Supplemental Security Income: Long-Standing Problems Put Program at Risk
for Fraud, Waste, and Abuse (Testimony, 03/04/97, GAO/T-HEHS-97-88).

GAO discussed the Social Security Administration's (SSA) Supplemental
Security Income (SSI) program and GAO's decision to designate the
program one of its high-risk areas.

GAO noted that: (1) the SSI program has had significant problems in
determining initial and continuing financial eligibility because of the
agency's reliance on individuals' own reports of their income and
resources and failure to thoroughly check this information; (2)
moreover, the judgmental nature of SSA's disability determination
process and SSA's past failure to adequately review SSI recipients to
determine whether they remain disabled have also exposed the program to
fraud, waste, and abuse; (3) SSA is at risk of paying some SSI
recipients benefits for too long because it has not adequately addressed
their special vocational rehabilitation needs or developed an agencywide
strategy for helping recipients who can enter the workforce; (4) the
Congress has recently made several changes that address program
eligibility issues and increase the frequency of SSA's continuing
eligibility reviews; (5) SSA has also begun addressing its program
vulnerabilities and has made the prevention of fraud and abuse a part of
its plan for rebuilding public confidence in the agency; (6) however,
GAO's concerns about underlying SSI program vulnerabilities and the
level of management attention devoted to these vulnerabilities continue;
and (7) as part of GAO's high-risk work, it is continuing to evaluate
the underlying causes of long-standing SSI problems and the actions
necessary to address them.

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

 REPORTNUM:  T-HEHS-97-88
     TITLE:  Supplemental Security Income: Long-Standing Problems Put 
             Program at Risk for Fraud, Waste, and Abuse
      DATE:  03/04/97
   SUBJECT:  Eligibility determinations
             Program abuses
             Social security benefits
             Disability benefits
             Medical examinations
             Federal social security programs
             Income maintenance programs
             Persons with disabilities
             Vocational rehabilitation
IDENTIFIER:  Supplemental Security Income Program
             SSA Plan for Achieving Self Support Program
             
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Cover
================================================================ COVER


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

For Release on Delivery
Expected at 10:00 a.m.
Tuesday, March 4, 1997

SUPPLEMENTAL SECURITY INCOME -
LONG-STANDING PROBLEMS PUT PROGRAM
AT RISK FOR FRAUD, WASTE, AND
ABUSE

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

GAO/T-HEHS-97-88

GAO/HEHS-97-88T


(105158)


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

  AFDC - Aid to Families With Dependent Children
  CDR - continuing disability review
  DDS - disability determination service
  DI - disability insurance
  PASS - plan for achieving self-support
  SSA - Social Security Administration
  SSI - Supplemental Security Income

SUPPLEMENTAL SECURITY INCOME: 
LONG-STANDING PROBLEMS PUT PROGRAM
AT RISK FOR FRAUD, WASTE, AND
ABUSE
============================================================ Chapter 0

Madam Chairman and Members of the Subcommittee: 

I am pleased to be here to discuss the Social Security
Administration's (SSA) Supplemental Security Income (SSI) program and
our decision to designate the program one of our high-risk areas.  As
you know, the SSI program provides means-tested income support
payments to eligible aged, blind, or disabled people.  Since the
program's inception in 1974, the number of individuals receiving SSI
cash benefits has grown significantly.  About 6.6 million recipients
now receive roughly $22 billion in federal benefits.  In the past
several years, a major reason for growth in the SSI rolls has been an
increasing number of younger recipients with mental impairments who
have limited work histories.  Rapid growth in the number of children
receiving SSI benefits has further contributed to changes in the
program's character.  The increased number and diversity of SSI
recipients have spurred criticism that the SSI program is
increasingly susceptible to fraud, waste, and abuse.  Through our
work, we have also demonstrated that the SSI program has been
adversely affected by internal control weaknesses, complex policies,
and insufficient management attention.  (A list of related GAO
products dealing with SSI program vulnerabilities appears at the end
of this statement.)

Today, I would like to discuss several long-standing problems in SSI
that have caused us to designate the program as high risk.  These
problems involve the methods SSA uses to verify recipients' initial
and continuing eligibility for SSI benefits and the agency's efforts
to get SSI recipients into the workforce.  These deficiencies have
placed the program at considerable risk and contributed to
significant annual increases in overpayments to SSI recipients. 
Overpayments include payments to people ineligible for the program,
as well as to those receiving higher benefit payments than their
income and assets warrant.  During 1996, SSA had $2.3 billion in
overpayments that was owed to the agency, including $895 million in
newly detected overpayments during the year.  In that year, the
agency was successful in recovering only $357 million of the total
outstanding debt. 

To briefly summarize our findings, the SSI program has had
significant problems in determining initial and continuing financial
eligibility because of the agency's reliance on individuals' own
reports of their income and resources and failure to thoroughly check
this information.  Moreover, the judgmental nature of SSA's
disability determination process and SSA's past failure to adequately
review SSI recipients to determine whether they remain disabled have
also exposed the program to fraud, waste, and abuse.  Finally, SSA is
at risk of paying some SSI recipients benefits for too long because
it has not adequately addressed their special vocational
rehabilitation needs nor developed an agencywide strategy for helping
recipients who can enter the workforce.  The Congress has recently
made several changes that address program eligibility issues and
increase the frequency of SSA's continuing eligibility reviews.  SSA
has also begun addressing its program vulnerabilities and has made
the prevention of fraud and abuse a part of its plan for rebuilding
public confidence in the agency.  However, our concerns about
underlying SSI program vulnerabilities and the level of management
attention devoted to these vulnerabilities continue.  As part of our
high-risk work, we are continuing to evaluate the underlying causes
of long-standing SSI problems and the actions necessary to address
them. 


   BACKGROUND
---------------------------------------------------------- Chapter 0:1

SSI provides cash benefits to low-income aged, blind, or disabled
people.  Currently, the aged SSI population is roughly 1.4 million
and the blind and disabled population more than 5.2 million.  Those
who are applying for benefits on the basis of age must be age 65 or
older and be financially eligible for benefits; those who are
applying for disability benefits must qualify on the basis of two
criteria:  financial and disability eligibility.  To qualify for
benefits financially, individuals may not have income greater than
the current maximum monthly SSI benefit level of $484 ($727 for a
couple) or have resources worth more than $2,000 ($3,000 for a
couple).  To be qualified as disabled, applicants must be unable to
engage in any substantial gainful activity because of an impairment
expected to result in death or last at least 12 months. 

The process SSA uses to determine an applicant's financial
eligibility for SSI benefits involves an initial determination when
someone first applies and periodic reviews to determine whether the
recipient remains eligible.  SSI recipients are required to report
significant events that may affect their financial eligibility for
benefits, including changes in income, resources, marital status, or
living arrangements, such as incarceration or residence in a nursing
home.  To verify that the information provided by a recipient is
accurate, SSA generally relies on matching data from other federal
and state agencies, including Internal Revenue Service form 1099
information, Department of Veterans Affairs benefits data, and
state-maintained earnings and unemployment benefits data.  When SSA
staff find discrepancies between income and assets claimed by a
recipient and the data from other agencies, they send notices to SSA
field offices to investigate further. 

To determine a person's qualifications for SSI as a disabled person,
SSA must determine the individual's capacity to work as well as his
or her financial eligibility.  To determine whether an applicant's
impairment qualifies him or her for SSI benefits, SSA uses state
Disability Determination Services (DDS) to make the initial
assessment.  Once a recipient begins receiving benefits, SSA is
required to periodically conduct Continuing Disability Reviews (CDR)
to determine whether a recipient's condition remains disabling. 

Regarding returning recipients to work, the Social Security Act
states that to the maximum extent possible, individuals applying for
disability benefits should be rehabilitated into productive activity. 
To this end, SSA is required to refer SSI recipients to state
vocational rehabilitation agencies for services intended to prepare
them for returning to work.  The act also provides various work
incentives to safeguard cash and medical benefits while a recipient
tries to return to work. 


   SSA PAYS INADEQUATE ATTENTION
   TO VERIFYING RECIPIENTS'
   FINANCIAL ELIGIBILITY
---------------------------------------------------------- Chapter 0:2

To correctly determine an individual's initial and continuing
financial eligibility, SSA needs accurate and timely information
because it is much easier to prevent overpayments than to recover
them.  SSA tries to get this information directly from applicants and
recipients but also supplements these data through the use of
computer matches with other federal and state agencies.  To do this,
SSA compares federal and state data with information claimed by SSI
applicants.  In many instances, these matches allow SSA to detect
information that SSI recipients fail to report; in other cases, they
provide more accurate information.  However, our prior reviews have
found that data from computer matches are often quite old and
sometimes incomplete.  For example, computer matches for earned
income rely on data that are from 6 to 21 months old, allowing
overpayments to accrue for this entire period before collection
actions can begin.  This puts SSI at risk because it collects only
about 15 percent of outstanding overpayments.  Another weakness in
this process is that SSA does not conduct some matches that could
help to detect additional overpayments.  For example, SSA has not
matched data from Aid to Families With Dependent Children (AFDC) to
detect SSI recipients who may be receiving benefits from this
program. 

Our work in the last few years suggests that recipients do not always
report required information when they should and may not report it at
all.  For example, last year we reported that about 3,000 current and
former prisoners in 13 county and local jails had been erroneously
paid $5 million in SSI benefits, mainly because SSA lacked timely and
complete information on their incarceration.  Recipients or their
representative payees did not report the incarceration to SSA as
required, and SSA had not arranged for localities to report such
information.  SSA told us that it has begun a program to identify SSI
recipients in jails who should no longer be receiving benefits. 

Our ongoing SSI work is identifying similar program problems and
weaknesses as those noted in prior reports.  For example, SSA staff
have indicated that recipients' reporting of changes in living
arrangements is frequently subject to abuse.  One common scenario
involves recipients who become eligible for SSI benefits and shortly
thereafter report to SSA that they have separated from their spouse
and are living in separate residences.  SSA field staff suspect that
these reported changes in living arrangements take place because
recipients become aware that separate living arrangements will
substantially increase their monthly benefits.  Another ongoing study
of SSI recipients admitted to nursing homes has found that despite
SSA procedures and recent legislation to encourage reporting such
living arrangement changes, thousands of SSI recipients in nursing
homes continue to receive full benefits, resulting in millions of
dollars in overpayments each year.  This happens because recipients
and nursing homes do not report changes in living arrangements and
because computer matches with participating states to detect nursing
home admissions are not done in a timely manner and are often
incomplete.  Consequently, these admissions and the resulting
overpayments are likely to go undetected for long time periods. 

In a final area related to financial eligibility, we recently
reported that between 1990 and 1994, approximately 3,500 SSI
recipients transferred ownership of resources, such as cash, houses,
land, and other items valued at an estimated $74 million, to qualify
to SSI benefits.  This figure represents only transfers of resources
that recipients actually told SSA about.  Although these transfers
are legal, using them to qualify for SSI benefits raises serious
questions about SSA's ability to protect taxpayer dollars from waste
and abuse and may undermine the public's confidence in the program. 
SSA has acknowledged and supports the need to work with the Congress
to develop legislation to address this problem. 

To obtain more timely and accurate recipient data, SSA is currently
testing the use of online access to state databases to supplement the
information it receives.  Online access provides direct connections
between SSA's computers and the databases maintained by certain state
agencies.  Data can be obtained immediately by SSA staff as soon as
requested and used for a variety of purposes, including verifying the
amount of AFDC or other benefit income a client reports.  After
reviewing this SSA initiative, we concluded that nationwide use of
online access to state computerized data could prevent or more
quickly detect about $130 million in overpayments due to unreported
or underreported income in one 12-month period.  Online access could
save program dollars by controlling overpayments and reducing the
administrative expense of trying to recover them.  In responding to
our review, SSA noted that it was exploring options for expanding
online access and was examining the cost-effectiveness of doing so. 
Although some states can currently provide online access to their
data inexpensively and easily, SSA has moved slowly in this area.  In
addition to state data, online access to other federal agencies' data
may help SSA save program dollars.  SSA has also moved slowly in this
area, however. 


   PROGRAM VULNERABILITIES ARE
   ASSOCIATED WITH DETERMINING
   DISABILITY ELIGIBILITY
---------------------------------------------------------- Chapter 0:3

In addition to financial eligibility, for those who apply for
disability benefits, SSA must also determine their disability
eligibility or their capacity to work.  SSA's lengthy and complicated
disability decision-making process results in untimely and
inconsistent decisions.  Adjudicators at all levels of this process
have to make decisions about recipients' work capacity on the basis
of complex and often judgmental disability criteria.  Determining
disability eligibility became increasingly difficult in the early
1990s as younger individuals with mental impairments began to apply
for benefits in greater numbers.  Generally, mental impairments are
difficult to evaluate, and the rates of award are higher for these
impairments than for physical impairments. 

SSA's processes and procedures for determining disability have placed
the SSI program at particular risk for fraud, waste, and abuse.  For
example, in 1995, we reported that SSA's ability to ensure reasonable
consistency in administering the program for children with behavioral
and learning disorders had been limited by the subjectivity of
certain disability criteria.  To address these problems, recent
welfare reform legislation included provisions to tighten the
eligibility rules for childhood disability and remove children from
the rolls who have qualified for SSI on the basis of less restrictive
criteria.  It is too early, however, to tell what impact the new
legislation will ultimately have on SSI benefit payments and SSA's
ability to apply consistent disability policies to this population. 

In addition, we reported in 1995 that middlemen were facilitating
fraudulent SSI claims by providing translation services to
non-English-
speaking individuals who were applying for SSI.  These middlemen were
coaching SSI claimants on appearing mentally disabled, using
dishonest health care providers to submit false medical evidence to
those determining eligibility for benefits, and providing false
medical information on claimants' medical and family history.  In one
state alone, a middleman arrested for fraud had helped at least 240
people obtain $7 million in SSI benefits.  SSI's vulnerability to
fraudulent applications involving middlemen was the result of the
lack of a comprehensive strategy for keeping ineligible applicants
off the SSI rolls, according to our review.  SSA told us that half of
all SSI's recently hired field office staff are bilingual, a step
that it believes will reduce the involvement of fraudulent middlemen. 

In light of the difficulty of determining disability and SSI's
demonstrated vulnerability to fraud and manipulation, periodic
reviews are essential to ensure that recipients are disabled.  Our
work has shown, however, that SSA has not placed adequate emphasis on
CDRs of SSI cases.  In 1996, we reported that many recipients
received benefits for years without having any contact with SSA about
their disability.  We also noted that SSA performed relatively few
SSI CDRs until the Congress mandated in 1994 that it conduct such
reviews.  Furthermore, SSA's processes for identifying and reviewing
cases for continuing eligibility did not adequately target recipients
with the greatest likelihood for medical improvement. 

Currently, SSA is implementing new review requirements in the welfare
reform law.  In addition, SSA had about 2-1/2 million required CDRs
due or overdue in the Disability Insurance (DI) program and 118,000
SSI CDRs due or overdue as of 1996.  Despite the importance of CDRs
for ensuring SSI program integrity, competing workloads from
implementing welfare reform legislation will challenge SSA in
completing the required number of SSI CDRs. 


   SSA HAS NOT EMPHASIZED RETURN
   TO WORK AND VOCATIONAL
   REHABILITATION
---------------------------------------------------------- Chapter 0:4

As mentioned previously, the Social Security Act states that as many
people as possible who are applying for disability benefits should be
rehabilitated into productive activity.  We have found, however, that
SSA places little priority on helping recipients move off the SSI
rolls by obtaining employment.  Yet, if only a small proportion of
recipients were to leave the SSI rolls by returning to work, the
savings in lifetime cash benefits would be significant. 

Technological and societal changes in the last decade have raised the
possibility of more SSI recipients returning to work.  For example,
technological advances, such as standing wheelchairs and synthetic
voice systems, have made it easier for people with disabilities to
enter the workplace.  Legislative changes, such as the Americans With
Disabilities Act, and social changes, such as an increased awareness
of the economic contributions of individuals with disabilities, have
also enhanced the likelihood of these individuals finding jobs. 
During the past decade, the proportion of middle-aged SSI recipients
has steadily increased.  Specifically, the number of SSI recipients
between the ages of 30 and 49 has increased from 36 percent in 1986
to about 46 percent in 1995 to about 1.6 million people.  Thus, many
SSI recipients have many productive years in which to contribute to
the workforce. 

Despite these factors, SSA has missed opportunities to promote work
among disabled SSI recipients.  In 1972, the Congress created the
plan for achieving self-support (PASS) to help low-income individuals
with disabilities return to work.  The program allows SSI recipients
to receive higher monthly benefits by excluding from their SSI
eligibility and benefit calculations any income or resources used to
pursue a work goal.  SSA pays about $30 million in additional cash
benefits annually to PASS program participants.  Despite these cash
outlays, almost none of the participants leave the rolls by returning
to work. 

SSA has poorly implemented and managed the PASS program.  In
particular, SSA has developed neither a standardized application
containing essential information on the applicant's disability,
education, and skills nor ways to measure program effectiveness.  We
have recommended that SSA act on several fronts to control waste and
abuse and evaluate the effect of PASS on recipients' returning to
work.  In general, SSA has agreed with our recommendations and taken
some steps to more consistently administer the PASS program. 

In the past several months, however, some efforts have begun to place
a greater emphasis on returning disabled people to work.  The
administration is seeking statutory authority to create a voucher
system that recipients could voluntarily use to get rehabilitation
and employment services from public or private providers and is also
seeking legislation to extend medical coverage for recipients who
return to work.  The Congress has also put forth several proposals in
these areas. 


   CONCLUSION
---------------------------------------------------------- Chapter 0:5

The problems we have identified in the SSI program are long-standing
and have contributed to billions of tax dollars being overpaid to
recipients.  They have also served to compromise the integrity of the
program and reinforce public perceptions that the SSI program pays
benefits to too many people for too long.  Although many of the
changes recently enacted by the Congress or implemented by SSA may
result in improvements, the underlying problems still exist. 

Our work has shown that SSI's vulnerability is due both to problems
in program design and inadequate SSA management attention to the
program.  Revising SSA's approach to managing the program will
require sustained attention and direction at the highest levels of
the agency as well as actively seeking the cooperation of the
Congress in improving the program's operations and eligibility rules. 
One challenge for the new SSA Commissioner will be to focus greater
agency attention on management of SSI and the future viability and
integrity of this program. 


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

This concludes my prepared statement.  I will be happy to respond to
any questions you or other members of the Subcommittee may have. 


   CONTRIBUTORS
---------------------------------------------------------- Chapter 0:6

For more information on this testimony, please call Jane Ross on
(202) 512-7230 or Roland Miller, Assistant Director, on (202)
512-7246. 



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

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

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

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

SSA Disability:  Return-to-Work Strategies From Other Systems May
Improve Federal Programs (GAO/HEHS-96-133, July 11, 1996). 

Social Security:  Disability Programs Lag in Promoting Return to Work
(GAO/T-HEHS-96-147, June 5, 1996). 

SSA Disability:  Program Redesign Necessary to Encourage Return to
Work (GAO/HEHS-96-62, Apr.  24, 1996). 

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

PASS Program:  SSA Work Incentive for Disabled Beneficiaries Poorly
Managed (GAO/HEHS-96-51, Feb.  28, 1996). 

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

Social Security:  New Functional Assessments for Children Raise
Eligibility Questions (GAO/HEHS-95-66, Mar.  10, 1995). 


*** End of document. ***