Supplemental Security Income: Action Needed on Long-Standing Problems
Affecting Program Integrity (Chapter Report, 09/14/98, GAO/HEHS-98-158).

GAO provided information on the management problems associated with the
Social Security Administration's (SSA) Supplemental Security Income
(SSI) Program.

GAO noted that: (1) to a great extent, SSA's inability to address its
most significant long-standing SSI problems is attributable to two
underlying causes: (a) an organizational culture or value system that
places a greater priority on processing and paying claims than on
controlling program expenditures; and (b) a management approach
characterized by SSA's reluctance to fulfill its policy development and
planning role in advance of major program crises; (2) SSA's
organizational culture has traditionally valued quickly processing and
paying SSI benefit claims more highly than controlling program
expenditures by ensuring that only eligible individuals receive
benefits; (3) other important financial controls such as aggressively
pursuing the recovery of overpaid funds and combatting SSI fraud have
also often received inadequate attention; (4) SSI problem resolution and
program direction have also been hindered by SSA's hesitance to take a
leadership role in SSI research and policy development, and its tendency
to react to resulting crises through a series of ad hoc initiatives; (5)
SSA's management approach was most evident regarding its reluctance to
play a leadership role in recent policy debates surrounding SSI
eligibility for children and substance abusers, and its failure to
devise a comprehensive strategy to help SSI recipients return to work;
(6) program direction has been further impaired by SSA's reluctance to
develop agencywide plans that adequately focus on the specific
characteristics and needs of the SSI program and its recipients; (7)
SSA's current plans do not adequately communicate SSI priorities, goals,
and objectives to staff; (8) reversing how the SSI program has
traditionally operated will require sustained and expanded attention to
developing and promoting tighter payment controls, increasing SSA's role
in SSI research and policy formulation, and a willingness to define a
long-term vision and strategy for improving program performance; (9)
recently, SSA has initiated several measures aimed at improving the
financial integrity of the SSI program; (10) as required by the
Government Performance and Results Act of 1993, SSA also intends to
develop a comprehensive SSI Action Plan in fiscal year 1998, which will
serve as a blueprint for long-term program operations; and (11) however,
such a plan has not yet been developed, and decisive action is needed to
ensure that SSA will focus on those program areas that pose the greatest
management challenges and that corrective actions will be implemented
and sustained over time.

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

 REPORTNUM:  HEHS-98-158
     TITLE:  Supplemental Security Income: Action Needed on 
             Long-Standing Problems Affecting Program Integrity
      DATE:  09/14/98
   SUBJECT:  Social security benefits
             Program abuses
             Overpayments
             Income maintenance programs
             Internal controls
             Eligibility determinations
             Claims processing
             Reporting requirements
             Program management
             Fraud
IDENTIFIER:  Supplemental Security Income Program
             
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Cover
================================================================ COVER


Report to the Commissioner of Social Security

September 1998

SUPPLEMENTAL SECURITY INCOME -
ACTION NEEDED ON LONG-STANDING
PROBLEMS AFFECTING PROGRAM
INTEGRITY

GAO/HEHS-98-158

SSI Program Integrity

(105153)


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

  ALJ - administrative law judge
  CBO - Congressional Budget Office
  CDR - continuing disability review
  DA&A - drug addicts and alcoholics
  DDS - Disability Determination Services
  DI - Disability Insurance
  HCFA - Health Care Financing Administration
  IFA - individualized functional assessment
  OASI - Old Age and Survivors Insurance
  OCSE - Office of Child Support Enforcement
  OHA - Office of Hearings and Appeals
  OIG - Office of Inspector General
  PASS - plan for achieving self-support
  SGA - substantial gainful activity
  SSA - Social Security Administration
  SSI - Supplemental Security Income
  TRO - tax refund offset
  VR - vocational rehabilitation

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


B-278097

September 14, 1998

The Honorable Kenneth S.  Apfel
Commissioner of Social Security

Dear Mr.  Apfel: 

This report, prepared at our own initiative, discusses management
problems associated with the Social Security Administration's
Supplemental Security Income program. 

The report contains recommendations to you.  As you know, 31 U.S.C. 
720 requires the head of a federal agency to submit a written
statement of actions taken on our recommendations to the Senate
Committee on Governmental Affairs and the House Committee on
Government Reform and Oversight no later than 60 days after the date
of the report and to the House and Senate Committees on
Appropriations with the agency's first request for appropriations
made more than 60 days after the date of this report. 

We are sending copies of this report to appropriate congressional
committees and Members of Congress, and the Director of the Office of
Management and Budget.  We will also make copies available to other
interested parties. 

The major contributors to this report are listed in appendix III. 

Sincerely yours,

Cynthia M.  Fagnoni
Director, Income Security Issues


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


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

The Social Security Administration (SSA) operates the Supplemental
Security Income (SSI) program, which is the nation's largest cash
assistance program for the poor.  In 1996, the SSI program paid about
6.6 million aged, blind, and disabled recipients more than $25
billion in benefits.  Since its inception in 1974, the SSI program
has grown in both size and complexity, and SSA has been significantly
challenged in its efforts to serve the diverse needs of recipients
while still protecting the financial health and integrity of the
program.  Reports in the media and by oversight agencies have
highlighted program abuses and mismanagement, increasing SSI
overpayment, and SSA's inability to adequately recover outstanding
SSI debt.  These and other problems documented over the years have
spurred congressional criticism of SSA's ability to effectively
manage SSI workloads and have also served to reinforce public
perceptions that SSA pays SSI benefits to too many people for too
long.  The SSI program's vulnerability to fraud and abuse, and the
magnitude of overpayments involved, were primary factors in GAO's
decision to designate SSI a high-risk program in 1997\1 and to begin
this larger body of work to document the underlying causes of
long-standing SSI program problems and the impact these problems have
had on program performance and integrity. 


--------------------
\1 High Risk Series:  An Overview (GAO/HR-97-1, Feb.  1997).  In
1990, GAO began a special effort to review and report on federal
program areas its work identified as high risk because of
vulnerabilities to waste, fraud, and mismanagement. 


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

Between 1974 and 1996, the number of SSI recipients increased almost
65 percent from about 4 million to about 6.6 million, and federal
benefit payments rose 565 percent from $3.8 billion to more than $25
billion.  In fiscal year 1997, outstanding SSI debt and newly
detected overpayments for the year totaled $2.6 billion.  SSA
recovered $437 million in that year--about 17 percent of the total
amount--and wrote off $562 million in overpayment debt. 

Our prior work shows that the SSI program has experienced several
long-standing problems that have affected SSA's ability to protect
the financial integrity of the program and provide effective
management direction.  These problems include (1) inadequate
attention to verifying recipients' initial and continuing eligibility
for SSI benefits, (2) a lack of priority given to recovering SSI
overpayments, (3) insufficient attention to addressing program fraud
and abuse, and (4) ineffective SSI policy development and program
planning. 


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

To a great extent, SSA's inability to address its most significant
long-standing SSI problems is attributable to two underlying causes: 
an organizational culture or value system that places a greater
priority on processing and paying claims than on controlling program
expenditures, and a management approach characterized by SSA's
reluctance to fulfill its policy development and planning role in
advance of major program crises. 

SSA's organizational culture has traditionally valued quickly
processing and paying SSI benefit claims more highly than controlling
program expenditures by ensuring that only eligible individuals
receive benefits.  Thus, SSA has often relied heavily on
self-reported recipient information when determining SSI eligibility,
which it has tried to validate with untimely and incomplete
verification processes.  Other important financial controls such as
aggressively pursuing the recovery of overpaid funds and combatting
SSI fraud have also often received inadequate attention. 

SSI problem resolution and program direction have also been hindered
by SSA's hesitance to take a leadership role in SSI research and
policy development, and its tendency to react to resulting crises
through a series of ad hoc initiatives.  SSA's management approach
was most evident regarding its reluctance to play a leadership role
in recent policy debates surrounding SSI eligibility for children and
substance abusers, and its failure to devise a comprehensive strategy
to help SSI recipients return to work.  Program direction has been
further impaired by SSA's reluctance to develop agencywide plans that
adequately focus on the specific characteristics and needs of the SSI
program and its recipients.  Thus, SSA's current plans do not
adequately communicate SSI priorities, goals, and objectives to
staff.  As a result, inefficient policies and procedures often
continue longer than they should have or are never addressed. 

Reversing how the SSI program has traditionally operated will require
sustained and expanded attention to developing and promoting tighter
payment controls, increasing SSA's role in SSI research and policy
formulation, and a willingness to define a long-term vision and
strategy for improving program performance.  Recently, SSA has
initiated several measures aimed at improving the financial integrity
of the SSI program.  The agency has also acknowledged the need to
reassess its approach to SSI policy development.  As required by the
Government Performance and Results Act of 1993,\2 SSA also intends to
develop a comprehensive SSI Action Plan in fiscal year 1998, which
will serve as a blueprint for long-term program operations.  However,
such a plan has not yet been developed, and decisive action is needed
to ensure that SSA will focus on those program areas that pose the
greatest management challenges and that corrective actions will be
implemented and sustained over time. 


--------------------
\2 The Results Act requires federal agencies to implement
results-oriented management reforms, such as strategic planning,
establishing program goals and objectives, measuring their progress
in meeting those goals, and reporting publicly on that progress. 


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


      ORGANIZATIONAL CULTURE HAS
      PERPETUATED SEVERAL
      LONG-STANDING PROBLEMS
-------------------------------------------------------- Chapter 0:4.1

In work spanning more than a decade, GAO has noted that SSA's
operations are heavily influenced by an organizational culture or
value system that places a greater emphasis on quickly processing and
paying claims than on controlling program costs or improving
operational efficiency.  GAO's current work confirmed the continued
existence of an agency culture that has tended to view the SSI
program in much the same way as SSA's Old Age and Survivors Insurance
and Disability Insurance programs--where emphasis is placed on
quickly processing claims for individuals with an earned right to
benefits--rather than as a welfare program where stronger income and
asset verification is necessary. 

The agency's organizational culture has been strongly influenced by
top management and is most evident in regard to SSA's (1) inadequate
attention to verifying recipients' initial and continuing SSI
eligibility, (2) lack of priority given to recovering SSI
overpayments, and (3) insufficient attention to addressing program
fraud and abuse.  More specifically, SSA is still not aggressively
pursuing the most timely and complete sources of automated data to
verify SSI financial eligibility--especially for nursing home
admissions and the wages recipients may earn.  The agency also has
not addressed long-standing vulnerabilities associated with
determining recipient living arrangements--an area that SSA's quality
reviewers have deemed to be highly prone to error, susceptible to
manipulation, and a major source of SSI overpayments. 

SSA's culture has also contributed to the lack of priority placed on
recovering overpayments once they are identified.  This is evidenced
by SSA's reluctance to use overpayment recovery tools currently
available to it and aggressively pursue additional tools when
warranted, including tax refund offsets, credit bureau reporting,
collection agencies, and interest levies on outstanding debt owed. 
Moreover, under current law, SSA cannot withhold more than 10 percent
of a recipient's total monthly income to recover overpaid funds.\3
Thus, SSA is limited in its ability to recover overpayments from
individuals who chronically and willfully abuse SSI program reporting
requirements.  SSA's own studies and data also show that field staff
rarely apply existing penalty provisions to encourage recipients to
report information in a timely manner.  Finally, SSA has not
developed adequate measures of the activities and time necessary to
develop fraud referrals.  Nor has SSA developed a means of
recognizing staff for additional time they spend on developing fraud
cases.  Thus, many staff may be unwilling to devote time to SSA's new
anti-fraud activities, for which there is little reward. 

Recently, SSA has taken a number of actions to improve the financial
integrity of the SSI program.  For example, SSA is expanding its use
of on-line data maintained by state agencies to better verify
recipient financial information, and is seeking an additional $50
million for fiscal year 1999 to review the financial status of
individuals who have been designated as having a high probability of
being overpaid.  Following a series of GAO briefings with SSA's
Deputy Commissioner and our recent testimony denoting SSA's
reluctance to pursue more aggressive debt collection tools, SSA is
also now seeking statutory authority to use credit bureaus, private
collection agencies, interest levies, and other ways to recover more
SSI overpayments.  The Office of Inspector General's investigative
staffing levels have also been significantly increased over previous
years, and that office has been more aggressive in pursuing those who
defraud the program.  However, progress on some initiatives has been
slow, and long-standing problems continue to affect SSI program
integrity.  Reversing the trends in SSI program performance will
require sustained attention to the issue of SSA's organizational
culture and specific initiatives designed to facilitate a change in
how SSI business is conducted, cases are processed, and staff and
managers are rewarded for their efforts. 


--------------------
\3 In contrast, in the Old Age and Survivors Insurance and Disability
Insurance programs, SSA currently has the authority to withhold 100
percent of a recipient's total monthly benefit until the overpayment
is recovered. 


      SSA'S MANAGEMENT APPROACH
      HAS HINDERED ADEQUATE
      PROGRAM DIRECTION
-------------------------------------------------------- Chapter 0:4.2

SSA's management approach is evident in its SSI policy development
and program planning.  In prior work, GAO has reported that SSA
should take a leadership role in identifying program problems before
they reach crisis levels and developing comprehensive plans and
strategies to address those problems.  However, SSA's approach to
research and policy development has been reactive in nature,
resulting in missed opportunities to address critical SSI policy
issues.  Its planning activities have also been at such a general
level that they provide inadequate programmatic direction. 

GAO's work shows that SSA has been reluctant to use its research and
policy development capabilities to assess the impacts of demographic
changes in the SSI population, legislation, and court-mandated
program changes that have occurred over the years.  SSA has also
often hesitated in initiating internal policy "fixes" to address
identified problems or suggesting changes to laws governing SSI.  For
example, in the recent congressional debate surrounding SSI
eligibility for children, SSA did not take a leadership role in
developing and communicating timely information to the Congress on
the impacts of prior legislative and court-mandated changes.  SSA
also did not develop its own proposals for revising childhood
eligibility policies, despite possessing many years of data
documenting explosive growth in childhood SSI rolls, changes in the
types of impairments qualifying for benefits, and allegations that
the program was being abused.  As a consequence, SSA missed an
opportunity to provide policymakers with needed information to assess
whether childhood disability laws were meeting the needs of the most
severely disabled children. 

In other areas, SSA has often viewed itself as an implementer of
program policies rather than as a leader in formulating a policy
vision.  For example, SSA did not address, before the issue reached
the crisis level, growing criticisms surrounding the rapid growth in
the number of drug addicts and alcoholics qualifying for SSI benefits
and reports of program abuses by recipients.  SSA has also been
reluctant to take a leadership role in devising a comprehensive
strategy for helping SSI recipients return to work.  In addition, SSA
has not developed options for revising policies for determining SSI
recipient living arrangements, despite acknowledging for many years
that this program area is highly error-prone, open to manipulation by
recipients, and a source of considerable SSI overpayments. 

Finally, SSA's strategic planning activities still do not provide
clear direction necessary to address its most significant SSI program
challenges.  Although SSA has developed an agencywide strategic plan
and an annual performance plan as required by the Results Act, these
plans still do not adequately focus on the specific needs and unique
characteristics of the SSI program and its recipient population. 
Instead, SSA's planning efforts have resulted in general goals and
objectives for SSA as a whole.  In the absence of an SSI-specific
plan or strategy, SSA risks failing to address those aspects of the
program that pose the greatest management challenge to the agency. 

SSA has acknowledged the need to play a more active policy
development role and is currently in the process of restructuring its
research and policy component to better address GAO's concerns in
this area.  Last year, SSA also made conducting effective policy
development, research, and program evaluation a key agency goal, with
attention to the SSI program being an important element of this goal. 
However, only recently has SSA submitted any significant SSI policy
proposals, and none has been enacted into law.  Finally, in its new
annual performance plan, SSA has also made a commitment to complete a
comprehensive action plan to improve the management of the SSI
program in fiscal year 1998.  This step links with SSA's new
strategic goal to make its programs the "best in business with zero
tolerance for fraud and abuse." However, such a plan has not yet been
completed. 


   RECOMMENDATIONS TO THE
   COMMISSIONER OF SSA
---------------------------------------------------------- Chapter 0:5

GAO is making several recommendations to the Commissioner of SSA,
which, if implemented, should result in a change in SSA's
organizational culture and enhance the financial integrity of the SSI
program, as well as facilitate a change in SSA's management approach
and improve SSI program direction.  These recommendations address
needed operational and program policy changes essential to improving
the financial verification aspects of the SSI program, aggressively
deterring and recovering SSI overpayments, combatting program fraud
and abuse, improving SSA's policy development role, and developing
programmatic plans consistent with the Results Act.  The specific
recommendations are presented in chapter 4 of this report. 


   AGENCY COMMENTS AND GAO'S
   EVALUATION
---------------------------------------------------------- Chapter 0:6

In its written comments on a draft of this report, SSA agreed that
the SSI program faces significant challenges.  However, SSA disagreed
with GAO's conclusion that it has historically placed greater
emphasis on processing and paying SSI claims than on controlling
program expenditures.  SSA was also concerned that the report did not
adequately acknowledge the initiatives it has taken to improve the
financial integrity of SSI.  GAO believes the evidence presented in
this report supports its conclusion.  GAOs' review involved an
extensive analysis of 200 internal and external studies of the SSI
program dating back to its inception, more than 100 interviews of
staff and managers at all levels of SSA, and an assessment of
performance data encompassing nearly a decade of program operations. 
Throughout this report, GAO has also provided numerous examples of
how SSA's emphasis on claims processing has led to internal control
weaknesses, overpayments to ineligible recipients, and has
contributed to a program environment where operating policies have
not adequately protected taxpayer dollars from fraud and abuse.  GAO
also believes the report fairly characterizes SSA's initiatives and
accurately portrays their implementation status.  In other areas, SSA
provided technical comments, which were addressed as appropriate. 
The full text of SSA's comments and GAO's response are included as
appendix II. 


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

The Social Security Administration (SSA) administers three federal
cash payment programs:  the Old Age and Survivors Insurance (OASI)
program, the Disability Insurance (DI) program, and the Supplemental
Security Income (SSI) program.  OASI and DI are social insurance
programs authorized under title II of the Social Security Act that
pay monthly benefits to eligible individuals or their families based
on average annual earnings in covered employment.  These payments are
made from the OASI and DI trust funds, which accumulate income
derived from the mandatory payment of employment taxes.  In contrast,
the SSI program is the nation's largest cash assistance program for
the poor, and it is funded by general revenues.  SSI was authorized
under title XVI of the Social Security Act to replace federal grants
to similar state-administered programs.\4 The program ensures a
minimum level of income for individuals who are aged, blind, or
disabled, and who meet financial eligibility standards.  The monthly
benefit amount is based on recipients' income and consists of a basic
federal payment, and in some cases, a state supplement.  SSA was
authorized to administer the SSI program because it already had a
system in place for paying monthly benefits to large numbers of
people, including a large number of field offices that could be used
as contact points for those seeking information and benefits. 

Since its implementation, the SSI program has increased rapidly in
both size and cost.  Between 1974 and 1996, the number of SSI
recipients increased almost 65 percent from about 4 million to about
6.6 million, and federal benefit payments rose about 565 percent from
$3.8 billion to about $25.3 billion.  Program growth has been
accompanied by dramatic changes in the make-up of the SSI recipient
population as the proportion of the SSI caseload consisting of aged
recipients has decreased, while the proportion of younger, mentally
disabled recipients has increased dramatically.  Because these
recipients tend to stay on the rolls longer, they are major
contributors to increasing program costs.  Over time, changes in the
SSI population and long-standing program problems have been
accompanied by increasing overpayments.  In fiscal year 1997,
outstanding SSI debt and newly detected overpayments for the year
totaled $2.6 billion (see fig.  1).  SSA recovered only $437 million
in that year or about 17 percent of the total amount. 

   Figure 1.1:  Outstanding SSI
   Overpayment Debt and New
   Detected Overpayments, Fiscal
   Years 1989-97

   (See figure in printed
   edition.)

Note:  Overpayments equal annual total beginning balance owed plus
new detections for the year. 

Source:  SSA's Office of Finance, Assessment, and Management. 


--------------------
\4 The SSI program was established by the Congress in 1972, with
payments beginning in January 1974. 


   AGENCY ORGANIZATION AND
   FUNCTIONS
---------------------------------------------------------- Chapter 1:1

SSA is headed by a Commissioner who is responsible for administering
the operations of the OASI, DI, and SSI programs.  According to the
most recent agency data, SSA employs about 65,000 employees and
serves the public through a network of 1,300 field offices located
throughout 10 SSA regions.  The Commissioner and Deputy Commissioner
head the management team and are responsible for addressing SSA's
existing problems and managing its future challenges.  In addition to
paying OASI, DI, and SSI benefits, SSA performs four basic functions
in support of its programs.  These include issuing Social Security
numbers, maintaining earnings information, making initial eligibility
determinations for payments, and making changes to beneficiaries'
accounts that affect their benefit payments (postentitlement
activities).  To execute these activities, SSA is organized
functionally into eight specialized components.  Each component is
headed by a Deputy Commissioner whose responsibilities include
supporting the agency's mission and objectives.  SSA also has an
Office of Inspector General (OIG), which conducts audits and
investigations of SSA's programs, as well as an Office of General
Counsel that provides legal advice and litigation services for the
agency.  (See app.  I for SSA's organizational chart.)


   DETERMINING SSI ELIGIBILITY
---------------------------------------------------------- Chapter 1:2

To be determined eligible for SSI, individuals must be at least 65
years of age, blind, or disabled.  Their income and assets also must
be below certain limitations.  To qualify as disabled, applicants
must be unable to engage in substantial gainful activity (SGA)
because of an impairment that is expected to result in death or to
last at least 12 months.\5 SSA relies on state Disability
Determination Services (DDS) to make the initial medical
determination of eligibility.  The DDSs are also required to help SSA
identify candidates for return-to-work services and may refer
eligible individuals to state vocational rehabilitation (VR) agencies
for services such as counseling and job placement, as well as therapy
and training.  Claimants whose initial disability claim is denied may
request a reconsideration of their claim by different DDS staff.  If
this review results in a confirmation of the original denial,
claimants may appeal to an administrative law judge (ALJ) located in
SSA's Office of Hearings and Appeals (OHA).  Claimants who disagree
with an ALJ denial may request that the case be reviewed by SSA's
Appeals Council.  After all SSA administrative remedies are
exhausted, a claimant has further appeal rights within the federal
court system, up to and including the U.S.  Supreme Court. 

SSA field staff are responsible for determining an individual's
financial eligibility for SSI benefits.  To meet the financial
requirements, individuals may not have combined income greater than
the current maximum monthly benefit of $494 ($741 for a couple), or
have resources worth more than $2,000 ($3,000 for a couple).  During
the initial application process at SSA field offices, individuals are
required to report any information that may affect their eligibility
for benefits.  Similarly, once individuals receive SSI benefits, they
are required to timely report events such as changes in income,
resources, marital status, or living arrangements to SSA field office
staff. 

To a significant extent, SSA depends on program applicants and
recipients to accurately report important eligibility information. 
However, to determine whether recipients remain financially eligible
for SSI benefits, SSA periodically conducts redeterminations.  These
are reviews of financial eligibility factors such as income,
resources, and living arrangements.  Recipients are reviewed at least
every 6 years, but reviews may be more frequent if SSA determines
that changes in eligibility are likely.  SSA also uses computer
matches to determine recipients' continuing financial eligibility. 
Matches compare SSI payment records against recipient financial
information contained in the payment files of third parties, such as
other federal and state government agencies.  To determine whether a
recipient has medically improved to the extent that he or she is no
longer considered to be disabled, SSA also conducts periodic
examinations called continuing disability reviews (CDR). 


--------------------
\5 In 1997, the SGA threshold was $1,000 per month for blind
recipients and $500 per month for individuals with other
disabilities. 


   THE SSI PROGRAM DIFFERS FROM
   THE OASI AND DI PROGRAMS
---------------------------------------------------------- Chapter 1:3

SSI differs from OASI and DI in terms of its underlying program
principles and eligibility requirements.  OASI and DI are intended to
help protect working Americans and their survivors against the loss
of income as a result of retirement, death, or disability.  These
programs provide benefits to individuals who have worked a specified
amount of time during which they contributed to the Social Security
Trust Funds through employment taxes.  Determining financial
eligibility for the OASI and DI programs is fairly easy and, once
established, rarely changes.  For example, there normally is little
difficulty in establishing whether an OASI or DI beneficiary has the
required work for insured status, and what the benefit amount should
be. 

By contrast, SSI is a welfare program composed of aged, blind, and
disabled recipients with limited or no work histories.  Benefit
eligibility and payment amounts for this population are determined by
complex and often difficult to verify financial factors such as an
individual's income, resource levels, and living arrangements. 
Individual financial circumstances may change often, requiring SSA to
frequently reassess recipients' eligibility for and level of
benefits.  Thus, the SSI program tends to be more difficult,
labor-intensive, and time-consuming to administer than the OASI and
DI programs.  These fundamental differences in SSA's programs require
different management approaches for implementing the programs, as
well as different policies and priorities to serve their diverse
populations and ensure the accuracy of program payments. 


   SSI IS A COMPLEX PROGRAM THAT
   HAS OFTEN BEEN AFFECTED BY
   EXTERNAL FORCES
---------------------------------------------------------- Chapter 1:4

Since its inception, the SSI program has been difficult to administer
because, similar to other means-tested programs, it relies on
complicated criteria to determine initial and continuing eligibility,
myriad policies and procedures for assessing recipients' often
changing income and resource levels, and constant monitoring to
ensure benefit amounts are adjusted to reflect these changes quickly
and adequately.  Over the years, the SSI program has become even more
complex as a result of policy and procedural changes often influenced
by legislation and decisions issued by the courts. 

Over time, legislative changes have had the effect of liberalizing
the SSI eligibility criteria on many occasions, and restricting them
at other times.  Thus, SSA has been tasked with implementing
ever-changing program policies and managing fluctuating recipient
populations.  The Social Security Disability Benefits Reform Act of
1984 is a primary example of a legislative change significantly
affecting the SSI program.  This act expanded the general definition
of disability for both children and adults.  Specifically, the act
required new standards for judging the impact of mental impairments
on eligibility.  It also required SSA to consider the combined
effects of multiple impairments if no single impairment was
sufficiently disabling to allow someone to qualify for benefits. 
Furthermore, the act allowed SSA to accept and consider nonmedical
evidence provided, for example, by an applicant's family and friends
when making the disability determination.  Finally, the act required
SSA to obtain medical evidence from an individual's treating
physician, if possible, before evaluating evidence from other
sources.  This law greatly expanded access to disability benefits and
contributed to increases in the number of younger, mentally disabled
individuals on the SSI rolls.  In 1996, the Congress passed the
Personal Responsibility and Work Opportunity Reconciliation Act,
which made the SSI eligibility criteria for children and noncitizens
more restrictive than it had been.  Subsequently, the Balanced Budget
Act of 1997 restored a significant number of noncitizens' SSI
benefits.  Thus, SSA has expended significant staff and
administrative time dealing with the effects of these legislative
changes. 

A major court decision also played a role in the transformation and
increasing complexity of the SSI program.  For example, in 1990 the
Supreme Court\6 held that SSA's disability determination process
violated the law because it held children to a more restrictive
standard than that applied to adults.  To comply with the decision,
SSA developed an individualized functional assessment (IFA) for those
children who did not qualify for disability on the basis of SSA's
strict listings of impairments.  The IFA determined the extent to
which the child's impairment limited his or her ability to act and
behave in age-appropriate ways.  By expanding the SSI eligibility
criteria, this decision contributed to a tripling in the number of
children receiving SSI benefits between 1989 and 1996, from about
300,000 to more than 1 million.  It also contributed to changes in
the composition of childhood disability rolls as more awards were
made to children who might not have met SSA's listing of impairments
but qualified on the basis of the less restrictive Zebley criteria. 
In addition to increased workloads, these changes further complicated
the disability determination process by requiring SSA to develop and
implement a new set of regulations and procedures.  Moreover, the
nature of these disabilities (generally, less severe mental and
physical impairments) forced SSA to make more determinations on the
basis of eligibility criteria that we reported to be subjective and
difficult to consistently administer. 

With these legislative and court-driven SSI changes, program
administration has become increasingly complicated.  SSA's own
reviews have found that, over the years, the SSI program has become
"encrusted" with a mass of complicating and sometimes contradictory
legislation and court-mandated changes.  According to SSA, each law
or court decision was designed to fix a specific program problem. 
Cumulatively, however, their effect was to make the program much more
complex to administer and difficult for recipients to understand than
was originally intended. 


--------------------
\6 Sullivan v.  Zebley, 493 U.S.  521 (1990). 


   OBJECTIVES, SCOPE, AND
   METHODOLOGY
---------------------------------------------------------- Chapter 1:5

The objective of this review was to document the underlying "root"
causes of long-standing SSI program problems.  To do our work, we
conducted an extensive literature review of 200 studies on the SSI
program conducted by GAO, SSA, congressional committees, and various
other external groups.  Some of these studies dated back to the SSI
program's inception.  We also conducted more than 100 in-depth
interviews with SSA personnel at all levels of the organization to
obtain their perspectives on the most significant problems in the SSI
program, the "root" causes of those problems, and agency actions
taken to address them.  We supplemented this information with
analysis of program performance data related to SSI beneficiary
groups, overpayments, payment accuracy rates, penalties, and so
forth. 

Our review was conducted at SSA's headquarters in Baltimore and four
SSA regions:  San Francisco, Dallas, Atlanta, and New York--regions
that account for more than 50 percent of the SSI population.  Our
interviews included senior executives and middle managers as well as
numerous line staff.  We also visited four state DDSs located in the
four regions noted as well as SSA's OHA and Office of Inspector
General.  While we sometimes state the statistical results of our
structured interviews, the results are not generalizable to all SSA
employees and managers.  However, we believe that these interviews
are useful indicators of the views of staff responsible for servicing
SSI workloads.  Our work was conducted between October 1996 and
February 1998 in accordance with generally accepted government
auditing standards. 

This report is organized around the two underlying causes that we
believe have had the most significant impact on SSI program
performance and integrity:  SSA's organizational culture and its
reactive management approach.  Thus, a discussion of SSA's
organizational culture and its impact on the financial integrity of
the SSI program is addressed in chapter 2.  Chapter 3 pertains to
SSA's management approach and its impact on SSA's ability to provide
adequate program direction.  In presenting our findings, we have
linked each long-standing problem to its most related root cause. 
However, we are aware that to varying degrees, SSA's organizational
culture and management approach often overlap and cut across several
of these problems.  As a result, some combination of these two root
causes may be present in each problem area.  In some instances, the
examples we cite as evidence of organizational culture are also
applicable to our discussion of SSA's management approach.  Our
method of categorization served as a general framework for linking
each problem area to its most likely root cause and for determining
an appropriate course of action to better control program
expenditures and protect program integrity. 


ORGANIZATIONAL CULTURE HAS
PERPETUATED SEVERAL LONG-STANDING
PROBLEMS AND AFFECTED THE
FINANCIAL HEALTH OF THE SSI
PROGRAM
============================================================ Chapter 2

SSA's organizational culture has historically placed a greater value
on quickly processing and paying SSI claims than on controlling
program expenditures.  This culture has adversely affected SSA's
ability to address several long-standing program problems and
ultimately control program expenditures.  To a significant extent, an
agency's culture emanates from and is shaped by top management
officials who are charged with establishing the priorities,
objectives, and performance measures that drive day-to-day program
operations.  Thus, over time, what is regularly emphasized, measured,
and rewarded by agency management becomes ingrained in the immediate
workload priorities of line managers and field staff.  To the extent
that agency priorities are not adequately balanced, serious
vulnerabilities may arise and continue to hinder performance.  We
reported in 1987 that SSA's agencywide operations had been heavily
influenced by an organizational culture or value system that placed a
greater emphasis on processing and paying claims than on controlling
program costs or improving operational efficiency.\7 As evidence of
this, we cited the results of our survey of a random sample of almost
650 mid-level managers.  Over 67 percent of these managers noted that
the number one factor emphasized by upper management when assessing
their work was timeliness. 

More than a decade later, our current field work confirmed that
little has changed, and SSA's organizational culture continues to
pose a barrier to reducing SSI fraud, abuse, and mismanagement.  More
specifically, our work shows that, to a great extent, SSI program
vulnerabilities are attributable to an agency culture that has tended
to view the SSI program in much the same way as SSA's title II
programs--where emphasis is placed on quickly processing claims and
making payments to individuals with an earned right to
benefits--rather than as a welfare program that requires stronger
income and asset verification policies.  Consequently, SSI program
policies and internal controls do not adequately protect taxpayer
dollars from being overspent or abused.  SSA's underlying culture has
been most evident as it relates to three long-standing problem areas
affecting SSI program performance:  (1) inadequate attention to
verifying initial and continuing SSI eligibility, (2) lack of
priority on recovering SSI overpayments, and (3) insufficient
attention to addressing program fraud and abuse. 


--------------------
\7 Social Security Administration:  Stable Leadership and Better
Management Needed to Improve Effectiveness (GAO/HRD-87-39, Mar.  18,
1987). 


   INATTENTION TO VERIFYING
   RECIPIENTS' INITIAL AND
   CONTINUING SSI ELIGIBILITY HAS
   AFFECTED PROGRAM INTEGRITY
---------------------------------------------------------- Chapter 2:1

When determining SSI eligibility, SSA relies heavily on applicants
and recipients to self-report important information relating to their
financial status and disabling condition.  Although SSA has
procedures in place to verify this information, they are often
untimely, incomplete, and subservient to the primary agency goal of
quickly processing and paying claims.  Data provided to us by SSA's
quality reviewers confirmed that the current system of self-reporting
and inadequate verification of this information has been costly to
the program.  According to SSA, 77 percent of all payment errors
resulting in overpayments between fiscal year 1991 and 1995 were
attributable to recipients' noncompliance with reporting
requirements.  And statistics show that once an SSI overpayment
occurs, SSA's success at recovering the overpayment is limited. 
Thus, effective initial and posteligibility verification policies are
essential to avoiding or mitigating potential overpayment
situations.\8

Our prior work suggests that recipients do not always report required
information when they should, and may not report it at all.  For
example, in 1996, we reported that about 3,000 current and former
prisoners in 13 county and local jails had been erroneously paid $5
million in SSI benefits, mainly because recipients or their
representative payees did not report the incarceration to SSA as
required, and SSA had not arranged for localities to report such
information.\9 In a report issued last year on SSI recipients
admitted to nursing homes, we found that despite legislation
requiring recipients and facilities to report such admissions,
thousands of SSI recipients residing in nursing homes continued to
receive full SSI benefits.\10 These erroneous payments occurred
because recipients and nursing homes did not report this information
and SSA lacked timely and complete automated admissions data.  We
also found that some offices placed a much lower priority on
investigating nursing home admissions information than on work
responsibilities that are monitored by SSA management, such as
processing claims.  SSA has estimated that overpayments to recipients
in nursing homes may exceed $100 million annually. 

To verify that recipient financial information is correct, SSA
generally relies on computer matching of data from other federal and
state agencies, such as the Internal Revenue Service, the Department
of Veterans Affairs, and state-maintained monthly earnings and
unemployment benefits data.  In many instances, these matches allow
SSA to detect information recipients fail to report.  However, SSA's
data matches are not always the most effective means of verifying
recipient financial status because the information is often quite old
and sometimes incomplete.  In 1996, we estimated that direct on-line
connections (as opposed to computer matches) between SSA's computers
and databases maintained by state agencies-welfare benefits,
unemployment insurance, and workers' compensation benefits could have
prevented or more quickly detected $34 million in SSI overpayments in
one 12-month period.\11

In March 1998, we reported that SSA's computer matches for earned
income rely on state data that are from 6 to 21 months old, allowing
overpayments to accrue for this entire period before collection
actions can begin.  We concluded that newly available Office of Child
Support Enforcement (OCSE) databases maintained by SSA could prevent
or more quickly detect about $300 million in annual SSI overpayments
caused by unreported recipient income.\12 These databases include
more timely state-reported information on newly hired employees, as
well as the quarterly earnings reported for these individuals.  In
the same report, we also concluded that opportunities existed for SSA
to prevent almost $270 million in overpayments by obtaining more
timely financial account information on SSI beneficiaries.  This
could be accomplished if SSA moves to obtain access to a nationwide
network that currently links all financial institutions.  Such
information would help ensure that individuals whose bank accounts
would make them ineligible for SSI do not gain eligibility.  On
average, SSA collects only about 15 percent of outstanding SSI
overpayments.  Thus, it is paramount that SSA move forward in
obtaining and utilizing more timely and complete recipient financial
information to prevent overpayments from occurring.  By doing so, SSA
may reduce the likelihood of having to go through the often difficult
and unsuccessful process of trying to recover overpaid SSI benefits. 

Our recent work confirmed that recipient self-reporting and SSA's
ineffectiveness at verifying this information remain a major SSI
program weakness.  During our visits to field offices, nearly 80
percent of staff and managers interviewed noted that recipient
nonreporting remains a serious problem in the SSI program.  In
discussing how SSA could encourage individuals to better report
important eligibility information, many staff believed SSA should
require recipients to furnish additional documentation on their
financial status, promote more frequent use of penalty provisions,
and acquire more authority to suspend payments to those who
chronically fail to report essential information.  Staff and managers
were particularly concerned that SSA had not addressed long-standing
living arrangement verification problems, despite many years of SSA
quality reviews denoting this as an area prone to error and abuse. 

To determine SSI eligibility and benefit amounts, SSA staff apply a
complex set of policies to document an individual's living
arrangements and any additional support they may be receiving from
others.  This process depends heavily on self-reporting by recipients
of whether they live alone or with others; the relationships
involved; the extent to which rents, food, utilities, and other
household expenditures are shared; and exactly what portion of those
expenses the individual pays.  In one field office we visited, staff
identified a pattern of activity involving recipients who, shortly
after becoming eligible for SSI benefits, claim that they have
separated from their spouse and are living in separate residences. 
Staff suspected that these reported changes occurred as married
recipients became aware that separate living arrangements would
substantially increase their monthly SSI benefits.  They also
suspected that several local attorneys were preparing "boiler plate"
separation agreements to help these individuals qualify for higher
benefits.  However, because of a lack of field representatives
necessary to investigate these claims, only rarely were these cases
closely reviewed or challenged. 

Finally, in addition to inadequate verification of recipients'
financial eligibility, SSA has historically placed little priority on
determining whether SSI recipients continue to remain medically
eligible for benefits.  To determine medical eligibility, SSA must
conduct continuing disability reviews (CDR).  SSA recently estimated
that conducting SSI CDRs on the 1.9 million recipients due or overdue
for a CDR would remove from the rolls about 5 percent of those
individuals.  On the basis of this information, we estimated that
these recipients would have received $481 million in federal SSI
benefits.\13 However, since the program's inception, SSA conducted
relatively few SSI CDRs until it was first mandated to do so by the
Congress in 1994.  This legislation required SSA to review one-third
of the beneficiaries who reached age 18 and at least 100,000
additional beneficiaries annually for fiscal years 1996 to 1998.\14

Subsequent legislation passed in 1996 required SSA to conduct
additional CDRs for children who were likely to improve and low birth
weight infants in their first year of life, as well as
redeterminations for all SSI children beginning on their 18th
birthday.\15 SSA estimates that about 600,000 cases will be added to
its CDR workloads between fiscal years 1998 and 2000 to meet these
requirements.  Agency management has attributed its past failure to
conduct SSI CDRs to resource constraints and no legal requirement to
do so.  SSA's inaction likely resulted in continuing benefit payments
to ineligible recipients and hundreds of millions of dollars in
unwarranted program costs since the program began.  However, SSA
recently reported that during fiscal year 1997, it processed over
690,000 CDRs, a 38-percent increase over 1996.  The agency expects to
process 1.2 million CDRs in fiscal year 1998. 

In a briefing with SSA management, we conveyed our finding that the
eligibility verification aspects of the SSI program have not been
adequately emphasized.  SSA's Acting Principal Deputy Commissioner
acknowledged that because of the rapidly rising workloads of prior
years, SSA decided to emphasize and prioritize the expedient
processing and payment of SSI claims rather than delay final
decisions by requiring more thorough verification steps and risk
hurting some recipients.  More recently, however, SSA has begun to
take more decisive action to protect the financial integrity of the
SSI program.  For example, SSA has started a program to identify SSI
recipients in jail who should no longer receive benefits and is
expanding its use of on-line state data to obtain more real-time
applicant and recipient information.  In accordance with our
recommendation, SSA also plans to give field offices on-line access
to OCSE wage data, new-hire data, and unemployment insurance data
beginning in March 1999.  This should allow field staff to better
prevent SSI overpayments by identifying undisclosed earnings at the
time of application.  SSA's fiscal year 1999 budget also asks for an
additional $50 million to complete financial redeterminations for
individuals who have been designated by SSA as having a high
probability of being overpaid.\16 SSA also told us that it is
continuing to study SSI living arrangement policies and may
ultimately consider proposing legislative changes to reduce the
complexity of the verification process and protect program dollars
from being overpaid to recipients.  Finally, in its current strategic
plan, SSA acknowledges that the needs of applicants and recipients
have been the nearly singular focus of past strategic and business
plans.  The plan now calls for a better balance between SSA's
traditional approach to its programs and the need to control program
costs. 

Despite SSA's planned and ongoing efforts, we continue to be
concerned that, in many areas, progress has been limited.  For
example, SSA's negotiations with states to obtain expanded on-line
access to their databases are moving slowly, and the agency still
does not adequately use on-line access as an overpayment detection
and prevention tool.  In regard to SSI recipients residing in nursing
homes, SSA plans to use a newly developed Health Care Financing
Administration system to more effectively capture information on
admissions to these and other facilities.  However, we reported last
year that automated nursing home data were already available in all
state medicaid agencies and could have been used by SSA in the
interim to identify SSI recipients living in nursing homes within 1
to 3 months of admission.\17 SSA's failure to use this information
while waiting for the implementation of an alternative system has
left the SSI program open to continued abuse and millions of dollars
in potential overpayments.  Finally, despite SSA's plans to continue
to study SSI living arrangement policies and problems, this costly
program vulnerability remains unaddressed more than two decades after
implementation of the program. 


--------------------
\8 SSI overpayments include payments to individuals ineligible for
the program as well as to those receiving higher benefit payments
than their income and assets warrant. 

\9 Supplemental Security Income:  SSA Efforts Fall Short in
Correcting Erroneous Payments to Prisoners (GAO/HEHS-96-152, Aug. 
30, 1996). 

\10 Supplemental Security Income:  Timely Data Could Prevent Millions
in Overpayments to Nursing Home Residents (GAO/HEHS-97-62, June 3,
1997). 

\11 Supplemental Security Income:  Administrative and Program Savings
Possible by Directly Accessing State Data (GAO/HEHS-96-163, Aug.  29,
1996). 

\12 Supplemental Security Income:  Opportunities Exist for Improving
Payment Accuracy (GAO/HEHS-98-75, Mar.  27, 1998). 

\13 Supplemental Security Income:  SSA Is Taking Steps to Review
Recipients' Disability Status (GAO/HEHS-97-17, Oct.  30, 1996). 

\14 Social Security Independence and Program Improvements Act of
1994. 

\15 Personal Responsibility and Work Opportunity Reconciliation Act
of 1996. 

\16 These redeterminations would be for nondisability factors of SSI
eligibility. 

\17 GAO/HEHS-97-62, June 3, 1997. 


   SSI OVERPAYMENT RECOVERIES HAVE
   RECEIVED INADEQUATE AGENCY
   ATTENTION
---------------------------------------------------------- Chapter 2:2

In addition to problems associated with SSA's verification of
important SSI eligibility information, SSA has not aggressively
pursued the recovery of overpayments.  Thus, over time, SSA's
recovery efforts have been outpaced by outstanding SSI debt, which is
becoming an increasingly larger portion of all debt owed to the
agency.  Between 1989 and 1997, outstanding SSI debt and annual
overpayments more than doubled to about $2.6 billion.  Although
overpayment recoveries also increased each year during this period,
the gap between what is owed SSA and what is actually collected each
year has continued to widen. 


      INSUFFICIENT USE OF DEBT
      COLLECTION TOOLS
-------------------------------------------------------- Chapter 2:2.1

One reason overpayment recoveries remain low is that SSA has not
adequately used the SSI overpayment recovery tools currently
available to it.  For example, SSA only this year began using the tax
refund offset (TRO) to recover SSI overpayments from former SSI
recipients, despite having had the authority to do so since 1984. 
The TRO has proven effective in another welfare program--Food
Stamps--for collecting delinquent debt.  In explaining why SSA did
not act sooner to implement the TRO, agency officials told us that
because the targeted population was generally poor, the expected
recovery amounts--estimated at about $6 million for fiscal year
1998--were relatively small compared with the total debt owed SSA. 
However, an official responsible for overseeing this initiative
conceded that SSA has historically experienced little success
recovering overpayments from former SSI recipients and, regardless of
its dollar impact, the TRO represented one of the few tools available
to SSA for increasing recoveries for this population.  He also agreed
that sustained use of the TRO could deter recipients from
misreporting eligibility information to SSA in the future.  So far
this year, the TRO has far exceeded SSA's overpayment recovery
estimates.  In fact, SSA recently testified that, in the first 4
months of 1998, it had collected more than $23 million. 

Another reason SSI overpayment debt has increased is that SSA does
not have, and has not adequately pursued authority to use more
aggressive debt collection tools, including the ability to
administratively intercept other federal payments recipients may
receive, notify credit bureaus of an individuals' indebtedness, use
private collection agencies, and charge interest on outstanding SSI
debt.  At present, SSA lacks statutory authority to use these tools
to recover SSI overpayments.  In 1995, we reported that welfare
programs that used a broad range of collection tools, such as those
listed, experienced better rates of overpayment recovery than
programs that did not.\18 In a recent testimony, SSA management also
acknowledged that such tools are valuable in recovering program
overpayments from individuals who have left the SSI rolls.  Following
a number of GAO briefings over the last year, and a recent testimony
in which we noted SSA's continued reluctance to pursue more
aggressive debt collection tools,\19 SSA announced that it is now
seeking authority to recover overpayments of title II benefits made
to former SSI recipients, as well as use credit bureaus, collection
agencies, interest levies, and so forth to strengthen its collection
efforts. 

To recover overpayments from current SSI beneficiaries, SSA relies
primarily on withholding monthly SSI benefit payments.  Before 1984,
SSA could withhold up to 100 percent of an overpaid individual's
benefit amount.  However, pursuant to the Deficit Reduction Act of
1984 (P.L.  98-369), SSA was limited to offsetting a maximum of 10
percent of a recipients' total monthly income, which includes SSI
payments.  Thus, SSA lost the discretion to withhold larger amounts,
even for individuals who willfully and/or continually fail to report
essential information.  SSA also lost a valuable means of encouraging
timely recipient reporting of information.  In discussing the
barriers to increased overpayment collections, headquarters officials
told us that the 10-percent withholding ceiling has affected SSI
collection efforts.  However, SSA has not sought a change in this
cap, even for individuals who chronically fail to report important
eligibility information or abuse the program. 

SSA also is not adequately utilizing overpayment penalties as a means
of ensuring that recipients comply with reporting policies.  Field
office personnel may impose penalties on recipients who fail to
submit timely reports of events that affect their eligibility for, or
the amount of, SSI payments.  Overpayment penalties range from $25 to
$100.  SSA's own reviews have noted that overpayment penalties, if
enforced by SSA, could serve as a deterrent to untimely recipient
reporting.  However, the agency found that penalty provisions were
almost universally ignored by field offices.  In a sample review,
analysts concluded that no penalty was considered in about 50 percent
of overpayment cases in which the individual had a history of failure
to make timely reports of earnings or living arrangements, or both. 

During our visit to field offices, almost 80 percent of staff and
managers interviewed told us that penalties are still rarely used in
the field to encourage recipients to better report essential
eligibility information.  When asked why penalties were rarely used,
staff commonly complained that SSA management did not encourage their
use.  Many others said that current penalty policies were unclear and
too labor intensive to implement, and that dollar amounts were too
low to change recipient behavior.  Our analysis of data from all 10
of SSA's regions confirmed that penalties are still rarely levied. 
In one 12-month period, SSA detected about $1.2 billion in erroneous
payments.  However, less than $80,000 in penalties was assessed by
SSA, and only about $8,000 was actually collected.  These infrequent
penalty assessments are a concern, considering that SSA's own reviews
have found that, on average, 77 percent of all overpayments are
attributable to recipient noncompliance with reporting requirements. 


--------------------
\18 Welfare Benefits:  Potential to Recover Hundreds of Millions More
in Overpayments (GAO/HEHS-95-111, June 20, 1995). 

\19 Supplemental Security Income:  Organizational Culture and
Management Inattention Place Program at Continued Risk
(GAO/T-HEHS-98-146, Apr.  21, 1998). 


      UNRECOVERED SSI DEBT IS
      MOUNTING
-------------------------------------------------------- Chapter 2:2.2

Efforts to improve overpayment debt recoveries are particularly
important because the gap between what is collected and what is owed
the program is continuing to grow (see fig.  2.1).  SSA's data show
that in fiscal year 1989, outstanding SSI debt and newly detected
overpayments totaled $792 million.  During that year, SSA recovered
about $165 million.  By fiscal year 1997, outstanding SSI debt and
new overpayment detections grew to about $2.6 billion.  Of the total
amount, SSI recovered $437 million.  Although annual overpayment
recoveries have increased steadily, the amount of outstanding SSI
debt has consistently outpaced SSA's collection efforts. 
Furthermore, as overpayment debt has grown, the amounts written off
by SSA each year have also increased.  Write-offs include overpayment
waivers and debt deemed uncollectible by SSA.  Policies governing the
issuance of waivers take into account whether the recipient or SSA
was at fault in creating the overpayment and the dollar amounts
involved.  In addition to waivers, SSA may deem some debts
uncollectible for numerous reasons, including the inability to locate
an individual for a prolonged period.  Since 1989, SSI write-offs
have totaled more than $1.8 billion.  This number includes $562
million written off in 1997 alone (see fig.  2.2).  According to SSA,
the 1997 write-offs included about $345 million in debt that had been
carried on SSA's books for years and was determined to be not
cost-effective to pursue.  Regardless of the reason, these write-offs
represent overpaid program benefit dollars that will likely never be
recovered.  More importantly, when these accumulated write-offs are
added to the outstanding SSI debt after collections for 1997, the
actual amount of unrecovered SSI debt since 1989 exceeds $3.4
billion. 

   Figure 2.1:  Gap Between SSI
   Overpayments and Recoveries
   Continues to Widen, Fiscal
   Years 1989-97

   (See figure in printed
   edition.)

Source:  SSA's Office of Finance, Assessment, and Management. 

   Figure 2.2:  Write-Offs of SSI
   Overpayment Debt Have
   Increased, Fiscal Years 1989-97

   (See figure in printed
   edition.)

Source:  SSA's Office of Finance, Assessment, and Management. 


   DESPITE RECENT AGENCY ACTIONS,
   SSI PROGRAM REMAINS VULNERABLE
   TO FRAUD AND ABUSE
---------------------------------------------------------- Chapter 2:3

The SSI program remains vulnerable to abuse, despite agency
initiatives to address it.  Shortly after SSA began administering SSI
in 1974, a study group was commissioned to evaluate the program and
recommend changes to improve effectiveness and fiscal accountability. 
The study group noted that a well-designed program with built-in
integrity safeguards would hold opportunities and occurrences of
fraud to a minimum.  However, they ultimately concluded that the SSI
program was originally implemented without adequate attention to
program integrity considerations and suffered from serious
shortcomings in the areas of fraud detection, prevention, and
prosecution.  Over the ensuing years, reports of program fraud and
abuse have often centered on recipients' failure to report their
financial status, the faking of disabilities, and fraudulent
residence reporting. 

For example, we reported in 1995, that "middlemen" were facilitating
fraudulent SSI claims while providing translation services to
non-English-speaking individuals applying for SSI.\20 These
individuals often coached claimants on appearing to be mentally
disabled, used dishonest health care providers to submit false
medical evidence to SSA, and provided false information on claimants'
medical and family history.  The following year, we reported that
between 1990 and 1994, approximately 3,500 SSI recipients admitted
transferring ownership of resources such as cars, cash, houses, land,
and other items valued at an estimated $74 million in order to
qualify for benefits.\21 This number represents only resource
transfers that recipients actually reported to SSA.  The SSI program
is designed to help individuals who have limited resources meet basic
needs.  Although these transfers are not prohibited under current
law, using them to qualify for SSI benefits has become an abusive
practice that raises serious questions about SSA's ability to protect
taxpayer dollars from waste and abuse.  We estimated that for the
cases mentioned, eliminating asset transfers would have saved $14.6
million in program expenditures.  The Congressional Budget Office
(CBO) has estimated that more than $20 million in additional savings
could be realized through 2002 by implementing an asset transfer
restriction. 

Although SSI represents less than 8 percent of SSA's total program
expenditures, the prevalence of fraud in the program is significant. 
In 1997, SSA's OIG noted that the income and resource requirements
associated with determining SSI eligibility created additional
opportunities for fraud and abuse.  The OIG generally receives
allegations of fraud directly from the general public, the Congress,
other government agencies, SSA personnel, and through its hot line,
which began operation in November 1996.  Through mid-July 1997, the
hot line received 12,680 allegations of fraud.  When compared with
SSA's other programs--OASI and DI--SSI fraud represented about 37
percent of all allegations received and about 24 percent of the fraud
convictions obtained. 

Since becoming an independent agency in 1995, SSA has begun to take
more decisive action to address SSI program fraud and abuse.  For
example, the number of OIG investigators has nearly tripled from 76
to 227 headquarters and field agents, and in 1997, combatting fraud
and abuse became a key agency goal.  Last year, SSA also created
national and regional anti-fraud committees to better identify,
track, and investigate patterns of fraudulent activity.  In addition,
several OIG pilot investigations are also under way that are aimed at
detecting fraud and abuse earlier in the SSI application process. 
One such pilot involves the creation of special units located in DDS
offices in several states.  As a preventive measure, these units
review disability applications, document evidence of fraudulent
transactions and identify pervasive patterns of fraud.  According to
SSA, this new emphasis on early prevention represents a major shift
away from how the agency has traditionally dealt with fraud and
abuse.  SSA also recently established procedures to levy civil
monetary penalties against recipients and others who make false
statements to obtain SSI benefits.  Following our briefings with
SSA's Deputy Commissioner and our two testimonies over the last year
that identified asset transfers as an area subject to abuse by
recipients, SSA also recently submitted a proposal to the Congress
aimed at preventing individuals from transferring assets in order to
qualify for SSI benefits.\22 Finally, in its new annual performance
plan, SSA has made a commitment to complete a comprehensive action
plan to improve the management of the SSI program during fiscal year
1998.  This step links to SSA's strategic goal of making its programs
the "best in the business, with zero tolerance for fraud and abuse."

It is too early to tell what immediate and long-term effects SSA's
activities will have on preventing fraud and abuse in the SSI
program.  However, many years of inadequate attention to program
integrity issues has fostered a strong skepticism among both
headquarters and field staff that fraud prevention is an agency
priority.  In fact, SSA's own studies show that many staff believe
the OIG does not adequately investigate fraud referrals or provide
adequate feedback on the status of investigations.  Other staff noted
that constant agency pressure to process more claims impeded the
thorough verification of recipient-reported information and the
development of fraud referrals.  SSA also found that staff were
concerned that the agency had not developed office work-credit
measures, rewards, and other incentives to encourage staff to devote
more time to developing fraud cases--a process that often takes many
hours.  SSA's Field Office Work Measurement System is used by
management to determine what employees are working on, the volume of
work completed, and how much time staff spend on particular
activities.  SSA assigns numerical values to certain tasks, such as
processing disability claims, that are based on the average time it
takes to accomplish them.  For example, for an initial SSI claim for
an aged person SSA determined that it should take about 3.24 hours. 
Any additional time spent verifying information or investigating
suspected fraud for this claim would not receive credit.  SSA
ultimately uses these data to estimate resource needs, assess
component productivity, and justify budget and staffing levels. 

Our review of SSA's office work-credit system confirmed that adequate
measures of the activities and time necessary to develop fraud
referrals have not been developed.  Nor has SSA developed a means of
capturing fraud activity data or recognizing staff for additional
time spent developing fraud cases.  This weakness in the current
work-credit system was noted by a speaker at SSA's annual Anti-Fraud
Conference.  In a speech advocating a better balance between customer
service and protecting the public trust, this field office manager
voiced concern that staff have been sent the message that "timeliness
and volume are the top priorities." As a result, few staff may be
willing to devote significant time to more thorough claims
verification because they fear production--cases processed and
paid--will be negatively affected.  Thus, SSA's new anti-fraud
activities and its current work-credit system may be working against
each other. 


--------------------
\20 Supplemental Security Income:  Disability Program Vulnerable to
Applicant Fraud When Middlemen Are Used (GAO/HEHS-95-116, Aug.  31,
1995). 

\21 Supplemental Security Income:  Some Recipients Transfer Valuable
Resources to Qualify for Benefits (GAO/HEHS-96-79, Apr.  30, 1996). 

\22 This draft bill is entitled the Supplemental Security Income
Program Integrity Act of 1998 and was submitted to the Congress on
May 4, 1998. 


SSA'S MANAGEMENT APPROACH HAS
HINDERED ADEQUATE PROGRAM
DIRECTION
============================================================ Chapter 3

In addition to long-standing problems attributable to SSA's
organizational culture, our work suggests that SSA's management of
the program has often led to untimely and flawed SSI program policies
and inadequate program direction.  Proactive program management
requires a willingness on the part of an agency to identify and
decisively address problems before they reach crisis levels.  Where
internal operational remedies are insufficient to address a
particular program weakness, the agency should then suggest and
sponsor legislative proposals for addressing underlying policy
weaknesses.  Proactive management also requires a willingness to
identify short- and long-term program priorities and goals and to
develop a clearly defined plan for meeting those goals.  But SSI
program direction and problem resolution have been hindered by SSA's
continued reluctance to take a leadership role in SSI policy
development before major program crises occur and the subsequent
tendency to react to these crises through a series of often ad hoc
and piecemeal initiatives.  Program direction has been further
impaired by a strategic planning process that has not sufficiently
focused on the specific characteristics and needs of the SSI program
and its recipients. 


   INSUFFICIENT AGENCY INVOLVEMENT
   IN SSI POLICY DEVELOPMENT
---------------------------------------------------------- Chapter 3:1

As the nation's SSI program expert, SSA is uniquely positioned to
assess the program impacts of trends in the SSI population.  It is
also in the best position to initiate internal policy "fixes" to
address specific problems.  If internal revisions would not be
effective, SSA is best qualified to identify areas where new
legislation is needed to address program weaknesses and to assist
policymakers in exploring and developing legislative options for
change.  However, SSA has not been sufficiently aggressive in this
regard.  Instead, SSA's approach to policy development has often been
reactive in nature, resulting in several missed opportunities to
address flawed operational policies and to play a key role with
policymakers in addressing critical issues affecting SSI program
performance and integrity.  Recent examples of SSA's management
approach include its reluctance to develop policy options to address
problems associated with assessing the SSI eligibility of children
and substance abusers, helping SSI recipients enter the workforce,
and determining recipient living arrangements.  SSA management has
acknowledged the need to take a more proactive policy development
role, and in the last few years has initiated several reorganizations
of its policy component to strengthen its capacity.  In fact, SSA is
currently restructuring its research and policy component in a way
that it believes will facilitate a stronger focus on SSI program
vulnerabilities and address our concerns in this area.  In 1997, SSA
also made conducting effective policy development, research, and
program evaluation a key goal of its strategic plan.  However, SSA
only recently developed and submitted its first significant package
of SSI policy proposals--draft legislation entitled the "Supplemental
Security Income Integrity Act of 1998"--to the Congress. 

In 1984, a Congressional Panel on Social Security noted that it was
SSA's responsibility to contribute to policy-making with advice,
information, expert analysis, and the kind of judgment that results
from the experience of program operations.  However, the panel
concluded that SSA's policy-making had often taken place in an
atmosphere of crisis and improvisation rather than as part of a
comprehensive strategy for addressing SSA's major program challenges. 
In 1995, we also criticized SSA for not taking a more active role in
analyzing and suggesting policy options for its programs.\23 More
specifically, in monitoring SSA's transition from a component of the
Department of Health and Human Services to a separate and independent
agency, we noted that SSA needed to take a more active role in
addressing its major program challenges, including those related to
its SSI caseloads.  In 1997, SSA's Advisory Board issued a report
with similar conclusions.  The board noted that SSA should take a
leadership role in the initiation of major policy changes rather than
continue its pattern of reacting to short-term crises.  The board
also found that SSA has had an overly cautious attitude toward
initiating the analysis of controversial policy issues.  Their report
concluded that improving program leadership would require SSA to
revise its long-standing tendency to focus on operational issues and
paying benefits to recipients at the expense of much needed program
policy and research activities. 

As discussed in chapter 1, between 1984 and 1991, legislative changes
and a major court decision greatly expanded the SSI eligibility
criteria for children.  Rapid growth in the number of children
receiving SSI disability payments, questions about SSA's ability to
adjudicate claims consistently, and allegations that some parents
were coaching their children to fake mental impairments to qualify
for benefits, elevated public and congressional concern that the
program was being abused.  In 1996, the Congress passed welfare
reform legislation, which tightened SSI eligibility for children and
restricted eligibility to those with the most severe impairments.  In
this example, SSA possessed several years of program data documenting
explosive growth in childhood disability caseloads, changes in the
types of impairments qualifying for benefits, and the impacts of
legislative and court-mandated program changes.  However, the agency
failed to take a leadership role in developing and communicating this
information to policymakers.  Nor did SSA develop formal proposals
for addressing identified weaknesses in the childhood eligibility
criteria, despite the fact that SSA had information that eligibility
guidelines--in particular, the IFA--for determining the severity of
childhood mental and behavioral impairments, were difficult to
interpret, unclear, and too subjective.  At a much earlier time, this
information could have been shared with the Congress for its
consideration in reassessing whether SSI was meeting the needs of the
most severely disabled children. 

SSA's reluctance to take a more proactive policy development role was
also evident in regard to the recent debate surrounding SSI
eligibility for drug addicts and alcoholics (DA&A).  In prior work,
we reported that DA&A caseloads had increased more than 150 percent
between 1989 and 1994.  We also raised serious questions about SSA's
payment controls and its ability to prevent recipients from
purchasing drugs and alcohol with SSI benefit payments.  Despite
congressional concern and growing media criticism surrounding this
issue, SSA did not take aggressive action to revise operational
polices that were subject to abuse by recipients, or suggest
legislative options for change.  SSA also failed to develop adequate
data on the reasons for growth in the DA&A caseloads, the number of
substance abusers actually in treatment, and the percentage of
individuals who had left the rolls as a result of treatment and
rehabilitation.  More importantly, however, SSA did not adequately
share the information it did have with the Congress to assist it in
addressing identified problems.  Thus, program abuses continued
longer than they should have and the Congress ultimately acted on its
own to tighten the eligibility criteria in this area. 

Our work has also shown that SSA has not provided adequate leadership
in regard to helping recipients return to work and promoting economic
independence.  Thus, few recipients leave the SSI rolls.  In several
reports and testimonies issued over the last several years, we have
faulted SSA's administration of SSI work incentives,\24 and
documented the need for a comprehensive return-to-work strategy that
includes earlier intervention, return-to-work assistance, and changes
in the structure of cash and health benefits to encourage work.\25 We
have also documented SSA's reluctance to play a leadership role in
devising a return-to-work plan.  SSA management told us that it is
only one player among many in the complex VR process, and that it
does not have the ability to develop a comprehensive strategy on its
own.  However, in its strategic plan, SSA has now pledged to pursue
the objective of helping people return to work.  As a first step, SSA
has developed a proposal, currently under consideration by the
Congress, that would expand recipients' choices of VR providers.  In
this instance, recipients would receive a "ticket" (similar to a
voucher), which they could use to obtain services from public or
private VR providers of their choice.  Although all pertinent players
should be involved in formulating a comprehensive VR strategy, we
continue to believe SSA has the fiduciary responsibility and is the
appropriate agency to take the lead in ensuring that returning to
work receives much greater emphasis. 

A final example of SSA's reluctance to address important program
policy issues involves the policies and procedures SSA uses to
determine recipient living arrangements and in-kind support and
maintenance.  As discussed previously, when determining living
arrangements, claims processors are required to apply a complex set
of policies designed to document an individual's living situation and
any additional support they may be receiving from others.  These
numerous rules and polices have made living arrangement
determinations one of the most complex and error-prone aspects of the
SSI program, and a major source of SSI overpayments.  During our
review, staff and managers told us that living arrangement policies
needed reassessment and change.  SSA quality reviewers have also
consistently identified living arrangement calculations as a major
source of benefit payment errors.  During our review, we identified
several internal and external studies of SSI living arrangement
issues conducted over many years.  Some of these studies recommended
ways to simplify the process by eliminating many complex calculations
and thereby making it less susceptible to manipulation by recipients. 
Others contained recommendations for making the SSI program less
costly to taxpayers by requiring that benefit calculations be subject
to maximum family caps or economies of scale or both when two or more
recipients reside in the same household.  In 1989, SSA's OIG reported
that a more simplified process that applied an economies-of-scale
rationale to all SSI recipients living with another person would
result in fewer decision errors and reduce annual overpayments by
almost $80 million.  The OIG also concluded that such a change would
require legislative action.  Despite these studies, and the potential
cost savings associated with addressing this issue, we could find no
evidence that SSA has ever acted on the recommendations or submitted
proposals for changing laws governing living arrangement policies. 


--------------------
\23 Social Security Administration:  Leadership Challenges Accompany
Transition to an Independent Agency (GAO/HEHS-95-59, Feb.  15, 1995). 

\24 PASS Program:  SSA Work Incentive for Disabled Beneficiaries
Poorly Managed (GAO/HEHS-96-51, Feb.  28, 1996).  SSA's plan for
achieving self-support (PASS) program allows SSI recipients to
exclude income and resources from benefit calculations that otherwise
would result in a reduction in SSI benefits, as long as the assets
are used to pay expenses associated with reaching employment goals. 

\25 Social Security:  Disability Programs Lag in Promoting Return to
Work (GAO/HEHS-97-46, Mar.  17, 1997) and Social Security Disability: 
Improving Return-to-Work Outcomes Important, but Trade-Offs and
Challenges Exist (GAO/T-HEHS-97-186, July 23, 1997). 


   AGENCY PLANNING EFFORTS DO NOT
   PROVIDE ADEQUATE SSI PROGRAM
   DIRECTION
---------------------------------------------------------- Chapter 3:2

Our work has shown that SSI program direction has suffered as a
result of SSA's failure to develop program-specific goals,
priorities, and associated plans for addressing program weaknesses. 
In this report, we have discussed a number of long-standing problems
that the SSI program continues to experience.  The continuation of
these problems demonstrates SSA's inability to focus agency attention
on its most significant program challenges and ensure that corrective
actions are carried out and sustained over time.  To a significant
degree, this may be due to SSA's strategic planning efforts, which
generally involve agencywide goals and concerns, with no programmatic
focus.  Thus, SSA still lacks a plan that lays out the SSI program
areas most in need of attention in order to ensure effective service
to the public and control program expenditures, both of which are
critical to the Congress, oversight entities, and SSA's employees. 
Typically, organizations rely on their planning processes to document
long- and short-term programmatic priorities.  The planning process
also facilitates organizational agreement as to where efforts will be
focused, what resources (both personnel and budgetary) will be
devoted to initiatives, what the time frames for action will be, and
how managers will be held accountable for meeting the stated
objectives of each effort.  If the planning process fails to provide
adequate management direction for a program, the organization tends
to take ad hoc measures to address program problems when they become
critical. 

In 1987, we noted that because of SSA's passivity in the area of
program planning, it (1) lacked a top management focus on surfacing
important program and operational issues, (2) was largely reactive to
external pressure from the Congress and the courts to improve its
programs, and (3) often addressed program challenges in an
uncoordinated or inefficient manner.  SSA developed its first
agencywide strategic plan in 1988 and then significantly revised it
in 1991.  As required by the Results Act, SSA developed and submitted
its current strategic plan in 1997.  This plan outlines SSA's
strategic goals and objectives for the next 5 years.  As also
required by the Results Act, SSA recently published its fiscal year
1999 performance plan.  This plan provides more detailed information
on how SSA intends to achieve its goals and the measures it will use
to hold itself accountable over the next year.  Together, these two
documents chart SSA's future course. 

In reviewing SSA's strategic and performance plans, we found that the
manner in which SSA has framed them may undermine SSA's ability to
address its most significant program vulnerabilities.  In particular,
SSA's plans still do not adequately address the specific needs and
problems of the SSI program, as well as the unique characteristics of
its recipient population.  Instead, SSA's approach to planning has
remained at the agencywide level, resulting in general goals and
objectives, for SSA's three major programs.  Although macro-level
goals and objectives are essential to SSA's operations, the absence
of an SSI-specific strategy and the fact that few goals, initiatives,
and performance measures are targeted to the program have impeded the
establishment of clear program-specific priorities.  For example, we
designated SSI a high-risk program primarily because of the magnitude
of SSI overpayments.  Despite noting that SSA faces considerable SSI
program challenges, the current strategic plan and annual performance
plan contain few specifics as to how SSA intends to reduce the more
than $1 billion in overpayments the program incurs annually. 

Furthermore, despite SSA's acknowledgement that SSI overpayments are
difficult to recover and are becoming an increasingly greater portion
of outstanding debt owed to the agency, SSA's plans do not include
future SSI overpayment recovery targets or other measures to gauge
whether debt collection rates are increasing or decreasing for this
program.  Instead, SSA's current plans call for increasing debt
collection agencywide by a total of 7 percent annually through 2002. 
Using this aggregate measure, however, could mask a worsening in
future SSI debt collection levels if they were offset by slightly
increased debt collections in the much larger OASI program. 
Consequently, SSA could meet its goal of increasing debt collection
agencywide without establishing new initiatives to address SSI debt
collection or actually recovering more SSI overpayments.  In
addition, SSA has also acknowledged that the SSI program is highly
susceptible to fraud and abuse.  However, SSA's plans contain no
measures or goals specifically targeted to SSI fraud prevention and
detection, such as the number of SSI fraud referrals received, cases
developed, convictions obtained, or penalties levied.  Without these
elements, it may be difficult for SSA to determine the true extent of
fraud and abuse in the SSI program and the impact its new fraud
prevention initiatives will ultimately have on the program.  Although
agencies may appropriately choose to aggregate such data in order to
monitor agencywide progress, long-standing weaknesses in the SSI
program argue for more closely monitoring debt collection and
anti-fraud activities on a program-specific basis. 

Without a comprehensive strategy or plan for addressing specific SSI
program problems, it is uncertain whether SSA will focus adequately
on those areas that put SSI at the greatest risk or that corrective
actions will be sustained over time.  In its new annual performance
plan, SSA has committed to developing a comprehensive SSI action plan
in fiscal year 1998.  However, such a plan has not yet been
completed, so it is still unclear whether SSA will focus adequately
on its most significant SSI challenges.  In many areas, substantive
program improvement may depend on the degree to which SSA succeeds in
separately identifying SSI program needs, goals, and performance
measures from those of its other programs, and targeting its efforts
to the specific long-standing SSI problems discussed in this report. 


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

After more than 20 years of operation, the SSI program still faces
significant problems.  To a large extent, these long-standing
problems and SSA's inability to address them are attributable to an
ingrained organizational culture that has historically placed a
greater value on quickly processing and paying SSI claims than on
controlling program costs, and a management approach that has been
reluctant to address SSI program problems requiring long-term
solutions and/or legislative change.  Together, these two underlying
themes have allowed long-standing SSI program problems to continue
and have contributed to the growth in SSI overpayments and
outstanding debt. 

As noted in chapters 2 and 3, SSA has not always struck an adequate
balance between meeting the needs of program recipients and fiscal
accountability for its programs.  Often SSA's actions to address SSI
program weaknesses have been ad hoc and crisis-driven, rather than
part of a comprehensive strategy for improving program performance in
the long term.  Thus, for many years, billions of program dollars
have been erroneously paid to ineligible individuals, and SSA has not
always dealt proactively with its most pressing program problems.  In
its most recent strategic plan, SSA acknowledges the role of
management leadership in shaping SSA's programs and the need to
rebalance its program priorities in a way that improves
accountability.  Significantly revising SSA's underlying
organizational culture and management approach will likely take many
years of concerted effort at the highest levels of the agency. 
However, we believe such a change is important to restoring public
confidence in a program that provides critical assistance to so many
needy, aged, and disabled recipients. 

More specifically, to address the issue of SSA's underlying culture
and its effect on the financial health of the SSI program, sustained
emphasis should be placed on reassessing SSA's traditional program
priorities and better controlling program expenditures.  This will
require SSA to revise and strengthen its approach to verifying SSI
eligibility, deterring and recovering SSI overpayments, and
combatting program fraud and abuse.  At present, many of the
difficulties experienced by the SSI program are the result of more
than 20 years of inattention to payment controls and SSA management's
failure to make them a significant workload priority.  As a result,
financial verification and program integrity issues receive
inadequate emphasis, and continued abuse of the program by recipients
often goes unchallenged by field staff.  A significant step in
addressing SSA's prevailing culture is management's acknowledgement
in its strategic plan that a rebalancing of SSI program priorities is
overdue and in recent agency-sponsored proposals to address SSI
program integrity issues.  However, SSA's management must be willing
to direct change by providing sustained programmatic leadership,
enhancing its commitment to the verification aspects of claims
processing, implementing more stringent payment controls and debt
collection tools, holding staff and managers accountable for
protecting program funds, and finding better ways to reward those who
do so.  If successful, SSA's actions should serve to reduce SSI
overpayments, improve the financial integrity of the program, and
ultimately reshape SSA's prevailing culture and value system. 

Regarding SSA's management approach, our work shows that SSA needs to
demonstrate a greater willingness to identify and actively address
emerging issues, and to provide a longer-term vision for the SSI
program through its policy development and strategic planning
activities.  As the acknowledged expert on the SSI program, SSA
possesses myriad performance data and more than two decades of
experience serving this often changing population.  Thus, the agency
is in a unique position to lead and inform public debate on the range
of issues affecting program performance and to establish an
agencywide program vision.  SSA is also in the best position to offer
long-term policy solutions for its most significant management and
operational challenges before they reach crisis levels.  However, our
work suggests that SSA has not yet maximized its research and policy
development role, nor has it developed adequate SSI program plans to
serve as a blueprint for managing the program more strategically,
focusing long-term program priorities and defining specific program
goals. 

In implementing the Results Act, SSA recently committed to developing
an SSI action plan in fiscal year 1998.  To be effective, this plan
should include a carefully designed set of initiatives aimed at
addressing the long-standing problems affecting SSI program
performance as well as specific measures to evaluate progress and
hold the agency accountable.  Without such a plan, SSA risks
continuing the policies and procedures that have allowed SSI
overpayments to grow and perpetuating its often piecemeal approach to
addressing program problems.  It also may forgo a valuable
opportunity to communicate to its employees, the Congress, and other
oversight entities its commitment to operating a more efficient and
fiscally responsible program. 


   RECOMMENDATIONS TO THE
   COMMISSIONER OF SOCIAL SECURITY
---------------------------------------------------------- Chapter 4:1

Revising SSA's organizational culture will likely take several years
of sustained effort at the highest levels of the agency.  To
facilitate such a change, we recommend that the Commissioner of
Social Security take the following actions: 

  -- Enhance SSA's ability to verify applicant- and
     recipient-reported eligibility information and deter
     overpayments by accelerating efforts to identify more timely and
     complete sources for verifying SSI financial eligibility
     information. 

  -- Sustain efforts to obtain and implement additional SSI
     overpayment deterrence and debt collection tools commonly
     available to other means tested programs.  These include using
     credit bureau reporting, collection agencies, intercepts of
     other state and federal benefit payments, and interest levies to
     recover more SSI debt. 

  -- For recipients who chronically and willfully abuse SSI reporting
     requirements, seek legislative authority to withhold higher
     amounts than the current 10-percent maximum. 

  -- Reassess current policies for imposing penalties on recipients
     who do not report important eligibility information.  This may
     include examining whether current penalty usage is sufficient to
     deter recipient nonreporting and removing any external or
     agency-created obstacles to using penalties. 

  -- Reevaluate SSA's field office work-credit and incentive
     structure at all levels of the agency and make appropriate
     revisions to encourage better verification of recipient
     information and greater staff attention to fraud prevention and
     detection.  For improved accountability, line staff and middle
     management expectations, as well as senior executive contracts,
     should include specific requirements and performance measures in
     this area. 

To facilitate a change in SSA's management approach and improve SSI
program direction, we recommend that the Commissioner of Social
Security take the following actions: 

  -- Better utilize SSA's policy development component to address SSI
     program policies that, for many years, have placed the program
     at risk of fraud, waste, and mismanagement.  This would include,
     but not be limited to, the development and advancement of
     legislative proposals aimed at simplifying complex SSI living
     arrangement and in-kind support and maintenance policies and
     continuing SSA's sponsorship of legislation restricting the
     transfer of valuable assets and resources to qualify for SSI
     benefits. 

  -- Move forward in developing an SSI-focused strategy or plan with
     clearly defined priorities, goals, and performance measures to
     gauge SSA's progress in addressing its most significant SSI
     program challenges.  This document should be consistent with the
     Results Act and include specific initiatives, goals, and
     performance measures aimed at addressing long-standing SSI
     program problems and facilitating a change in SSA's
     organizational culture and management approach to the SSI
     program. 


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

In providing comments on this report, SSA agreed that the SSI program
faces significant challenges.  However, the agency disagreed with our
conclusion that it has historically placed a greater emphasis on
processing and paying SSI claims than on controlling program
expenditures.  SSA was also concerned that the draft report did not
adequately acknowledge a number of initiatives it has undertaken to
improve the financial integrity of the SSI program.  Accordingly,
SSA's comments include a discussion of several key initiatives. 
Finally, SSA either fully or partially concurred with five of our
seven recommendations.  SSA did not agree with our recommendation
that it should seek legislative authority to withhold higher benefit
amounts than the current 10-percent limit from individuals who
chronically and willfully abuse reporting requirements.  SSA also
disagreed with our recommendation that it reassess current penalty
provisions for recipient nonreporting and remove any barriers to
their use.  According to SSA, its newly submitted administrative
proposal requesting authority to impose a period of ineligibility for
individuals who provide false information to the agency is a more
effective approach than reassessing current penalty provisions.  SSA
agreed that its current field office work-credit and incentive
structure should be reassessed to better ensure that payment accuracy
and fraud prevention receive adequate staff attention.  However, the
agency was concerned that incorporating specific requirements and
performance measures for collections and fraud prevention into
managers' performance plans could be misperceived both within and
outside the organization. 

In regard to SSA's disagreement with our conclusion that it has
historically placed inadequate emphasis on controlling program
expenditures, we believe our audit work was sufficient to reach such
a conclusion.  Our review involved an extensive analysis of 200
studies of the SSI program dating back to its inception, more than
100 interviews with staff and managers at all levels of the agency,
and an assessment of performance data encompassing nearly a decade of
program operations.  Throughout this report, we have also provided
numerous examples drawn from this evidence to demonstrate how SSA's
focus on quickly processing and paying SSI claims has allowed
long-standing problems to continue and contributed to a program
environment in which program policies and internal controls have not
adequately protected taxpayer dollars from being overspent or abused. 
In interviews with us and in a recent testimony, SSA's Principal
Deputy Commissioner also acknowledged that, because of the rapidly
rising workloads of prior years, SSA made a conscious decision to
prioritize expedited claims processing over instituting additional
steps to better ensure payment accuracy and verify benefit
eligibility.  Thus, we believe there is ample evidence to support our
conclusion that SSI claims processing has historically received
greater management emphasis.  However, this report also acknowledges
the recent steps SSA has begun to take to address its most
significant program challenges, and in the future, strike a better
balance between meeting the needs of SSI recipients and protecting
the financial integrity of the program. 

We also disagree with SSA's concern that we have not adequately
recognized its initiatives to address long-standing SSI program
vulnerabilities.  Although our primary audit work was conducted
through February 1998, we frequently updated program performance data
and the status of SSA's initiatives as information was provided to us
by the agency.  To the extent that SSA's initiatives were either in
the planning stages, partially initiated, or fully operational, we
have fairly characterized them in this report.  We recognize that
since the SSI program was designated a high-risk area by GAO, SSA has
begun numerous initiatives to address the problems discussed here. 
We will continue to monitor SSA's progress in this area and relevant
program performance data to determine whether its efforts to address
identified SSI program vulnerabilities are successful. 

In regard to SSA's response to our specific recommendations, we
continue to believe SSA should seek legislative authority to recover
larger amounts than the current 10-percent limit from overpaid
recipients who chronically fail to report important eligibility
information.  We believe that providing field staff with the
discretion to recover larger amounts from overpaid recipients who
regularly fail to report information relevant to their disability or
financial status will provide SSA with an additional deterrent
against future instances of nonreporting.  Statistics also show that
SSA collects only about 15 percent of overpaid benefits.  For those
recipients who leave the rolls because they become employed or die,
recovery becomes even less likely.  SSA's 1997 write-off of $562
million in outstanding debt provides a clear example of how
overpayments that are carried on SSA's books for many years become
extremely difficult to recover.  Increasing the 10-percent limit
should improve SSA's debt collection efforts by allowing it to more
quickly recover a greater portion of overpaid benefits from
individuals who abuse program requirements before leaving the SSI
rolls.  However, it should be noted that our recommendation is
designed to address chronic non-reporting by recipients.  For the
majority of SSI recipients, we continue to believe that field staff
should have the discretion to calculate repayment amounts for
overpayments on the basis of an individual's ability to pay, rather
than on a specified percentage of his or her monthly benefit payment
or a specified dollar amount as determined by law. 

We have similar concerns about SSA's statement that a review of
current overpayment penalty policies is unnecessary, despite the
infrequent use of penalties and field staff complaints that the
process is administratively burdensome.  By failing to act on this
issue, SSA is forgoing a valuable opportunity to both demonstrate its
commitment to deterring future instances of recipient nonreporting
and to internally address agency policies that may be ineffective or
difficult for staff to implement.  In its comments, SSA contends that
its current legislative proposal seeking authority to suspend the
benefits of individuals who knowingly fail to report important
eligibility information renders our recommendation to reassess its
penalty process unnecessary.  While we do not dispute the value of
SSA's proposal, it is unclear whether such authority will ultimately
be granted, and we continue to believe that improving SSA's existing
penalty process to allow staff to quickly sanction individuals who
regularly fail to comply with program reporting requirements will
provide SSA with a deterrent against future overpayments.  In short,
SSA's overpayment penalty process was intended to be an important
internal control mechanism that should be fully utilized by the
agency.  If SSA's legislative proposal is enacted into law, field
staff will have another valuable tool, in addition to penalties, to
control SSI payments. 

Finally, we believe SSA's decision to reevaluate its current field
office work-credit and incentive system represents a positive step
toward rebalancing SSI program priorities.  However, we do not agree
with SSA's objection to developing specific performance measures to
hold managers accountable for thoroughly verifying recipient
information and combatting program fraud and abuse.  If properly
designed and managed, these measures would provide much-needed
incentives to encourage staff to devote more time to program
integrity issues while servicing their daily workloads.  Such
performance measures would also further demonstrate to field staff
SSA management's commitment to protecting SSI benefits from being
overpaid.  The full text of SSA's comments and our response are
included in appendix II. 


SSA ORGANIZATIONAL CHART
=========================================================== Appendix I



   (See figure in printed
   edition.)



   (See figure in printed
   edition.)

Source:  SSA, 1998. 




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



(See figure in printed edition.)



(See figure in printed edition.)



(See figure in printed edition.)



(See figure in printed edition.)



(See figure in printed edition.)



(See figure in printed edition.)



(See figure in printed edition.)



(See figure in printed edition.)



(See figure in printed edition.)


The following are GAO's comments on the Social Security
Administration's letter dated July 24, 1998. 


   GAO COMMENTS
--------------------------------------------------------- Appendix I:1

1.  SSA disagreed with our conclusion that it has historically
emphasized processing and paying SSI claims over controlling program
expenditures.  SSA was also concerned that we did not accurately
recognize initiatives it has taken to address SSI program integrity
issues.  In regard to SSA's first point, we believe that the evidence
presented in this report supports our conclusion.  Our review
involved an extensive analysis of 200 internal and external studies
of the SSI program dating back to its inception, more than 100
interviews of staff and managers at all levels of the agency, and an
assessment of performance data encompassing nearly a decade of
program operations.  Throughout this report we have also provided
numerous examples of how SSA's historical emphasis on quickly
processing and paying SSI claims has led to internal control
weaknesses, overpayments to ineligible recipients, and has
contributed to a program environment in which operating policies have
not adequately protected taxpayer dollars from fraud and abuse.  We
also disagree with SSA's claim that the draft report does not
adequately reflect the initiatives SSA has recently undertaken to
address long-standing SSI program vulnerabilities.  We believe the
report fairly characterizes SSA's initiatives and accurately portrays
their implementation status. 

2.  As noted above, we believe SSA's initiatives to control
overpayments have been characterized fairly and accurately in this
report.  In regard to SSA's efforts to better verify recipients'
financial information by accessing the OCSE database, we do not fully
agree with SSA's characterization that corrective actions were
already under way before we made our recommendations.  Our March 1998
report recommended that in addition to SSA's plans to use the OCSE
database to recover overpaid SSI benefits, SSA should also develop
automated field office interfaces to prevent overpayments by
identifying undisclosed earnings at the time of application.\26 At
the time of our review, SSA had not begun developing these interfaces
and did not appear to have any concrete plans to do so.  However, on
the basis of information received from SSA in July 1998, we have
revised our report to note that, in accordance with our
recommendation, SSA plans to provide such interfaces by March 1999. 

3.  The HCFA example was intended to illustrate SSA's historical
reluctance to take a more proactive approach to overpayment detection
and recoveries.  Consistent with our prior recommendation, we
continue to believe that SSA should have taken immediate action to
pursue interim agreements with state Medicaid agencies to obtain
nursing home admissions data.  We also continue to believe that SSA's
decision to wait for an alternative system when other data sources
were already available has likely cost the program a significant
amount in overpaid benefits.  From the time we made our
recommendation on this issue until SSA begins using the HCFA system
in November 1998, at least another 18 months will have passed without
more timely identification of SSI recipients residing in nursing
homes.  Furthermore, SSA plans only semiannual matches with the data,
rather than monthly matches as we recommended.  This will permit
overpayments to routinely accrue and go undetected for a significant
amount of time. 

4.  In chapter 1 of this report we emphasize that SSI is a complex
program that has changed significantly over time.  We also
acknowledge the administrative difficulties SSA faces in determining
eligibility and payment amounts for recipients whose financial
circumstances change frequently.  However, our audit work and SSA's
own quality reviews show that recipient nonreporting of essential
eligibility information remains a significant and costly program
vulnerability.  Thus, it is essential that more effective financial
eligibility procedures be established and overpayment recoveries
receive enhanced attention.  The fact that SSA says it is now
developing a "comprehensive plan that attacks the growth in
outstanding overpayment debt" appears to support our conclusion that
additional focus is needed in this area.  Finally, we are aware that
current laws preclude SSA from using more aggressive debt collection
tools, such as credit bureaus, interest levies, and federal salary
offsets to recover overpaid SSI benefits.  However, our point in this
report is that, consistent with SSA's reactive approach to managing
the SSI program, the agency did not take a leadership role in prior
years to develop and sponsor legislative changes that would have
provided SSA with additional recovery tools.  In fact, it was only
after a number of GAO briefings over the last year, and a recent
testimony in which we noted SSA's continued reluctance to pursue more
aggressive debt collection tools, that SSA recently submitted a
legislative proposal requesting additional recovery authorities. 

5.  In our report's section on the SSI program's vulnerability to
fraud and abuse, we note that since becoming an independent agency,
SSA has begun to take more decisive action to address fraud and abuse
in the SSI program.  We also acknowledge the substantial increase in
OIG investigative resources and the numerous agency initiatives
designed to combat program fraud and abuse.  However, many of the
initiatives were barely under way at the time of our review and it
was too early to determine their impacts.  Our audit work and SSA's
own recent studies did find that many years of inadequate attention
to program integrity issues has fostered a strong skepticism among
both headquarters and field staff that fraud prevention is an agency
priority.  Overcoming this perception remains a significant challenge
for SSA. 

6.  SSA's comments note that its recent legislative proposal
requesting authority to suspend recipients who fail to report
eligibility information negates our recommendation that SSA should
seek authority to recover greater amounts than the current 10-percent
limit from individuals who chronically abuse program reporting
requirements.  While we do not dispute the potential value of SSA's
legislative proposal, we believe that obtaining authority to withhold
higher amounts would give field staff an additional means for
deterring recipient nonreporting.  Currently, staff do not have this
discretion, regardless of the number of times an individual fails to
comply with program reporting requirements.  During our review, the
10-percent limit was also noted by SSA management as a barrier to
increased collections.  Thus, in some cases, increasing the limit
would likely improve SSA's recovery efforts by allowing it to more
quickly recover overpayments before recipients leave the SSI rolls
because they have become employed or died and recovery from the
individual or his or her survivors becomes less likely. 

7.  We disagree with SSA's view that a reassessment of current
policies on imposing penalties for recipient nonreporting is
unnecessary.  SSA's own quality reviews show that, on average, 77
percent of all overpayments are attributable to recipient
noncompliance with reporting requirements.  SSA has also reported in
prior years that penalties are rarely used, even for individuals with
a history of failing to comply with reporting requirements.  Given
the infrequent use of penalties documented during our review and
staff complaints that penalties are administratively burdensome to
levy and too low to deter future nonreporting, we believe a review is
necessary. 

8.  We do not agree with SSA's objection to developing specific
requirements and performance measures to hold managers accountable
for better verifying recipient eligibility information and combatting
fraud and abuse.  If properly designed and managed, these measures
would provide much needed incentives to encourage staff to devote
more time to program integrity issues while servicing their daily
workloads.  Such performance measures would also further demonstrate
to field staff SSA management's commitment to protecting SSI benefits
from being overpaid. 

9.  SSA's data show that outstanding SSI debt carried over from
previous years was about $1.6 billion at the start of fiscal year
1997.  New overpayment detections during the course of the year
totaled about $1 billion dollars.  In response to SSA's comments, we
have revised the report to more accurately reflect that outstanding
debt and new detections totaled $2.6 billion in 1997.  Our report
also notes that, during that year, SSA actually collected about $437
million in overpayments owed the agency. 

10.  Between fiscal years 1989 and 1997, SSA wrote off about $1.8
billion in overpaid benefits, including $562 million in 1997 alone. 
In response to SSA's comments, we have noted that the 1997 write-off
included debt that SSA has carried on its books for many years and
deemed not cost-effective to pursue.  In response to SSA's technical
comments, we have also revised the report to more accurately reflect
the total amount of unrecovered SSI overpayments experienced since
fiscal year 1989. 

11.  As noted in our report, annual SSI overpayment collections have
increased steadily.  However, the amount of outstanding SSI debt owed
the agency has consistently outpaced its collection efforts.  Thus,
we continue to believe that specific performance measures for the SSI
program should be developed and included in SSA's programmatic plans
for the purpose of monitoring SSA's progress in addressing critical
areas of vulnerability.  At present, adequate measures are not
included in SSA's plans, and by aggregating collection goals across
all of its programs, SSA may lack the necessary management
information to target future resources to problem areas in the SSI
program.  In addition, aggregated performance data may also make it
difficult for oversight entities such as SSA's OIG and GAO to assess
SSA's progress in addressing its most significant SSI program
vulnerabilities. 

12.  On the basis of a review of SSA's May 1998 legislative
proposal--the Supplemental Security Income Integrity Act of 1998--we
have incorporated into the body of this report SSA's recent efforts
to restrict asset transfers.  Despite our requests to SSA, we have
been provided no evidence to document the 1996 formal legislative
proposal SSA refers to in its comments. 


--------------------
\26 Supplemental Security Income:  Opportunities Exist for Improving
Payment Accuracy (GAO/HEHS-98-75, Mar.  27, 1998). 


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

GAO CONTACTS

Roland H.  Miller III, Project Manager, (202) 512-7246
Dan Bertoni, Deputy Project Manager, (202) 512-5988

STAFF ACKNOWLEDGMENTS

In addition to those named above, the following individuals made
important contributions to this report:  Nancy Cosentino, Deputy
Project Manager; Jeremy Cox, Senior Evaluator; James P.  Wright,
Assistant Director (Study Design and Analysis); and Jill Yost,
Evaluator. 

RELATED GAO PRODUCTS

Supplemental Security Income:  SSA Needs a Uniform Standard for
Assessing Childhood Disability (GAO/HEHS-98-123, May 6, 1998). 

Supplemental Security Income:  Opportunities Exist for Improving
Payment Accuracy (GAO/HEHS-98-75, Mar.  27, 1998). 

SSA's Management Challenges:  Strong Leadership Needed to Turn Plans
Into Timely, Meaningful Action (GAO/T-HEHS-98-113, Mar.  12, 1998). 

Supplemental Security Income:  Timely Data Could Prevent Millions in
Overpayments to Nursing Home Residents (GAO/HEHS-97-62, June 3,
1997). 

High Risk Program:  Information on Selected High-Risk Areas
(GAO/HR-97-30, May 16, 1997). 

Supplemental Security Income:  Long-Standing Problems Put Program at
Risk for Fraud, Waste, and Abuse (GAO/T-HEHS-97-88, Mar.  4, 1997). 

High Risk Series:  An Overview (GAO/HR-97-1, Feb.  1997). 

High Risk Series:  Quick Reference Guide (GAO/HR-97-2, Feb.  1997). 

Supplemental Security Income:  SSA Is Taking Steps to Review
Recipients' Disability Status(GAO/HEHS-97-17, Oct.  30, 1996). 

Supplemental Security Income:  SSA Efforts Fall Short in Correcting
Erroneous Payments to Prisoners (GAO/HEHS-96-152, Aug.  30, 1996). 

Supplemental Security Income:  Administrative and Program Savings
Possible by Directly Accessing State Data (GAO/HEHS-96-163, Aug.  29,
1996). 

Supplemental Security Income:  Some Recipients Transfer Valuable
Resources to Qualify for Benefits (GAO/HEHS-96-79, Apr.  30, 1996). 

Supplemental Security Income:  Disability Program Vulnerable to
Applicant Fraud When Middlemen Are Used (GAO/HEHS-95-116, Aug.  31,
1995). 

Social Security Administration:  Leadership Challenges Accompany
Transition to an Independent Agency (GAO/HEHS-95-59, Feb.  15, 1995). 


*** End of document. ***