SSA medical consultant/disability examiner teams have found that
in 18 percent of the cases the medical evidence supported awarding
benefits.  In many of those cases, SSA's review teams using POMS
criteria have arrived at different RFC assessments than have the DDSs
on the basis of the same written evidence. 

These findings are based on cases reviewed through March 25, 1994. 
As of that date, the medical consultants and disability examiners had
reviewed 9,600 ALJ decisions (5,500 that awarded benefits and 4,100
that denied benefits).  The peer reviewer ALJs had reviewed a
subsample of 6,000 ALJ decisions (3,000 that awarded benefits and
3,000 that denied benefits). 

The sample for DHQRP is selected monthly from OHA's case control
system.  Although hearing allowances are reviewed after SSA starts
sending benefit payments, all cases selected for review are
administratively final and are not changed by the study results. 
Hearing denials selected for the study either already have been
reviewed by the Appeals Council, or their appeal period has expired. 

The sample design allows analyses and conclusions to be drawn at the
national and regional levels but not at the state or DDS level.  In
addition, the DHQRP database does not identify the ALJs who issued
the decisions being reviewed. 



(See figure in printed edition.)Appendix III

--------------------
\27 See Social Security:  Racial Difference in Disability Decisions
Warrants Further Investigation (GAO/HRD-92-56, Apr.  21, 1992). 


COMMENTS FROM THE SOCIAL SECURITY
ADMINISTRATION AND OUR EVALUATION
========================================================== Appendix II



(See figure in printed edition.)



(See figure in printed edition.)



(See figure in printed edition.)



(See figure in printed edition.)


The following are GAO's comments on the Social Security
Administration's letter dated July 8, 1997. 


   GAO COMMENTS
-------------------------------------------------------- Appendix II:2

1.  We revised the report, where appropriate, to use the term "RFC"
assessment rather than "functional" assessment.  In addition, we
clarified our discussion of SSA's plans for a new decision
methodology to distinguish between (1) the development new
instruments for clinical assessments of function and (2) the
expansion of functional considerations in the administrative
decision-making process envisioned under disability redesign.  We
agree that more objective assessments of function would ameliorate
some differences in results if these assessments provided better
evidence for decision-making. 

We continue to believe, however, that the new decision-making process
may exacerbate inconsistent decisions.  Under disability redesign,
SSA plans to reduce medical determinations to a relatively small
number of claims, while expanding the functional component of the
decision-making process.  Because it is unlikely that the new
decision-making method will eliminate all adjudicator judgment needed
to make functional determinations, we continue to believe that SSA
should proceed cautiously and test any new decision-making methods to
determine their effects on consistency as well as on award rates.  In
its comments, SSA stated that it is committed to using research
results to dictate which, if any, changes will be made to the
decision-making methods.  We support this commitment. 

2.  We revised our recommendation to emphasize the importance of
SSA's committing itself under the Results Act to foster consistency
in results and to monitor and report on its progress in shifting the
proportion of cases awarded from the ALJ to the DDS level.  Such a
shift is the measure of SSA's achieving its qualitative goal to "make
the right decision the first time." In it comments, SSA stated that
it wholeheartedly supports our conclusion that it needs to take
immediate steps to reduce inconsistent decisions and considers
process unification the linchpin of disability redesign.  But the
agency has not taken steps to be accountable for the success of this
effort.  Because process unification is the linchpin of the
determination process, not just disability redesign, we continue to
believe that SSA needs to establish a performance goal for this
initiative and that the Results Act is the appropriate mechanism to
achieve the desired results. 

SSA believes that it would not be legally defensible or advisable to
set quantitative goals for increasing DDS award percentages and
decreasing the award percentages for hearings.  It stated that
setting numerical goals could be construed as dictating decisions to
award or deny claims, while each claim should stand on its own
merits.  We believe that if properly designed and implemented,
however, the use of a performance goal would direct the agency's
overall management of the process and would not dictate individual
decisions. 

Furthermore, the agency states that a wide variety of factors
influences claim outcomes, including worsening conditions, new
evidence, and the like.  As the report discusses, however, virtually
all factors influencing differences in results--differences in
approach, inadequate DDS written evaluations, and problems in the
focus of quality reviews--are under SSA's management control. 
Therefore, we believe it is advisable for SSA management, consistent
with the Results Act, to hold itself accountable for continued
progress toward process unification. 


GAO CONTACTS AND STAFF
ACKNOWLEDGMENTS
========================================================== Appendix IV

GAO CONTACTS

Cynthia A.  Bascetta, Assistant Director, (202) 512-7207

STAFF ACKNOWLEDGMENTS

David F.  Fiske
William E.  Hutchinson
Ira B.  Spears
Kenneth F.  Daniell
Carolina M.  Morgan
Ellen S.  Habenicht
Carol Dawn Petersen
Mary Ellen Fleishman
John G.  Smale, Jr.


*** End of document. ***