SSA Disability Redesign: Focus Needed on Initiatives Most Crucial to
Reducing Costs and Time (Chapter Report, 12/20/96, GAO/HEHS-97-20).

The disability insurance and supplemental security income programs grew
rapidly between 1988 and 1995; the number of beneficiaries increased by
about 50 percent. The Social Security Administration (SSA), which
downsized during that period, has struggled to keep up with the
unprecedented growth in applications for disability benefits and appeals
of disability decisions. The processing of claims has been delayed,
creating hardship for disabled claimants, who often must wait for more
than a year for a final decision. SSA is trying to redesign its
disability claims process to reduce administrative costs and shorten the
time a claimant awaits a decision. This report provides information on
the redesign, specifically (1) SSA's vision for and progress in
redesigning the disability claims process, (2) issues related to the
scope and complexity of the redesign, and (3) SSA's efforts to maintain
stakeholders' support.

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

 REPORTNUM:  HEHS-97-20
     TITLE:  SSA Disability Redesign: Focus Needed on Initiatives Most 
             Crucial to Reducing Costs and Time
      DATE:  12/20/96
   SUBJECT:  Federal social security programs
             Claims processing
             Human resources utilization
             Social security benefits
             Disability benefits
             Federal agency reorganization
             Cost control
             Administrative costs
             Eligibility determinations
             Personnel management
IDENTIFIER:  Social Security Disability Insurance Program
             Supplemental Security Income Program
             SSA Reengineered Disability Program
             
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Cover
================================================================ COVER


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

December 1996

SSA DISABILITY REDESIGN - FOCUS
NEEDED ON INITIATIVES MOST CRUCIAL
TO REDUCING
COSTS AND TIME

GAO/HEHS-97-20

SSA Disability Redesign

(106902)


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

  ALJ - administrative law judge
  AO - adjudication officer
  DCM - disability claim manager
  DDS - Disability Determination Service
  DI - Disability Insurance
  DPRT - Disability Process Redesign Team
  IWS/LAN - intelligent workstation/local area network
  MER - medical evidence of record
  NCDDD - National Council of Disability Determination Directors
  RDS - Reengineered Disability System (formerly the Modernized
     Disability System)
  SGA - substantial gainful activity
  SSI - Supplemental Security Income
  SSA - Social Security Administration

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


B-265676

December 20, 1996

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 efforts and progress in redesigning the disability
determination claims process so as to reduce administrative costs and
the time a claimant waits for a decision. 

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 upon request. 

Please contact Diana S.  Eisenstat, Associate Director, at (202)
512-7215, if you have any questions.  Other GAO contacts and major
contributors to this report are listed in appendix III. 

Sincerely yours,

Jane L.  Ross
Director, Income Security Issues


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


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

In fiscal year 1995, the Social Security Administration (SSA) spent
$3 billion to pay about $61.3 billion in cash benefits to disabled
and blind recipients and their dependents.  These benefits were paid
under the Disability Insurance and Supplemental Security Income
programs--the largest federal programs providing cash benefits to
blind and disabled people.  These programs grew rapidly between 1988
and 1995, with the number of beneficiaries increasing by about 50
percent.  While downsizing during this time, SSA has struggled to
deal with unprecedented growth in applications for disability
benefits and in appeals of disability decisions.  Processing of
claims has been delayed, creating hardship for disabled claimants,
who often wait more than a year for a final decision.  Faced with
these challenges, SSA decided that it must redesign its disability
claims process to reduce administrative costs and the time a claimant
waits for a decision. 

In 1994, GAO reported that SSA's proposal to redesign its disability
claims process is a valid attempt to address fundamental problems,
but cautioned that many implementation challenges would have to be
addressed.  These include new staffing and training demands,
developing and installing technology enhancements, and confronting
entrenched cultural barriers to change.  Because of the cost and
large resource investment this effort will consume, the Chairman of
the Subcommittee on Social Security, House Ways and Means Committee,
asked GAO to provide information on the redesign, specifically (1)
SSA's vision and progress for redesigning the disability claims
process, (2) issues related to the scope and complexity of the
redesign, and (3) SSA's efforts to maintain stakeholder support. 


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

Reengineering is a process recognized as a means to identify and
quickly put in place dramatic improvements.  It has been used by
private and government organizations to fundamentally rethink and
radically redesign business processes to improve efficiency and
customer service.  Today's experts in business process reengineering
frequently cite certain best practices that increase the likelihood
for success. 

While a reengineering project can be large and encompassing, experts
suggest segmenting the project and concentrating, at any one time, on
completing a small number of manageable initiatives with measurable
performance outcomes.  This segmentation (1) gives managers better
control over the initiatives and allows a faster response if problems
arise or deadlines are not met and (2) produces results in a short
time frame, which helps maintain support from stakeholders. 

Although the time frame to realize the full benefit of a
reengineering project may run from 2 to 5 years, in a government
organization, leadership turnover and frequent changes in the public
policy agenda necessitate redesign in which progress on individual
initiatives can be made in relatively short time periods.  Finally,
reengineering best practices call for identifying all stakeholders
and working to get and keep their support.  Such support is vital
because stakeholder opposition can jeopardize the success of the
redesign. 

In late 1994, SSA released a plan for redesign that was extensive in
scope and complex.  It included 83 initiatives (later reduced to 80),
to be accomplished during the 6-year period from fiscal year 1995
through 2000.  Of these 80 initiatives, 38 were near-term--to be
completed or be in a research and development or testing phase by
September 30, 1996.  To direct this effort, SSA created a centralized
management team, known as the Disability Process Redesign Team.  The
team was assisted by top SSA management, various task teams, and the
state and federal employees that decide disability claims. 


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

Although reengineering can reduce administrative costs, save time,
and improve the quality of service in the disability claims process,
the scope and complexity of SSA's many initiatives have put at risk
the likelihood of accomplishing the redesign goals.  SSA is about
one-third the way through the 6 years it estimated for redesigning
the process, but has made relatively little progress in meeting its
goals.  As of July 1996, SSA had not completed any initiative and
testing had not begun for 14 of the 19 initiatives that contain
testing requirements.  As a result, SSA has not made sufficient
progress to know whether specific proposed changes will achieve the
desired results.  Further, there have not been concrete and
measurable accomplishments to keep the support of stakeholders. 

A number of these initiatives have expanded in scope, thus increasing
the time frames required to complete them.  Increasing the time
frames has several disadvantages, such as delaying implementation and
heightening the risk of disruption from turnover in senior
executives.  In addition to delays, SSA has also experienced turnover
of senior executives since the beginning of the redesign.  Although
it is difficult to determine if this turnover has had a negative
impact on the redesign thus far, continued turnover could result in
possible loss of momentum or change of direction.  In a constantly
changing government environment, agencies are less likely to have
continuity of leadership and the same public policy agenda for
projects that last several years or more. 

Further complicating SSA's redesign efforts are difficulties in
maintaining much needed stakeholder support.  First, some federal and
state employees, as well as the unions that represent them, are
concerned that redesign could mean the loss of jobs.  Second, state
employees are concerned about SSA's decision to pay federal employees
at a higher rate than state employees for the same job.  And third,
support from state management officials involved in the disability
claims process has been declining steadily. 


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


      REDESIGN HAS MADE LIMITED
      PROGRESS
-------------------------------------------------------- Chapter 0:4.1

SSA's implementation approach is limiting the progress of the
redesign.  In prioritizing its redesign initiatives, SSA chose to
work on 38 of them simultaneously--a decision that requires a
significant investment in time and resources.  Thousands of federal,
state, and contractor employees throughout the country are engaged in
activities such as designing, developing, testing, and evaluating
processes and developing and delivering training programs.  While SSA
had completed six discrete tasks (a subcomponent of an initiative) as
of July 1996, it had not fully completed or implemented any of the 38
initiatives and is behind schedule in meeting its testing milestones. 


      REDESIGN COMPLEXITY AND
      SCOPE POSE PROBLEMS FOR
      IMPLEMENTATION
-------------------------------------------------------- Chapter 0:4.2

SSA has encountered significant challenges in implementing some of
the more complex initiatives.  For example, SSA considers technology
vital to redesign; it has, therefore, undertaken a complex technology
initiative to more fully automate the processing of disability
claims--from the first contact with the claimant to the final
decision.  To carry out the initiative, SSA is purchasing over 50,000
computers, installing a local area network in more than 1,350 office
locations, and developing software.  Completion of this key
initiative has been delayed by more than 2 years because of software
development problems and the need for additional testing to assess
redesign changes. 

Another complex initiative, which will require completion of several
crucial initiatives, is implementing the disability claim manager
(DCM) position.  SSA currently plans to place about 11,000 employees
in this position.  DCMs will be expected to gather and store claim
information, develop both medical and nonmedical evidence, share
facts about a claim with medical consultants and specialists in
nonmedical or technical issues, and prepare well-thought-out
decisions.  A DCM will be responsible for making the final decision
on both medical and nonmedical aspects of a disability claim.  Before
fully implementing the DCM position, SSA must first provide a number
of crucial initiatives, including technology enhancements and a
simpler method for making disability decisions--features that SSA
does not expect to be available for several years.  In October 1996,
SSA stated that the decision to implement the DCM will not be made
until valid and reliable testing demonstrates that this position is
viable. 

Several of SSA's initiatives are beginning to expand in scope and,
consequently, time.  For example, the scope of SSA's initiative to
achieve consistent decisions throughout all stages of the disability
process has expanded considerably.  SSA refers to this initiative as
process unification.  Initially, the redesign called for developing a
single policy manual for use by all SSA and state employees involved
in the claims process.  As SSA worked on the initiative, it realized
that considerably more effort was required.  As a result, SSA
expanded this initiative to include (1) conducting the same training
for 14,000 decisionmakers, including doctors and reviewers; (2)
developing a consistent quality review process that balances review
of allowances and denials and applies the same standards at all
stages of the process; and (3) using more consistent medical input
throughout the disability determination process.  With these expanded
tasks, full implementation has been extended from September 1996 to
January 1998 or later. 

Although SSA may take many years to fully implement its redesigned
process, experts suggest that individual project initiatives should
be completed quickly--generally taking no more than 12 months to
implement--to give managers better control over these initiatives and
allow for faster response to problems that arise.  Achieving
measurable results quickly also enables an organization to build
stakeholder support for its initiatives and overall redesign project. 

Moreover, the cornerstone of any redesign effort is the commitment
and long-term availability of its senior executives.  Redesign
initiatives that take many years to complete face increased risk--the
longer the project takes, the greater the chance that the senior
executives will change.  Turnover typically causes project delays and
possible changes in scope and direction.  Although SSA recognizes the
importance of management stability and continuity to redesign, it has
already experienced turnover of senior executives since
implementation began.  While there is no indication thus far that the
turnover has had a negative impact on redesign, continued turnover
could result in possible loss of momentum or change of direction for
the redesign. 


      SSA CHALLENGED TO MAINTAIN
      STAKEHOLDER SUPPORT
-------------------------------------------------------- Chapter 0:4.3

According to reengineering experts, to the extent possible, managers
of redesign should seek out and gain support from all stakeholders. 
SSA has tried to involve stakeholders in the redesign by identifying
more than 140 of them, meeting with them to discuss redesign issues,
and including them on task teams and work groups.  Although
stakeholders generally support the need for redesign, SSA has had
problems getting and keeping support from some of them.  In fact,
some redesign proposals are beginning to cause major concerns for
stakeholders.  We found, for example, that SSA's decision to create
the DCM position to decide claims raised fears that some staff would
lose their jobs.  Furthermore, for federal employees selected for the
position, SSA's decision to temporarily promote them to a higher pay
grade raised a major concern for state employees who would be paid
less for the same work. 

While SSA recognizes it needs the support of the states to
successfully redesign the disability determination process, support
for redesign from state Disability Determination Service directors
has been declining.  In response to a January 1996 survey question
about how the state directors viewed the overall redesign, about 55
percent did not support it, compared with 40 percent a few months
earlier. 


   RECOMMENDATION
---------------------------------------------------------- Chapter 0:5

To increase the likelihood that SSA's redesign will succeed, GAO
recommends that the Commissioner

  -- select those initiatives most crucial to producing significant,
     measurable reductions in claims-processing time and
     administrative costs--including those initiatives intended to
     achieve process unification, establish new decision-making
     positions, and enhance information systems--and

  -- combine those initiatives into an integrated process, test that
     process at a few sites, and evaluate the results--before
     proceeding with full-scale implementation. 

Other initiatives could be undertaken at a later date when progress
is ensured for the initiatives discussed above and resources become
available. 


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

SSA generally agreed with the thrust of GAO's recommendation and
stated it is directing a larger portion of its redesign resources to
crucial initiatives.  SSA also plans to conduct an integrated test of
several redesign features.  GAO agrees that SSA needs to scale down
its redesign activities and select those initiatives that are most
crucial to reducing claims-processing time and administrative costs. 
However, GAO continues to believe that SSA should combine all crucial
initiatives into an integrated process, test that process at a few
sites, and evaluate testing results before proceeding with full-scale
implementation.  SSA made some technical comments, which were
incorporated as appropriate.  See chapter 4 for GAO's evaluation of
agency comments and appendix II for the full text of SSA's comments. 


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

The Social Security Administration (SSA) manages two major federal
disability programs that provide cash benefits to people with
long-term disabilities--the Disability Insurance (DI) and
Supplemental Security Income (SSI) programs.  The DI program was
enacted in 1956 and provides monthly cash benefits to severely
disabled workers.  SSI was enacted in 1972 as an income assistance
program for aged, blind, or disabled people.  Disability is defined
in the Social Security Act as an inability to engage in substantial
gainful activity (SGA) because of a severe physical or mental
impairment.  Both programs use the same criteria and procedures for
determining whether the severity of an applicant's impairment
qualifies him or her for disability benefits. 

In 1995, 5.7 million disabled workers and their dependents received
about $40.2 billion in DI benefits; 4.7 million disabled or blind SSI
claimants received about $21.1 billion in SSI benefits.  From the 6.8
million recipients in 1988, overall program enrollment has increased
by more than 50 percent.  In fiscal year 1995, SSA spent $3 billion
on these two programs, more than half of the agency's total
administrative expenses for the year.  Nevertheless, the agency has
acknowledged that it has had difficulty providing a satisfactory
level of service to its disability claimants.  The process is slow,
labor-intensive, and paper-reliant. 

Despite efforts to manage this workload with shrinking resources, SSA
has not been able to keep pace with program growth.  Initial claim
levels remain high, appealed case backlogs are growing, and decisions
are not being made in a timely manner.\1 In fiscal year 1995, about
2.5 million initial disability claims were forwarded to state offices
for disability determinations, an increase of 43 percent over fiscal
year 1990.  During the same period, of the applicants requesting an
administrative law judge (ALJ) to reconsider a decision denied at the
initial claim level, the number escalated from about 311,000 to about
589,000, an increase of 89 percent.  Furthermore, SSA is concerned
with the amount of time required to process claims--in many cases a
claimant waits more than a year for a final disability decision.  As
of June 1996, processing an initial disability claim averaged 78 days
for DI claims and 94 days for SSI claims; the processing time for an
ALJ decision averaged 373 days. 


--------------------
\1 Some of our previous work that reports on these conditions
includes Social Security Administration:  Effective Leadership Needed
to Meet Daunting Challenges (GAO/HEHS-96-196, Sept.  12, 1996);
Social Security Administration:  Backlog Reduction Efforts Under Way;
Significant Challenges Remain (GAO/HEHS-96-87, July 11, 1996); Social
Security Disability:  Management Action and Program Redesign Needed
to Address Long-Standing Problems (GAO/T-HEHS-95-233, Aug.  3, 1995);
and Social Security:  Increasing Number of Disability Claims and
Deteriorating Service (GAO/HRD-94-11, Nov.  10, 1993). 


   SSA'S CURRENT ELIGIBILITY
   DETERMINATION AND APPEALS
   PROCESS
---------------------------------------------------------- Chapter 1:1

Under the current eligibility determination process, DI and SSI
disability claims can pass through from one to five decision points,
at which eligibility is determined.  The initial claim, initial state
Disability Determination Service (DDS) decision, reconsideration, ALJ
hearing, Appeals Council, and federal court review all involve
procedures for evidence collection, review, and decision-making.  The
decision points within the current disability claims process are
shown in figure 1.1. 

   Figure 1.1:  Current Decision
   Process

   (See figure in printed
   edition.)

To be considered eligible for either program, claimants must meet
SSA's definition of disability.  Claimants must also meet work
requirements for DI claims and financial eligibility requirements for
SSI claims.  Under both programs, applications for disability
benefits can be initiated at one of SSA's over 1,300 field offices or
through SSA's toll-free telephone system. 

SSA field office personnel assist with completing the application;
obtaining medical, financial, and work history information; and
determining whether applicants meet the nonmedical criteria for
eligibility.  Field offices forward claimant information, along with
supporting medical evidence, to a state DDS, of which there are 54. 
At the DDS, medical evidence is further developed and a final
decision is made as to the existence of a medically determinable
impairment that meets SSA's definition of disability.  SSA funds the
state DDS agencies, provides them with guidance for making disability
decisions, and reviews the accuracy and consistency of their
decisions.  Claimants who are dissatisfied with an initial
determination may request reconsideration by the DDS.  A
reconsideration is conducted by different staff from the original
staff, but the criteria and process for determining disability are
the same. 

Claimants who disagree with a reconsideration denial have the right
to a hearing before 1 of SSA's 1,035 ALJs in the Office of Hearings
and Appeals.  At these hearings, claimants and medical or vocational
experts may submit additional evidence; attorneys usually represent
the claimants.  If denied by the ALJ, the claimant may then request a
review by SSA's Appeals Council.  The Appeals Council may affirm,
modify, or reverse the decision of the ALJ; the Council may also
remand the case to the ALJ for further consideration or development. 
Finally, the claimant may appeal the Council's decision to federal
court. 


   WHY SSA IS REDESIGNING ITS
   DISABILITY CLAIMS PROCESS
---------------------------------------------------------- Chapter 1:2

SSA faces increasing responsibilities in the future and must manage
its growing workload with fewer resources.  SSA has estimated that if
it conducts business as usual, it would need the equivalent of about
76,400 workers to handle its workload by the end of the century. 
Instead, SSA expects to handle this work with about 62,000
workers--2,000 fewer than it has today.  To successfully manage its
growing workload, SSA knows that it must (1) increasingly rely on
technology and (2) build a workforce with the flexibility and skills
to operate in a changing environment. 

Concerned about managing its workload while reducing administrative
costs, saving time, and improving the quality of service, SSA's
leadership decided it needed to redesign its disability claims
process.  To improve the process, SSA's leadership turned to business
process reengineering.  SSA concluded that redesigning its process
for deciding disability claims was critical to its goal of providing
world-class customer service with fewer resources.  In April 1994, we
testified that the redesign proposal for the disability process is
SSA's first valid attempt to address major fundamental changes needed
to realistically cope with the disability determination workload.  We
cautioned SSA, however, that many difficult implementation issues
would need to be addressed.\2 These include new staffing and training
demands, development and installation of technology enhancements, and
confrontation with the entrenched cultural barriers to change. 

Reengineering is risky by definition, but if done well it can net
positive benefits for the organization.  As envisioned, SSA expects
the redesigned process will produce tangible savings.  However, the
bulk of these savings will come from more efficient use of federal
and state employees to process disability claims.  Greater efficiency
will (1) allow the agency to use its current workforce to accomplish
other pressing activities and (2) avoid hiring to replace all those
who retire or otherwise leave the agency.  In addition, SSA expects
the redesign will result in intangibles, such as improved customer
service, an empowered and better-trained workforce, and increased
public confidence in SSA. 

When SSA proposed its redesign, it estimated that it would cost $148
million to administer, with the largest portion of these costs
allocated to training activities.\3

However, SSA estimated net savings of $704 million through fiscal
year 2001--the year for which full implementation is anticipated. 
SSA also estimated recurring annual savings of $305 million, once the
redesign is fully implemented. 


--------------------
\2 Social Security Administration:  Major Changes in SSA's Business
Processes Are Imperative (GAO/T-AIMD-94-106, Apr.  14, 1994). 

\3 This estimate does not include certain costs, such as those for
developing software and for the salaries of the redesign team
members. 


   FOLLOWING REENGINEERING BEST
   PRACTICES INCREASES LIKELIHOOD
   FOR SUCCESSFUL REDESIGN
---------------------------------------------------------- Chapter 1:3

While success cannot be guaranteed, leading private organizations
have used business process reengineering to identify and quickly put
in place dramatic improvements in their operations.  The objective of
reengineering is to fundamentally rethink and redesign a business
process from start to finish, so that it becomes more efficient and,
as a result, significantly improves service to customers.  There is,
however, no "right" way to reengineer and no step-by-step sequence of
prescribed activities.  Reengineering is highly situational and
should be tailored to meet the needs of each organization, according
to reengineering experts. 

Nevertheless, today's leaders in business process reengineering
advocate certain critical success features, or best practices, to
help organizations increase the likelihood of success.\4 Case studies
show that reengineering has failed to achieve the desired change, in
part, because managers have not followed best practices.  These
practices include concentrating on a small number of initiatives at
any given time for broad-scoped comprehensive projects; developing
and implementing the initiatives quickly; identifying, securing, and
maintaining stakeholder support; and having the organizational
commitment to initiate and sustain the redesign. 

Concentrating on a small number of initiatives at any given time is
essential.  According to the experts, reengineering should remain
focused to achieve rapid results.  Without such focus, an
organization risks becoming overwhelmed.  Further, once started, the
scope of the redesign should not be expanded.  Trying to work on too
much forces managers to choose among projects, which further dilutes
the time and attention required to quickly move the redesign forward. 

Developing and implementing initiatives quickly is also essential. 
According to some reengineering experts, the time from concept
formulation to realizing the first release of a reengineered process
should take no more than 12 months.  Other reengineering experts note
that while the full value of a redesigned process may take 2 to 5
years, individual initiatives should be accomplished in a year or
less. 

Identifying, securing, and maintaining stakeholder support is also an
essential element of redesign.  Stakeholders consist of individuals
who are both internal and external to an organization, as well as
groups that can influence the organization in some way.  For SSA,
internal stakeholders include the staff within the organization that
will need to adapt to changes in business processes; external
stakeholders include the Congress, state employees, labor unions,
oversight bodies, key interest groups, customers, and others who
oversee, fund, or are affected by SSA's activities.  Managers of
redesign should strive to secure and maintain support of all
stakeholders.  Without such support throughout redesign, the chances
of success can be jeopardized. 

Finally, having the organizational commitment to initiate and sustain
redesign is another essential element.  It is paramount to the
success of the redesign.  As a top-down process, reengineering
requires strong, continuous, and committed senior executives from the
beginning of the redesign. 


--------------------
\4 See the Bibliography for references to reengineering source
documents. 


   OBJECTIVES, SCOPE, AND
   METHODOLOGY
---------------------------------------------------------- Chapter 1:4

The Chairman of the House Subcommittee on Social Security, House Ways
and Means Committee, asked us to provide information on the
implementation challenges facing SSA as it redesigns its disability
claims process.  More specifically, in this report, we address SSA's
vision and progress for redesigning the disability claims process,
issues related to the scope and complexity of the redesign, and the
agency's efforts to maintain stakeholder support. 

To develop our information, we reviewed extensive literature on the
principles of reengineering.  We interviewed officials at SSA
headquarters and its Atlanta Regional Office.  We also reviewed SSA's
extensive design, development, testing, and implementation data for
the redesign.  We met with the president of the National Council of
Disability Determination Directors (NCDDD), who represents the 54
state DDSs, and obtained state director views on SSA's testing and
implementation activities.  We also met with representatives from the
Office of Management and Budget, the American Federation of
Government Employees, and the National Association of Disability
Examiners. 

We received formal briefings from SSA and state organizations on
specific projects and activities related to the redesign effort. 
These briefings included periodic updates by the director, Disability
Process Redesign Team (DPRT), on the overall redesign direction and
progress; demonstrations on the development of technology
enhancements; and presentations by state employee associations on the
issues, progress, and problems associated with redesign. 

We did not assess the validity of SSA's redesign as a means to
improve services to claimants and to reduce administrative costs. 
Nevertheless, in the course of our work, we noted that SSA's redesign
includes features that appear sensible for a project of this nature. 
Two such features are (1) a single approach for all decisionmakers to
use when making decisions and (2) enhanced technology to support the
redesign. 

Our audit work was conducted from July 1995 through September 1996 in
accordance with generally accepted government auditing standards. 


SSA'S VISION AND PROGRESS IN
IMPLEMENTING THE REDESIGNED
DISABILITY CLAIMS PROCESS
============================================================ Chapter 2

As with many federal agencies faced with fiscal constraints and
increasing demands for services, SSA recognized the need to
dramatically improve its disability claims process.  Consequently,
SSA created an implementation plan for improving its process through
80 initiatives.  By September 30, 1996, 38 of those initiatives were
to be addressed.\5

Although SSA has begun nearly all of the initiatives it planned to
have under way during the first 2 years of its implementation plan,
as of July 1996, SSA had (1) not completed any initiative and (2) not
begun testing for 14 of the 19 initiatives that contain testing
requirements. 


--------------------
\5 During fiscal years 1995-96, SSA adjusted the number of near-term
initiatives from 40 to 38 and the number of total initiatives from 83
to 80; SSA deleted 3 near-term initiatives and 1 mid-term initiative
because of ongoing initiatives elsewhere in the agency; and SSA added
a near-term initiative to include customer partnership in claims
processing, which provides the opportunity for claimants to obtain
medical evidence. 


   SSA'S VISION FOR THE REDESIGNED
   CLAIMS PROCESS
---------------------------------------------------------- Chapter 2:1

In October 1993, SSA created a Disability Reengineering Project Team
to fundamentally rethink and redesign the disability determination
process, so as to make it more efficient and improve service to
claimants.  The team was asked to redesign the process so as to
better use technology to help SSA reduce the costs and time of claims
processing and enable the agency to meet its workload demands with
fewer resources. 

The team did the following:  analyzed the current process; sponsored
a series of general public and claimant focus groups to understand
the public's preferences relating to service; compared key aspects of
the process with best practices of other public and private sector
organizations; conducted independent research; and solicited ideas
for improving the process from thousands of stakeholders who were
involved in the disability process, including employees, health care
providers, consumer advocates, and legal representatives. 

After extensive consultation with individuals and organizations
representing the disabled, the Commissioner, in September 1994,
approved SSA's vision for redesigning the disability claims process. 
The redesigned, user-friendly process emphasizes making correct
decisions quickly and efficiently at the earliest possible point. 
This process is expected to reduce average processing time:  for a
decision on an initial DI claim, the time would be reduced from 78
days to almost 60 and for a decision on an initial SSI claim, from 94
days to about 60.  Similarly, the processing time for appealed cases
is expected to be reduced from 373 to 225 days.  The steps in SSA's
new process are shown in figure 2.1. 

   Figure 2.1:  Redesigned
   Decision Process

   (See figure in printed
   edition.)

The goal of the redesigned process is to guide all decisionmakers at
all levels to (1) use standards from the same sources for
decision-making and (2) make "correct" decisions in an easier,
faster, and more cost-effective manner at the earliest possible point
in the process.  SSA states a correct disability decision is one that
appropriately considers whether an individual meets the factors of
entitlement for disability, as defined by SSA's statute, regulations,
rulings, and policies.  According to SSA, correct decisions in the
new process depend on these factors:  a simplified decision
methodology that provides a common frame of reference for determining
disability by all decisionmakers in processing claims; consistent
direction and training to all decisionmakers; enhanced and targeted
collection and development of medical evidence; an automated and
integrated claims- processing system that will assist decisionmakers
in gathering evidence; a single, comprehensive quality review
process; and the creation of the disability claim manager (DCM)
position to give claimants direct access to the decisionmaker
throughout the process and the opportunity to discuss any claim
before it is disallowed. 

Under the redesigned process, a DCM will be the focal point for
claimant contacts throughout the process and will be responsible for
processing and deciding the initial claim.  In the current process,
these responsibilities are shared by federal claims representatives
and state disability examiners.  In the redesigned process, the DCM
will take the initial claim, gather and retain claim information,
develop medical and nonmedical evidence, share information with
medical consultants, analyze information, and make the decision as to
whether to allow or deny the claim.  If the evidence for the initial
claim does not support an allowance before denying the claim, the DCM
will issue a predecision notice, advising the claimant of what
evidence has been considered and providing the claimant with the
opportunity to submit additional evidence.  If no evidence is
provided or if the evidence provided does not support an allowance,
the DCM will deny the claim. 

Claimants who disagree with a DCM decision can appeal the decision to
the Office of Hearings and Appeals.  When a claimant appeals a
decision, an adjudication officer (AO) will interview the claimant
and become the primary contact during the appeal.  This position is
not available under the current process and is being introduced by
SSA to make allowance decisions in less time.  The AO will review the
file, identify the issues in dispute, and determine whether there is
a need to obtain additional evidence.  The AO will also have the
authority to issue a favorable decision, if warranted, or forward the
completed claim to an ALJ for consideration.  If, after careful
review, the ALJ denies the claim, the claimant may appeal the
decision to a federal district court. 

Throughout its effort, SSA intends to assess all redesign activities
against the Commissioner's five primary objectives for the redesign. 
These are making (1) the process user-friendly for claimants and
their representatives, (2) the right decision the first time, (3) the
decision as quickly as possible, (4) the process efficient, and (5)
the work satisfying for staff. 

In November 1994, SSA released an extensive and complex redesign
implementation plan to facilitate turning its vision into reality. 
The plan, to be accomplished over a 6-year period--beginning in
fiscal year 1995 and concluding in fiscal year 2000--includes six
lead areas, encompassing 23 process improvement features and three
enablers.  The lead areas are

  -- process entry and intake,

  -- disability decision methodology,

  -- medical evidence development,

  -- administrative appeals,

  -- quality assurance, and

  -- communication. 

The enablers, critical support structures that SSA contends are
necessary for successful implementation, are

  -- developing a single presentation of all policies for determining
     disability,

  -- technology enhancements, and

  -- using third parties to help claimants with application packages,
     including completing forms and obtaining the medical evidence
     necessary for deciding claims. 

See appendix I for a description of (1) the 23 features and more
details on the three enablers and (2) planned completion dates. 


   MANAGEMENT STRUCTURE FOR
   IMPLEMENTING REDESIGN
---------------------------------------------------------- Chapter 2:2

To help direct its redesign effort, SSA established a management
structure to provide leadership, oversight, and continuity throughout
the testing and implementation phase.  The relationship between SSA's
redesign implementation team and the Commissioner, principal deputy
commissioner, and executive steering committee is shown in figure
2.2. 

   Figure 2.2:  SSA's Management
   Structure for Redesign

   (See figure in printed
   edition.)

An executive steering committee was formed to meet on a regular basis
to advise the Commissioner on development of the redesigned process
and to ensure the support of SSA's senior management team.  The
committee includes the principal deputy commissioner and the director
of the DPRT, as well as senior managers representing SSA, state, and
union components.  Some of these include the Office of Disability;
Office of Hearings and Appeals; Office of Budget; Association of
Administrative Law Judges, Inc.; and the Office of Systems
Components. 

SSA assembled the DPRT to help direct the implementation of the
redesigned disability claims process.  Team leaders work full-time on
the redesign and are responsible for its major components.  Within
the major components, designated heads of lead areas will coordinate
planning and oversee implementation.  These designees, as well as
DPRT staff who assist them, are drawn from SSA's federal and state
workforce. 

Overall day-to-day leadership, control, and coordination of all
redesign implementation activities is vested in the director of the
DPRT.  The director, reporting to the Commissioner and principal
deputy commissioner, is expected to establish implementation
priorities, develop specific timelines, and provide oversight to
ensure that implementation decisions are consistent with the vision
for the redesign process. 

In addition, task teams were established to address specific
implementation issues within each of the areas.  These teams were
directed to address a broad range of planning issues involving
strategic, tactical, and operational matters.  In early 1995, 12 task
teams met to formulate and recommend specific actions that should be
undertaken.  For each task team, the overall purpose and related
activities are summarized in table 2.1. 



                         Table 2.1
          
                   Task Team and Purpose

Task team           Purpose
------------------  --------------------------------------
Third-Party Claims  Develop ways to expand third-party
                    (people or organizations) service to
                    assist claimants in filing disability
                    application forms and obtaining
                    medical evidence

Comprehensive       Develop disability information packets
Public Information  and a comprehensive public information
                    campaign to (1) create a more user-
                    friendly process and (2) promote more
                    effective claimant partnership

Guiding Principles  Develop guiding principles for the
of Quality          development of the quality assurance
Assurance           system

Adjudication        Before national implementation,
Officer (AO)        develop detailed procedures and a plan
                    for implementing an AO position,
                    including operational
                    responsibilities, limits of authority,
                    and procedures for testing

Early               To speed the decisions on disability
Adjudication/       claims, design an incremental approach
Disability Claim    through the creation of (1) workflows
Manager (DCM)       for early allowances and denials and
                    (2) team approaches for claims
                    processing

Process             At all stages of the process, ensure
Unification         consistency in deciding disability
                    claims through consistent application
                    of laws, regulations, and rulings

Streamlining        Identify opportunities for (1)
Medical Evidence    streamlining medical evidence
                    requirements through the use of
                    technology development and (2)
                    reducing the burden--on claimants,
                    providers, and decisionmakers--
                    associated with development and
                    evaluation of medical evidence

Increased Claimant  Identify opportunities and guidelines
Participation in    that encourage active claimant
Medical Evidence    participation in evidence collection
of Record (MER)     for those claimants who can and will
                    participate

Training for        Ensure that comprehensive training
Claims Examiner     materials about the disability program
and MER Providers   are available for claims examiners and
                    providers

Role of the         Redefine the role of the medical
Medical Consultant  consultant and develop an
                    implementation plan

End-of-Line         Develop an integrated system that will
Quality Assurance   comprehensively review and monitor the
                    quality of decisions

In-Line Quality     Develop and implement a system for
Assurance           periodically reviewing and monitoring
                    quality throughout the claims process
----------------------------------------------------------

   SSA'S REDESIGN SOLUTION
---------------------------------------------------------- Chapter 2:3

In deciding to redesign the disability claims process, SSA tackled
the entire process rather than using a building block approach,
improving aspects of the process a little at a time.  SSA's ambitious
approach led it, in November 1994, to identify 83 initiatives (later
reduced to 80) associated with 23 process features. 

SSA chose to prioritize these initiatives by dividing them into three
time frames:  near-term (fiscal year 1995 to 1996), mid-term (fiscal
year 1997 to 1998), and long-term (fiscal year 1999 to 2000). 
Near-term implementation initiatives are those (1) scheduled to be
fully implemented nationwide by the end of fiscal year 1996 or (2)
for which the research and development or site testing can be
initiated by the end of fiscal year 1996.  Mid-term initiatives are
those that are scheduled to be developed and tested in fiscal years
1997 and 1998 and implemented nationwide by fiscal year 1998. 
Finally, long-term initiatives are those requiring extensive research
and development that cannot be tested fully before fiscal year 1999
or cannot be fully implemented nationwide before fiscal year 2001. 

SSA's near-term initiatives, to be completed or under way by
September 30, 1996, include a rollout of 40 (later reduced to 38),
almost one-half, of the 80.  The 38 initiatives were designed to set
the pace for fully implementing the redesign. 

Completing the initiatives will require a significant investment in
time and resources.  Thousands of federal, state, and contractor
employees will be needed throughout the country for (1) activities
such as designing, developing, testing, and evaluating processes and
(2) developing and delivering training programs.  Each initiative
contains its own set of unique and complex circumstances.  The six
process features and corresponding near-term initiatives are
summarizied in table 2.2.  See appendix I for DPRT's complete
timetable for redesign. 



                         Table 2.2
          
           Near-Term Initiatives (38) SSA Planned
                      for Fiscal Years
                       1995 and 1996

                    Near-term initiatives (fiscal years
Process feature     1995 and 1996)
------------------  --------------------------------------
Process entry and intake
----------------------------------------------------------
Comprehensive       Make disability information packets
public information  available in conjunction with a
about the           comprehensive public information
disability          campaign (nationwide)
programs

Starter             Test and evaluate use of starter
application         application

Claimant chooses    Local managers develop arrangements
mode of entry into  with third parties, who are capable of
application         providing assistance, based on SSA
process             protocols for third-party interaction

                    Test mail-in application

                    Develop, test, and implement options
                    for telephone interviews

Claimant            Claimants (and their families or
partnership in      support networks) who are able
disability claims   actively participate in obtaining
processing          medical evidence to support their
                    claims (nationwide)

DCM as single       In every region, test ways to
agency contact for  facilitate claims representative and
all initial         disability examiner interaction
claims-processing   (nationwide)
activities

Evidence            In all regions, test ways to
development         facilitate claims representative and
tailored to         disability examiner interaction
claimant            regarding the extent of medical
circumstances       development

Predecision         Publish final regulations and conduct
contact before      tests in selected sites on the various
initial denial      means of providing (1) predecision
determination       notices and (2) opportunities for
                    personal contact prior to an initial
                    denial determination

Statement of the    Test use of enhanced decision
claim               rationale in Reengineered Disability
                    System (RDS) pilot sites


Disability decision methodology
----------------------------------------------------------
Index of Disabling  Develop and test, using existing
Impairments         regulatory authority, a means to
replaces Listing    identify disability allowances earlier
of Impairments      in the process

Ability to perform  Assess research needs, develop work
substantial         scope, and award research contracts
gainful activity    based on the relationship between age
(SGA) (adults)      and the ability to adjust to other
                    work; the development of standardized
                    approaches to assessing functional
                    ability; and identification of the
                    functional requirements of baseline
                    work

Change the role of  Revise regulatory requirements, for
the medical         medical consultant sign-off on initial
consultant          determinations, so as to make them
                    consistent with existing statutory
                    provisions requiring medical
                    consultant involvement in childhood
                    disability claims

                    Identify categories of claims
                    requiring medical consultant analysis
                    at all levels of decision-making


Medical evidence development
----------------------------------------------------------
Streamlined and     Identify opportunities for which
targeted requests   medical evidence requirements can be
for medical         streamlined
evidence
                    Test options for requesting, storing,
                    and retrieving medical records
                    electronically

                    Local managers focus resources on
                    professional education and medical
                    relations outreach with the medical
                    community (nationwide)

                    Increase customer partnership in
                    claims processing by providing
                    opportunity for claimants to pursue
                    their own medical evidence

Sliding-fee         Develop and test options for a
schedule for        sliding-fee schedule for medical
medical evidence    evidence


Administrative appeals process
----------------------------------------------------------
First level of      Initiate case reviews before oral
appeal is the       hearing to expedite evidence
administrative law  collection and identify possible
judge (ALJ)         allowances
hearing
                    Develop and publish regulations to
                    test options for using an AO

                    Publish regulations to test options
                    for eliminating reconsideration in
                    connection with testing of predecision
                    notice and contact

                    In specified claims, conduct
                    prehearing conferences to narrow
                    issues for hearing

Revised role for    Develop and publish regulations to
Appeals Council     test options for narrowing the scope
                    of mandatory Appeals Council review

                    Develop and test options, in
                    conjunction with a new quality
                    assurance system, for expanding the
                    Appeals Council's own motion reviews


Quality assurance
----------------------------------------------------------
Training            Provide consistent training and
                    direction to all disability
                    decisionmakers (nationwide)

In-line quality     Develop and test procedures for
reviews             implementing peer review and in-line
                    monitoring

                    Test revised in-line quality review
                    system

End-of-line         Develop and implement revised end-of-
quality reviews     line review, addressing both medical
                    and nonmedical accuracy in DI and SSI
                    claims (nationwide)

Customer            Conduct customer and employee surveys
satisfaction        in conjunction with local, regional,
surveys             and national pilots of disability
                    process changes

Measurements        Measure overall processing time from
                    the customer's perspective
                    (nationwide)

Enablers

Process             For determining disability, develop
unification         and implement a single presentation of
                    all substantive policies, with
                    appropriate monitoring and enforcement
                    procedures (nationwide)

Role of             Develop and implement regulations
representatives     regarding representatives'
                    qualifications and standards of
                    conduct (nationwide)

                    Conduct outreach to the legal
                    community regarding disability program
                    requirements

Technology          Implement RDS in pilot sites

                    Standardize claim file preparation at
                    all levels (nationwide)

                    Test the use of video conferencing at
                    appropriate remote sites

                    Test redesign features, where
                    feasible, in intelligent workstation/
                    local area network (IWS/LAN) sites
----------------------------------------------------------

   STATUS OF NEAR-TERM INITIATIVES
---------------------------------------------------------- Chapter 2:4

The time frames established in SSA's November 1994 implementation
plan, "Disability Process Redesign:  Next Steps in Implementation,"
sets forth an outside time frame, September 30, 1996, for (1)
completing the near-term initiatives or (2) initiating research and
development or site testing.  Nevertheless, the redesign
implementation team was to focus on completing the tasks as early in
the time frame as possible.  However, SSA has not met its near-term
goal.  While SSA has completed six tasks (a subcomponent within an
initiative) as of July 1996, it has not fully completed or
implemented any near-term initiative and is running behind in meeting
its testing milestones. 

As to tasks completed between November 1994 and July 1996, SSA has
(1) disseminated a 1-page disability information fact sheet, (2)
completed program operation instructions for the Early Decision List
and sequential interviewing, (3) revised the disability form 3368 to
collect medical source information, (4) finalized the DCM Workgroup
report, (5) published regulations to test the DCM, the predecision
interview, and the elimination of the reconsideration step in the
current process, as well as began training all decisionmakers on
existing policy for treating physician opinion, pain and other
symptoms, and residual functional capacity,\6 and (6) developed a
research plan for developing a new disability determination
methodology.  Furthermore, of the 19 initiatives requiring testing,
which were to be completed or initiated by September 30, 1996, only 5
had testing ongoing as of July 1996; 3 of them--the AO position, use
of mail-in applications, and the single-decisionmaker\7 --were being
fully tested; the other 2 had limited testing under way.  Testing on
the remaining 14 has not started.  The status of SSA efforts to
complete the 38 near-term initiatives is shown in table 2.3. 



                               Table 2.3
                
                Status of 38 Near-Term Initiatives as of
                               July 1996

Category of initiatives                                         Number
--------------------------------------------------------------  ------
Completed                                                            0
With activity                                                       33
With no activity                                                     5
With testing planned                                                19
With ongoing tests                                                   5
With tests completed                                                 0
----------------------------------------------------------------------

--------------------
\6 Residual functional capacity is what the claimant can do despite
his or her limitations. 

\7 In November 1995, the DPRT began testing the AO initiative at 9
state locations and, in January 1996, at 17 federal locations.  In
May 1996, the DPRT began testing the single decisionmaker at 6 state
locations and 2 federal locations. 


SCOPE OF PROJECT AND DIFFICULTY
WITH STAKEHOLDER SUPPORT LIMIT
POTENTIAL FOR SUCCESS
============================================================ Chapter 3

SSA began its redesign by identifying problems with the current
claims process and focusing on initiatives it felt needed to be
undertaken immediately.  In its 2-year plan for near-term
improvements, SSA has moved forward with 38 initiatives rather than
keeping its efforts focused on a few initiatives at one time and
striving for rapid process change--a best practice associated with
successful reengineering.  Many of the initiatives SSA has undertaken
are complex, requiring more time to complete than it planned.  Thus,
the risk of leadership turnover, before the overall project is
complete, is increased.  According to reengineering experts,
continuity of senior executive leadership is much more likely for
initiatives of shorter duration. 

Further complicating SSA's redesign activities is the difficulty it
has experienced in trying to maintain the support of all its
stakeholders.  SSA identified more than 140 stakeholders, many with
conflicting concerns.  While SSA has been working to secure their
support for the redesigned process, a number of stakeholders do not
support SSA's approach.  Moreover, because none of the initiatives
have been successfully implemented, there are no concrete and
measurable results that enable SSA to demonstrate the merits of its
approach to encourage stakeholder support. 


   SSA'S REDESIGN INCLUDES SOME
   INITIATIVES THAT ARE COMPLEX
   AND
   LARGE IN SCOPE
---------------------------------------------------------- Chapter 3:1

In deciding to tackle 38 initiatives in the first 2 years of the
redesign, SSA did not follow a best practice--organizations that
successfully manage redesign usually focus on a small number of
initiatives at one time.  Nevertheless, SSA decided to take on a
large number of initiatives concurrently.  Some of the more important
initiatives--such as technology enhancements, the DCM position, and
process unification\8 --are large and complex.  They will require
many years to complete and the commitment and support of numerous
stakeholders. 


--------------------
\8 Process unification is an initiative intended to achieve
consistent decision-making throughout all stages of the disability
determination process. 


      NEEDED TECHNOLOGICAL
      ENHANCEMENTS WILL BE A
      LONG-TERM AND COMPLEX
      UNDERTAKING
-------------------------------------------------------- Chapter 3:1.1

A major part of SSA's redesign is implementing technological
enhancements to improve the disability claims process.  The
redesigned process would replace a slow, labor-intensive, and
paper-reliant process with an automated system from first contact to
final decision. 

Throughout all stages of the process, all staff will use essentially
the same software to assign claims, schedule appointments, gather and
store information, develop medical and nonmedical evidence,
facilitate decision-making, provide case control, keep fiscal and
accounting information, and manage the information.  SSA will also
need to acquire over 50,000 intelligent workstations (personal
computers).  This extensive software and hardware acquisition will be
installed on a local area network (LAN), connecting more than 1,350
SSA and state offices throughout the United States.  SSA estimates
that it will be 1998 before the hardware is installed in all field
locations. 

SSA's software development activities demonstrate the long-term and
complex nature of this initiative.  Developing software designed to
allow SSA to move from its current manual process to an automated
process is critical to success.  However, the scheduled
implementation of this new software has been delayed by about 28
months because of problems identified during testing.  Software
development is further constrained by the lack of firm requirements
for the new disability determination process.  For example, SSA
cannot effectively develop software to obtain medical evidence of
records until the DPRT decides how it wants to standardize
information, requested from medical sources, to substantiate
disability claims. 


      MULTIFACETED DCM INTENDED TO
      CONSOLIDATE CLAIMS
      PROCESSING
-------------------------------------------------------- Chapter 3:1.2

SSA chose to create the DCM position to consolidate different
elements of the claims determination process.  However, recognizing
the scope of the changes involved, SSA determined it needed to
introduce the position gradually; the DCM position would not become
fully operational until fiscal year 2000. 

The DCM is a key dimension of SSA's redesign.  SSA plans to (1)
establish over 11,000 DCM positions in about 1,350 federal and state
locations and (2) recruit DCMs from its current workforce of about
16,000 federal claims representatives and about 6,000 state
disability examiners.  As mentioned earlier, the DCM would be
responsible for making all decisions about a disability claim.  This
is a major deviation from current practice:  an SSA claims
representative processes the initial claim; then a state disability
examiner and a medical consultant make the medical determination. 

The DCM would conduct personal interviews, develop records for
evidence, and determine medical and nonmedical eligibility. 
Specifically, the DCM would gather and store claim information,
develop both medical and nonmedical evidence, share necessary facts
in a claim with medical consultants and specialists in nonmedical or
technical issues, analyze evidence, and make the decision whether to
allow or deny the claim.  If the initial evidence does not support an
allowance before denying the claim, the DCM will issue a predecision
notice advising the claimant of what evidence has been considered and
provide the claimant with the opportunity to submit additional
evidence.  Although DCMs could still call on medical and technical
support personnel for assistance, a DCM alone would make the final
decision on both medical and nonmedical aspects of a disability
claim. 

To accomplish all these tasks, the DCM would need a number of crucial
initiatives, such as technology enhancements, process unification,
and a simplified decision methodology.  However, SSA acknowledges
that these initiatives will not be implemented soon. 

In addition, SSA faces many other challenges before the DCM can
become operational, for example, securing support from state
governments, state and federal labor unions, and congressional
committees; developing training plans; conducting tests at pilot
sites; bargaining with state unions; posting vacancy announcements
for positions; and selecting and training employees.\9 In October
1996, SSA stated that the decision to implement the DCM will not be
made until valid and reliable testing demonstrates that this position
is viable. 


--------------------
\9 SSA Disability Redesign:  More Testing Needed to Assess
Feasibility of New Claim Manager Position (GAO/HEHS-96-170, Sept. 
27, 1996) provides detailed information on implementing the DCM
position. 


      PROCESS UNIFICATION
      OBJECTIVES EXPANDED
-------------------------------------------------------- Chapter 3:1.3

The scope of process unification has increased significantly since
the implementation plan for the redesign was released in November
1994.  At that time, the DPRT was primarily interested in developing
a single policy manual--known as the "one book"--of all substantive
policies for determining disability. 

Since then, SSA has expanded the scope of its initiative to put
together the one book.  Under process unification, SSA hopes to
achieve similar results on similar cases at all stages of the
disability claims process, with consistent application of laws,
regulations, and rulings.  SSA's expanded initiative includes (1)
conducting the same training for 14,000 decisionmakers, including
doctors and reviewers, (2) developing a consistent quality review
process that balances review of allowances and denials and applies
the same standards at all stages of the process, and (3) using more
consistent medical input throughout the disability determination
process. 

Consequently, process unification will not be completed by September
30, 1996, as initially envisioned, but will be phased in through a
series of incremental changes that could take through January 1998 or
longer to complete. 


   LENGTHY INITIATIVES PUT SUCCESS
   OF REDESIGN AT RISK
---------------------------------------------------------- Chapter 3:2

When undertaking reengineering initiatives, organizations are often
working toward accomplishing a vision for the future; they may invest
several or more years to fully complete all of the initiatives.  This
is also true for SSA's redesign initiatives.  As mentioned earlier,
experts suggest, however, that organizations that have successfully
reengineered their work processes meet their long-term vision by
implementing discrete projects of relatively short duration.  Experts
therefore advocate planning initiatives that can be implemented
within 12 months.  Experts also state that achieving quick progress
is the key to maintaining stakeholder support for long-term changes. 

Furthermore, redesign in government agencies can be affected by
constantly changing political environments that often restrict the
time available for career officials to achieve program goals. 
Consequently, redesign initiatives with relatively short time frames
allow organizations to avoid major disruption because of leadership
changes.  Some of SSA's initiatives, however, are beginning to expand
in scope and become lengthy endeavors. 

Reengineering experts also caution that lengthy initiatives can
affect the continuity and availability of the agency's senior
executives.  Such senior executives are a necessary prerequisite for
successful reengineering.  These executives are the cornerstone of
any redesign effort and actively demonstrate the agency's commitment
to initiate and sustain the change.  Although SSA recognizes the
importance of management stability and continuity to the redesign
process, it has experienced turnover in three senior executive
positions since implementation began.  We did not develop evidence
that such turnover has had a negative impact on SSA's redesign.  But
continued turnover could result in possible loss of momentum or
change of scope or direction.  Redesign initiatives that take many
years to complete face increased risk--the longer the project runs,
the greater the chance that turnover of leadership will occur. 


   MAINTAINING STAKEHOLDER SUPPORT
   HAS BEEN CHALLENGING
---------------------------------------------------------- Chapter 3:3

Maintaining stakeholder support is critical to reengineering. 
Because stakeholders can jeopardize the chances for successful
reengineering if they are not committed to it, managers of redesign
must seek out and secure support from all stakeholders.  Stakeholders
have considerable knowledge of the business and organizational
environment and can help rally support from other stakeholders. 

SSA identified and tried to involve stakeholders in the redesign, but
has encountered problems obtaining and maintaining their support.  In
September 1993, SSA established an executive workgroup to identify
the stakeholders that should be involved in the development and
implementation of redesign.  More than 140 stakeholders were
identified from congressional, federal, state, public, and private
groups. 

In its November 1994 redesign implementation plan, SSA called on its
federal and state workforce to make the vision a reality.  Since
then, some actions taken by SSA have raised major concerns for some
stakeholders--especially salary issues.  According to the president
of the American Federation of Government Employees, Local 1923, the
union would have opposed the DCM position if SSA attempted to
implement it as a grade 11.  Under a memorandum of understanding
between the union and SSA, those assigned to DCM positions will
receive temporary promotions to grade 12, one grade higher than the
journeyman level for the claims representative position.  However,
this action raised concerns for the state DDS directors and their
workforce, many of whom believe that the agreement with the union
will (1) exacerbate the existing salary gap between state and federal
employees and (2) give federal employees a workload that is currently
states' responsibility. 

Another stakeholder disagreement arose following deliberations of a
workgroup SSA created to determine how to accelerate testing of the
DCM position.  This workgroup was comprised of SSA and DDS
management, claims representatives and disability examiners, and
federal and state union representatives.  The workgroup's final
report endorsed SSA's proposal to test 1,500 DCMs over a 3-year
period.  Even though DDS representatives were workgroup participants,
they did not support SSA's proposal to test such a large number of
positions.  At the conclusion of the DCM workgroup's activities, the
NCDDD presented a position paper to the DPRT director.  The paper
stated that the directors would only agree to a pilot test involving
60 state and 60 federal DCMs. 

On September 11, 1996, the director, DPRT, stated that SSA plans to
begin training DCMs in January 1997.  Federal employees will receive
about 30 weeks of training and state employees about 6.  After formal
training is complete, a period of coaching and mentoring will take
place.  The total time envisioned for the formal training and the
coaching period is about 18 months.  However, as further evidence
that stakeholder support is eroding, the director also said that he
was not sure there will be a DCM test.  He explained that (1) of the
16 states that previously agreed to take part in the test, 3 have
decided not to participate and (2) several of the remaining 13 states
are now reconsidering their decision to participate. 

Further, SSA has not obtained strong support from a major
stakeholder--the NCDDD.  The directors manage over 14,000 state
employees nationwide, of whom about 6,000 are disability examiners. 
According to two recent NCDDD surveys, the DDS directors indicated
that many states were not strongly supportive of a number of redesign
initiatives.  According to the first survey, conducted in September
1995, only 3 of the 42 respondents,\10 or about 7 percent, strongly
supported redesign.  In addition, 17 states, or about 40 percent,
either moderately or strongly did not support SSA's efforts to
redesign the disability process.  According to the second survey,
conducted in January 1996, the DDS directors' opinions about redesign
had worsened, in part due to DCM testing.  In response to the
question about how the states viewed the overall redesign, 28 of 51
respondents, or about 55 percent, either moderately or strongly did
not support redesign.  Further, according to the survey, only 1 of 50
DDS directors thought the DCM position could be implemented
successfully without all the enablers in place.  In addition, 24 of
these directors thought the DCM position could never be successfully
implemented. 


--------------------
\10 As mentioned in ch.  1, there are 54 DDS offices nationwide. 


CONCLUSIONS, RECOMMENDATION, AND
AGENCY COMMENTS AND OUR EVALUATION
============================================================ Chapter 4

Given the high cost and long processing time of SSA's current
process, the agency's redesign, which undertakes a large number of
initiatives at one time, is proving to be overly ambitious.  Some
initiatives are also getting more complex as SSA expands the work
required to complete them.  This approach is likely to limit the
chances for success and has already led to delays in implementation: 
testing milestones have slipped and stakeholder support for the
redesign has diminished. 

As of July 1996, activity is under way for most of SSA's near-term
initiatives; however, none is complete and many are behind schedule. 
Only about one-fourth of the near-term initiatives that contain
testing requirements have been started.  Consequently, SSA has not
made the progress it intended in order to know whether specific
initiatives will achieve the desired results. 

Further, many of the initiatives are complex and have expanded in
scope, thus increasing the time frames to complete them.  A
disadvantage to extending the time frames and delaying implementation
is that they increase the likelihood that SSA will experience senior
executive changes during the course of the redesign.  Moreover, this
delay also means that no concrete and measurable results are
available to maintain stakeholder support. 

While any one of the problems discussed in this report could possibly
be managed and handled successfully, SSA currently faces a multitude
of problems that raises questions about the likelihood redesign will
succeed. 


   RECOMMENDATION
---------------------------------------------------------- Chapter 4:1

To increase the likelihood that its reengineering project will
succeed, given the major delays that SSA has experienced and the risk
of further decline in stakeholder support, we recommend that the
Commissioner of the Social Security Administration concentrate on
accomplishing rapid results through initiatives of smaller, more
manageable scope.  This effort should include

  -- selecting those initiatives most crucial to producing
     significant, measurable reductions in claims-processing time and
     administrative costs--including those initiatives intended to
     achieve process unification, establishment of new
     decision-making positions, and enhancement of information
     systems support--and

  -- combining those initiatives into an integrated process, testing
     that process at a few sites, and evaluating the results--before
     proceeding with full-scale implementation. 

The valuable experience gained in these initial efforts can then be
used both to improve the redesign and to build support among
stakeholders and potential program beneficiaries.  In addition, other
initiatives could be undertaken at a later date, when progress is
ensured for the initiatives described above and resources become
available. 


   AGENCY COMMENTS AND OUR
   EVALUATION
---------------------------------------------------------- Chapter 4:2

In its comments, SSA generally agreed with the thrust of our report
and its recommendation.  SSA stated it is directing a larger portion
of its redesign resources to crucial initiatives.  Further, SSA plans
to evaluate several key redesign features in early 1997--the single
decisionmaker and predecision interview process, elimination of the
reconsideration stage, and the proposed adjudication officer (AO)
position--in an integrated test.  This approach does not, however,
include integrated testing of all the initiatives we and SSA now
consider crucial.  Among the initiatives excluded from this testing
approach are process unification, quality assurance, and enhancement
of information systems support. 

We continue to believe that SSA, before proceeding with full-scale
implementation, should combine all crucial initiatives into an
integrated process, test that process at a few sites, and evaluate
test results.  The approach we recommend is quite similar to one that
was under consideration at SSA in 1995.  Under that 1995 approach,
sites were to serve as comprehensive test locations, with the
principal function of integrating and combining all crucial
initiatives, including automation and technology enablers. 

In its comments, SSA also expressed some reservations about how
quickly it could complete redesign.  SSA stated that while other
organizations could achieve results quickly, such an expectation
regarding SSA's redesign would be unrealistic, given the scope of the
initiatives.  But during the course of our work, we identified
several instances of large, complex government and private
organization redesigns in which significant test results were
achieved in a relatively short time.  Although testing a fully
integrated process may require considerable effort, quick completion
would both (1) provide valuable information that would assist SSA in
selecting a redesign solution and (2) serve as a concrete
demonstration of progress.  These two factors should be helpful in
building support among stakeholders and potential program
beneficiaries.  See appendix II for the full text of SSA's comments. 


DISABILITY REDESIGN PLANNING
TIMETABLE
=========================================================== Appendix I

                                        Mid-term (fiscal    Long-term (fiscal
                    Near-term (fiscal   years               years 1999 and
Process feature     years 1995-96)      1997-98)            beyond)
------------------  ------------------  ------------------  --------------------
Process entry and intake
--------------------------------------------------------------------------------
Comprehensive       Make disability
public information  information
about the           packets available
disability          in conjunction
programs            with a
                    comprehensive
                    public information
                    campaign
                    (nationwide)

Starter             Test and evaluate   Make starter
application         use of starter      application
                    application         available for all
                                        claimants
                                        (nationwide)

Claimant chooses    Local managers      Test and implement  Give claimant option
mode of entry into  develop             options for third   to file an
application         arrangements with   parties to assist   application
process             third parties, who  in the completion   electronically, by
                    are capable of      and development of  mail, by telephone,
                    providing           disability claims,  or in person
                    assistance, based   including           (nationwide)
                    on SSA protocols    electronic
                    for third-party     interaction         Allow recognized
                    interaction         (nationwide)        third parties to
                                                            electronically (1)
                    Test use of mail-                       interact with SSA
                    in applications                         and (2) submit
                    for certain types                       complete application
                    of claims or for                        packages for
                    hard-to-reach                           determination by
                    applicant                               disability claim
                    populations                             manager (DCM)
                                                            (nationwide)
                    Develop, test, and
                    implement options
                    for immediate
                    telephone
                    interviews

Claimant            Claimants (and
partnership in      their families or
disability claims   support networks)
processing          who are able
                    actively
                    participate in
                    obtaining medical
                    evidence in
                    support of their
                    claims
                    (nationwide)

DCM as single       In every region,    Continue testing    DCM is the single
agency contact for  test ways to        and implement       point of contact for
all initial         facilitate claims   claims              disability claims
claims-processing   representative and  representative and  intake, decision-
activities          disability          disability          making, and payment
                    examiner            examiner teams,     effectuation
                    interaction, as     making them         (nationwide)
                    well as teamwork,   responsible for
                    in application      disability claims
                    intake and claims   intake, decision-
                    decision-making     making, and
                                        payment
                                        effectuation
                                        (nationwide)

                                        Test use of DCM in
                                        specified regional
                                        sites or for
                                        specified types of
                                        claims

Evidence            In every region,    Decisionmaker
development         test ways to        decides the extent
tailored            facilitate claims   of medical
to claimant         representative and  development
circumstances       disability          necessary to reach
                    examiner            a decision
                    interaction
                    regarding the
                    extent of medical
                    development

Predecision         Publish final       Provide
contact before      regulations and     predecision notice
initial denial      conduct tests in    and opportunity
determination       selected sites on   for a personal
                    the various means   contact with the
                    of providing (1)    decisionmaker,
                    predecision         prior to issuing
                    notices and (2)     an initial denial
                    opportunities for   determination
                    personal contact    (nationwide)
                    prior to issuing
                    an initial denial
                    determination

Statement of the    Test use of         Prepare a
claim               enhanced decision   statement of the
                    rationales in       claim for all
                    reengineered        initial claims
                    disability system   determinations
                    (RDS) pilot sites   (nationwide)


Disability decision methodology
--------------------------------------------------------------------------------
Eliminate "not                                              Develop regulations
severe" step                                                to remove the "not
                                                            severe" step
                                                            (nationwide)

Index of Disabling  Develop and test,   Develop and test    Develop regulations
Impairments         using existing      the use of an       that provide for an
replaces Listing    regulatory          Index of Disabling  Index of Disabling
of Impairments      authority, a means  Impairments (adult  Impairments (adult
                    to identify         and child) to       and child) to
                    disability          facilitate          replace the Listing
                    allowances earlier  allowances earlier  of Impairments
                    in the process      in the              (nationwide)
                                        process

Ability to perform  Assess research     Continue research   Expand case studies
substantial         needs, develop      and apply research  to test refinements
gainful activity    scope of work, and  results to          of new methodology
(SGA) (adults)      award research      refining the
                    contracts based on  current approach    Develop regulations
                    the relationship    to assessing        to apply new
                    between age and     residual            methodology
                    the ability to      functional          developed as a
                    adjust to other     capacity and the    result of case
                    work; the           ability to perform  studies (nationwide)
                    development of      other work
                    standardized
                    approaches to       Develop a baseline
                    assessing           of occupational
                    functional          demands that
                    ability, including  represents work
                    the impact of       existing in
                    education; and      significant
                    identification of   numbers in the
                    the functional      national economy
                    requirements of
                    baseline work       Model changes and
                                        refinements to the
                                        decision
                                        methodology using
                                        case studies and
                                        other methods, as
                                        appropriate

Comparable                                                  Develop, test, and
severity                                                    implement
(childhood)                                                 standardized
                                                            instruments for
                                                            assessing a child's
                                                            functional ability
                                                            (nationwide)

Change the role of  Revise regulatory   Test and implement
the medical         requirements, for   a new role for
consultant          medical consultant  medical
                    sign-off on         consultants
                    initial             (including Office
                    determinations, so  of Hearings and
                    as to make them     Appeals medical
                    consistent with     experts) at all
                    existing statutory  levels of
                    provisions          decision-making
                    requiring medical   (nationwide)
                    consultant
                    involvement in
                    childhood
                    disability claims
                    or claims that are
                    denied based on
                    mental
                    impairments

                    Identify
                    categories of
                    claims requiring
                    medical consultant
                    analysis at all
                    levels of
                    decision-making


Medical evidence development
--------------------------------------------------------------------------------
Streamlined and     Identify            Develop, test, and  Standardized forms
targeted requests   opportunities for   implement           for medical evidence
for medical         which medical       standardized forms  collection are tied
evidence            evidence            for medical         to Index
                    requirements can    evidence            requirements and
                    be streamlined      collection,         standardized
                                        including fraud-    functional
                    Test options for    prevention          assessment criteria
                    requesting,         measures            (nationwide)
                    storing, and        (nationwide)
                    retrieving medical                      Treating sources are
                    records             Integrate the       encouraged to submit
                    electronically      process for         evidence
                                        requesting,         electronically
                    Local managers      storing, and        (nationwide)
                    focus resources on  retrieving medical
                    professional        records
                    education and       electronically
                    medical relations   into RDS
                    outreach with the
                    medical community,
                    including
                    consultative
                    examination
                    providers
                    (nationwide)

                    Increase customer
                    partnership in
                    claims processing
                    by providing
                    opportunity for
                    claimants to
                    pursue their own
                    medical evidence

Sliding-fee         Develop and test    Implement national  Sliding-fee schedule
schedule for        options for a       sliding-fee         tied to medical
medical evidence    sliding-fee         schedule for        evidence
                    schedule for        medical evidence    requirements of new
                    medical evidence    (nationwide)        methodology
                                                            (nationwide)

Administrative
appeals process

First level of      Initiate case       Develop and
appeal is the       reviews before      publish
administrative law  oral hearings to    regulations to
judge (ALJ)         expedite evidence   implement an
hearing             collection and      adjudication
                    identify possible   officer (AO)
                    allowances          position
                                        (nationwide)
                    Develop and
                    publish             Develop and
                    regulations to      publish
                    test options for    regulations to
                    using an AO in      eliminate
                    prehearing          reconsideration
                    proceedings         (nationwide)

                    Publish
                    regulations to
                    test options for
                    eliminating
                    reconsideration in
                    connection with
                    testing of
                    predecision notice
                    and contact

                    In specified
                    claims, conduct
                    prehearing
                    conferences to
                    narrow issues for
                    hearing

Revised role for    Develop and         Continue testing
Appeals Council     publish             and implement new
                    regulations to      role for Appeals
                    test options for    Council
                    narrowing the       (nationwide)
                    scope of mandatory
                    Appeals Council
                    review

                    Develop and test
                    options, in
                    conjunction with a
                    new quality
                    assurance system,
                    for expanding the
                    Appeals Council's
                    own motion reviews


Quality assurance
--------------------------------------------------------------------------------
Training            Provide consistent  Identify new
                    training and        training needs and
                    direction to all    modify existing
                    disability          training programs
                    decisionmakers      based on results
                    (nationwide)        of end-of-line
                                        quality reviews
                                        (nationwide)

In-line quality     Develop and test    Implement revised
reviews             procedures for      in-line quality
                    implementing peer   review system at
                    review and in-      all levels
                    line monitoring     (nationwide)

                    Test revised in-
                    line quality
                    review system

End-of-line         Develop and         Implement revised
quality reviews     implement revised   comprehensive end-
                    end-of-line         of-line (medical
                    review, addressing  and nonmedical)
                    both medical and    review system
                    nonmedical          (nationwide)
                    accuracy in
                    Disability          Use results of
                    Insurance (DI) and  end-of-line review
                    Supplemental        system to identify
                    Security Income     needed policy and
                    (SSI) disability    process
                    claims at all       improvements
                    levels              (nationwide)
                    (nationwide)

Customer            Conduct customer    Implement ongoing
satisfaction        and employee        customer and
surveys             surveys in          employee
                    conjunction with    satisfaction
                    local, regional,    surveys
                    and national        (nationwide)
                    pilots of
                    disability process
                    changes

Measurements        Measure overall     Develop and         Customize management
                    processing time     implement revised   information to
                    from the            performance         user's needs
                    customer's          measures
                    perspective         (nationwide)
                    (nationwide)


Enablers
--------------------------------------------------------------------------------
Process             For determining
unification         disability,
                    develop and
                    implement a single
                    presentation of
                    all substantive
                    policies, with
                    appropriate
                    monitoring and
                    enforcement
                    mechanisms
                    (nationwide)

Role of third       Develop and
parties             implement
(representatives)   regulations
                    regarding
                    representatives'
                    qualifications and
                    standards of
                    conduct
                    (nationwide)

                    Conduct outreach
                    to the legal
                    community
                    regarding
                    disability
                    programs
                    requirements

Technology          Implement RDS in    Implement RDS with  Implement fully
                    pilot sites         enhanced            integrated
                                        decisional support  disability claims-
                    Standardize claims  (nationwide)        processing system
                    file preparation                        with paperless
                    at all levels       Implement video     claims processing
                    (nationwide)        conferencing at     (nationwide)
                                        appropriate remote
                    Test the use of     sites               Provide electronic
                    video conferencing                      access to claims-
                    at appropriate      Begin integration   processing system to
                    remote sites        of other SSA        claimants,
                                        claims-processing   representatives, and
                    Test redesign       systems with RDS    recognized third
                    features, where                         parties
                    feasible, in                            (nationwide)
                    intelligent
                    workstation/local                       Make cost-effective
                    area network (IWS/                      video conferencing
                    LAN) sites                              technology available
                                                            (nationwide)
--------------------------------------------------------------------------------



(See figure in printed edition.)Appendix II
COMMENTS FROM THE SOCIAL SECURITY
ADMINISTRATION
=========================================================== Appendix I



(See figure in printed edition.)



(See figure in printed edition.)



(See figure in printed edition.)


GAO CONTACTS AND ACKNOWLEDGMENTS
========================================================= Appendix III

GAO CONTACTS

Michael T.  Blair, Jr., Assistant Director, (404) 679-1944
Clarence L.  Tull, Sr., Evaluator-in-Charge, (404) 679-1870

STAFF ACKNOWLEDGMENTS

In addition to those named above, John M.  Ortiz coauthored the
report and contributed significantly to all data-gathering and
analysis efforts. 


BIBLIOGRAPHY
============================================================ Chapter 1

Caudle, S.  L.  Reengineering for Results:  Update.  1995. 

Hammer, M., and J.  Champy.  Reengineering the Corporation.  New
York:  HarperCollins Publishers, 1993. 

Hammer, M., and S.  A.  Stanton.  The Reengineering Revolution.  New
York:  HarperCollins Publishers, 1995. 

Linden, Russell M.  Seamless Government:  A Practical Guide to
Re-Engineering in the Public Sector.  Jossey-Bass Publishers, 1994. 

U.S.  General Accounting Office.  Business Process Reengineering
Assessment Guide.  Exposure Draft, Version 1.0, 1995. 





RELATED GAO PRODUCTS
============================================================ Chapter 2

SSA Disability Redesign:  More Testing Needed to Assess Feasibility
of New Claim Manager Position (GAO/HEHS-96-170, Sept.  27, 1996). 

Social Security Administration:  Effective Leadership Needed to Meet
Daunting Challenges (GAO/HEHS-96-196, Sept.  12, 1996). 

SSA Disability Reengineering:  Project Magnitude and Complexity
Impede Implementation (GAO/T-HEHS-96-211, Sept.  12, 1996). 

Social Security Administration:  Effective Leadership Needed to Meet
Daunting Challenges (GAO/T-OCG-96-7, July 25, 1996). 

Social Security Administration:  Major Changes in SSA's Business
Processes Are Imperative (GAO/T-AIMD-94-106, Apr.  14, 1994). 


*** End of document. ***