Social Security Disability: SSA Is Making Progress Toward Eliminating
Continuing Disability Review Backlogs (Testimony, 09/25/97,
GAO/T-HEHS-97-222).

GAO discussed the Social Security Administration's (SSA) plan to
eliminate the backlog of continuing disability reviews (CDRs) in the
Disability Insurance and Supplemental Security Income (SSI) programs,
focusing on: (1) SSA's progress toward achieving its current 7-year plan
cost-effectively and on schedule; (2) SSA's spending rate; and (3) the
status of selection formulas needed to meet future goals.

GAO noted that: (1) SSA's experience in CDRs during fiscal year 1997 is
encouraging; (2) for 1997, SSA expects to meet or exceed its goal to
conduct 603,000 CDRs; (3) for 1998, SSA is planning to increase its goal
because it was able to meet its 1997 goal, while also processing at
least 235,000 SSI childhood eligibility redeterminations; (4) reviewing
more cases sooner than planned, to the extent possible, is clearly
desirable because of the high costs--in taxpayer dollars and program
integrity--of continuing benefits to those who are no longer eligible;
(5) in addition, SSA's spending to date and estimates of future
processing costs suggest that it will be able to complete its current
7-year plan with the funds the Congress has authorized, although its
revised plan will not be available until November 1997; and (6) key
issues, however, such as deciding which beneficiaries should undergo a
full medical review--a lengthy and costly process--are still unresolved
but will determine how quickly and at what cost SSA can become current
on its CDR workload.

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

 REPORTNUM:  T-HEHS-97-222
     TITLE:  Social Security Disability: SSA Is Making Progress Toward 
             Eliminating Continuing Disability Review Backlogs
      DATE:  09/25/97
   SUBJECT:  Social security benefits
             Claims processing
             Eligibility determinations
             Persons with disabilities
             Medical examinations
             Beneficiaries
             Cost analysis
             Federal social security programs
IDENTIFIER:  Social Security Disability Insurance Program
             Supplemental Security Income Program
             
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Cover
================================================================ COVER


Before the Subcommittee on Social Security, Committee on Ways and
Means, House of Representatives

For Release on Delivery
Expected at 1:00 p.m.
Thursday, September 25, 1997

SOCIAL SECURITY DISABILITY - SSA
IS MAKING PROGRESS TOWARD
ELIMINATING CONTINUING DISABILITY
REVIEW BACKLOGS

Statement of Jane L.  Ross, Director
Income Security Issues
Health, Education, and Human Services Division

GAO/T-HEHS-97-222

GAO/HEHS-97-222T


(207015)


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

  CDR - continuing disability review
  DI - Disability insurance
  DDS - disability determination services
  IFA - individualized functional assessment
  SSA - Social Security Administration
  SSI - Supplemental Security Income

SOCIAL SECURITY DISABILITY:  SSA
IS MAKING PROGRESS TOWARD
ELIMINATING CONTINUING DISABILITY
REVIEW BACKLOGS
============================================================ Chapter 0

Mr.  Chairman and Members of the Subcommittee: 

Thank you for inviting me to testify on the Social Security
Administration's (SSA) plan to eliminate the backlog of continuing
disability reviews (CDR) in the Disability Insurance (DI) and
Supplemental Security Income (SSI) programs.  These programs together
pay about $60 billion annually to 9 million disabled beneficiaries. 
CDRs, required by law for all DI and some SSI beneficiaries, help
ensure that only those eligible continue receiving benefits.  During
the last 20 years, however, SSA has conducted from as few as 36,000
to as many as 544,000 reviews in various years.  We have reported on
several occasions that because SSA has not consistently done the
required CDRs, hundreds of millions of dollars in unnecessary costs
have been incurred each year, and program integrity has been
undermined.  (See the list of related GAO products at the end of this
statement.)

For almost a decade, budget and staff reductions and large increases
in initial claims hampered SSA's efforts to conduct these reviews. 
Consequently, more than 4 million beneficiaries were due or overdue
for CDRs by 1996.  Both SSA and the Congress focused attention on
CDRs in that year.  As a result, SSA developed a plan to conduct 8.2
million CDRs between 1996 and 2002, and the Congress authorized
funding of about $4.1 billion over 7 years for this purpose.  Soon
after SSA developed its plan, the Congress established a new
requirement for CDRs and for disability redeterminations for certain
SSI children, for whom eligibility criteria were made more
restrictive as part of welfare reform.  SSA expects to complete an
update of its plan in November 1997 to incorporate these SSI CDRs as
well as its progress conducting CDRs. 

My testimony today presents our observations on SSA's ability to
achieve its current 7-year plan cost effectively and on schedule.  I
will discuss SSA's progress so far, its spending rate, and the status
of selection formulas needed to meet future goals.  My testimony is
based on our previous reports and our ongoing work for you and
Representative Kennelly. 

In summary, we have found that SSA's experience in conducting CDRs
during fiscal year 1997 is encouraging.  For 1997, SSA expects to
meet or exceed its goal to conduct 603,000 CDRs.  And, for 1998, it
is planning to increase its goal because it was able to meet its 1997
goal, while also processing at least 235,000 SSI childhood
eligibility redeterminations.  Reviewing more cases sooner than
planned, to the extent possible, is clearly desirable because of the
high costs--in taxpayer dollars and program integrity--of continuing
benefits to those who are no longer eligible.  In addition, SSA's
spending to date and estimates of future processing costs suggest
that it will be able to complete its current 7-year plan with the
funds the Congress has authorized, although its revised plan will not
be available until November 1997.  Key issues, however, such as
deciding which beneficiaries should undergo a full medical review--a
lengthy and costly process--are still unresolved but will determine
how quickly and at what cost SSA can become current on its CDR
workload. 


   PRIORITY OF CDRS HAS VARIED
---------------------------------------------------------- Chapter 0:1

SSA's disability programs provide cash benefits to people with
long-term disabilities.  The DI program provides monthly cash
benefits and Medicare eligibility to severely disabled workers; SSI
is an income assistance program for blind, disabled, or aged people
whose income and resources fall below a certain threshold.  The law
defines disability for adults for both programs as the inability to
engage in substantial gainful activity because of a severe physical
or mental impairment that is medically determinable and has lasted or
is expected to last at least 1 year or result in death.  For children
seeking SSI disability benefits, the impairment must meet the
duration requirement and result in marked and severe functional
limitations. 

Both the DI and SSI programs are administered by SSA and state
disability determination services (DDS).  DDSs receive their funding
from SSA and make disability decisions in accordance with SSA's
policies and procedures.  They process initial disability
applications, assess beneficiaries' potential for medical
improvement, set due dates for CDRs, and conduct full medical
reviews. 

In early 1978, we reported on serious program administration
weaknesses that allowed many medically ineligible recipients to go
undetected.\1 Because of its concerns about the effectiveness of the
CDR process and the growing number of disability beneficiaries, the
Congress enacted a provision in a 1980 law requiring periodic CDRs
for all DI beneficiaries.\2 This provision requires SSA to review--at
least once every 3 years--the status of DI beneficiaries whose
disabilities are not permanent to determine their continuing
eligibility for benefits.  The law also requires CDRs for DI
beneficiaries with permanent impairments but gives SSA latitude in
determining the frequency of these reviews.  The 1980 provision does
not require SSA to review cases involving SSI recipients.  Before the
1980 legislation, SSA scheduled beneficiaries for medical reviews
only if medical improvement was expected. 

As a result of the 1980 law, SSA began increasing the number of CDRs
in fiscal year 1981, using age, benefit amount, and medical
characteristics as selection criteria.  This resulted in the
selection of a disproportionate number of young people with mental
impairments for CDRs, as shown in table 1.  Many of these cases were
terminated because they did not meet new strict mental disability
criteria that had been implemented after they had been put on the
rolls. 



                          Table 1
          
          CDR Historical Data, Fiscal Years 1975-
                             96

                     Benefit
                    cessatio
                      n rate
            Number       (in
Fiscal          of  percent)  Selected significant events
year        CDRs\a        \c  in CDR history
--------  --------  --------  ----------------------------
1975       147,200        21
1976       170,000        24
1977       150,300        38
1978       118,800        46  GAO reported its concern
                               that thousands of medically
                               ineligible recipients were
                               going undetected.
1979       134,500        46
1980       159,600        46  The Congress established
                               requirement for periodic
                               reviews of DI
                               beneficiaries.
1981       257,100        47  SSA increased CDRs and began
                               targeting CDRs on the basis
                               of age, benefit amount, and
                               medical factors that
                               disproportionately affected
                               younger people and the
                               mentally impaired.
1982       496,800        45
1983       544,200        41
1984       156,600        24  The Congress enacted medical
                               improvement review
                               standard, and SSA declared
                               moratorium on CDRs.
1985        35,900        11
1986        47,700         6  SSA lifted the CDR
                               moratorium after publishing
                               regulations for the medical
                               improvement review
                               standard. SSA also
                               published criteria for
                               scheduling CDRs.
1987       206,000        13
1988       353,800        12
1989       366,800         9
1990       195,100        11  SSA began diverting CDR
                               resources to initial
                               disability claims, which
                               were growing rapidly.
1991        73,500        10
1992        73,100        13
1993      64,800\b        11  SSA implemented mailer CDR
                               process for certain DI
                               beneficiaries under age 59.
1994      118,400\        14  The Congress enacted
                 b             requirement for 100,000 SSI
                               CDRs annually during fiscal
                               years 1996-98.
1995      217,000\        17
                 b
1996      498,400\        11  The Congress authorized $4.1
                 b             billion for CDRs during
                               fiscal years 1996-2002 and
                               required additional SSI
                               childhood disability
                               reviews and
                               redeterminations for which
                               it authorized an additional
                               $250 million.
----------------------------------------------------------
\a CDR data for 1975 through 1994 include "work" CDRs for which DDSs
conduct full medical reviews.  Work CDRs are unscheduled reviews that
SSA's field offices initiate when, for example, they receive reports
indicating a beneficiary is working or has income.  SSA estimates
that DDSs annually conduct about 20,000 full medical reviews as a
result of work CDRs. 

\b For 1993-96, the number of mailers, respectively, were about
34,600, 31,000, 76,500, and 248,000. 

\c Data represent initial cessation rate before appeals. 

Source:  SSA. 

In response to this situation, the Congress enacted a law in 1984
establishing the Medical Improvement Review Standard, which prohibits
benefit termination unless SSA can show that the beneficiary's
medical condition has improved since the last medical decision and
that this improvement relates to the individual's ability to work.\3
As a result, SSA declared a moratorium on conducting CDRs until the
new medical improvement standard was implemented by regulation in
late 1985.  Since enactment of the new standard, the cessation rate
for CDRs has declined greatly. 

SSA's regulations require CDRs every 6 to 18 months for DI
beneficiaries expected to improve medically and at least once every 3
years if medical improvement is considered possible.  For DI
beneficiaries whose impairments are judged to be permanent, the
regulation requires CDRs once every 5 to 7 years.  Until 1993, all
CDRs were labor-intensive full medical reviews.  In full medical
reviews, one of SSA's 1,300 field offices first contacts the
beneficiary to determine whether he or she is engaged in any gainful
activity that would make the beneficiary ineligible for benefits.  If
not, the field office forwards the case to a DDS, which determines
whether the beneficiary still meets the medical eligibility
requirements.  SSA currently estimates that a full medical review
costs about $800. 

To conduct CDRs more cost effectively, SSA developed an alternative
to full medical reviews.\4 Under this alternative, SSA mails a
questionnaire (referred to as a "mailer") to beneficiaries who have a
low likelihood of benefit termination for them to report information
on their medical conditions, treatments received, and work
activities.  About 2 percent of these beneficiaries eventually
undergo a full medical review because their responses to the mailer
and statistical information used to indicate the likelihood of
cessation indicate that a more comprehensive review is warranted. 
SSA currently estimates that a mailer CDR costs about $50 to process. 

Due to budget and staff reductions after 1986 and large increases in
initial disability claims beginning in 1990, SSA diverted resources
from CDRs and could not conduct all required DI CDRs; nor could the
agency conduct many SSI CDRs.  In 1994, the Congress established the
first statutory requirement for SSI CDRs, mandating that SSA review
one-third of the SSI beneficiaries who reach age 18 and at least
100,000 additional SSI beneficiaries annually in fiscal years 1996 to
1998.\5

We reported in October 1996 that about 2.4 million DI beneficiaries
were due or overdue for CDRs, all required by law, and about 1.9
million SSI beneficiaries were due or over due for CDRs, of which
118,000 were required by law.\6 SSA calculated a smaller number of
due or overdue CDRs--1.4 million for DI beneficiaries and 1.6 million
for SSI beneficiaries.  SSA excluded from its calculation DI worker
beneficiaries aged 59 and older, disabled adult children and disabled
widows and widowers of DI worker beneficiaries, and SSI beneficiaries
aged 59 and older.  SSA officials have acknowledged that CDRs were
required for all DI beneficiaries excluded from its calculation but
stated that because of the CDR backlog it was focusing on the
portions of the CDR population that the agency estimated as the most
cost effective to review. 

In early 1996, SSA developed an ambitious 7-year plan to conduct 8.2
million CDRs during fiscal years 1996 to 2002, and, in March 1996,
the Congress authorized a total of about $4.1 billion to fund SSA's
plan.\7 The current 7-year plan includes (1) CDRs for DI worker
beneficiaries under age 59, (2) SSI CDRs required under the Social
Security Independence and Program Improvements Act of 1994, and (3)
about 2 million additional SSI CDRs. 

In November 1997, SSA plans to complete its updated plan to include
additional beneficiary groups mandated in recent legislation.  SSA
estimates adding about 600,000 cases to its plan during fiscal years
1998 to 2000 to comply with requirements to conduct (1) CDRs at least
every 3 years for SSI children under age 18 who are likely to
improve; (2) CDRs for infants in their first year of life who receive
SSI benefits due to low birth weight; and (3) redeterminations for
all SSI children beginning on their 18th birthdays, using adult
disability criteria.\8 The August 1996 legislation also required that
SSA conduct SSI eligibility redeterminations for all children who
previously qualified for disability on the basis of an individualized
functional assessment (IFA), which the law eliminated, or on
maladaptive behavior criteria, which the law revised to eliminate
double counting of impairments.  SSA estimated that about 300,000
children had been approved on the basis of the IFA or maladaptive
behavior criteria.  These cases, which are not counted in the CDR
workload, must be completed by February 1998. 


--------------------
\1 See GAO numbered correspondence HRD-78-97. 

\2 See the Social Security Disability Amendments of 1980 (P.L. 
96-265) Sec.  311. 

\3 See the Social Security Disability Benefit Reform Act of 1984
(P.L.  98-460). 

\4 To develop the mailer CDR process, SSA used the outcomes of
previous DI CDRs to statistically estimate the likelihood that a CDR
would result in benefit termination.  The estimate is based on
characteristics such as age, impairment, length of time on the
disability rolls, and previous CDR activity.  If the estimated
likelihood of benefit termination is high, SSA routes the case to a
DDS for a full medical review.  If the estimated likelihood of
benefit termination is low, SSA sends a mailer to the beneficiary,
permitting SSA to do more CDRs than if all cases were forwarded to
DDSs for full medical reviews. 

\5 See the Social Security Independence and Program Improvements Act
of 1994. 

\6 See Social Security Disability:  Alternatives Would Boost
Cost-Effectiveness of Continuing Disability Reviews (GAO/HEHS-97-2,
Oct.  16, 1996) and Social Security Disability:  Improvements Needed
to Continuing Disability Review Process (GAO/HEHS-97-1, Oct.  16,
1996).  Also see Supplemental Security Income:  SSA Is Taking Steps
to Review Recipients' Disability Status (GAO/HEHS-97-17, Oct.  30,
1996). 

\7 The Contract With America Advancement Act of 1996 (P.L.  104-121)
authorizes funding for 7 years for CDRs from the Federal Old-Age and
Survivors Insurance Trust Fund and the Federal Disability Insurance
Trust Fund. 

\8 See the Personal Responsibility and Work Opportunity
Reconciliation Act of 1996.  This act repealed the provision for CDRs
for 18-year-olds in the 1994 legislation.  SSA determined that newly
required CDRs on low birth weight babies and children under age 18
whose impairments are likely to improve and redeterminations for
18-year-olds may count toward the 100,000 CDRs required under the
Social Security Independence and Program Improvement Act of 1994. 
The Balanced Budget Act of 1997 permits SSA to schedule a CDR for a
low birth weight child after the child's first birthday if it is
determined that the child's impairment is not expected to improve
within 12 months after birth. 


   SSA MET 1997 TARGET, FURTHER
   PROGRESS EXPECTED
---------------------------------------------------------- Chapter 0:2

SSA data indicate that it will meet its CDR target for 1997, while
also processing the newly required SSI childhood redeterminations. 
This result is due in part to SSA's working with the DDSs to increase
case processing capacity to handle the unprecedented workloads in
SSA's CDR plan.  We find this progress encouraging and will continue
to review SSA's progress in our ongoing work. 

In fiscal year 1997, SSA faced a new SSI childhood redetermination
workload that competed for the same resources that conduct CDRs. 
Even so, the DDSs were on track to meet or exceed the 1997 target of
603,000 CDRs (see table 2).  Both SSA and DDS officials told us that
they attributed part of their success to the decline in initial
applications--from about 2.4 million in fiscal year 1996 to about 1.9
million through the first 11 months of fiscal year 1997.  SSA is
reassessing its CDR workload target for 1998 to determine the extent
to which it can increase the CDR target beyond the 1.1 million the
plan currently calls for. 

To prepare for this ambitious CDR workload, SSA has negotiated with
the DDSs to increase CDR workloads and increase the DDSs' efforts to
hire, train, and supervise additional staff.  After several months of
training, the new staff would be expected to handle initial
disability determinations, freeing more senior examiners to handle
CDRs.  Training and supervising new disability examiners, however,
can require a great deal of the senior disability examiners' time. 
Our preliminary work indicates that the DDSs substantially succeeded
in meeting their 1997 hiring goals, despite problems such as hiring
freezes, shortages of qualified applicants, and limited office space,
which sometimes caused DDSs to reach their hiring goals later in the
year than planned.  From 1996 to 1997, the number of full-time
disability examiners in the DDSs increased from 5,459 to 5,724, not
including 435 trainees.  SSA also expects DDSs to be able to meet
their 1998 hiring goals. 



                                         Table 2
                         
                               SSA's CDR and SSI Childhood
                           Redetermination Workload Targets and
                         Cases Completed, Fiscal Years 1996-2002

                                      (In thousands)

             1996              1997  1998          1999      2000      2001      2002
-----------  ------------  --------  ------------  --------  --------  --------  --------
Current workload targets
-----------------------------------------------------------------------------------------
CDRs         500                603  1,117         1,397     1,595     1,527     1,443
processed
(mailers
and full
medical
reviews)

SSI          Not                288  Not           Not       Not       Not       Not
childhood    applicable              provided\b    applicab  applicab  applicab  applicab
initial                                            le        le        le        le
redetermina
tions\a


Actual cases completed
-----------------------------------------------------------------------------------------
CDRs\c       498                603  Unavailable   Unavaila  Unavaila  Unavaila  Unavaila
(mailers                                           ble       ble       ble       ble
and full
medical
reviews)

SSI          Not              235\d  Unavailable   Not       Not       Not       Not
childhood    applicable                            applicab  applicab  applicab  applicab
initial                                            le        le        le        le
redetermina
tions\a
-----------------------------------------------------------------------------------------
\a Years other than 1997 and 1998 are not applicable for childhood
redetermination targets or cases completed because the Aug.  1996
legislation required that all childhood redeterminations be completed
by Aug.  22, 1997, and in 1997 the Congress extended this deadline to
Feb.  1998 in P.L.  105-33.  Actual cases completed for 1998 are
unavailable until the end of 1998. 

\b SSA did not provide the current target workload for childhood
redeterminations in 1998. 

\c CDRs completed for 1996 represents CDRs for DI and SSI
beneficiaries.  CDRs completed for 1997 includes periodic CDRs, CDRs
for SSI low birth weight babies, and redeterminations for SSI
children after they reach age 18.  The 603,000 cases for 1997 is an
estimate based on actual cases completed through the end of Aug. 
1997.  Cases completed for fiscal years beyond 1997 are unavailable
until the end of each fiscal year. 

\d As of the end of Aug.  1997, about 235,000 of the original 288,000
SSI childhood redeterminations had been processed.  Of the 235,000
cases processed, SSA determined on the basis of a review of existing
medical evidence that about 28,000 cases could be continued without
referring them to DDSs for medical redeterminations.  DDSs conducted
medical redeterminations for the remaining 207,000 cases.  SSA did
not provide an estimate of the initial redeterminations it will
complete by the end of Sept.  1997. 

Source:  SSA. 


   BUDGET AUTHORITY APPEARS
   SUFFICIENT TO CONDUCT REQUIRED
   CDRS
---------------------------------------------------------- Chapter 0:3

On the basis of SSA's current cost estimates, the congressionally
authorized funding levels for fiscal years 1998 through 2002 will
exceed the estimated costs of the CDR workloads in SSA's current
plan.  The Congress has authorized a total of about $4.3 billion for
DI and SSI CDRs and SSI redeterminations during fiscal years 1996
through 2002 (see table 3).\9



                          Table 3
          
               Amounts Authorized, Requested,
          Appropriated, and Obligated for CDRs and
          SSI Redeterminations, Fiscal Years 1996-
                            2002

                   (Dollars in millions)

Funding for
DI and SSI
CDRs and SSI
redeterminat
ions              1996      1997      1998  1999-2002
------------  --------  --------  --------  --------------
Amount            $260      $510      $670  $720\a
 authorized
SSA's budget       260       510     490\b  Not available
 request
Amount             260     510\b     490\c  Not available
 appropriated

Amount obligated by SSA
----------------------------------------------------------
CDRs               207       288       366  Not available
SSI                  0       235       164  Not available
 redetermina
 tions
==========================================================
Total             $207    $523\d    $530\e  Not available
 obligations

Amount not spent and carried forward
----------------------------------------------------------
CDRs                53        40         0  Not available
SSI                  0         0         0  Not available
 redetermina
 tions
==========================================================
Total              $53       $40        $0  Not available
----------------------------------------------------------
\a The annual authorization from 1999-2002 is $720 million. 

\b The $510 million appropriated in 1997 and the $490 million
requested for 1998 include $200 million annually from SSA's
administrative expenses to be used for CDRs.  The remaining
funds--$310 million in 1997 and $290 million in 1998--are from an
additional budget authority that can be used to process either CDRs
or SSI redeterminations. 

\c The Senate approved SSA's $490 million request on Sept.  11, 1997. 
Final approval by the Congress is pending. 

\d In 1997, SSA obligated more than the amount appropriated because
$53 million of unobligated 1996 funds had been carried forward to
1997. 

\e SSA estimates it will have $530 million in obligations available
in 1998--its $490 million request plus the unobligated $40 million
carried over from 1997. 

Source:  SSA. 

For fiscal year 1996, SSA requested and received $260 million for
CDRs, of which the Congress designated $60 million as 2-year funding
for use in 1996 or 1997.  SSA spent a total of $207 million in 1996
to conduct 498,000 CDRs--only 2,000 short of its goal of 500,000.  In
1996, SSA found that full medical reviews cost less than previously
estimated--about $800 each, rather than $1,000 each.  As a result,
SSA carried forward $53 million from 1996 into 1997. 

For fiscal year 1997, SSA requested and received $510 million--$200
million for CDRs and $310 million of 2-year funding that could be
used for either CDRs or SSI redeterminations.  Including the $53
million that SSA carried forward from 1996, SSA had a total of $563
million available for 1997.  Of this $563 million, SSA estimates it
will spend $288 million to meet its goal of conducting 603,000 CDRs
and will spend $235 million to process more than 235,000 SSI
redeterminations--or a total of $523 million.  This means SSA will
spend $13 million more than the $510 million appropriated; however,
it still will be able to carry forward $40 million into 1998 because
of the $53 million carried forward from 1996 into 1997. 

SSA officials told us that in fiscal years 1996 and 1997 the agency
could not have effectively spent the unused funds ($53 million and
$40 million, respectively) to greatly increase the number of full
medical reviews conducted during those years because the DDSs were
gearing up to handle the increased CDR workloads.  As mentioned
previously, some DDS officials told us they could not have expanded
any faster. 

In 1996, the Congress authorized $670 million for CDRs and SSI
redeterminations in fiscal year 1998.  This $670 million consisted of
$570 million authorized by Public Law 104-121 for CDRs and an
additional $100 million authorized by Public Law 104-193, which
enacted the SSI redetermination requirements.  SSA officials told us
that the $570 million authorization assumed that the DDSs would
conduct 533,000 full medical reviews costing $1,000 each.  In
formulating its budget request for 1998, however, SSA reduced the
full medical review workload from 533,000 to 428,000 (costing $800
each).  SSA reduced the workload because of the size of other DDS
workloads.  As a result, SSA submitted a budget request of $490
million or $180 million less than the total amount authorized for
CDRs and SSI redeterminations. 

On the basis of SSA's current 7-year plan and the current estimated
average cost of processing CDRs, it appears that the $720 million
authorized for each year from 1999 to 2002 will exceed the cost of
conducting CDRs (see table 4).  For example, the current plan calls
for the largest number of CDRs to be conducted in 2000.  At an
average estimated cost of $800 per full medical review and $50 per
mailer, the estimated total cost for CDRs in 2000 is about $668
million, compared with the authorized amount of $720 million. 



                          Table 4
          
             Estimated Costs of Conducting CDRs
            During Fiscal Years 1999-2002 Under
              SSA's Current CDR Workload Plan

                        1999      2000      2001      2002
------------------  --------  --------  --------  --------
Workload targets specified in current plan (CDRs in
thousands)
----------------------------------------------------------
Full medical             593       780       778       678
 reviews
Mailer CDRs              880       890       820       840

Estimated average cost per CDR in FY 1998
----------------------------------------------------------
Full medical            $800      $800      $800      $800
 reviews
Mailer CDRs               50        50        50        50

Estimated total cost (dollars in millions)
----------------------------------------------------------
Full medical             474       624       622       542
 reviews
Mailer CDRs               44        44        41        42
==========================================================
Total cost              $518      $668      $663      $584
Amount authorized        720       720       720       720
 (dollars in
 millions)
Authorized amount        202        52        57       136
 less estimated
 cost
 (dollars in
 millions)
----------------------------------------------------------
Source:  GAO computations based on SSA data. 


--------------------
\9 The Contract With America Advancement Act of 1996 (P.L.  104-121)
authorized about $4.1 billion for DI and SSI CDRs during fiscal years
1996 to 2002.  The Personal Responsibility and Work Opportunity
Reconciliation Act of 1996 (P.L.  104-193) added a total of $250
million to the authorized amounts for fiscal years 1997 and 1998. 


   TIMELY COMPLETION OF SELECTION
   FORMULAS NEEDED TO MEET FUTURE
   GOALS
---------------------------------------------------------- Chapter 0:4

To make the CDR process more cost effective, SSA has been developing
selection formulas to identify which beneficiaries should receive
lower cost mailers and which should be designated for higher cost
full medical reviews.  In October 1996, we reported that SSA had
sufficiently developed the selection formulas to apply them to about
one-half of the beneficiaries due for CDRs.  SSA is still developing
selection formulas for many of the other beneficiaries due for CDRs,
however, and the extent of SSA's success could affect its ability to
complete its 7-year plan cost effectively and on schedule. 

We reported that although SSA had developed selection formulas for
beneficiaries under age 59 who have potential for medical
improvement, the formulas could not identify for most beneficiaries
in this group who should receive a mailer or be referred for a full
medical review.  Recently, however, SSA began full medical reviews
for the 10 percent of these beneficiaries with the highest
probability of benefit cessation.  Successful completion of selection
formulas for the remainder of the beneficiaries is important because
if SSA has to do full medical reviews for all of them, it could
jeopardize meeting the 2002 goal. 

SSA is also developing selection formulas to apply to more than
600,000 SSI childhood cases that will be coming due for a CDR by
fiscal year 2000.  Completing these CDRs on schedule may depend on
SSA's ability to develop and implement a reliable mailer process for
children. 

SSA has finished developing selection formulas for beneficiaries aged
59 and older and for beneficiaries not expected to improve medically. 
Of this latter group, SSA sent mailers to 44,000 beneficiaries in
early 1997.  For beneficiaries aged 59 and older, SSA plans to send
mailers to 60,000 beneficiaries in October 1997. 

SSA officials also said that the agency is nearing the completion of
selection formulas for disabled adult children and disabled widows
and widowers of DI worker beneficiaries, and mailers for this group
could start going out sometime in fiscal year 1998. 


   CONCLUDING OBSERVATIONS
---------------------------------------------------------- Chapter 0:5

SSA plans to conduct over 8 million CDRs by 2002, more than double
the number of CDRs conducted during the entire preceding 21-year
period.  Our preliminary findings indicate that SSA is meeting its
capacity-building goals in the DDSs and should have adequate funding
to carry out its current plan.  In fact, SSA may be able to conduct
these CDRs in a shorter time period.  The more quickly SSA can remove
those who are no longer eligible from the rolls, the more it can save
in program costs.  Therefore, in light of the lower levels of initial
applications, SSA should increase its yearly CDR goals.  Finally, we
note that many beneficiaries who will not medically improve could
nevertheless have or regain work capacity.  In light of this, we
continue to encourage SSA to consider ways to integrate
return-to-work efforts into its overall management of the CDR process
for all beneficiaries. 


-------------------------------------------------------- Chapter 0:5.1

Mr.  Chairman, this concludes my prepared statement.  At this time, I
will be happy to answer any questions you or the other Subcommittee
members may have. 




RELATED GAO PRODUCTS
=========================================================== Appendix 1

Social Security Disability:  SSA Must Hold Itself Accountable for
Continued Improvement in Decision-Making (GAO/HEHS-97-102, Aug.  12,
1997). 

Social Security:  Disability Programs Lag in Promoting Return to Work
(GAO/HEHS-97-46, Mar.  17, 1997). 

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

Social Security Disability:  Alternatives Would Boost
Cost-Effectiveness of Continuing Disability Reviews (GAO/HEHS-97-2,
Oct.  16, 1996). 

Social Security Disability:  Improvements Needed in Continuing
Disability Review Process (GAO/HEHS-97-1, Oct.  16, 1996). 

Social Security:  New Continuing Disability Review Process Could Be
Enhanced (GAO/HEHS-94-118, June 27, 1994). 

Social Security:  Continuing Disability Review Process Improved, But
More Targeted Reviews Needed (GAO/T-HEHS-94-121, Mar.  10, 1994). 

Social Security Disability:  SSA Needs to Improve Continuing
Disability Review Program (GAO/HRD-93-109, July 8, 1993). 

Social Security:  Effects of Budget Constraints on Disability Program
(GAO/HRD-88-2, Oct.  28, 1987). 

Social Security Disability:  Implementation of the Medical
Improvement Review Standard (GAO/HRD-87-3BR, Dec.  16, 1986). 

More Diligent Followup Needed to Weed Out Ineligible Disability
Beneficiaries (HRD-81-48, Mar.  3, 1981). 


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