Supplemental Security Income: Additional Actions Needed to Reduce Program
Vulnerability to Fraud and Abuse (Letter Report, 09/15/1999,
GAO/HEHS-99-151).

Pursuant to a congressional request, GAO provided information on the
Supplemental Security Income (SSI) program's vulnerability to fraud and
abuse, focusing on: (1) the extent to which SSI is vulnerable to
individuals who obtain eligibility by feigning disabilities with the
help of middlemen and medical providers; (2) the Social Security
Administration's (SSA) methods for preventing, detecting, and responding
to this type of program fraud and abuse; and (3) additional strategies
SSA could use to more effectively address this problem.

GAO noted that: (1) although the number of people who have feigned
injuries or illnesses to obtain SSI benefits is unknown, the SSI program
is vulnerable to this type of fraud and abuse; (2) many SSI
beneficiaries' impairments are difficult to objectively verify; (3) from
a sample file of beneficiaries--developed by SSA to research
characteristics of the SSI population--GAO found that more than 60
percent had such impairments, including psychoses, schizophrenia, and
other mental disorders, as well as a range of physical disorders; (4) in
addition, providers who have been investigated for defrauding Medicaid,
Medicare, or private insurance companies furnished at least some portion
of the supporting medical evidence for more than 12,000 of the 208,000
SSI disabled recipients in the 6 states GAO examined; (5) over 96
percent of the 158 officials and staff GAO interviewed said they
believed that the practice of middlemen helping people improperly
qualify for SSI benefits has continued; (6) SSA has taken several
actions to reduce the program's vulnerability to this and other forms of
fraud; (7) SSA has: (a) established pilot fraud investigation teams in
five states during 1998 to examine individual cases where significant
fraud and abuse is suspected; (b) developed new policies and procedures
to make it easier to deny claims or terminate benefits when program
fraud or abuse is detected; and (c) strengthened its ability to handle
its non-English speaking clients; (8) these steps have achieved positive
results; (9) front-line staff largely rely on their experience and
perceptions to identify suspicious claims; they lack other valuable
information, such as the names of middlemen and medical providers
suspected of fraudulent or abusive practices by other employees or
organizations, that could help them judge a claim's validity; (10) SSA
and Disability Determination Services (DDS) staff said that they do not
always follow the new procedures because they believe the procedures
conflict with agency work incentives that stress speed in processing
claims and because they believe they are not adequately protected from
legal liability that could arise if they were to follow claims denial
procedures; (11) they also question the agency's commitment to fighting
fraud, since they repeatedly see the same suspicious middlemen and
medical providers involved in SSI cases, despite previous referrals for
investigation; and (12) several additional types of actions could reduce
SSI's vulnerability to fraud and abuse by middlemen and medical
providers.

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

 REPORTNUM:  HEHS-99-151
     TITLE:  Supplemental Security Income: Additional Actions Needed to
	     Reduce Program Vulnerability to Fraud and Abuse
      DATE:  09/15/1999
   SUBJECT:  Fraud
	     Program abuses
	     Disability benefits
	     Internal controls
	     Income maintenance programs
	     Social security benefits
IDENTIFIER:  Supplemental Security Income Program
	     SSI

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

Report to the Honorable Henry A.  Waxman, Ranking Minority Member,
Committee on Government Reform, House of Representatives

September 1999

SUPPLEMENTAL SECURITY INCOME -
ADDITIONAL ACTIONS NEEDED TO
REDUCE PROGRAM VULNERABILITY TO
FRAUD AND ABUSE

GAO/HEHS-99-151

SSI Vulnerability to Fraud and Abuse

(207024)

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

  ALJ - administrative law judge
  CDI - Cooperative Disability Investigation
  CDR - continuing disability review
  DDS - Disability Determination Services
  FSF - fraud or similar fault
  HCFA - Health Care Financing Administration
  MFCU - Medicaid Fraud Control Unit
  NICB - National Insurance Crime Bureau
  OHA - Office of Hearings and Appeals
  OIG - Office of Inspector General
  SSA - Social Security Administration
  SSI - Supplemental Security Income

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

B-278983

September 15, 1999

The Honorable Henry A.  Waxman
Ranking Minority Member
Committee on Government Reform
House of Representatives

Dear Mr.  Waxman: 

The Supplemental Security Income (SSI) program, administered by the
Social Security Administration (SSA), is the nation's largest cash
assistance program.  At the end of 1998, the SSI program was paying
benefits to about 5.2 million needy blind and disabled recipients and
1.3 million needy aged recipients.  Program expenditures for the year
totaled about $29 billion ($25 billion and $4 billion, respectively). 
Over the next 10 years, the combined federal cost alone for SSI and
related Medicaid benefits is estimated at $122,000 per recipient. 

In the early 1990s, media reports and congressional hearings alleged
that some SSI recipients may have improperly gained access to program
benefits by feigning or exaggerating disabilities with the help of
middlemen and medical providers.  In 1995, we reported that some
ineligible non-English-speaking applicants had obtained SSI benefits
illegally by using middlemen, particularly interpreters, who had
provided inaccurate translations or had coached applicants on how to
appear disabled.\1 As a result, we recommended that SSA develop a
more aggressive and programwide strategy to obtain and share data
about interpreters and middlemen.  Similarly, some providers have
submitted misleading diagnoses for SSI applicants, claiming mental
impairments and other conditions that are difficult to verify, to
help applicants obtain medical eligibility for SSI benefits. 

In light of these long-standing concerns, you asked us to (1)
determine the extent to which SSI is vulnerable to individuals who
obtain eligibility by feigning disabilities with the help of
middlemen and medical providers; (2) describe SSA's methods for
preventing, detecting, and responding to this type of program fraud
and abuse; and (3) identify additional strategies SSA could use to
more effectively address this problem.  Some of SSA's actions
discussed in this report were partially responsive to the
recommendation in our earlier report. 

To conduct our work, we met with a variety of personnel involved in
the administration of the SSI program, including claims
representatives, claims adjudicators, fraud investigators,
administrative law judges (ALJ), and SSA administrators.  We also
obtained and analyzed several databases to assess program
vulnerability and consider the value of potential changes in
administrative controls.  We focused on six states with large SSI
populations (together, these states comprise about 40 percent of all
SSI recipients) or where SSA has experienced serious problems with
disability fraud and abuse. 

To identify program vulnerability to fraud and abuse and possible
ways to enhance SSA prevention strategies, we enlisted the assistance
of several investigative organizations.  To protect the
confidentiality of their records, these organizations provided
information under special arrangements.  This information identified
medical providers who had been investigated or who were being
investigated for fraudulent activities involving Medicaid, Medicare,
and the payment of private health insurance benefits.  We did not
solicit information on the results of these investigations for
several reasons.  In some cases, the outcome of the investigation was
not readily available because the case was still open, the
organization lacked the resources to provide a complete listing of
the outcomes, or the charges could not be substantiated.  In the
majority of cases, investigations do not result in an admission of
guilt or a conviction of fraud.  An investigation may be closed, for
example, because a settlement is reached or the subject agrees to
make restitution in exchange for nonprosecution.  However, since
investigations are not initiated on the basis of a simple complaint,
we included all investigated providers in our analysis.\2 We use the
term "suspicious" to characterize medical providers or middlemen who
had been or were being investigated by these organizations at the
time of our study. 

Our work was done between October 1997 and May 1999 in accordance
with generally accepted government auditing standards.  See appendix
I for additional information on our scope and methodology. 

--------------------
\1 Supplemental Security Income:  Disability Program Vulnerable to
Applicant Fraud When Middlemen Are Used (GAO/HEHS-95-116, Aug.  31,
1995). 

\2 For example, one organization told us that before starting an
investigation, it had to have a written statement of facts supporting
the position that false claims had been filed and the false claims
did not appear to be the result of an honest billing error or
misinterpretation of requirements. 

   RESULTS IN BRIEF
------------------------------------------------------------ Letter :1

Although the number of people who have feigned injuries or illnesses
to obtain SSI benefits is unknown, the SSI program is vulnerable to
this type of fraud and abuse.  First, many SSI beneficiaries'
impairments are difficult to objectively verify.  From a sample file
of beneficiaries--developed by SSA to research characteristics of the
SSI population--we found that more than 60 percent had such
impairments, including psychoses, schizophrenia, and other mental
disorders, as well as a range of physical disorders.  In addition,
providers who have been investigated for defrauding Medicaid,
Medicare, or private insurance companies furnished at least some
portion of the supporting medical evidence for more than 12,000 (6
percent) of the 208,000 SSI disabled recipients in the six states we
examined.  Finally, over 96 percent of the 158 officials and staff we
interviewed said they believed that the practice of middlemen helping
people improperly qualify for SSI benefits has continued. 

SSA has taken several actions, both on its own and in response to
legislation, to reduce the program's vulnerability to this and other
forms of fraud.  SSA has

  -- established pilot fraud investigation teams in five states
     during 1998 to examine individual cases where significant fraud
     and abuse is suspected,

  -- developed new policies and procedures to make it easier to deny
     claims or terminate benefits when program fraud or abuse is
     detected, and

  -- strengthened its ability to handle its non-English-speaking
     clients. 

These steps have achieved positive results.  For example, as of March
31, 1999--just 6 to 14 months after they began their work--the pilot
teams in five locations have provided information that contributed to
cessations and denials of SSI benefits worth about $11 million.  The
overall effectiveness of SSA's actions, however, has been limited by
several factors.  First, front-line staff largely rely on their
experience and perceptions to identify suspicious claims; they lack
other valuable information, such as the names of middlemen and
medical providers suspected of fraudulent or abusive practices by
other employees or organizations, that could help them judge a
claim's validity.  In addition, SSA and Disability Determination
Services (DDS) staff said that they do not always follow the new
procedures because they believe the procedures conflict with agency
work incentives that stress speed in processing claims and because
they believe they are not adequately protected from legal liability
that could arise if they were to follow claims denial procedures. 
They also question the agency's commitment to fighting fraud, since
they repeatedly see the same suspicious middlemen and medical
providers involved in SSI cases, despite previous referrals for
investigation. 

In our view, several additional types of actions could reduce SSI's
vulnerability to fraud and abuse by middlemen and medical providers. 
SSA could establish a national information system that identifies
suspicious middlemen and medical providers.  These type of data would
help front-line staff, on whom SSA relies to fight program fraud and
abuse, to better identify cases that warrant closer scrutiny. 
Further, SSA needs to (1) implement our recommendation from a
previous report to reevaluate its work credit and incentive structure
to encourage greater attention to fraud detection and (2) reexamine
its policy regarding SSA-provided interpreters.  The Congress may
also wish to protect staff from legal liabilities that might arise
from following new claims denial procedures. 

   BACKGROUND
------------------------------------------------------------ Letter :2

The SSI program, authorized under title XVI of the Social Security
Act in 1972, provides cash benefits to blind, disabled, and aged
individuals whose income and resources are below certain specified
levels.  To qualify for benefits, blind and disabled individuals must
meet medical and functional disability criteria as well as financial
eligibility requirements. 

The benefit application process begins with initial interviews of
applicants at any of SSA's 1,298 field offices.  During these
interviews, SSA staff solicit information on applicants' financial
situation and the disability being claimed.  Applicants can work
directly with SSA staff or use middlemen who provide services, often
for a fee, such as help in completing forms, interpreting for
non-English-speaking individuals, and offering advice on how to
navigate the application process.  Interpreters supplied by SSA are
also available to help non-English-speaking applicants through this
process. 

The field offices forward the disability information gathered during
the initial interviews to one of 54 state DDS offices, which are
responsible for deciding if applicants meet the program's criteria
for disability.  These offices develop evidence related to a claim by
obtaining reports from the medical sources that an applicant has used
to treat or diagnose the impairment.  If necessary, the DDS office
may require an applicant to have an SSA-paid medical (consultative)
examination to evaluate and document the impairment further.  At this
stage, non-English-speaking applicants again may rely on either their
own or SSA-supplied interpreters to help them answer questions raised
by DDS staff during the adjudication process and by medical providers
during required SSA medical exams. 

Individuals who are found eligible to receive SSI benefits are
subject to periodic reevaluations of their financial status, known as
redeterminations, and of their medical status, known as continuing
disability reviews (CDR).  During a redetermination, the financial
factors related to the recipient's eligibility--essentially earnings,
assets, and current living arrangements--are reviewed.  A CDR is
conducted to determine whether a person is still medically and
functionally unable to work.  Situations that can trigger a CDR
include medical evidence concluding that a condition is expected to
improve, substantial earnings reported to SSA that indicate a
recipient is working, and medical improvement reported to SSA by a
vocational rehabilitation agency. 

Individuals dissatisfied with SSA decisions to deny or terminate
benefits (whether for financial or medical reasons) can use SSA's
administrative review process.  First, a dissatisfied person may
request a reconsideration of the adverse decision.  The
reconsideration is an independent examination, by a specially trained
DDS staff member, of all evidence on record plus any further evidence
and information submitted by the claimant or the claimant's
representative.  If there is disagreement with the reconsidered
determination, a hearing before an ALJ from SSA's Office of Hearings
and Appeals (OHA) may be requested.  At the hearing level, OHA
personnel examine the evidence of record; the client or the client's
representative may also introduce new evidence and new impairments. 
Finally, if a disagreement remains with the OHA decision, persons may
request a review by SSA's Appeals Council. 

At each of these levels, the input of middlemen and medical providers
can be a factor.  Middlemen and medical providers can have different
motives for assisting persons in obtaining SSI benefits.  Some
middlemen and medical providers help individuals obtain SSI benefits
because they want to help persons who have backgrounds similar to
their own or who need financial assistance.  Others are motivated by
financial gain.  Middlemen often charge fees for their services
contingent upon applicants becoming eligible for program benefits. 
In most states, medical providers can bill Medicaid for treating SSI
recipients, and improper Medicaid billings have been a long-standing
problem. 

Investigating possible fraudulent activity is the responsibility of
SSA's Office of the Inspector General (OIG).  In the past, SSA's OIG
has cooperated in and reported on the results of investigations
involving middlemen and medical providers.  For example, in December
1997, the OIG reported on an extended family in Georgia that
consisted of 181 members receiving SSI benefits.  DDS personnel
performed CDRs on 151 of them and terminated benefits to 88.  The
investigation disclosed that a psychiatrist who was responsible for
helping many of these individuals qualify for SSI benefits then
billed Medicaid for their treatment after they were awarded SSI
benefits. 

   SSI IS INHERENTLY VULNERABLE TO
   INDIVIDUALS FEIGNING
   DISABILITIES WITH THE HELP OF
   PROVIDERS AND MIDDLEMEN
------------------------------------------------------------ Letter :3

Our analysis of the SSI program indicates that SSI is inherently
vulnerable to people who, with the help of others, feign their
impairments to obtain benefits.  Over 60 percent of SSI disability
cases from an SSA statistical sample involved impairments that are
difficult to objectively verify, and thousands of SSI recipients in
the six states we studied used suspicious medical providers to gain
access to the program.  Middlemen also play a significant role in SSI
fraud and abuse, according to SSA officials and front-line staff. 

      SSI PROGRAM RECIPIENTS'
      IMPAIRMENTS ARE OFTEN
      DIFFICULT TO OBJECTIVELY
      VERIFY
---------------------------------------------------------- Letter :3.1

OIG fraud investigators, SSA officials, and DDS staff told us that
certain types of impairments that can be feigned are difficult to
objectively verify.  Some specific impairments that they identified
as falling into this category include mental retardation,
post-traumatic stress syndrome, and depression.  Back impairments,
unrelenting severe pain, and vision problems that lack objective
evidence, such as clearly documented pathology or treatment history,
are also potentially exaggerated or feigned disorders. 

Our analysis of a sample file of SSI beneficiaries--which SSA
developed to research characteristics of the SSI population--shows
that the majority of disabled recipients had the types of impairments
that SSA and DDS staff considered susceptible to feigning.\3
Specifically, we found that 64 percent of disabled recipients in the
April 1998 version of the sample file had impairments susceptible to
feigning.  Table 1 shows the estimated number of adults and children
with impairments that SSA and DDS staff believe are difficult to
objectively verify within broad categories of impairments. 

                          Table 1
          
          Estimated Number of SSI Child and Adult
            Recipients in April 1998 Sampling by
           Category of Impairments Considered by
           SSA and DDS Staff to Be Vulnerable to
                          Feigning

                                                   Percent
                       Child     Adult     Total  of total
------------------  --------  --------  --------  --------
All SSI disabled     799,730  3,251,58  4,051,31     100.0
 recipients with                     0         0
 identifiable
 impairments

Recipients with mental impairments susceptible to feigning
----------------------------------------------------------
Psychoses and        190,940   707,180   898,120      22.2
 neuroses
Schizophrenia          3,890   339,170   343,060       8.5
Mental retardation   302,870   738,570  1,041,44      25.7
                                               0

Recipients with physical impairments susceptible to
feigning
----------------------------------------------------------
Back disorders             -   136,490   136,490       3.4
Muscle, ligament,          -    21,170    21,170       0.5
 fascia disorders,
 sprains, and
 strains
Epilepsy              11,950    30,870    42,820       1.1
Vision problems            -    44,930    44,930       1.1
Chronic pulmonary          -    59,490    59,490       1.5
 insufficiency
Total recipients     509,650  2,077,87  2,587,52      64.0
 with impairments                    0         0
 susceptible to
 feigning
----------------------------------------------------------
Note:  The data in the table represent persons who have impairments
that are difficult to objectively verify.  They do not suggest that
individuals with these impairments are feigning them.  Percentages
have been rounded to the nearest 10th of a percentage point.  The
sampling errors for all but one of the numerical estimates in this
table do not exceed plus or minus 6 percent of the estimate at the
95-percent confidence level. 

--------------------
\3 About 400,000 records (77.2 percent of the file) had information
on SSI recipients' disabilities, representing over 4 million disabled
SSI recipients. 

      SUSPICIOUS MEDICAL PROVIDERS
      ARE ASSISTING SSI APPLICANTS
      AND RECIPIENTS
---------------------------------------------------------- Letter :3.2

From records maintained by SSA and other entities, we found that
suspicious medical providers have helped individuals obtain or
maintain SSI benefits and roughly estimated the program's
vulnerability to these types of activities.  Using SSA records for
SSI beneficiaries in the six states we studied, we identified 208,085
SSI recipients who--through a determination or a redetermination
conducted between January 1, 1997, and June 30, 1998--were found
eligible for SSI benefits on the basis of an impairment that was
difficult to objectively verify.  From government agencies that pay
Medicare and Medicaid benefits and a private organization that
supports health insurance companies, we obtained lists of suspicious
medical providers and compared them with lists of providers used by
these SSI recipients. 

Of the 208,085 SSI recipients who had impairments difficult to
objectively verify, we found that 12,565 (about 6 percent) had used
doctors identified as suspicious.\4

(See table 2.)

                          Table 2
          
              SSI Recipients With Impairments
          Difficult to Objectively Verify Who Used
          Suspicious Medical Providers to Support
              Their Disability Claim, by State

              SSI recipients  SSI recipients
                        with        who used
                 impairments         medical
                difficult to       providers
                 objectively    suspected of
State                 verify  fraud or abuse    Percentage
------------  --------------  --------------  ------------
California           112,240           7,028           6.3
Florida               28,764           1,759           6.1
Georgia               12,969             711           5.5
Louisiana              8,162             551           6.8
Massachusett          15,668           1,074           6.9
 s
New York              30,282           1,442           4.8
==========================================================
Total                208,085          12,565           6.0
----------------------------------------------------------
Of the suspicious providers identified by benefit-paying entities, we
found that 1,447 assisted these SSI recipients in obtaining or
maintaining benefits.  Many assisted numerous SSI clients.  For
example, in California, 11 providers had assisted from 100 to 300 SSI
recipients with impairments difficult to objectively verify.  We also
found that one medical practice had submitted evidence for 632
recipients with such impairments.  (See table 3.)

                                         Table 3
                         
                           Suspicious Medical Providers and SSI
                              Recipients They Assisted Whose
                              Impairments Were Difficult to
                               Objectively Verify, by State

                                         Number of suspicious medical providers
                               ----------------------------------------------------------
Number of SSI recipients                     6-   11-   26-   51-  100-  301-        Tota
assisted                          1   2-5    10    25    50   100   300   500  500+     l
-----------------------------  ----  ----  ----  ----  ----  ----  ----  ----  ----  ----
California                      279   314    85    83    22    10    11     1     -   805
Florida                         120    88    26    14     8     1     -     -     1   258
Georgia                          12    15    10     3     3     2     2     -     -    47
Louisiana                        16    11     7    12     6     1     -     -     -    53
Massachusetts                     8    12     4    12     7     1     3     -     -    47
New York                        116    74    23    12     7     3     2     -     -   237
=========================================================================================
Total                           551   514   155   136    53    18    18     1     1  1,44
                                                                                        7
-----------------------------------------------------------------------------------------
Although our analysis does not prove that any fraud or program abuse
was committed in any of these cases, it shows that SSI recipients
with impairments that are difficult to objectively verify have used
evidence from medical providers who had been or were being
investigated for fraudulent activities by other benefit-paying
entities. 

--------------------
\4 The lists provided to us contained the names of hospitals, group
practices, and individual medical providers suspected or convicted of
fraudulent or abusive activity.  In our analysis, we excluded
hospitals as a suspect source of medical information because
hospitals have many providers and we could not identify which
providers were under investigation.  If we had included the
hospitals, the number of recipients with questionable medical sources
would have risen from 12,565 to 34,153 (16.4 percent of the
recipients with impairments difficult to verify in the six states we
analyzed). 

      FRONT-LINE STAFF BELIEVE
      MIDDLEMEN CONTINUE TO HELP
      PERSONS FEIGN DISABILITIES
---------------------------------------------------------- Letter :3.3

We could not determine the extent to which middlemen participate in
cases involving feignable impairments or identify which middlemen
were involved in a large number of cases because SSA does not
routinely record the names and addresses of middlemen when a claim is
filed.  Therefore, to find out whether middlemen remain a significant
source of potential fraud and abuse, we contacted 158 SSA, OIG, and
DDS staff and managers in SSA's Baltimore headquarters and in field
offices in California, New York, Massachusetts, and Washington and
asked them if they believed problems with middlemen continued.  Of
these, 96 percent (152) indicated that SSA remains vulnerable to
middleman fraud. 

The following are examples of cases these staff cited. 

  -- SSA and DDS staff in New York told us about a middleman whose
     clients are typically diagnosed as having severe mental
     conditions but continue to live at home and receive no
     treatment.  The clients almost always have very low reported
     intelligence quotient scores and almost never have any
     historical medical records. 

  -- In California, field office staff said some applicants are
     coached by middlemen on what to say and how to respond to
     questions before they come to the office.  Staff in other
     offices told us that middlemen will use various aliases to mask
     their true identity or go to offices where they are less known. 

  -- Field office staff in California said that middlemen are still
     active in SSI cases, but are trying to hide their involvement. 
     They said that when district offices in Southern California
     hired bilingual staff to address concerns about interpreter
     fraud, middlemen began taking their clients to other district
     offices.  Because SSA does not maintain a centralized database
     on suspicious middlemen, its field staff cannot check whether a
     middleman accompanying a claimant should be considered
     suspicious. 

  -- OIG investigators believe middlemen remain active because they
     have observed middlemen waiting in cars while an applicant
     pursues a claim or has a medical exam.  OIG investigators
     further suspect that the middlemen continue to prepare claims
     applications and to coach applicants on how to act and respond
     to interview questions.  In this regard, field staff pointed out
     that suspicious claims applications are prepared using language
     that mimics SSA policy manuals.  They also said that suspicious
     applicants always seem to know the right answer to SSA
     employee questions. 

   SSA'S ANTIFRAUD INITIATIVES ARE
   VALUABLE BUT LIMITATIONS
   UNDERMINE EFFECTIVENESS
------------------------------------------------------------ Letter :4

To reduce SSI's vulnerability to fraud and abuse, SSA has undertaken
several initiatives, some of which were required by legislation.  SSA
has established pilot investigation teams in five states dedicated to
examining cases where fraud or abuse is suspected.  It also has
developed new procedures that DDS staff handling claims must use when
they encounter suspicious disability claims and instituted new
approaches for handling claims of non-English-speaking individuals. 
While these initiatives are useful steps in addressing potentially
fraudulent cases, their effectiveness is limited by staff reluctance
to routinely implement them.  Staff perceive that these actions
conflict with other agency goals or are not convinced of their
effectiveness.  Other staff believe that certain procedures expose
them to potential legal liability. 

      SSA IS PILOTING FRAUD
      INVESTIGATION TEAMS
---------------------------------------------------------- Letter :4.1

In 1998, SSA created as a pilot project five Cooperative Disability
Investigation (CDI) teams to investigate suspected cases of
disability fraud or abuse.  The CDI teams are patterned after a fraud
investigation unit established in 1994 to respond to a large number
of disability fraud and abuse cases being identified in the Southern
California area.  Each CDI team investigates cases referred through
SSA's OIG fraud hotline and by DDS and SSA field office staff who
have been instructed to refer all cases--both applicants and
recipients--in which they suspect disability fraud or abuse.  The
referrals can cover questionable situations, such as a recipient's
failing to report work activity or feigning disabilities. 

Each CDI team consists of four or five members and is headed by an
agent from SSA's OIG.  Other CDI team members typically include DDS
examiners and state law enforcement personnel, such as Medicaid fraud
investigators.  SSA has placed these units in five cities that it
believes have serious disability fraud and abuse problems:  Oakland,
California; Chicago, Illinois; Baton Rouge, Louisiana; Atlanta,
Georgia; and Brooklyn, New York.  In cities that do not have a CDI
team, SSA OIG offices continue to have the responsibility to
investigate fraud cases. 

In conducting their investigations, CDI teams obtain information that
helps SSA decide whether applicants or recipients are truly qualified
to receive benefits.  Although teams do not typically develop
evidence for the prosecution of criminal fraud, CDI investigations of
individual applicants and recipients may provide a basis for the OIG
to conduct broader investigations into the practices of medical
providers and middlemen. 

DDS staff continue processing the case even after referring it to the
CDI team.  While the DDS office assesses the medical information, the
CDI team begins gathering evidence that either substantiates or
contradicts statements that applicants or recipients have made
regarding matters such as their income and how their disabilities
limit their daily lives.  The teams typically do this by conducting
undercover surveillance of the individual's daily activities and
interviewing the individual's neighbors, family, and friends. 
Although the disability determination can be made before the CDI team
completes its investigation, if evidence is developed that affects
the determination, the DDS office may reopen the case. 

The effectiveness of the CDI teams has been demonstrated.  For
example, in 1998, a state DDS office referred a case to a CDI team
because the applicant's treating physician had a history of providing
similar information on multiple patients.  The applicant alleged that
headaches, memory loss, weakness, asthma, and depression severely
limited her ability to carry out activities such as shopping and
prevented her from obtaining a driver's license and learning English. 
The CDI investigation disclosed that the applicant had a valid
driver's license, and during surveillance, CDI staff observed the
applicant grocery shopping.  Staff also approached the applicant with
a question and discovered that she spoke English.  This information
led to a denial of benefits in the case. 

As of March 31, 1999, SSA's OIG reported that the five CDI
teams--which had been operating for 6 to 14 months--had conducted 624
investigations that contributed to the denial of benefits to 119
applicants and the cessation of benefits to 58 recipients, according
to SSA's OIG.  The OIG estimates total SSI program savings from these
claims denials and cessations of benefits amounted to about $11
million.\5 The original investigative team established by SSA and DDS
in Southern California has also had an effect on the program.  From
November 1995 through March 1999, this team's investigations have
resulted in the cessation of benefits in 42 cases and the denial of
benefits in 27 cases.  According to the team, these investigations
have saved the SSI program an estimated $5.5 million.  SSA is pleased
with these results and anticipates that similar teams will be placed
in 12 additional locations by fiscal year 2003. 

--------------------
\5 Because of the way CDI results were reported, it is probable that
the actual number of cases investigated, terminated, and denied is
higher. 

      SSA HAS REVISED PROCEDURES
      FOR HANDLING SUSPICIOUS
      CLAIMS
---------------------------------------------------------- Letter :4.2

In 1994, the Social Security Act was amended to require that evidence
in eligibility determinations be disregarded if there is reason to
believe that fraud or similar fault was involved in the providing of
such evidence. SSA issued implementing fraud or similar fault (FSF)
procedures to the DDS offices in April 1998.  FSF implementing
procedures for SSA field offices and appellate adjudicators are still
under development. 

Under its implemented FSF procedures, DDS adjudicators must consider
all evidence in the case record before determining whether any
specific evidence should be disregarded.  Supporting evidence should
be disregarded only if a preponderance of other evidence establishes
a reason to believe that fraud or similar fault was involved.  Fraud
or similar fault involves knowingly making an incorrect or incomplete
statement or knowingly concealing material information.  As is the
case with the CDI teams, the goal of the FSF procedures is to prevent
individuals who are not truly disabled from receiving benefits--not
to develop sufficient evidence to prosecute a person for fraud. 

To help DDS staff identify high-risk cases, the FSF procedures first
list characteristics that have been commonly associated with
fraudulent or abusive cases in the past.  The FSF procedures then
recommend special ways that high-risk cases should be handled and
developed to determine whether there is reason to believe fraud or
similar fault was involved.  The special handling includes gathering
additional evidence to determine whether statements about the
disabilities and functional limitations of clients are correct and
complete and checking with appropriate staff to see if there are any
known problems with the person's medical evidence sources or any
middlemen involved in the cases. 

These new procedures require DDS staff to document a fraud or similar
fault finding and cite any evidence that is disregarded.  After
disregarding any evidence, DDS staff should make the disability
determination based on the remaining evidence in the file.  The
procedures require that staff notify SSA's OIG of all cases where
similar fault is suspected, alerting OIG to suspicious middlemen or
medical providers who may have been involved in providing incomplete
or incorrect statements.  The OIG then has the option of
investigating these cases further to establish whether fraud
occurred. 

      SSA HAS MADE CHANGES IN THE
      USE OF AGENCY-SUPPLIED
      INTERPRETERS
---------------------------------------------------------- Letter :4.3

Program policy on the use of interpreters varies among the different
components involved in making disability decisions.  SSA has a
general policy at its field offices of allowing non-English-speaking
SSI applicants to choose whether they want to use their own
interpreters or an SSA-supplied interpreter at the time a claim is
filed.  Interpreters provided by applicants must now sign a form
stating that they will accurately translate applicant responses
during the interview.  However, if field staff suspect that an
applicant-supplied interpreter is not providing accurate information
during an SSA interview, they can stop the interview and reschedule
it for a time when an SSA-supplied interpreter is available.  Failure
to sign the form is also grounds for SSA to stop and reschedule an
interview with an SSA-supplied interpreter. 

During required consultative medical examinations, the DDS offices in
most states follow SSA's field office policy of generally allowing
applicants to decide whether to use their own interpreter or one
supplied by the DDS office.  Staff can also insist that the applicant
or recipient use an agency-supplied interpreter if they have
suspicions about a case.  One state, however, requires all
non-English-speaking applicants and recipients to use DDS-supplied
interpreters. 

For cases denied by a DDS and then appealed, OHA requires that its
ALJs use a qualified interpreter.  Interpreters have to be able to
read, write, and demonstrate fluency in the language of the claimant
and in English.  They should have a basic familiarity with SSA
terminology, agree to act in the best interest of the claimant and
the public at large, provide exact translations, and comply with SSA
disclosure and confidentiality requirements.  Sources considered as
qualified include SSA and state employees, consultative examination
providers, family members, or persons affiliated with churches and
advocacy groups. 

Because of both an increase in the number of non-English-speaking
clients and a heightened awareness of the problems associated with
unscrupulous interpreters, SSA has hired over 2,300 additional staff
with bilingual capabilities since 1993.\6

However, SSA does not know how many bilingual staff it has in total,
nor has it determined how many it needs.  SSA officials told us that
the agency has begun tracking claimant language preferences so that
it can target interpreter services more effectively.  It is also
placing more emphasis on ensuring that adequate funds are available
to pay for non-English-speaking interpreter services where bilingual
staff are not available and providing specialized training for
bilingual employees. 

--------------------
\6 The changes in SSA interpreter policy and the hiring of additional
bilingual staff partially respond to the recommendations that we made
in our 1995 report. 

      STAFF CONCERNS LIMIT THE
      EFFECTIVENESS OF ANTIFRAUD
      INITIATIVES
---------------------------------------------------------- Letter :4.4

Each SSA initiative depends on its field and DDS staff first
recognizing suspicious cases (which can be difficult) and then
following the new procedures to refer the case for investigation by a
CDI team, or use the new FSF procedures, or arrange for an
agency-supplied interpreter.  However, many of the staff whom we
interviewed said they are reluctant to routinely take these actions
for several reasons.  Some staff believe the new procedures conflict
with other agency goals, and some staff do not perceive the
procedures as being effective in preventing fraud and abuse.  In
addition, some staff have concerns about their legal liability from
following the FSF procedures. 

         CONCERNS ABOUT
         CONFLICTING AGENCY GOALS
-------------------------------------------------------- Letter :4.4.1

Many DDS staff told us that they do not refer all suspicious cases to
CDI teams because such referrals require extra processing time. 
Specifically, in cases where fraud or similar fault is suspected,
staff must develop evidence to support their suspicions; prepare
referral forms that explain the basis for their concern; and, to the
extent possible, provide evidence that supports their concern. 
Proposed referrals are then discussed with DDS management, which
decides whether to refer the case to a CDI team. 

According to DDS staff, this extended processing time is inconsistent
with SSA's goal to quickly and accurately process claims and
post-entitlement decisions, and SSA has not made allowances in its
performance goals and measures (work credits) for the additional time
needed to identify and handle suspicious cases.  SSA continues to
monitor processing times, and staff believe that any delays in DDS
decisions are viewed as negatively affecting performance.  For
example, one DDS examiner told us that when a case is held up, it has
an adverse affect on an employee's mean case-processing time.  At
another DDS office, staff said that case examiners do not always
refer suspicious cases because they do not want their processing
times to suffer. 

We heard similar comments about processing time concerns from staff
in SSA field offices.  For example, we were told that staff lack the
time and resources to properly check claims.  When they detect a
possible problem during the interview and would like to follow up on
those suspicions, they sometimes do not because they do not receive
credit for the additional work.  At another field office, a staff
member said she believes the investigative teams are understaffed and
she hates to let her processing time suffer by making referrals to
them.  At a third field office, we were told that the referrals were
not an effective use of staff time. 

When we discussed processing times and the new FSF and agency
interpreter procedures with front-line staff, concerns such as the
following were raised: 

  -- DDS staff said that the new FSF procedures are more
     labor-intensive than those required for other claims.  They can
     also require additional development of evidence.  Further, they
     said that the guidelines on how to identify claims that might
     warrant special handling are so general that they could apply to
     most SSI claims. 

  -- SSA field office staff echoed these views.  They told us that
     stopping interviews because of concerns over interpreters just
     extends the time needed to handle and close a claim.  It takes
     time to establish another date when SSA can arrange for its own
     interpreter and for the applicant to appear at another
     interview.  Consequently, the new policy can result in field
     staff missing processing time goals. 

According to an SSA official, the agency has developed a "culture"
that values helping needy people and, within this culture, the prompt
payment of benefits takes precedence over all other activities,
including efforts to uncover fraud and abuse. 

         CONCERNS ABOUT
         EFFECTIVENESS OF NEW
         INITIATIVES
-------------------------------------------------------- Letter :4.4.2

Both DDS and SSA field office staff perceive that SSA's antifraud
initiatives will have a limited effect on fraud and abuse, which adds
to their reluctance to invest the time and effort required by these
new initiatives.  Basically, staff believe that even if they deny a
claim, applicants will ultimately be awarded benefits at the appeals
level. 

One basis for this perception stems from the differences in
procedures for ALJs and DDS offices.  Because FSF procedures have not
yet been issued for ALJs, they operate under adjudicative rules,
which may cause them to reach a decision different from other SSA
decision levels.  According to OHA officials, by law ALJs must give
controlling weight to the medical opinion provided by an applicant's
or recipient's treating physician, provided the medical opinion is
well supported by acceptable clinical and laboratory diagnostic
techniques and is not inconsistent with other evidence.  Under FSF
procedures issued for DDS-level adjudicators, DDS staff may decide
not to give controlling weight to the medical evidence from a
treating physician when the DDS office has evidence that the
physician has repeatedly provided identical diagnoses in other cases. 
Consequently, a denial determination under FSF procedures by DDS
adjudicators may well be overturned by the ALJ when the judge does
not have the necessary documentation about the reasons the DDS did
not give controlling weight to the treating physician's opinion. 

In addition, SSA and DDS staff told us that they are reluctant to
refer all fraud or similar fault cases to SSA's OIG for possible
prosecution--although FSF procedures require them to do so--because
they perceive that the OIG is not willing to investigate such cases. 
In the past, the OIG has devoted its limited resources to
investigating fraud cases where large dollar amounts were involved or
a conviction was likely.  Furthermore, when fraud cases were referred
to the OIG, there was no feedback on the outcome of the referrals. 
When staff continued to see the same middlemen and providers involved
in other cases, they concluded that the OIG referrals were not a
productive use of their time. 

The OIG is aware of these views and is developing systems to better
inform field staff about the status of cases they have referred. 
There have also been staffing increases to improve its investigative
capacity and efforts have been made to publish information about the
outcome of fraud cases. 

         CONCERNS ABOUT STAFF
         LIABILITY
-------------------------------------------------------- Letter :4.4.3

Finally, staff are concerned that they can be held liable for actions
they take under the new procedures, which require them to place
written statements in the files whenever they believe material
information provided by applicants, medical providers, middlemen, or
other third parties is misleading, inaccurate, or incomplete.  Staff
fear that if this type of statement becomes known, they could be sued
and held liable for damages claimed by medical providers and
interpreters alleging that DDS staff impugned their reputations. 

One state DDS has not yet implemented the new FSF procedures because
of these concerns.  Although the principle of sovereign immunity
generally exempts states from liability suits based on actions taken
by employees performing their official duties, state laws and court
decisions have created some exceptions to that immunity.  Officials
in the state pointed out that there is nothing to prevent providers,
middlemen, or organizations representing them from seeking to hold
the state or its employees liable under one of the exceptions.  The
state does not want to incur the time or expense involved in
defending itself and its employees or risk an adverse outcome. 

SSA officials stated that the agency cannot guarantee that DDS
employees would be held harmless by a court.  Such a guarantee would
mean that the government would have to defend any DDS employee, even
if the employee were negligent in making adverse statements about a
medical provider or other third party in a claims file.  SSA
officials also believe it is clear that the guidelines for
identifying suspicious claims are just that--guidelines--and not
mandates to apply the FSF procedures to each case meeting these
criteria. 

   OPPORTUNITIES EXIST TO BETTER
   IDENTIFY AND TRACK SUSPICIOUS
   MIDDLEMEN AND MEDICAL PROVIDERS
------------------------------------------------------------ Letter :5

In our view, there are several additional actions SSA could take to
help reduce the SSI program's vulnerability to fraud and abuse. 
Because SSA relies heavily on its front-line staff to detect
suspicious claims and the involvement of suspicious middlemen and
medical providers, it is important that resources and processes
assist staff in their identification efforts and encourage them to
use SSA's new initiatives. 

      BETTER INFORMATION NEEDED
      FOR FRONT-LINE STAFF
---------------------------------------------------------- Letter :5.1

Approaches that focus on obtaining and sharing information about
suspicious middlemen and medical providers programwide would likely
enhance SSA's ability to identify cases where individuals may be
obtaining benefits by feigning disabilities.  With this type of
information, DDS personnel and SSA's field staff could better
determine which claims should receive increased scrutiny and target
their investigations of current beneficiaries to evaluate whether
they should be removed from the program.  Such information could also
help staff more readily identify cases that meet certain profiles
(suspicious middlemen and medical providers), which should result in
more effective referrals from DDS examiners and better use of CDI and
OIG resources.  The information could also be used to identify those
middlemen and providers who are involved in multiple claims. 

SSA could use information it has to begin developing comprehensive
databases on suspicious middlemen.  SSA and DDS staff could annotate
the database with the reasons for their suspicions about each
identified middleman.  Because data on practicing middlemen are not
readily available, SSA would need to require that all third parties
involved in claims document their identity (for example, name,
address, and social security or driver's license number).  With these
data, SSA could identify the cases in which each middleman was
involved, and SSA field and DDS staff could check the database when
handling claims and add new names to this database as they became
known.  Thus, SSA, with its own data on suspicious middlemen, could
centralize and share this information agencywide, as we suggested in
our 1995 report.  While SSA plans to centralize information on
suspicious middlemen within each DDS through its new FSF procedures,
this step may not be sufficient to address the problem of middlemen
operating among offices in more than one location.  Limiting the
databases to specific geographic areas would likely reduce their
effectiveness as a tool to identify the involvement of suspicious
middlemen in SSI cases. 

With databases that could be shared agencywide, the agency would be
better able to identify potential problem cases and unscrupulous
middlemen, regardless of the office being used.  SSA could also
require that its own interpreters be used when an applicant uses a
suspicious middleman listed in the database, instead of requiring
staff to rely on their suspicions that an interpreter is providing
inaccurate translations.  To facilitate the use of agency-supplied
interpreters in these situations, SSA could require that
non-English-speaking claimants schedule an interview at a field
office where staff have the appropriate language capability.  If this
is inconvenient for the client, SSA could schedule an interview at an
office of the applicant's choosing and send an agency-supplied
interpreter to that office on the established appointment date. 

SSA could supplement the middleman database with information on
suspicious medical providers identified by other entities (for
example, the Medicaid and Medicare programs and private insurance
companies) to identify cases for scrutiny.  SSA's past experience
with investigating disability fraud and abuse has shown that medical
providers suspected or convicted of Medicaid fraud have provided many
SSI recipients with misleading medical evidence that helped them
improperly obtain benefits.  Moreover, fraud investigators have told
us that medical providers who try to take advantage of one program
often try to abuse or defraud other programs as well. 

Benefit-paying agencies typically maintain databases of suspicious
providers they have investigated for alleged fraudulent and abusive
activities.  If SSA gathered and maintained this information, it
could determine through computer matching whether any SSI applicants
or recipients had used or were using these same providers.  A match
would not prove that the applicant or recipient was actually feigning
his or her disability.  However, it would alert DDS staff to the
possibility of fraud or abuse and highlight the case for more careful
review either by them or by a CDI team, if one is present at the DDS
office.  Establishing such a database would require some changes in
SSA recordkeeping practices.  For example, the agency would have to
include in its electronic records the names of the medical providers
used by applicants and recipients to supply medical evidence. 
Currently, only state DDS offices maintain provider names to
facilitate payment for medical evidence submitted on the behalf of
claimants. 

To ensure such comprehensive databases would be secure and the
information therein confidential, SSA would need to address
widespread weaknesses in controls over access to its systems, which
we recently reported on.\7 These control weaknesses expose its
computer systems to external and internal intrusion, subjecting
sensitive SSA information to potential unauthorized access,
modification, and disclosure.  Although SSA has developed and
continues to pursue corrective actions to address these problems,
some organizations may not want to disclose data they maintain on
providers, fearing that improper handling would adversely affect
their own operations. 

In addition, medical providers and middlemen may be concerned that
their reputations could be damaged if it becomes known that they had
been suspected of fraud or abuse and the suspicions may not have been
substantiated.  There are ways to address these concerns.  For
example, insurance laws in most states allow regulators to maintain
databases of suspicious medical providers and others suspected of
defrauding insurance companies.  To encourage these companies to
report the names of suspicious providers and other parties in the
claims they are evaluating, the laws guarantee that the companies
cannot be sued by a suspicious provider or other third party for
maintaining or referring such data, as long as the referral was made
without malice or intent to harm.  In addition to these state-level
databases, insurance companies provide the names of suspicious
individuals to the National Insurance Crime Bureau, a national
not-for-profit organization that maintains a central database for
member insurance companies to consult in their efforts to deter and
prevent insurance crimes.  It is also used by law enforcement
agencies in their efforts to combat fraud. 

Further, SSA is required by law to take certain steps to ensure the
privacy and security of data, whether that information was internally
generated by SSA or obtained from other agencies.  These steps
include traditional safeguards such as developing a security plan,
audit trails, automated alerts to prevent inappropriate requests for
personal information, personal identification numbers and passwords,
training, and periodic internal and external evaluations of all
privacy and security measures. 

--------------------
\7 Information Security:  Serious Weaknesses Place Critical Federal
Operations and Assets at Risk (GAO/AIMD-98-92, Sept.  23, 1998). 

      ENCOURAGING STAFF TO PURSUE
      SUSPICIOUS CASES
---------------------------------------------------------- Letter :5.2

Fighting fraud and abuse will require changes in management
approaches.  SSA needs to demonstrate to its front-line staff that it
is serious about having them pursue questions about suspicious cases. 
Management systems that emphasize timely processing of claims without
recognizing the additional time needed to develop evidence related to
suspicious cases are hindering SSA's antifraud efforts. 

Both the OIG and we have noted how staff perceive agency priorities. 
For example, we concluded in a recent report that long-standing
problems in the SSI program are attributable to SSA's ingrained
organizational culture that has historically placed a greater value
on quickly processing and paying SSI claims than on controlling
program costs.\8 We recommended that SSA reevaluate its 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.  The OIG also noted that developing fraud cases for
referrals can require significant amounts of time and concluded that
SSA cannot simply measure claims processing by how many and how
quickly cases are processed because this approach creates a
disincentive to staff for developing fraud cases.  It also suggested
that incentives to develop suspicious cases be provided and that
adjustments to tracking processing times be made.\9

SSA told us that giving special consideration when tracking staff
claims processing times in suspicious cases remains under review. 

--------------------
\8 Supplemental Security Income:  Action Needed on Long-Standing
Problems Affecting Program Integrity (GAO/HEHS-98-158, Sept.  14,
1998). 

\9 SSA, Proceedings of the 2nd Annual Fraud Conference, Sept.  8-12,
1997. 

   CONCLUSIONS
------------------------------------------------------------ Letter :6

SSI and other benefit programs may be losing millions of dollars each
year because individuals improperly obtain benefits by feigning
disabilities with the help of medical providers and middlemen.  Every
individual who obtains benefits in this manner will cost the federal
government an estimated $122,000 in SSI and Medicaid benefits over
the next 10 years.  While SSA has made progress in addressing this
problem since our 1995 report and its efforts have had positive
results, detecting fraudulent and abusive SSI cases remains
difficult. 

Because SSA relies heavily on its front-line staff to identify
potential fraud and abuse, it is important for staff to have the
ability to detect suspicious cases.  Their detection abilities would
be strengthened if they had additional tools to meet this challenge. 
To the extent that information on problem middlemen and medical
providers can be developed, maintained, and shared with staff, SSA's
fraud detection and prevention efforts will be enhanced.  In
addition, by implementing our previous recommendation to reevaluate
its work-credit and incentive structure to encourage better
verification of recipient information and greater staff attention to
fraud prevention and detection, staff will be encouraged to use the
new procedures.  Finally, we believe legislative action to address
staff liability concerns could enhance the use of established
procedures to fight fraud. 

   RECOMMENDATIONS
------------------------------------------------------------ Letter :7

We recommend that the Commissioner of Social Security take the
following actions: 

  -- Study the feasibility of obtaining information on suspicious
     medical providers from federal, state, and private entities that
     face similar fraud and abuse issues as SSA does in managing the
     SSI program. 

  -- Systematically track suspicious middlemen and medical providers
     identified by SSA staff and outside agencies, and routinely
     share this information throughout SSA.  For example, SSA could
     electronically maintain information on such medical providers
     and middlemen and on the SSI applicants and recipients they
     serve.  This information would help SSA (1) determine which
     claims should receive increased scrutiny to prevent these
     applicants from improperly receiving benefits and (2) target
     investigations of current beneficiaries to determine if they
     should be removed from the program. 

  -- Reexamine SSA's policy regarding SSA-provided interpreters for
     SSI applicants with the aim of determining the extent to which
     it is followed by field and DDS staff and its effectiveness, and
     whether the use of SSA-provided interpreters should be required
     in situations which meet certain profiles. 

   RECOMMENDATION TO THE CONGRESS
------------------------------------------------------------ Letter :8

To address liability concerns related to maintaining lists of
suspicious middlemen and medical providers and following FSF
procedures, the Congress may wish to provide a limitation of the
legal liability of state employees who follow SSA policies that
require them to identify and document middlemen and medical providers
suspected of providing misleading, inaccurate, and incomplete
evidence in disability claims. 

   AGENCY COMMENTS AND OUR
   EVALUATION
------------------------------------------------------------ Letter :9

We provided SSA a draft of this report for review and comment.  In
its written response, SSA agreed that more can be done to prevent
fraud in the SSI program and endorsed our recommendation to reexamine
its current policy on the use of interpreters.  However, the agency
indicated that while our other two recommendations have potential
value, it wanted to explore them further before committing to
developing implementation strategies for them.  SSA also emphasized
that its issuance of a plan to improve SSI program management was
evidence of its commitment to fight fraud and noted that it has taken
actions that can substantially reduce the potential for such fraud. 

Our views about several specific concerns raised in SSA's letter
follow.  SSA's letter is reprinted as appendix III. 

  -- Regarding the finding that SSI remains vulnerable to middleman
     fraud, SSA is concerned that our report relies almost
     exclusively on anecdotal evidence.  SSA said that while the
     middleman problem has not been completely eradicated, it
     believes that it has taken actions that substantially reduce the
     potential for middleman fraud and remains committed to taking
     further action. 

As our report states, SSA does not routinely record the names and
addresses of middlemen when a claim is filed.  As a result, we could
not determine the extent of suspicious middleman involvement in SSI
cases involving feignable impairments.  As a substitute measure, we
spoke with staff SSA relies on to identify potentially fraudulent
cases (its field office employees and DDS staff) and SSA's fraud
investigators.  Both said middleman fraud is a continuing problem. 

  -- SSA is also concerned that we may have overstated the extent of
     the problem with unscrupulous medical providers.  It said that
     lists of suspicious providers may prove to be a valid indicator
     of the potential for fraud in a case.  However, it also said
     that our inclusion of persons suspected of fraud rather than
     limiting the study to those convicted or otherwise sanctioned
     for fraud could overstate the problem.  SSA noted that being
     investigated for fraud cannot and should not be equated with
     being convicted or sanctioned. 

Precisely measuring the SSI program's vulnerability to fraud and
abuse is difficult.  By its nature, fraud is surreptitious and
perpetrators are not always identified and prosecuted.  Even if the
rate is half what we measured, there is a problem that SSA needs to
address.  Some medical providers--an important component of the
disability adjudication process--have been at least suspected of
fraudulent activities by others.  We believe SSA can improve staff
ability to identify cases that deserve closer scrutiny by developing
and maintaining lists of medical providers and middlemen whose past
actions make their involvement in SSI cases suspicious. 

  -- SSA emphasized that its October 1998 plan to improve SSI
     management addresses employee views that workload priorities
     overshadow antifraud activities.  It said the plan makes it
     clear that SSA is pursuing initiatives designed to balance its
     program stewardship responsibilities with its public service
     responsibilities.  Over time, it believes the plan activities
     will achieve this balance. 

We believe SSA's issuance of a plan to improve SSI management is a
positive step in its efforts to combat fraud and abuse in the program
and that it has taken a number of actions to enhance program
stewardship.  However, the plan mentioned by SSA does not specify any
initiatives that directly address employee perceptions that workload
priorities overshadow antifraud activities.  SSA needs to take some
specific actions to overcome this widespread and deep-seated
perception among its staff. 

  -- SSA commented that the majority of the cost savings achieved by
     its five CDI teams are not necessarily related to fraud
     perpetuated against the program.  It said that many if not most
     of the CDI team savings appear to involve instances of
     disability decisions being made incorrectly or without proper
     documentation rather than fraud. 

As our report notes, the purpose of the CDI teams was not to prove
fraud; rather, it was to assist SSA and DDS staff in making
benefit-related decisions.  The report notes that the CDI teams
believe that their investigative work contributed to denials and
cessations of benefits--not that they contributed to prosecutions for
fraudulent activity. 

  -- Finally, before pursuing two of our recommendations, SSA would
     like to have in-depth discussions about these approaches with
     its OIG staff and GAO.  SSA said that implementing two of our
     three recommendations--tracking suspicious middlemen and medical
     providers SSA encounters and sharing this information with its
     staff; and studying the feasibility of obtaining information on
     suspicious medical providers from federal, state, and private
     entities to supplement this information--may be fruitful. 
     However, SSA is concerned about the definition of suspicious
     medical providers or middlemen and the legal ramifications of
     tracking individuals who may not have been convicted or have not
     admitted guilt.  Because the suspicious individuals in our study
     included people who had been or were being investigated as well
     as people who have been convicted or sanctioned, SSA states that
     this approach raises serious legal issues relative to the
     Privacy Act, the Freedom of Information Act, individual state
     and employee liability, and accessibility (security). 
     Specifically, SSA notes that the Privacy Act requires that
     agencies maintain records that are accurate, complete, relevant,
     and timely as reasonably necessary to ensure fairness in any
     determinations made about the individual.  Before establishing
     such a system of records, SSA would have to make the public
     aware of its plans by publishing a notice of its intended
     actions and allowing the public to comment.  Once aware of the
     records system, the public could use the provisions of the
     Privacy Act to obtain records about themselves and the right to
     request correction of erroneous information in the records.  If
     SSA inappropriately or incorrectly labels individuals as
     suspicious without the benefit of convictions or admissions of
     guilt, it could be vulnerable to legal challenges in civil
     actions brought by these individuals. 

We agree that SSA must comply with the Privacy Act and other relevant
legislation and must act carefully and responsibly in characterizing
individuals as suspicious, particularly where that characterization
could lead to criminal prosecution, denial of benefits, or other
adverse consequences.  Our definition of "suspicious" was reasonable
for research purposes but may not be appropriate for law enforcement
purposes.  In our opinion, however, the Privacy Act is not an
impediment to implementing our recommendation to systematically track
suspicious middlemen and medical providers.  SSA already maintains a
system of records, the Program Integrity Case Files, that contains
the same kind of information and complies with the Privacy Act.  We
believe this system of records--or a similar one designed for this
purpose--could be used to carry out our recommendations as well. 
Information in the Program Integrity Case Files, according to SSA's
published Privacy Act notice, includes the identity of persons
suspected of violating Federal statutes affecting the administration
of programs under the responsibility of SSA. We see no reason why
information about suspicious middlemen and providers in the SSI
program could not be maintained in the same fashion.  Since SSA
already maintains such records, our recommendations create no new
category of risk of civil liability for incorrectly labeling
individuals as suspicious.  Nevertheless, the intent of our
recommendations is to provide SSA and DDS staff with information,
such as the involvement of suspicious middlemen or providers in a
case.  This type of information will enable them to identify
potentially fraudulent cases for closer review. 

---------------------------------------------------------- Letter :9.1

We are providing copies of this report to the Honorable Kenneth S. 
Apfel, Commissioner of Social Security.  We will also send copies to
other interested parties on request.  If you or your staff have any
questions about this report, please contact Barbara Bovbjerg,
Associate Director, at (202) 512-5491, or Rod Miller, Assistant
Director, at (202) 512-7246.  Other major contributors to this report
were Nancy Cosentino, Jill Yost, William Staab, and Kevin Craddock. 

Sincerely yours,

Cynthia M.  Fagnoni
Director, Education, Workforce,
 and Income Security Issues

SCOPE AND METHODOLOGY
=========================================================== Appendix I

This appendix describes our approach for collecting and analyzing
data and for interviewing officials in agencies coping with fraud and
abuse in health insurance programs.  Our work was directed at
determining (1) the potential risk that recipients become eligible
for SSI by feigning disabilities with the help of middlemen and
medical providers; (2) how SSA prevents, detects, and responds to
this type of program fraud and abuse; and (3) additional methods SSA
could use to effectively address this problem.  We did not, however,
verify the accuracy of the automated data provided by SSA or the
investigative organizations.  We conducted our review from October
1997 to August 1999. 

   INTERVIEWS WITH SSA MANAGERS
   AND STAFF
--------------------------------------------------------- Appendix I:1

To determine the beliefs of SSA managers, front-line staff, and
various fraud investigators about the continued existence of
middleman fraud, we asked 158 individuals to discuss their opinions
on and experiences with middleman fraud in the SSI program.  These
individuals were not randomly selected and were not in sufficient
numbers to constitute a statistically valid sampling of the opinions
of all individuals who work with the SSI program.  Table I.1 shows
the number of interviews we held, by organization. 

                         Table I.1
          
          Number of Interviews GAO Conducted With
           Individuals to Ask About the Continued
          Existence of Middleman Fraud in the SSI
                  Program, by Organization

                                                 Number of
Organization                                    interviews
--------------------------------------  ------------------
SSA headquarters                                        17
OHA headquarters                                         5
SSA regional offices                                    10
DDS offices                                             43
SSA field offices                                       43
OHA regional offices                                     7
Investigators                                           33
----------------------------------------------------------

   ANALYSIS OF SSI RECIPIENTS IN
   SUSCEPTIBLE DIAGNOSTIC
   CATEGORIES
--------------------------------------------------------- Appendix I:2

To learn which mental and physical disabilities are considered
susceptible to being feigned or exaggerated, we interviewed
disability specialists at SSA headquarters in Baltimore, medical
consultants and medical relations officers at DDS offices in seven
states, and investigators who specialize in disability fraud.  We
also reviewed SSA's Program Operations Manual, which lists
impairments prevalent in claims involving fraud or similar fault. 
The specific categories we identified as susceptible to feigning are
identified in appendix II. 

We then analyzed the distribution of diagnostic categories among
recipients in SSA's Characteristic Extract Record, often referred to
as the "10-percent file," to identify how many adults and children
had mental or physical disabilities that fell into the susceptible
diagnostic categories.  Because over 20 percent of the records lack
the diagnostic code which would indicate the disability that
qualified the recipient for SSI benefits, our analysis reflects only
those records in the 10-percent file that contained the diagnostic
code. 

   ANALYSIS OF SUSPICIOUS MEDICAL
   PROVIDERS INVOLVED IN SSI CASES
--------------------------------------------------------- Appendix I:3

To determine the potential extent of SSI disability fraud and abuse
by medical providers, we obtained records from SSA that identified
SSI recipients whose disabilities were among those considered
susceptible to being feigned or exaggerated.  The records covered six
states (California, Florida, Georgia, Louisiana, Massachusetts, and
New York).  SSI recipients in these states constitute about 40
percent of the total SSI population. 

Using these recipient names and social security numbers, the DDS
offices for these six states created files containing records that
identified both the SSI recipients and the medical providers who had
submitted evidence to support their disability claims.  (In many
cases, the DDS record contained only the name of a hospital, and it
was not possible to identify the specific doctor at the hospital who
had been involved in a claim.) The names of those medical providers
were matched against lists of providers who had been or were
currently under investigation by agencies tasked with investigating
suspicious medical providers, the Health Care Financing
Administration (HCFA), the National Insurance Crime Bureau (NICB),
and the states' Medicaid Fraud Control Units (MFCU).  We did not
verify the accuracy of the data provided by these agencies. 

      HCFA AND NICB MATCHES
------------------------------------------------------- Appendix I:3.1

We matched the name, address, and tax identification number of the
service providers in the DDS file against providers listed in the
HCFA and NICB files.  These files contained identifying information
for medical providers who had been either suspected or convicted of
defrauding or abusing programs paying Medicare, Medicaid, and private
health insurance benefits.  For those providers who appeared in both
lists, we created a file of the records for all SSI recipients who
had obtained evidence from them. 

      MFCU MATCH
------------------------------------------------------- Appendix I:3.2

State regulations require state MFCUs to protect the privacy and
confidentiality of service providers investigated for possible
fraudulent activity.  For this reason, we developed a protocol for
this data match that differed from those used with the HCFA and NICB
data. 

We created for each state MFCU a file in which we had assigned a
control number to each service provider identified in the DDS
records.  MFCUs matched the name, address, and tax identification
information in our file against their databases of investigated
service providers, then provided us with a list of the control
numbers associated with providers who appeared in both files.  Using
the control numbers, we generated a file of SSI recipients who had
used medical evidence from these suspicious providers to prove their
disability. 

IMPAIRMENTS CONSIDERED BY SSA TO
BE VULNERABLE TO EXAGGERATION
========================================================== Appendix II

SSA uses a four-digit code to designate disabilities.  The codes are
based on the International Classification of Diseases, published by
the Department of Health and Human Services.  The diagnostic codes
are divided into general areas, such as cardiovascular,
musculoskeletal, and mental.  To determine which of these
disabilities were most likely to be feigned or exaggerated by a
person applying for SSI disability benefits, we interviewed medical
consultants and medical relations officers at DDS offices in seven
states, disability specialists at SSA headquarters, and investigators
who specialize in disability fraud.  We also reviewed SSA's Program
Operations Manual, which lists impairments prevalent in claims
involving fraud or similar fault.  From these sources, we developed
the following list of disabilities that were considered susceptible
to being feigned or exaggerated. 

                         Table II.1
          
           Impairments Considered Susceptible to
                 Exaggeration in SSI Claims

SSA disability
code              Description
----------------  ----------------------------------------
Adult/childhood disabilities
----------------------------------------------------------
2900-2949         Organic mental disorders

2950-2959         Schizophrenic disorders

2960-2999         Affective disorders

3000-3009         Anxiety disorders

3010-3059         Personality disorders

3060-3169         Somatoform disorders

3170-3199         Mental retardation

3450-3459         Epilepsy

Adult-only disabilities
----------------------------------------------------------
3690-3699         Blindness and low vision

4960-4949         Chronic pulmonary insufficiency

7240-7249         Disorders of the back (discogenic and
                  degenerative)

7280-7289         Disorders of the muscle, ligament, and
                  fascia

8480-8489         Sprains and strains (all types)
----------------------------------------------------------

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

(See figure in printed edition.)

(See figure in printed edition.)

(See figure in printed edition.)

*** End of document. ***