Social Security Disability
Reviews of Beneficiaries' Disability Status Require Continued Attention to Achieve Timeliness and Cost-Effectiveness Gao ID: GAO-03-662 July 24, 2003The Social Security Administration (SSA) has had difficulty in conducting timely reviews of beneficiaries' cases to ensure they are still eligible for disability benefits. SSA has been taking steps to improve the cost-effectiveness of its review process. SSA has linked the review process to eligibility for a new benefit that provides return-to-work services. This report looks at SSA's ability to stay current with future reviews, identifies potential improvements to the review process, and assesses the review process--return-to-work link.
SSA will likely face a backlog of about 200,000 continuing disability review (CDR) cases by the end of fiscal year 2003. SSA officials attribute the pending backlog to its decision to reduce the number of cases reviewed as a result of the delay in obtaining fiscal year 2003 funding. In addition, the pending backlog resulted from putting more emphasis on initial applications over CDRs. To ensure CDRs receive adequate attention, SSA has requested some fiscal year 2004 funds be "earmarked" for these reviews. Given SSA's ability to eliminate its previous CDR backlog using targeted funds, this maneuver could help SSA. Over the next 5 years, SSA has estimated that 8.5 million CDRs, costing about $4 billion, are needed to stay current. If SSA generates another backlog, cost savings and program integrity may be compromised by paying benefits to disability beneficiaries who are no longer eligible to receive them. SSA is not making the best use of available information when conducting its CDRs, leaving opportunities for improvement. First, SSA's decisions on the timing of CDRs are not based on systematic analysis of available information. Second, SSA's process for determining which CDR method to use is not always based on the best available information. For example, SSA requires an in-depth review for all beneficiaries who, upon entering the program, are expected to medically improve even if current information on certain of those beneficiaries indicates that improvement is unlikely and that the review would be better handled through a shorter, less expensive method. Third, SSA has not fully pursued medical treatment data available from the Medicare and Medicaid programs despite their potential to improve SSA's decisions regarding which review method to use. Fourth, SSA's CDRs continue to be hampered by missing or incomplete information on beneficiaries' case history. SSA delays the provision of new return-to-work benefits to beneficiaries expected to medically improve based on the assumption that such beneficiaries are least likely to need them. However, according to SSA data, about 94 percent of such beneficiaries are not found to have medically improved upon completion of a disability review. As a result, some individuals who might benefit from return-to-work services are initially denied access to them. SSA is reviewing this policy and while doing so, will need to consider how to best balance its financial stewardship and return-to-work goals.
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entitled 'Social Security Disability: Reviews of Beneficiaries'
Disability Status Require Continued Attention to Achieve Timeliness and
Cost-Effectiveness' which was released on July 24, 2003.
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Report to the Chairman, Subcommittee on Social Security, Committee on
Ways and Means, House of Representatives:
United States General Accounting Office:
GAO:
July 2003:
Social Security Disability:
Reviews of Beneficiaries' Disability Status Require Continued Attention
to Achieve Timeliness and Cost-Effectiveness:
Social Security Disability:
GAO-03-662:
GAO Highlights:
Highlights of GAO-03-662, a report to the Chairman, Subcommittee on
Social Security, Committee on Ways and Means, House of
Representatives
Why GAO Did This Study:
The Social Security Administration (SSA) has had difficulty in
conducting timely reviews of beneficiaries‘ cases to ensure they are
still eligible for disability benefits. SSA has been taking steps to
improve the cost-effectiveness of its review process. SSA has linked
the review process to eligibility for a new benefit that provides
return-to-work services.
This report looks at SSA‘s ability to stay current with future
reviews, identifies potential improvements to the review process, and
assesses the review process–return-to-work link.
What GAO Found:
SSA will likely face a backlog of about 200,000 continuing disability
review (CDR) cases by the end of fiscal year 2003. SSA officials
attribute the pending backlog to its decision to reduce the number of
cases reviewed as a result of the delay in obtaining fiscal year 2003
funding. In addition, the pending backlog resulted from putting more
emphasis on initial applications over CDRs. To ensure CDRs receive
adequate attention, SSA has requested some fiscal year 2004 funds be
’earmarked“ for these reviews. Given SSA‘s ability to eliminate its
previous CDR backlog using targeted funds, this maneuver could help
SSA. Over the next 5 years, SSA has estimated that 8.5 million CDRs,
costing about $4 billion, are needed to stay current. If SSA generates
another backlog, cost savings and program integrity may be compromised
by paying benefits to disability beneficiaries who are no longer
eligible to receive them.
SSA is not making the best use of available information when
conducting its CDRs, leaving opportunities for improvement. First,
SSA‘s decisions on the timing of CDRs are not based on systematic
analysis of available information. Second, SSA‘s process for
determining which CDR method to use is not always based on the best
available information. For example, SSA requires an in-depth review
for all beneficiaries who, upon entering the program, are expected to
medically improve even if current information on certain of those
beneficiaries indicates that improvement is unlikely and that the
review would be better handled through a shorter, less expensive
method. Third, SSA has not fully pursued medical treatment data
available from the Medicare and Medicaid programs despite their
potential to improve SSA‘s decisions regarding which review method to
use. Fourth, SSA‘s CDRs continue to be hampered by missing or
incomplete information on beneficiaries‘ case history.
SSA delays the provision of new return-to-work benefits to
beneficiaries expected to medically improve based on the assumption
that such beneficiaries are least likely to need them. However,
according to SSA data, about 94 percent of such beneficiaries are not
found to have medically improved upon completion of a disability
review. As a result, some individuals who might benefit from return-
to-work services are initially denied access to them. SSA is reviewing
this policy and while doing so, will need to consider how to best
balance its financial stewardship and return-to-work goals.
What GAO Recommends:
GAO recommends that the Commissioner of SSA
* pursue a more comprehensive, data-driven approach to the method it
uses to decide when to assess individuals for on-going eligibility;
* rely more readily on current assessments of beneficiary information
rather than on assessments made at time of program entry when deciding
which review method to use; and
* study, and incorporate if cost-effective, the more comprehensive use
of Medicare/Medicaid data into SSA‘s decisions about the review method
to use.
In its comments on a draft of this report, SSA generally agreed with
GAO‘s recommendations.
www.gao.gov/cgi-bin/getrpt?GAO-03-662.
To view the full product, including the scope
and methodology, click on the link above.
For more information, contact Robert E. Robertson at (202) 512-7215 or
RobertsonR@gao.gov.
[End of section]
Contents:
Letter:
Results in Brief:
Background:
End of Targeted Funding and Other Issues Could Contribute to Another
Backlog, Threatening Cost Savings:
Further Opportunities Exist for SSA to Improve CDR Cost-Effectiveness:
SSA's Rationale for Postponing Return-to-Work Services to Some
Beneficiaries Is Not Well-Supported by Program Experience:
Conclusions:
Recommendations to the Commissioner of SSA:
Agency Comments and Our Evaluation:
Appendix I: Scope and Methodology:
Appendix II: Comments from the Social Security Administration:
Appendix III: GAO Contacts and Staff Acknowledgments:
GAO Contacts:
Staff Acknowledgments:
Tables:
Table 1: Estimated CDR Activities, Fiscal Years 2004-08:
Table 2: DDS Directors' Reported Likelihood, If Any, of Experiencing an
Event That Jeopardizes Meeting CDR Workload During Fiscal Years 2004
and 2005:
Table 3: Extent That DDSs Have a Strategy to Manage Anticipated Events
and Likelihood That Events Will Have Negative Impact on Workload
Processing During Fiscal Year 2004 and 2005:
Table 4: Summary of SSA's CDR Activities During Special Funding Period,
Fiscal Years 1996-2002:
Abbreviations:
CDR: continuing disability reviews:
CMS: Center for Medicare and Medicaid Services:
DDS: Disability Determination Services:
DI: Disability Insurance:
EF: Disability Electronic Folder:
MIE: medical improvement expected:
MINE: medical improvement not expected:
MIP: medical improvement possible:
SGA: substantial gainful activity:
SSA: Social Security Administration:
SSI: Supplemental Security Income:
United States General Accounting Office:
Washington, DC 20548:
July 24, 2003:
The Honorable E. Clay Shaw, Jr.
Chairman,
Subcommittee on Social Security
Committee on Ways and Means
House of Representatives:
Dear Mr. Chairman:
The Disability Insurance (DI) and Supplemental Security Income (SSI)
programs are the largest federal income programs for disabled
individuals, paying about $86 billion to about 10 million disabled
beneficiaries in 2002. These programs have been growing in recent years
and are poised to grow further as the baby boom generation ages. To
help ensure that only eligible beneficiaries remain on the rolls, the
Social Security Administration (SSA) is required by law to conduct
continuing disability reviews (CDR) for all DI beneficiaries and some
SSI disability recipients to determine whether they continue to meet
the disability requirements of the law. In addition, to assist
beneficiaries who want to return to work and leave the disability
rolls, SSA began implementing the Ticket to Work and Self-Sufficiency
Program in 2002. Under this program, beneficiaries are issued a
"ticket," or voucher, which they can use to obtain vocational
rehabilitation, employment, or other return-to-work services from an
approved provider of their choice.
Through much of the 1980s and 1990s, the Congress and GAO, among
others, emphasized the importance of CDRs for maintaining DI and SSI
program integrity and, consequently, the critical need for SSA to
conduct CDRs when they are due and in a cost-effective manner. However,
SSA had difficulty completing all required CDRs when they were due,
which resulted in the development of an enormous backlog of 4.3 million
cases. In 1996, the Congress, in response to these difficulties,
authorized funding targeted exclusively for CDRs from fiscal year 1996
through 2002 to eliminate the CDR backlog and conduct new CDRs as they
became due.[Footnote 1]
At the time beneficiaries enter the DI or SSI programs or continue
their benefits following a CDR, state-based Disability Determination
Services (DDS) determine beneficiaries' due date for a CDR based on
their potential for medical improvement. Beneficiaries classified as
"medical improvement expected" are generally scheduled for a CDR within
6 to 18 months, beneficiaries classified as "medical improvement
possible" are scheduled once every 3 years, and beneficiaries
classified as "medical improvement not expected" are scheduled once
every 5 to 7 years. Once the date for a review arrives, SSA compiles
information such as age, length of time on the rolls, and qualifying
medical condition to determine if it would be cost-effective to
complete the CDR based on information reported by the beneficiary on a
mailed-out questionnaire ("mailer"). In instances where SSA determines
it is best to examine the beneficiary in person, SSA sends the
beneficiaries' case file to the DDS for a full medical review.
To reduce work disincentives and address some beneficiaries' fear that
any work activity could result in the termination of their benefits
through a CDR, the Ticket to Work and Self-Sufficiency Program
prohibits SSA from conducting CDRs for beneficiaries who are using a
ticket. However, SSA has decided that it will not issue a ticket to
beneficiaries who are expected to medically improve until their first
CDR is completed. SSA believes these beneficiaries do not require
assistance to return to work. But some disability advocates and policy
experts believe that beneficiaries expected to medically improve could
benefit from early ticket services and, therefore, should not be
subject to restrictions on ticket issuance.
Given the importance of CDRs in ensuring program integrity and
determining beneficiary eligibility for assistance under the ticket
program, the Chairman of the Subcommittee on Social Security, House
Committee on Ways and Means requested that we review the CDR process.
In response, this report discusses: (1) what impact the expiration of
targeted funding for CDR processing would have on SSA's ability to
remain current with the CDR caseload, and what level of funding would
be needed over the next 5 years to keep the workload current; (2) what
opportunities exist for SSA to improve the cost-effectiveness of the
CDR process; and (3) whether SSA's rationale for delaying return-to-
work and vocational services under the ticket program for beneficiaries
who are expected to medically improve is adequately supported by
program experience. To answer these questions, we reviewed SSA
documents, including the agency's budget request and estimates of the
cost and savings from conducting CDRs. Also, we surveyed 52 DDS
directors to assess the potential effect of the expiration of CDR-
targeted funding on DDS operations. Moreover, we analyzed SSA data on
CDR outcomes, reviewed SSA-contracted studies of the CDR process,
examined legislation, regulations, and SSA policy guidance related to
CDRs and the ticket program, and interviewed SSA officials. We
performed our work in accordance with generally accepted government
auditing standards between August 2002 and May 2003. See appendix I for
a more detailed description of our scope and methodology.
Results in Brief:
With the expiration of CDR-targeted funds at the end of fiscal year
2002, SSA is at risk of generating another CDR backlog; based on SSA's
cost and workload projections, it would cost a total of about $4
billion or more over the next 5 years to complete its CDR workload.
However, most of the backlog expected to appear by the end of fiscal
year 2003 will likely consist of SSI CDRs and, according to SSA
officials, this makes the backlog less problematic than if it consisted
mostly of DI cases. The expected shortfall is attributable to several
factors. One factor was SSA's decision to reduce the number of CDRs it
processed pending fiscal year 2003 funding decisions. Other factors
relate to workload capacity and the lower priority given to CDRs
relative to initial claims. In the years ahead, a CDR backlog could
grow due to an expected increase in the number of initial claims as
well as DDS' potential difficulty with replacing the disability
examiners who leave through retirement or attrition. If another large
CDR backlog is generated, SSA is at risk of foregoing cost savings and
compromising the integrity of its disability programs by paying
benefits to disability beneficiaries who are no longer eligible to
receive them.
While SSA has taken a number of actions over the past decade to
significantly improve the cost-effectiveness of the CDR process,
opportunities remain for SSA to better use information in CDR decision
making. In particular, SSA's process for deciding when beneficiaries
should undergo a CDR is not based on systematic analysis of available
information, and likely results in some CDRs not being conducted at the
optimal time. Also, SSA's process for determining which method to use
in conducting a CDR--mailer or full medical review--is not always based
on the best available information. For example, SSA requires a full
medical review for all beneficiaries who, upon entering the program,
are expected to medically improve even if current information on
certain of those beneficiaries indicates that improvement is unlikely
and that the CDR would be better handled through a much less expensive
mailer. In addition, SSA has not fully studied and pursued the use of
medical treatment data on beneficiaries available from the Medicare and
Medicaid programs despite the potential of these data to improve SSA's
decisions regarding whether to use a mailer or full medical review to
complete a CDR. Finally, SSA continues to be hampered in its CDR
decisions by missing or incomplete information on beneficiaries' case
history. While the exact magnitude of this problem is unknown, 72
percent of DDSs reported that missing or incomplete information hinders
their ability to determine whether medical improvement has occurred,
thereby making it difficult for SSA to cease benefits for some
individuals who no longer meet eligibility standards.
SSA's rationale for delaying issuance of a ticket to beneficiaries
expected to medically improve, based on the premise that they will
regain their capacity to return to work without SSA assistance, is not
well-supported by program experience. The majority of these
beneficiaries--about 94 percent--are not found to have medically
improved upon completion of a CDR. As a result, some beneficiaries who
might otherwise benefit from potentially valuable return-to-work
assistance have to wait up to 3 years to access services through the
ticket program. SSA has acknowledged the need to reexamine this policy,
and agency officials have informed us that they are in the process of
doing so. As SSA reexamines this policy, it will need to consider
alternatives that better balance the agency's program stewardship and
return-to-work goals.
This report contains recommendations for further improving the cost-
effectiveness of SSA's CDR process. In its comments on a draft of this
report, SSA agreed with our recommendations and said that our review
represents a comprehensive and accurate assessment of SSA's
accomplishments in improving the CDR process as well as opportunities
to improve the process. SSA also provided a number of technical
comments, which we incorporated where appropriate.
Background:
The DI and SSI programs are the two largest federal programs providing
cash assistance to people with disabilities. Established in 1956, DI is
an insurance program that provides monthly cash benefits to workers who
are unable to work because of severe long-term disability. Workers who
have worked long enough and recently enough are insured for coverage
under the DI program. In addition to cash assistance, DI beneficiaries
receive Medicare coverage after they have received cash benefits for 24
months. In 2002, SSA paid about $60 billion to 5.5 million disabled
workers, with average monthly cash benefits amounting to $834 per
person.[Footnote 2] DI cash benefits are paid from the Federal
Disability Insurance Trust Fund.[Footnote 3]
SSI, created in 1972, is a means-tested income assistance program that
provides a financial safety net for disabled, blind, or aged
individuals who have low income and limited resources. Unlike the DI
program, SSI has no prior work requirement and no waiting period for
cash or medical benefits. Eligible SSI applicants generally begin
receiving cash benefits immediately upon entitlement and, in most
cases, receipt of cash benefits makes them eligible for Medicaid
benefits. In 2002, about 5.5 million people with disabilities received
SSI benefits.[Footnote 4] In the same year, federal SSI cash benefits
paid to SSI beneficiaries with disabilities equaled $26 billion, and
average monthly federal SSI cash benefits amounted to about $398 per
person. SSI cash benefits are paid from general tax revenues.
The DI and SSI programs use the same statutory definition of
disability. To meet the definition of disability under these programs,
an individual must have a medically determinable physical or mental
impairment that (1) has lasted or is expected to last at least 1 year
or to result in death and (2) prevents the individual from engaging in
substantial gainful activity (SGA). Individuals are considered to be
engaged in SGA if they have countable earnings above a certain dollar
level.[Footnote 5] Moreover, for a person to be determined to be
disabled, the impairment must be of such severity that the person not
only is unable to do his or her previous work but, considering his or
her age, education, and work experience, is unable to do any other kind
of substantial work that exists in the national economy. SSA contracts
with state DDS agencies to determine whether applicants are disabled.
To help ensure that only eligible beneficiaries remain on the rolls,
SSA is required by law to conduct CDRs for all DI beneficiaries and
some SSI disability recipients to determine whether they continue to
meet the disability requirements of the law. In 1980, because of
concerns about the effectiveness of the CDR process and growing
disability rolls, the Congress enacted a law requiring that CDRs be
conducted at least once every 3 years for all DI beneficiaries whose
disabilities are not considered permanent and at intervals determined
appropriate by SSA for DI beneficiaries whose impairments are
considered permanent. SSA issued regulations in 1986 stating its policy
of conducting CDRs for SSI disability beneficiaries with the same
frequency as it conducts CDRs for DI beneficiaries. In 1994, the
Congress established the first statutory requirement for SSI CDRs,
requiring that CDRs be conducted for a relatively small proportion of
SSI beneficiaries. Welfare reform legislation enacted in August 1996
focused on CDRs for SSI children.[Footnote 6] This legislation required
that SSA (1) conduct CDRs at least once every 3 years for SSI children
under age 18 if their impairments are not considered permanent and for
infants during their first year of life if they are receiving SSI
benefits due to low birth weight and (2) review the cases of all SSI
children beginning on their 18th birthdays to determine whether they
are eligible for disability benefits under adult disability criteria.
The redeterminations for 18-year-olds are considered part of the CDR
workload.
CDR Process:
At the time beneficiaries enter the DI or SSI programs, DDSs determine
when beneficiaries will be due for CDRs on the basis of their potential
for medical improvement. Based on SSA regulations, DDSs classify
individuals into one of three medical improvement categories, called
"diary categories": "medical improvement expected" (MIE), "medical
improvement possible" (MIP), or "medical improvement not expected"
(MINE). Based on the diary categories, DDSs select a "diary date" for
each beneficiary, which is the date that the beneficiary is scheduled
to have a CDR. The diary date is generally within 6 to 18 months if the
beneficiary is classified as MIE;[Footnote 7] once every 3 years if
classified as MIP; and once every 5 to 7 years if classified as MINE.
Upon completion of a CDR, DDSs reassess the medical improvement
potential of beneficiaries who remain eligible for benefits to
determine the most appropriate medical improvement category and time
frame for conducting the next CDR. Beneficiaries classified as MIE are
not eligible to receive Ticket to Work services until either the
completion of their first CDR, or until they have received benefits for
3 years.
While SSA uses diary categories to determine the timing of CDRs, it has
developed another method, called profiling, to determine the most cost-
effective method of conducting a CDR. Profiling involves the
application of statistical formulas that use data on beneficiary
characteristics contained in SSA's computerized records--such as age,
impairment type, length of time on disability rolls, previous CDR
activity, and reported earnings--to predict the likelihood of medical
improvement and, therefore, of benefit cessation. For example, SSA
found that the longer an individual is on the disability rolls, the
less likely he or she is to have benefits terminated. In addition, once
an individual undergoes a CDR, the chance that a new CDR will result in
benefit termination is reduced substantially. Reported earnings, on the
other hand, greatly increase the likelihood of termination.
Through its profiling formulas, SSA assigns a "score" to beneficiaries
indicating whether there is a high, medium, or low likelihood of
medical improvement. In general, beneficiaries with a high score are
referred for full medical reviews--an in-depth assessment of a
beneficiaries' medical and vocational status--while beneficiaries with
lower scores are, at least initially, sent a questionnaire, known as a
"mailer."[Footnote 8] The mailer consists of a short list of questions
asking beneficiaries to report information on their medical conditions,
treatments, and work activities. If beneficiaries' responses to a
mailer indicate possible improvement in medical condition or vocational
status, SSA may refer these individuals for a full medical review.
However, in most cases, SSA decides that a full medical review is not
warranted and that benefits should be continued.
In contrast to mailers, full medical reviews are labor intensive and
expensive. These reviews generally involve the following steps: (1) SSA
headquarters personnel determine that a CDR is due and notify the SSA
processing center; (2) personnel at the processing center locate the
beneficiary's file and send it to the appropriate SSA field office; (3)
field office personnel contact the beneficiary, conduct a lengthy
interview, and send the file to the appropriate DDS; (4) the DDS
requests medical records from the beneficiary's physicians and other
medical sources and, if these sources cannot provide sufficient
evidence, schedules medical or psychological examinations with
consulting physicians outside the DDS; and (5) a DDS team, consisting
of a disability examiner and a physician or psychologist, determines
whether the beneficiary continues to meet SSA disability criteria.
CDR Backlog:
As of fiscal year 1996, about 4.3 million CDRs were due or overdue. In
response, SSA and the Congress focused on providing funding to conduct
overdue CDRs and new CDRs as they became due. SSA developed a plan for
a 7-year initiative to conduct about 8.2 million CDRs during fiscal
years 1996 through 2002. In the Contract with America Advancement Act
of 1996 (Pub. L. No. 104-121), the Congress authorized a total of about
$4.1 billion to fund the 7-year CDR plan.[Footnote 9] In addition, The
Personal Responsibility and Work Opportunity Reconciliation Act of 1996
(Pub. L. No. 104-193) required SSA to conduct CDRs on several
beneficiary groups, such as low birth weight babies and authorized an
additional $250 million for CDRs in fiscal years 1997 and 1998. The
actual amount appropriated during the 7-year period, about $3.68
billion, was less than the amount authorized in 1996.
SSA reported to the Congress in its fiscal year 2000 CDR report that in
that year, the agency became current with the backlog of CDRs for all
DI beneficiaries. SSA officials indicated to us that although they are
in the midst of preparing the final statistics for its fiscal year 2002
CDR report, it became current with the backlog of CDRs for all SSI
beneficiaries by the end of fiscal year 2002.
CDR Cost-Effectiveness:
Since first implementing the profiling and mailer processes in the
early 1990s, SSA has continued its efforts to improve the cost-
effectiveness of the CDR process. Most notably, SSA has refined the
statistical formulas used in profiling to identify which method--mailer
or full medical review--should be used to conduct the CDR. According to
SSA officials and studies of the profiling process, these improvements
have led to some beneficiaries receiving a mailer who otherwise would
have received a full medical review, thereby allowing SSA to reduce the
overall cost of the CDR process. Conversely, by improving SSA's ability
to identify beneficiaries who are likely to medically improve, these
refinements have also helped the agency better ensure that it is
conducting full medical reviews--and ceasing benefits--when
appropriate.[Footnote 10] In addition to improvements in its profiling
process, SSA has also implemented other CDR process improvements such
as introducing an automated review of mailers.
End of Targeted Funding and Other Issues Could Contribute to Another
Backlog, Threatening Cost Savings:
In the midst of its first year following the cessation of CDR-targeted
funds, SSA appears to be developing another CDR backlog; the agency
estimates it will cost several billion dollars in total over the next 5
years to keep its workload current. By the end of fiscal year 2003, on
the basis of SSA's current projections, the agency will likely face a
backlog of 200,000 CDRs, though the characteristics of the backlog may
mitigate its negative effects. SSA attributes the mounting backlog to
the management decisions it made at the beginning of the fiscal year
during budget deliberations, as well as the need to process a larger
than expected workload of initial disability applications. SSA has
estimated that it will need a total of about $4 billion to process its
projected CDR workload over the next 5 years. However, SSA's updated
estimate, expected to be available later this year, will likely show a
higher cost as the disability rolls continue to expand. Aside from
funding issues, DDSs reported that challenges associated with
processing initial disability applications and maintaining enough
disability examiners could jeopardize their ability to stay current
with the CDR workload over the next few years. If another large CDR
backlog is generated, SSA is at risk of foregoing cost-savings, thereby
compromising the integrity of its disability programs as a result of
paying benefits to disability beneficiaries who are no longer eligible
to receive them.
CDR Backlog Likely to Reemerge, Though Its Characteristics May Minimize
Negative Effects:
At the end of March 2003--six months after the expiration of separate
authorized CDR funding--SSA was on a pace to generate a CDR backlog by
the end of the current fiscal year. However, most of the backlogged
claims will consist of SSI CDRs, which may make the backlog less
problematic than it otherwise would have been because, among other
reasons, SSI CDRs have lower long-term savings than DI CDRs. In its
fiscal year 2003 budget justification, SSA indicated that it needed to
process about 1.38 million CDRs during fiscal year 2003 to stay current
with its CDR workload. Yet, SSA expects to process a total of 1.18
million CDRs, if not more, by the end of the fiscal year.[Footnote 11]
By the end of March 2003--the midpoint of the fiscal year--SSA had
processed about 539,000 CDRs. To reach the 1.18 million end-year
revised total, SSA will need to process CDRs during the second half of
the fiscal year at a pace similar to that achieved during the first 6
months of the fiscal year.[Footnote 12] Nevertheless, while it appears
that SSA should be able to achieve this outcome, by the end of fiscal
year 2003, it will have accumulated a backlog of 200,000 CDRs.
SSA officials attributed the delay in obtaining a fiscal year 2003
budget as the main factor in hampering their ability to conduct all of
the planned CDRs for the fiscal year.[Footnote 13] Because of the
uncertainty surrounding the agency's funding level, SSA reduced the
number of CDRs it sent to DDS officials for processing as well as froze
DDS hiring and overtime pay. SSA officials told us that they took these
actions because they were concerned that the fiscal year 2003
appropriations would not support CDR activity at the fiscal year 2002
level. SSA officials recognize that a hiring freeze can have a longer-
term impact because it disrupts the normal replacement of disability
examiners lost through attrition. SSA officials explained that
disability examiners generally do not increase overall productivity
when first hired. In fact, new disability examiners could initially
decrease productivity because experienced examiners may devote some of
their time to training these new examiners. SSA officials noted that it
generally takes 1 to 2 years before disability examiners become
proficient.
SSA's management strategy to cut back on the number of CDRs it
processed during the delays to the extended fiscal year 2003 budget
process reflects the agency's higher priority for processing of initial
applications for disability benefits. Specifically, while SSA cut back
on the number of CDRs, no similar action was reported with DI and SSI
initial eligibility decision making. SSA officials indicated that the
application rate for disability benefits increased during the beginning
months of fiscal year 2003, further affecting its ability to stay
current with CDRs. SSA officials told us that although SSA sets a goal
to process all CDRs and initial applications, initial eligibility
decisions are given the highest priority. Officials said that, due to
political pressure, getting disability benefits to people in a timely
manner is emphasized over reviewing whether current beneficiaries
remain eligible for benefits. DDSs, likewise, place a greater priority
on processing initial applications. Three-fourths (75 percent) of
directors said processing initial disability claims were a top priority
relative to CDRs, whereas far fewer directors (23 percent) said that
processing initial claims and CDRs were equal priorities.
SSA has recently proposed an approach to avoid this competition between
CDRs and initial claims. Specifically, in SSA's fiscal year 2004 budget
request, the Commissioner requested that almost $1.5 billion be
earmarked for three activities that could provide a return on
investment--CDRs, SSI nondisability redeterminations,[Footnote 14] and
overpayment workloads. While we did not review the sufficiency of the
level of this request, the earmarking of funds for activities such as
CDRs could help SSA keep current with these activities. For example, if
the number of initial applications for disability benefits continues to
increase over the next several years, holding apart the necessary funds
for CDRs could be a prudent measure.
SSA has indicated in its annual CDR reports, as well as in its
performance and accountability report, that its ability to complete all
CDRs as they become due in the future is dependent upon adequate
funding. In 2000, SSA estimated that a total of about $4 billion was
needed to process the CDR workload during the 5-year period between
fiscal year 2004 and 2008 (see table 1). SSA based these "rough
estimates" on cost and workload projections available at that time. SSA
expects to release updated workload and cost projections in the summer
of 2003. While the estimates made in 2000 are not inconsistent with
recent years' authorized CDR funding levels, they rely upon assumptions
that may change in the years ahead. For instance, the updated numbers
for the fiscal year 2004 to 2008 period will likely be higher than the
past estimate for this time period because of the recent growth in the
disability rolls.
Table 1: Estimated CDR Activities, Fiscal Years 2004-08:
Fiscal year: 2004; CDRs to be processed during year (in thousands):
1,637; CDR expenses (dollars in millions): $716; Cessations
[A](In thousands): 61.
Fiscal year: 2005; CDRs to be processed during year (in thousands):
1,682; CDR expenses (dollars in millions): $729; Cessations
[A](In thousands): 59.
Fiscal year: 2006; CDRs to be processed during year (in thousands):
1,632; CDR expenses (dollars in millions): $787; Cessations
[A](In thousands): 61.
Fiscal year: 2007; CDRs to be processed during year (in thousands):
1,769; CDR expenses (dollars in millions): $896; Cessations
[A](In thousands): 65.
Fiscal year: 2008; CDRs to be processed during year (in thousands):
1,793; CDR expenses (dollars in millions): $857; Cessations
[A](In thousands): 62.
Source: SSA's Office of the Chief Actuary, May 2000 estimates.
[A] Estimated ultimate cessations after all appeals.
[End of table]
Despite the likely reemergence of a CDR backlog, the characteristics of
the backlog may mitigate its negative consequences. During fiscal year
2003, SSA has focused on DI CDRs. SSA officials cite four reasons for
this: (1) cessations of beneficiaries receiving DI benefits lead to
higher savings than cessations of recipients receiving SSI benefits,
(2) SSA desires to protect the DI trust fund, (3) legislation sets out
a clearer mandate to complete CDRs on beneficiaries receiving DI
benefits than for adult beneficiaries receiving SSI benefits, and (4)
external auditors cite SSA for noncompliance with the law when SSA does
not complete the required CDRs for DI beneficiaries.
As a result, most of the backlog that is expected to reemerge by the
end of fiscal year 2003 will likely consist of SSI CDRs and, according
to SSA officials, this makes the backlog less problematic than if the
backlog consisted of mostly DI cases. SSA maintains that not only do
SSI adult CDRs result in lower long-term savings, but also the
legislative mandate for conducting SSI CDRs is less prescriptive.
Therefore, the negative effects of falling behind on SSI CDRs are less
severe.
DDS Directors Expressed Concerns about Their Ability to Meet Future CDR
Workload:
Several of the issues that have contributed to the pending fiscal year
2003 CDR backlog will also appear, in the views of DDS directors, in
the future. First, nearly all directors expect to process a higher
number of initial disability claims than in the past. Most DDS
directors have a strategy in place to deal with this rising initial
claims workload, but still expect increased initial claims to
negatively affect their ability to process their CDR workload. Second,
most directors expect to experience difficulties in maintaining an
adequate level of staffing, caused by many examiners leaving and
difficulties finding replacements. Most DDSs who anticipate facing
these staffing challenges reported that they have strategies in place
to manage them. Nevertheless, nearly all believe that these staffing
issues will negatively impact their ability to stay current with their
expected CDR workloads. Tables 2 and 3 provide more specific results.
Table 2: DDS Directors' Reported Likelihood, If Any, of Experiencing an
Event That Jeopardizes Meeting CDR Workload During Fiscal Years 2004
and 2005:
Numbers in percent.
Higher number of initial disability claims than in past (n=51);
Not at all likely: 2; Somewhat likely:
35; Very likely: 63.
State budget shortfalls causing constraints (e.g., personnel
restrictions) (n=49); Not at all likely: 25;
Somewhat likely: 29; Very
likely: 47.
Difficulties hiring disability; examiners (n=51);
Not at all likely: 28; Somewhat likely: 31; Very likely: 41.
High turnover of disability examiners due to reasons other than
retirement (n=51); Not at all likely: 35;
Somewhat likely: 51; Very likely: 14.
Large number of disability examiner retirements (n=51); Not at all
likely: 39; Somewhat likely: 39; Very likely: 22.
Source: GAO survey of DDS directors, February 2003.
[End of table]
Table 3: Extent That DDSs Have a Strategy to Manage Anticipated Events
and Likelihood That Events Will Have Negative Impact on Workload
Processing During Fiscal Year 2004 and 2005:
Event: Higher number of initial disability claims than in past (n=50);
Percentage of DDSs anticipating event that have a strategy currently in
place: 78; [Empty]; Likelihood event will reportedly have a negative
impact on staying current with projected CDR workloads in fiscal year
2004 and 2005, even with a strategy (in percentage): Not at all likely
or not sure: 8; Likelihood event will reportedly have a negative impact
on staying current with projected CDR workloads in fiscal year 2004 and
2005, even with a strategy (in percentage): Somewhat likely or very
likely: 92.
Event: State budget shortfalls causing constraints (e.g., personnel
restrictions) (n=37); Percentage of DDSs anticipating event that have a
strategy currently in place: 57; [Empty]; Likelihood event will
reportedly have a negative impact on staying current with projected CDR
workloads in fiscal year 2004 and 2005, even with a strategy (in
percentage): Not at all likely or not sure: 17[A]; Likelihood event
will reportedly have a negative impact on staying current with
projected CDR workloads in fiscal year 2004 and 2005, even with a
strategy (in percentage): Somewhat likely or very likely: 83[A].
Event: Difficulties hiring disability; Examiners (n=37); Percentage of
DDSs anticipating event that have a strategy currently in place: 70;
[Empty]; Likelihood event will reportedly have a negative impact on
staying current with projected CDR workloads in fiscal year 2004 and
2005, even with a strategy (in percentage): Not at all likely or not
sure: 8; Likelihood event will reportedly have a negative impact on
staying current with projected CDR workloads in fiscal year 2004 and
2005, even with a strategy (in percentage): Somewhat likely or very
likely: 92.
Event: High turnover of disability examiners due to reasons other than
retirement (n=33); Percentage of DDSs anticipating event that have a
strategy currently in place: 79; [Empty]; Likelihood event will
reportedly have a negative impact on staying current with projected CDR
workloads in fiscal year 2004 and 2005, even with a strategy (in
percentage): Not at all likely or not sure: 3; Likelihood event will
reportedly have a negative impact on staying current with projected CDR
workloads in fiscal year 2004 and 2005, even with a strategy (in
percentage): Somewhat likely or very likely: 97.
Event: Large number of disability examiner retirements (n=31);
Percentage of DDSs anticipating event that have a strategy currently in
place: 81; [Empty]; Likelihood event will reportedly have a negative
impact on staying current with projected CDR workloads in fiscal year
2004 and 2005, even with a strategy (in percentage): Not at all likely
or not sure: 3; Likelihood event will reportedly have a negative impact
on staying current with projected CDR workloads in fiscal year 2004 and
2005, even with a strategy (in percentage): Somewhat likely or very
likely: 97.
Source: GAO survey of DDS directors, February 2003.
[A] Percentage based on 35 responses (2 of the 37 DDS directors did not
indicate a response about the likelihood of the event having a negative
impact on CDR workload).
[End of table]
Cost Savings and Program Integrity Could Be Jeopardized If CDR Backlog
Grows Again:
To the extent that funding, staffing, and other issues limit SSA's
ability to process its CDR workload, the full realization of CDR cost
savings could be in jeopardy. SSA maintains that the return on
investment from CDR activities is high. In fact, SSA's most recent
annual CDR report to the Congress summarizes its average CDR cost-
effectiveness during fiscal year 1996 to 2000 at about $11 returned for
every $1 spent on CDRs.[Footnote 15] SSA has noted, however, that such
rates of return are unlikely to be maintained because as SSA works down
the backlog and beneficiaries come up for their second and third CDRs,
the agency does not expect as many cessations and, therefore, the cost-
benefit ratio could decline.
Since the Congress' provision of dedicated CDR funding starting in
fiscal year 1996, SSA has reported completing millions of CDRs that
resulted in substantial long-term savings. Table 4 shows the number of
CDRs processed annually between fiscal year 1996 and 2001, which ranged
from about 500,000 to over 1.8 million. SSA has reported that these
annual CDRs will lead to long-term savings ranging from about $2
billion to $5.2 billion.[Footnote 16]
Table 4: Summary of SSA's CDR Activities During Special Funding Period,
Fiscal Years 1996-2002:
Fiscal year: 1996; Number of CDRs processed: 498,400; Estimated
cessations[A]: 26,500; CDR Costs (dollars in millions): $208; 10-year
estimated savings[B] (dollars in millions): $2,040.
Fiscal year: 1997; Number of CDRs processed: 690,478; Estimated
cessations[A]: 49,700; CDR Costs (dollars in millions): $330; 10-year
estimated savings[B] (dollars in millions): $3,555.
Fiscal year: 1998; Number of CDRs processed: 1,391,889; Estimated
cessations[A]: 70,300; CDR Costs (dollars in millions): $462; 10-year
estimated savings[B] (dollars in millions): $4,435.
Fiscal year: 1999; Number of CDRs processed: 1,703,414; Estimated
cessations[A]: 87,300; CDR Costs (dollars in millions): $547; 10-year
estimated savings[B] (dollars in millions): $5,185.
Fiscal year: 2000; Number of CDRs processed: 1,836,510; Estimated
cessations[A]: 76,000; CDR Costs (dollars in millions): $609; 10-year
estimated savings[B] (dollars in millions): $5,060.
Fiscal year: 2001; Number of CDRs processed: 1,730,572; Estimated
cessations[A]: 63,600; CDR Costs (dollars in millions): $603; 10-year
estimated savings[B] (dollars in millions): $4,245.
Fiscal year: 2002; Number of CDRs processed: SSA expects to report
these data to the Congress in fall, 2003.
Source: SSA's annual CDR reports submitted to the Congress, fiscal year
1996-2001. The law that authorized dedicated CDR funding for SSA
between fiscal year 1996 and 2002 (Pub. L. No. 104-121) required SSA to
report to Congress for each of those fiscal years specific information
such as the amount spent on CDRs and the estimated savings that would
result from the cessation of benefits.
[A] Estimated ultimate cessations after all appeals.
[B] Estimates of the reductions in benefit payments for the following
programs: the Old-Age, Survivors, and Disability Insurance program; the
SSI program; the two Medicare programs, Hospital Insurance and
Supplemental Medical Insurance; and the Medicaid program.
[End of table]
In addition to a favorable return on investment, SSA's CDR activities
help protect DI and SSI program integrity. Keeping current with the CDR
workload can help build and retain public confidence that only
qualified individuals are receiving disability benefits. In addition,
it helps protect the programs' fiscal integrity and allows SSA to meet
its financial stewardship responsibilities. To the extent the agency
falls behind in conducting CDRs, a CDR backlog undermines these
positive outcomes.
Further Opportunities Exist for SSA to Improve CDR Cost-Effectiveness:
While SSA has taken a number of actions over the past decade to
significantly improve the cost-effectiveness of the CDR process,
opportunities remain for SSA to better use program information in CDR
decision making. While DDS personnel study available information on
beneficiaries to decide when they should undergo a CDR, they do not
conduct a systematic analysis of this information. As a result, CDRs
may not be conducted at the optimal time. Also, SSA's process for
determining what method to use for a CDR--mailer or full medical
review--is not always based on the best information available. In
addition, SSA has not fully studied and pursued the use of medical
treatment data on beneficiaries available from the Medicare and
Medicaid programs despite the potential of these data to improve SSA's
selection of the most appropriate CDR method. Finally, SSA continues to
be hampered in its CDR decisions by missing or incomplete information
on beneficiaries' case history, which may prevent SSA from ceasing
benefits for some individuals who no longer meet eligibility standards.
Decisions on Timing of CDRs Are Not Based on Systematic Analysis of
Available Information:
While DDS personnel review available information on beneficiaries to
establish a diary date indicating when beneficiaries should undergo a
CDR, they do not conduct a systematic analysis of this information.
Diary decisions are inherently complex because DDS personnel must
assess a beneficiary's likelihood of medical improvement and how such
medical improvement will affect that person's ability to work. Based on
these judgments, beneficiaries are placed in a diary category
indicating either that medical improvement is "expected," "possible,"
or "not expected." DDS personnel then assign a diary date that
corresponds with the diary category; the more likely a beneficiary is
to medically improve, the earlier the diary date.
Although SSA has established guidance for DDS personnel on diary date
decisions, SSA officials told us that, ultimately, such decisions are
difficult to make and are based on the judgment of the DDS staff. An
SSA contracted study of the diary process found that this process is
often subjective and that the setting of diary categories and dates is
"almost an afterthought" once the case file is developed and a
disability determination has been made. SSA's study identified
shortcomings in the diary date process. For example, most beneficiaries
assigned to the diary category indicating they are expected to
medically improve are not found to have improved when a CDR is
conducted. Our analysis of SSA data indicates that between 1998 and
2002, only about 5 percent of beneficiaries in the MIE
category[Footnote 17] were found to have medically improved to the
point of being able to work again.
SSA's diary process study indicated that diary predictions of medical
improvement could be substantially improved through the use of
statistical modeling techniques similar to those used in the CDR
profiling process that SSA uses to determine whether a mailer or a full
medical review is needed. The study noted that this systematic,
quantitative approach to assigning diary categories and dates would
likely enhance disability program efficiency by reducing the number of
CDRs that do not result in benefit cessation.[Footnote 18] Another
benefit derived from a more systematic approach to diary
categorization, according to SSA's study, is improved integrity of the
diary process. Such integrity improvements will result from more timely
CDRs and from actual medical improvement rates that more closely
correlate with the diary categories that SSA assigns to beneficiaries.
For example, SSA's study indicates that the actual medical improvement
rate for beneficiaries assigned to the MIE diary category would
increase to about 29 percent under this improved process.
SSA officials told us that, in response to the diary study
recommendations, the agency has begun to revise its diary process to
introduce a more systematic approach to selecting a CDR date. In
particular, SSA is developing a process that will use beneficiary data
collected at the time of benefit application, such as impairment type
and age, in a statistical formula to help determine when a CDR should
be conducted. While this change is likely to result in some
improvements in the timing of CDRs, the fundamental diary
categorization process used by DDSs will remain the same. Despite the
study's findings and recommendations, SSA officials told us that they
will not replace SSA's current process for assigning diary categories
with a statistical process because of what they believe would be
significant costs involved in changing this system across DDSs.
However, SSA's study acknowledged the potential cost of implementing a
new process in DDSs, and instead recommended that a revised diary
process be centrally administered in order to avoid such high costs.
The officials also said that such fundamental changes in the diary
process would require a change in regulations.
SSA's Process for Determining CDR Method Not Always Based on Best
Information Available:
SSA's process for determining what method to use for a CDR is not
always based on the best information available. In the 1990s, SSA
introduced a system that develops a "profile score" for each
beneficiary. The profile score indicates the beneficiary's likelihood
for medical improvement based on a statistical analysis of beneficiary
data. The purpose of the profile score is to allow SSA to determine
whether it is more cost-effective to send a mailer or to conduct a full
medical review. SSA's own contracted studies indicate that profiling
results provide the best available indication of whether a beneficiary
is likely to medically improve. Nevertheless, for some beneficiaries,
SSA continues to use the diary category that was judgmentally assigned
by DDS personnel as the basis for their decision about whether to send
a mailer or conduct a full medical review.
SSA requires a full medical review for all beneficiaries whose diary
category indicates that medical improvement is expected (MIE) and who
have not yet undergone a CDR.[Footnote 19] This is the case even when
the profile score indicates that improvement is unlikely. In fiscal
year 2002, about 14 percent of beneficiaries in the MIE diary category
were assigned to the "low" profile category, which indicates that
medical improvement is not likely. SSA officials acknowledged that
their policy requiring full medical reviews for all beneficiaries in
this diary category departs from their usual practice of using mailers
for beneficiaries in the low profile category, but they believe that
this policy is reasonable given that these beneficiaries are more
likely to medically improve than those assigned to other diary
categories. However, SSA's data from 1998 to 2002 shows that most
beneficiaries in this category--about 94 percent--do not medically
improve to the point of being able to work.
For other CDR cases, SSA may require that a mailer be sent even when
the profile score indicates that conducting a full medical review would
be most cost-effective. Specifically, SSA's policy is to send a mailer
to all beneficiaries who were assigned a diary category that indicates
medical improvement is not expected (MINE),[Footnote 20] even if the
profile score indicates a relatively high likelihood of medical
improvement.[Footnote 21] Whether or not these beneficiaries
subsequently receive a full medical review will be based on the results
of their mailer. SSA officials said that MINE beneficiaries with a high
profile score are more likely to receive a full medical review based on
their mailer responses because SSA conducts a more stringent review of
their mailer responses.[Footnote 22] However, it is not clear that
sending mailers to beneficiaries in the high profile category is the
most cost-effective approach. SSA studies of the mailer process have
indicated that, while this process is effective, it does not provide
the same assurance as full medical reviews that medical improvement
will be identified. As a result, the use of mailers for beneficiaries
whose profile scores indicate a high likelihood of improvement could
result in SSA identifying fewer benefit cessations.[Footnote 23]
SSA Has Not Fully Studied and Pursued the Use of Medical Treatment Data
from Medicare and Medicaid:
SSA has not fully studied and pursued the use of medical treatment data
on beneficiaries available from the Medicare and Medicaid programs
despite the potential of these data to improve SSA's decisions
regarding whether to use a mailer or full medical review to complete a
CDR. In 2000, an SSA contracted study found that the use of Medicare
data from the Center for Medicare and Medicaid Services (CMS)--such as
data on hospital admissions and medical treatments--resulted in a
significant improvement in SSA's ability to assess potential medical
improvement through CDR profiling. Based on these results, SSA, in
fiscal year 2003, implemented a process that uses CMS Medicare data in
CDR profiling to determine if DI beneficiaries who are initially
identified as candidates to receive a full medical review should
instead receive mailers.[Footnote 24] SSA expects that this will result
in administrative savings due to the reduced number of full medical
reviews the agency must conduct. SSA has also initiated a study to
assess whether CMS Medicaid data can be used in the same way to decide
if SSI beneficiaries, scheduled to receive full medical reviews, could
instead be sent mailers.
But SSA's efforts to obtain and use CMS Medicare or Medicaid data are
incomplete because the data will only be used to reclassify full
medical reviews to mailers but not to reclassify mailers to full
medical reviews. SSA officials told us that they have no plans to
pursue this additional use of the data because they believe their
current profiling system is sufficient for identifying beneficiaries
who have a low likelihood of medical improvement. While they agreed
that the CMS data could potentially be useful for reclassifying mailers
to full medical reviews, they noted that they would need to first study
this particular use of the data and would need to develop another
interagency agreement with CMS to authorize and obtain data for this
purpose. Also, they said that any action to reclassify mailers to full
medical reviews would require SSA to publish a Federal Register notice
describing this action.
SSA could potentially achieve substantial program savings from
conducting additional full medical reviews in cases where CMS data
indicate that beneficiaries originally identified as mailer candidates
have a relatively high likelihood of medical improvement. Using CMS
Medicare data for this purpose would be consistent with the results of
an SSA study that recommended that these data be used whenever it
improves the agency's ability to accurately predict medical
improvement. For example, the study noted that the CMS data would be
useful for enhancing SSA's profiling of beneficiaries with mental
impairments, including those with a low likelihood of medical
improvement for whom SSA would usually send a mailer. To the extent
that CMS data improves SSA's ability to identify beneficiaries for full
medical review, the program savings from reduced lifetime benefit
payments to those beneficiaries whose benefits are ceased could easily
exceed any increased administrative costs resulting from additional
full medical reviews.
Missing or Incomplete Case Folders May Result in Fewer Benefit
Cessations:
SSA continues to be hampered in its CDR decisions by missing or
incomplete information on beneficiaries' case history, which may
prevent SSA from ceasing benefits for some individuals who no longer
qualify for benefits. To cease benefits based on a CDR, SSA must
determine if the beneficiary has improved by comparing information
about the beneficiary's current condition to information from the
agency's previous decision regarding the beneficiary's medical
condition. This previous decision and the evidence supporting it are
recorded by SSA and maintained in case folders that are usually stored
in SSA records storage facilities. However, in conducting CDRs, DDSs
sometimes have difficulty retrieving the case folders or the key
medical evidence that is maintained in these folders.
Without the information contained in case folders, DDSs cannot
establish a comparison and, therefore, cannot determine if medical
improvement has occurred. As a result, SSA is legally required to keep
the beneficiary on the disability rolls even though the beneficiary may
have been judged to no longer qualify for benefits had the DDS been
able to establish a comparison. SSA's inability to cease benefits in
cases where folders are missing or incomplete could result in a
substantial cost to the federal government arising from continued
payments of benefits--cash and medical--to people who no longer meet
eligibility standards.[Footnote 25]
Our discussions with SSA officials, survey of DDSs, and review of SSA
studies indicate that missing or incomplete folders present an obstacle
to effective processing of CDRs. However, evidence on the extent of
this problem is mixed. In responding to our survey on CDRs, about 72
percent of DDSs informed us that missing or incomplete information from
case folders negatively impacted the quality or timing of CDR decisions
to a moderate or great extent. An August 2002 study of missing or
incomplete folders conducted by SSA's Office of the Inspector General
reported that DDSs, as well as other SSA components such as field
offices, complained that a large proportion of cases were missing
information.[Footnote 26] This study found that case folder retrieval
is a significant problem for SSA. Among the problems identified were
untimely receipt of case folders, nonreceipt of requested folders, and
folders provided without necessary medical evidence. The report
questioned SSA's oversight of folder inventory and retrieval processes
and recommended that SSA take various actions, such as independent
quality assurance reviews, to improve management of case folders. A
study contracted by SSA also identified problems with disability case
folder management, such as misrouted or missing folders. The study
noted that "inefficient folder management increases administrative and
program costs and risks data integrity" and recommended that SSA
"analyze the reasons for missing folders and provide recommendations
for process and systems improvements.":
SSA headquarters officials we spoke with said that SSA has examined the
incidence of missing or incomplete case folders and found that the
problem is not as significant as claimed by DDSs. For example, in
fiscal year 2000, SSA investigated allegations of substantial numbers
of missing case folders in two DDSs. SSA officials told us that they
were able to locate many of the folders that had been reported as
missing. The officials attribute the discrepancy between their findings
and the allegations of DDSs, in part, to staff shortages and workload
pressures at field offices, which result in a failure of these offices
to take further steps to look for folders. However, our survey of DDSs
indicates that regardless of SSA's ability to locate many case folders
upon further investigation, DDSs are still having difficulty obtaining
the information they need to make CDR decisions.
In a 2002 memorandum to SSA's Inspector General, the SSA Commissioner
acknowledged that missing or incomplete case folders are a problem in
the CDR process, but noted that the problem had been overstated. The
memorandum cited data indicating a lost folder rate of about 0.5
percent for DI CDRs and about 3 percent for SSI CDRs.[Footnote 27] The
Commissioner also said that SSA had taken a number of actions in recent
years to reduce the incidence of lost folders, such as issuance of
additional guidance and training on this issue. In addition, the
Commissioner noted that the agency was committed to building a system
of electronic folders[Footnote 28] that will "virtually eliminate the
incidences of lost folders." While electronic folders may be a key
initiative in resolving SSA's problems with missing or incomplete case
folders, SSA does not plan to fully implement this system until mid-
2005.[Footnote 29] In addition, these electronic folders will be
established only for new disability cases; cases established prior to
implementation of electronic folders will remain in a paper format.
Therefore, problems in handling these older case folders will likely
continue.
SSA's Rationale for Postponing Return-to-Work Services to Some
Beneficiaries Is Not Well-Supported by Program Experience:
SSA's rationale for postponing issuance of a ticket to beneficiaries
expected to medically improve--those who are assigned an MIE diary
category--is not well-supported by program experience. In issuing
regulations implementing the ticket act, SSA decided to postpone
issuance of tickets to MIE beneficiaries who have not yet had a CDR
based on the premise that these beneficiaries could be expected to
regain their capacity to work without SSA assistance.[Footnote 30]
However, our analysis of SSA data indicates that the vast majority of
MIE beneficiaries in the DI and SSI programs--about 94 percent--are not
found to have medically improved upon completion of a CDR. As a result,
some beneficiaries who might otherwise benefit from potentially
valuable return-to-work assistance must wait up to 3 years to access
services through the ticket program.[Footnote 31]
Some disability advocacy groups and SSA's own Ticket to Work and Work
Incentives Advisory Panel have questioned SSA's policy of delaying the
issuance of tickets to MIE beneficiaries. In particular, they have
commented that delaying tickets to all MIE beneficiaries when only a
small proportion of these beneficiaries return to work underscores the
inherent weakness of relying upon the MIE category as a basis for
granting access to ticket services. Furthermore, the ticket panel cited
research indicating that the sooner a person with recent work history
receives employment services, the more likely the person will be to
return to work. In our prior work examining DI and SSI return-to-work
policies, we also noted that delays in the provision of vocational
rehabilitation services can diminish the effectiveness of such return-
to-work efforts.[Footnote 32] Delaying services to some disability
beneficiaries, therefore, undermines SSA's recent efforts to increase
its emphasis on helping these beneficiaries return to work.
In publishing its final regulations implementing the ticket
program,[Footnote 33] SSA wrote that many commenters on the draft
regulations had indicated that the agency should provide tickets to all
beneficiaries, regardless of their diary category. The commenters also
referred to the MIE diary category as an "administrative convenience"
that is "not a sufficiently precise tool to deny beneficiaries
immediate access to a ticket." In responding to these comments, SSA
wrote that use of the MIE category to identify which beneficiaries
should receive tickets "is the most administratively feasible approach
currently available to us." SSA acknowledged that it might be possible
to improve the system for identifying such beneficiaries and wrote that
it planned to conduct an evaluation to identify possible improvements.
SSA officials told us that they are examining the current policy of
issuing tickets to MIE beneficiaries to identify possible alternatives
but they are not sure when this assessment will be completed.[Footnote
34] However, they noted that their policy of limiting ticket issuance
reflects congressional interests in striking an appropriate balance
between program stewardship and encouraging return to work. Moreover,
they explained that reversing the current policy would be costly. SSA's
actuaries have estimated that issuing tickets to all MIE beneficiaries
would cost an additional $822 million over 10 years because the ticket
law prohibits SSA from conducting CDRs on beneficiaries who are using a
ticket. Therefore, SSA would continue to pay DI and SSI benefits to
some beneficiaries who might have otherwise had their benefits
terminated.
The drawbacks of SSA's current policy of postponing issuance of tickets
to MIE beneficiaries and the potential costs associated with an
alternative policy that would allow immediate issuance of tickets to
these beneficiaries highlights the need for SSA, as part of its policy
reexamination, to consider other policy alternatives that might better
balance the agency's program stewardship and return-to-work objectives.
While we did not conduct an in-depth assessment of potential
alternatives to SSA's current policy,[Footnote 35] our review of the
CDR program and ticket provisions indicate that other options may exist
that would achieve a better balance among SSA's program objectives. For
example, SSA could develop a better means of identifying beneficiaries
who are expected to medically improve. Earlier in this report, we noted
that an SSA-contracted study of the diary process recommended
implementation of an improved system that, among other things, would
better identify MIE beneficiaries through statistical modeling of diary
decisions. One effect of such improved identification, according to the
study, would be to substantially reduce the proportion of beneficiaries
with an MIE diary category. For instance, the study found that although
SSA, over the past decade, has assigned the MIE diary category to about
9 percent of DI beneficiaries, a statistically-based diary process
would result in about 3 percent of DI beneficiaries being assigned to
the MIE category. This would potentially minimize the number of
beneficiaries initially denied tickets and may also provide more
assurance, within and outside SSA, that such beneficiaries can truly be
expected to improve.
SSA might also consider an option that provides for the issuance of
tickets to all MIE beneficiaries while allowing CDRs to be conducted as
scheduled for these beneficiaries. This policy would require a
legislative change because, as we noted earlier, the Ticket to Work Act
currently prohibits SSA from conducting a CDR while a person is using a
ticket.[Footnote 36] While the ticket program's prohibition on CDRs for
ticket users was intended to remove a potential disincentive for
beneficiaries to return to work, MIE beneficiaries currently get
neither a ticket nor protection from a CDR. A policy allowing CDRs to
be conducted on these beneficiaries while they use a ticket would at
least give these beneficiaries immediate access to return-to-work
services offered under the ticket program. In addition, SSA would still
be able to achieve the cost savings that are derived from CDRs for
beneficiaries that it considers most likely to medically improve.
Conclusions:
Failure to cost effectively process CDRs as they become due could
negatively affect DI and SSI program integrity. SSA and DDSs are to be
commended for bringing the CDR workload current as of the end of 2002.
SSA is also to be commended for the improvements it has made in the CDR
process. However, a confluence of events, such as the expiration of
targeted CDR funding and an increase in initial applications, is
increasing the chances of a CDR backlog recurring, which could result
in SSA paying out billions of dollars in the long term to beneficiaries
who no longer qualify for benefits. In its fiscal year 2004 budget
request, SSA has asked the Congress for targeted funding for several
program activities, including CDRs, that provide a return on
investment. If approved, the targeted funding could increase SSA's
chances of staying current with its CDR workload because this workload
would not have to compete internally for funding with the initial
determination workload.
While SSA has taken a number of steps to improve the CDR process, it
has not taken advantage of other opportunities that could further
improve the cost-effectiveness of this process and its ability to stay
current. In particular, although a more systematic and quantitative
process for assigning diary categories and dates would likely improve
the timing of CDRs, SSA does not intend to make comprehensive revisions
to the diary process based on this more rigorous approach. In addition,
despite SSA's reliance on profiling formulas to improve the agency's
ability to predict medical improvement and benefit cessation, SSA is
ignoring or not giving full consideration to information from these
formulas in its decisions to conduct mailers or full medical reviews
for some beneficiaries. Also, although SSA acknowledges that medical
treatment data from Medicare and, possibly, Medicaid improve the
agency's ability to determine when a mailer should be used, it does not
see a need to consider the use of these data to help determine when a
full medical review might be preferable. Furthermore, despite long-
standing concerns, SSA has not fully addressed the problem of missing
or incomplete case folders, which limits SSA's ability to achieve cost
savings through the CDR process.
Finally, SSA's initial assessments of which beneficiaries are most
likely to improve are not very accurate and, therefore, may not be the
most appropriate criteria to use for delaying beneficiary access to a
ticket for return-to-work services. The ticket program is relatively
new so little program information is available for SSA to draw upon in
reexamining its current policy on ticket access for beneficiaries most
likely to improve. SSA has the challenge of developing a policy that
will make return-to-work assistance available to beneficiaries at the
appropriate time while providing adequate mechanisms for ensuring
program integrity.
Recommendations to the Commissioner of SSA:
To further improve the cost-effectiveness of the CDR process, we
recommend that the Commissioner of SSA take the following actions:
* Pursue more comprehensive enhancements of the CDR diary process--
beyond those already being considered--to ensure that the full benefits
of a more systematic, quantitative approach to diary setting are
attained. Among such key enhancements would be the use of a statistical
approach to determine diary categories. Given the significant
implications of such changes for the DI and SSI programs, SSA could
consider pilot testing the revised diary process before fully
implementing it.
* Given the cost-effectiveness of conducting mailers in cases where
there is a low likelihood for benefit cessation, revise SSA's policy to
allow mailers to be sent whenever appropriate--as indicated by the
profiling scores--to beneficiaries with a diary category indicating
that they are expected to medically improve. For beneficiaries assigned
to a diary category indicating that they are not expected to medically
improve, SSA should conduct a thorough analysis of its current policy,
which allows mailers to be used for all of these beneficiaries
regardless of their profile scores. SSA's analysis should evaluate the
overall cost-effectiveness of this policy, taking into account both the
potential reduction in administrative costs from conducting fewer full
medical reviews and the potential increase in benefit payments from
reduced cessations. If this analysis indicates that the current policy
results in higher overall costs for SSA's disability programs, SSA
should revise the policy to make it consistent with the agency's
general profiling approach--which prescribes the use of full medical
reviews in cases where profiling indicates that a beneficiary has a
relatively high likelihood of medical improvement.
* Study the use of Medicare and Medicaid data for the purpose of
deciding whether to use a full medical review in conducting a CDR for
beneficiaries who would otherwise receive a mailer. If found to be
cost-effective, SSA should incorporate Medicare and Medicaid data into
its CDR process for this purpose.
Agency Comments and Our Evaluation:
In commenting on a draft of this report, SSA agreed with our
recommendations. SSA noted that our review represents a comprehensive
and accurate assessment of SSA's accomplishments in improving the CDR
process as well as opportunities to improve the process. While agreeing
with each of our recommendations, SSA supplied additional information
describing its current or planned actions and the basis for such
actions.
With regard to our recommendation that SSA pursue more comprehensive
enhancements of its diary process, SSA said that it is currently
studying recommendations made by its contractor regarding the
establishment of a statistically-based diary process and that SSA staff
will be meeting in the near future to explore implementation options.
However, SSA noted it has not yet made a decision regarding
implementation.
Regarding our recommendation that SSA revise its policies for
determining what method to use for a CDR--mailer or full medical
review--SSA said that while it generally agreed with our
recommendation, it believes we were overly harsh in stating that it is
not making the best use of available information. SSA noted that its
policy for allowing mailers to be used for all MINE beneficiaries
supplements information produced through profiling, thereby improving
the process for selecting a CDR method. SSA said that this policy is
based on evaluation and analysis of several thousand similar cases and
noted that it will verify the cost-effectiveness of this policy through
its ongoing integrity reviews. We continue to believe that any
departure from SSA's analytically-based process for using profiling
scores to select a CDR method should be based on sound analysis
indicating that an alternative process would result in improved cost-
effectiveness. We, therefore, are encouraged by SSA's plans to evaluate
the cost-effectiveness of its current policy. However, it is not clear
that SSA's integrity reviews[Footnote 37] will be adequate for
assessing the cost-effectiveness of the agency's mailer policy for MINE
beneficiaries due to the potential limitations of these reviews. For
example, an SSA-contracted study identified several problems with the
integrity reviews that SSA conducts for beneficiaries in the low
profile category, such as the drawing of integrity samples that are not
consistently representative of the mailer population. To the extent
that such problems remain unresolved, SSA may need to develop an
alternative means of evaluating its mailer policy for MINE
beneficiaries.
With regard to our recommendation on the use of Medicare and Medicaid
data for deciding whether to use a full medical review for
beneficiaries who would have otherwise received a mailer, SSA said that
it intends to contract for such a study in fiscal year 2004 if funding
is available. SSA noted that if the concept is found to be feasible, it
will develop a pilot for this approach.
SSA also provided additional comments intended to update or clarify
some information we provide in this report. In particular, SSA noted
that, due to its efforts to keep as current as possible, it believes
its CDR backlog by the end of fiscal year 2003 will be significantly
less than the potential backlog of 200,000 CDRs that we cited. While
there is always a certain degree of imprecision associated with any
projection, our backlog figure is based on the best information that
was available during our review. We developed our potential backlog
figure based on extensive discussions with SSA officials and reviews of
SSA's CDR workload and budget projections. SSA did not provide us with
any revised official estimates or analyses that would have led us to
revise the CDR backlog figure we report.
In addition, SSA said that our report implies that it does not take
seriously the shortfall in completing CDRs for the SSI program. SSA is
apparently referring to our discussion of the CDR backlog where we note
that most of the backlog that is expected to develop by the end of
fiscal year 2003 will consist of SSI CDRs, which may make the backlog
less problematic than it otherwise would have been because, among other
reasons, SSI CDR cessations have lower long-term savings than DI CDR
cessations. We did not intend to imply that SSA does not take the SSI
backlog seriously. Rather, we included this information to more
accurately characterize the nature of the potential backlog because
that could provide important insights as to how to deal with it.
Finally, SSA said that although our survey of DDS directors indicates
that attrition among disability examiners is an issue for DDSs, SSA and
DDSs are accustomed to dealing with such issues and DDSs are still able
to complete their workloads. Although we are aware that DDSs regularly
confront multiple challenges to completing their disability program
workloads, we cannot ignore the clear implications of DDS directors'
answers to our survey questions. Given that a clear majority of DDS
directors indicated that disability examiner attrition is somewhat or
very likely to jeopardize their ability to complete their CDR workload,
we believe that it is important for us to identify this issue as a
potentially significant factor in the possible development of a CDR
backlog in the years ahead.
SSA's comments appear in appendix II. SSA also provided additional
technical comments that we have incorporated in the report, as
appropriate.
Copies of this report are being sent to the Commissioner of SSA,
appropriate congressional committees, and other interested parties. The
report is also available at no charge on GAO's Web site at http://
www.gao.gov. If you have any questions about this report, please
contact me at (202) 512-7215. Other contacts and staff acknowledgments
are listed in appendix III.
Sincerely yours,
Robert E. Robertson
Director,
Education, Workforce, and Income Security Issues:
Signed by Robert E. Robertson:
[End of section]
Appendix I: Scope and Methodology:
To evaluate the impact of the expiration of separate funding for
continuing disability review (CDR) processing and the level of funding
needed to remain current with the CDR caseload, we interviewed Social
Security Administration (SSA) officials from the Office of Budget, the
Office of the Chief Actuary, the Office of Disability and Income
Security Programs at SSA headquarters in Baltimore. We also reviewed
SSA documents, including the agency's budget request and estimates of
the cost and savings from conducting CDRs. In addition, we surveyed
Disability Determination Services (DDS) directors to assess the
potential effect of the expiration of special CDR funding on DDS
operations. To develop the survey, we identified information that would
help us address the research questions. We generated specific survey
items by reviewing SSA CDR reports submitted annually to the Congress
and drawing upon interviews we conducted early in the assignment with
SSA officials and the National Association of Disability Examiners. We
validated our survey instrument by obtaining feedback from SSA
officials and pretesting it with several current DDS directors.
In consultation with SSA, we excluded 2 of the 54 DDSs from our survey
as well as the federal DDS. The two DDSs excluded were Guam and South
Carolina's DDS serving persons who are blind-both relatively small DDSs
that are run by one person. We excluded the federal DDS because
responses from this site might skew results as the site (1) is a
federal entity and as such it is "different" than other DDSs, (2) is
used to process the overflow of CDRs, and (3) serves as SSA's test
unit. The remaining 52 DDSs (essentially 1 for each of the 50 states,
plus the District of Columbia and Puerto Rico) comprised the study
universe. All 52 of these DDSs responded to our survey.
To assess the opportunities for SSA to improve CDR cost-effectiveness
and to examine SSA's rationale for delaying return-to-work services to
some beneficiaries under the ticket to work program, we interviewed SSA
officials from the Office of Disability and Income Security Programs
and the Office of the Chief Actuary at SSA headquarters in Baltimore.
We also reviewed legislation, regulations, and SSA policy guidance
related to the CDR and the ticket programs. In addition, we examined
various studies and reports on the CDR and ticket to work programs,
including reports from SSA's Office of the Inspector General and a wide
range of contractor-produced reports analyzing the cost-effectiveness
of the CDR process. Finally, we analyzed data from SSA on the number of
adult DI and SSI beneficiaries, aged 19-64, assigned to various CDR
diary and profiling categories and the CDR outcomes--cessation or
continuance--for these beneficiaries. These data were derived from SSA
administrative data sets used by the agency to select cases for review
and to track the results of CDRs. We did not independently verify these
data, but based on comparison to SSA's previously published data, and
discussion of minor discrepancies with SSA officials, we determined
that they were sufficiently reliable for our purposes. We performed our
work in accordance with generally accepted government auditing
standards between August 2002 and May 2003.
[End of section]
Appendix II: Comments from the Social Security Administration:
SOCIAL SECURITY:
The Commissioner:
June 30, 2003:
Mr. Robert E. Robertson
Director,
Education, Workforce, and Income Security Issues
U.S. General Accounting Office Washington, D.C. 20548:
Dear Mr. Robertson:
Thank you for the opportunity to review and comment on the draft report
"Reviews of Beneficiaries' Disability Status Require Continued
Attention to Achieve Timeliness and Cost-Effectiveness" (GAO-03-662).
Enclosed, please find our comments on the report content and specific
recommendations. If you have any questions, please have your staff
contact Mark Zelenka at (410) 965-1957.
Sincerely,
Jo Anne B. Barnhart:
Signed by Jo Anne B. Barnhart:
Enclosure:
SOCIAL SECURITY ADMINISTRATION BALTIMORE MD 21235-0001:
COMMENTS ON THE GENERAL ACCOUNTING OFFICE (GAO) DRAFT REPORT "SOCIAL
SECURITY DISABILITY REVIEWS OF BENEFICIARIES' DISABILITY STATUS REQUIRE
CONTINUED ATTENTION TO ACHIEVE TIMELINESS AND COST-EFFECTIVENESS" (GAO-
03-662):
Thank you for the opportunity to review and comment on the draft
report. Overall, we find GAO's review of SSA's Continuing Disability
Review (CDR) process represents a comprehensive and accurate assessment
of SSA's accomplishments in improving the CDR process as well as
opportunities to improve the process. GAO relied heavily on findings
from SSA-initiated studies on the diary process, particularly those
that supported GAO's recommendations to enhance the diary process by
using analyses similar to that used in the CDR profile scoring process.
The report fairly represents SSA's challenges and concerns in
addressing the issues of a possible reemergence of a CDR backlog, CDR-
targeted funding, inconsistencies between the profile scoring system
and the diary system, and using Medicare and Medicaid information from
the Centers for Medicare and Medicaid Services (CMS).
We appreciate GAO's recognition of SSA's and the Disability
Determination Services' (DDS) achievement of becoming current in CDRs
by the end of fiscal year (FY) 2002. We also appreciate GAO's
acknowledgement of SSA's actions over the past decade to significantly
improve the cost-effectiveness of the CDR process. Finally, we
appreciate GAO's acknowledgement of the balance between the cost-
effectiveness of any diary process policy changes and the potential for
higher disability program costs.
However, at the same time, we believe GAO may have been overly negative
in its statement that SSA is not making the best use of available
information when conducting disability reviews. Although there always
is room for improvement, GAO may be overlooking certain considerations
that SSA brought to its attention during this review.
In the "Highlights" cover sheet section of the subject report, GAO
cites a backlog of 200,000 CDRs by the end of FY 2003. We believe this
number will be significantly less due to our efforts to keep as current
as possible on the CDR workload. In addition, the GAO report implies
that SSA does not take seriously the shortfall in completing its
Supplemental Security Income (SSI) CDRs. This is an inaccurate
characterization of our intent. While it is true that not all SSI CDRs
will be performed this year, SSA plans to catch up as soon as possible.
As GAO later notes, SSA proposes that almost $1.5 billion be earmarked
for CDRs and other program integrity workloads in its FY 2004 budget
request.
Another point to clarify is GAO's statement based on their survey of
DDS administrators that CDR backlogs could grow because of DDS'
potential difficulty in
replacing disability examiners who leave through retirement or
attrition. Although the survey results do identify attrition rates as
an issue, we and the DDS are accustomed to dealing with it in our day-
to-day business. Despite attrition, hiring replacements occur and the
DDS continually have good productivity and deliver their budgeted
workload.
Below are our comments to the specific recommendations along with
technical comments.
Recommendation 1:
SSA should pursue more comprehensive enhancements of its diary process
- beyond those already being considered - to ensure that the full
benefits of a more systematic, quantitative approach to diary setting
are attained. Among such key enhancements would be the use of a
statistical approach to determine diary categories. Given the
significant implications of such changes for the Disability Insurance
(DI) and SSI programs, SSA should consider pilot testing the revised
diary process before fully implementing it.
Comment:
We agree. As noted by GAO, SSA tasked a contractor in FY 2003 to study
the feasibility of an analytical approach to diary setting and SSA is
currently studying the recommendations made by the contractor.
Pertinent SSA staff will be meeting in the near future to discuss
whether a statistical profiling model should be implemented, and if so,
in what manner. SSA will need to evaluate policy and systems issues
that may be involved and explore implementation options. At this point
in time, SSA has not made a decision on implementation.
Recommendation 2:
Given the cost-effectiveness of conducting mailers in cases where there
is a low likelihood for benefit cessation, SSA should revise its policy
to allow mailers to be sent whenever appropriate - as indicated by the
profiling scores - to beneficiaries with a diary category that they are
expected to medically improve. For beneficiaries assigned to a diary
category indicating that they are not expected to medically improve,
SSA should conduct a thorough analysis of its current policy, which
allows mailers to be used for all of these beneficiaries regardless of
their profile scores. SSA's analysis should evaluate the overall cost-
effectiveness of this policy, taking into account both the potential
reduction in administrative costs from conducting fewer full medical
reviews and the potential increase in benefit payments from reduced
cessations. If this analysis indicates that the current policy results
in higher overall costs for SSA's disability programs, SSA should
revise the policy to make it consistent with SSA's general profiling
approach - which prescribes the use of full medical reviews in cases
where profiling indicates that a beneficiary has a relatively high
likelihood of improvement.
Comment:
GAO's recommendation arises out of the fact that some cases judged
likely to improve by the DDS are considered low likelihood to improve
by the profiling process and vice versa. In the case of beneficiaries
with a medical diary indicating that they are expected to medically
improve, SSA currently does not use the mailer for any case that has
not had a full medical review.
SSA's practice of sending mailers to beneficiaries with a diary
indicating that they are not expected to medically improve regardless
of their profile score is based on evaluation and analysis of several
thousand similar cases. It is for this reason that we believe GAO's
statement that SSA's process for determining how to process a CDR is
not always based on the best information available is overly harsh. Our
position is that we are improving the process by supplementing the
profiled information. We believe it is cost-effective to do so, and
will be verified by our ongoing integrity reviews.
However, we generally agree with the recommendation. We are looking to
the possible change in the diary setting process as described above to
resolve the issue.
Recommendation 3:
SSA should study the use of Medicare and Medicaid data for the purpose
of deciding whether to use a full medical review in conducting a CDR
for beneficiaries who would otherwise receive a mailer. If found to be
cost-effective, SSA should incorporate Medicare and Medicaid data into
its CDR process for this purpose.
Comment:
We agree. SSA will include a feasibility study to determine whether
Medicare and Medicaid data will change the status of those CDR cases
selected for the mailer process to full medical reviews. SSA will
include this task in its CDR contract for FY 2004, if funding is
available for this contract. If the concept is found to be feasible, a
pilot will be developed. If SSA uses the Medicaid or Medicare data to
give full medical CDRs to individuals who otherwise would be mailer
candidates, notification must be published in the Federal Register. SSA
will not need to revise any regulations as noted in the GAO report. SSA
is currently exploring the use of Medicaid data to identify more
mailers for Title XVI recipients and will be exploring (in a contract
to be awarded this year) the use of Medicaid data for identifying age
18 redeterminations cases that are likely to cease at the age 18
redetermination.
[End of section]
Appendix III: GAO Contacts and Staff Acknowledgments:
GAO Contacts:
Shelia D. Drake, Assistant Director (202) 512-7172 Brett S.
Fallavollita, Analyst-in-Charge (202) 512-8507:
Staff Acknowledgments:
The following individuals also made important contributions to this
report: Mark Trapani, Melinda L. Cordero, and Corinna A. Nicolaou.
FOOTNOTES
[1] The Balanced Budget and Emergency Deficit Control Act of 1985, as
amended, established statutory limits on federal government spending
for fiscal year 1991 through 2002. The act created, among other
provisions, annual adjustable dollar limits (spending caps) on
discretionary spending funded through the regular appropriations
process. The act, as amended, also required that SSA's discretionary
spending caps that existed through fiscal year 2002 be adjusted upward
to account for appropriations targeted for CDRs. The Contract with
America Advancement Act of 1996 authorized about $4.1 billion to be
paid from the Old-Age and Survivors Insurance Trust Fund and the
Disability Insurance Trust Fund to process CDRs in fiscal year 1996
through 2002. Hereafter, in this report, we refer to this funding
mechanism authorized by the Balanced Budget and Emergency Deficit
Control Act of 1985 as "CDR-targeted funding."
[2] Included among these 5.5 million beneficiaries are about 1.2
million beneficiaries who were dually eligible for SSI benefits
because of the low level of their income and resources. In 2002, the
DI program also paid about $6 billion in cash benefits to about 1.7
million spouses and children of disabled workers.
[3] Most disabled Social Security beneficiaries are disabled insured
workers who receive benefits through the DI program based on their own
earnings record. However, as of 2002, about 952,000 Social Security
disability beneficiaries were disabled surviving spouses and disabled
adult children who qualified for disability benefits based on the
earnings record of an insured spouse or parent. Many of these disabled
surviving spouses and adult children receive their disability benefits
through the Social Security Old-Age and Survivors Insurance (OASI)
program, not the DI program. OASI disability benefits for disabled
surviving spouses and disabled adult children are paid from the Old-Age
and Survivors Trust Fund. To receive OASI disability benefits,
surviving spouses and adult children must meet the DI program's
disability criteria, and they are also subject to the requirement for
CDRs. For simplicity, our report refers to all disabled Social Security
beneficiaries (in both DI and OASI) as "DI beneficiaries."
[4] About 3.9 million of these individuals were working age adults aged
18 to 64.
[5] For 2003, SSA considers countable earnings above $800 a month to be
substantial gainful activity for persons who are not blind and above
$1,330 a month for persons who are blind.
[6] Personal Responsibility and Work Opportunity Reconciliation Act of
1996 (Pub. L. No. 104-193).
[7] Although SSA's policy guidance indicates that CDRs for MIE
beneficiaries should generally be scheduled at intervals of 6 to 18
months, the guidance provides DDS personnel with flexibility to
establish a diary date for any time period between 6 and 36 months.
[8] While SSA uses mailers primarily for beneficiaries with low profile
scores, the agency has recently expanded its use of mailers to some
beneficiaries with medium and high profile scores.
[9] The act also required that SSA report to the Congress annually for
fiscal years 1996 - 2002 on its CDR activities, including the estimated
savings resulting from CDRs.
[10] According to SSA's study of its profiling model, the agency's
recent improvements in statistical profiling have resulted in hundreds
of millions of dollars in annual savings from being better able to
identify and cease the benefits of individuals who have a relatively
high likelihood of medical improvement.
[11] On May 14, 2003, SSA released its revised final performance plan
for fiscal year 2003. The plan projects that SSA will process 1,129,000
CDRs during fiscal year 2003. SSA also expects to process an additional
20,000 CDRs initiated for reasons other than maturation of the
scheduled diary date (e.g., a third party reports that the individual
may no longer be disabled).
[12] SSA indicated that 710,000 CDRs had been processed nearing the end
of April 2003. This year-to-date completion rate positions SSA to
complete all 1.18 million CDRs.
[13] The federal government had operated under a series of continuing
resolutions from the beginning of the fiscal year through February 20,
2003. A continuing resolution is legislation that may be enacted to
provide budget authority for agencies to continue in operation when the
Congress and the President have not completed action on appropriations
by the beginning of the fiscal year.
[14] To determine whether beneficiaries remain financially eligible for
SSI benefits after the initial assessment, SSA conducts nondisability
redeterminations to verify eligibility factors such as income,
resources, and living arrangements. Beneficiaries are reviewed at least
once every 6 years, but reviews may be more frequent if SSA determines
that changes in eligibility are likely.
[15] SSA calculated its annual cost-effectiveness ratios by dividing
the estimated present value of total lifetime benefits saved with
respect to CDR cessations (including Old-Age, Survivors, and Disability
Insurance, SSI, Medicare, and Medicaid savings) by the dollar amount
spent on periodic CDRs in a given year. SSA points out that the ratios
should be considered an approximation because, for example, costs do
not include the costs of appeals processed after the end of a given
year. However, SSA officials also noted that the administrative costs
for CDRs in a given year include the costs of appeals of CDR cessations
in prior years which are processed in that year.
[16] Although we did not independently verify these savings estimates,
we discussed how SSA made its calculations and believe its approach is
reasonable. To estimate long-term savings, SSA calculated the value of
the reduction in both cash and medical insurance coverage that
otherwise would have been provided to individuals whose benefits were
ceased following the completion of a CDR. SSA factored in the effect of
appealed cases: SSA did not count savings from those beneficiaries who
were initially found ineligible for continued benefits but whose
cessations were later successfully appealed. Moreover, SSA officials
told us that to estimate savings over 10 years, they took into account
the likelihood that some individuals whose benefits were ceased through
a CDR would likely have left the disability rolls through death,
retirement, and other reasons pertaining to eligibility.
[17] This figure includes all MIE beneficiaries--those who have already
undergone a CDR as well as those who have not yet had a CDR.
[18] The study recommended that DDSs continue to assign diary
categories because this process is useful for indicating the severity
of an impairment. The statistical formula would then factor in this DDS
diary category in developing an ultimate diary determination.
[19] SSA applies a different process for MIE beneficiaries who have
undergone one or more CDRs. These beneficiaries may receive a mailer if
their CDR profile score indicates that they have a low likelihood of
medical improvement. However, most beneficiaries assigned to the MIE
category have not yet undergone a CDR; in fiscal year 2002, about 88
percent of all beneficiaries in this diary category had not had a CDR.
When referring to MIE beneficiaries in the remainder of our discussion
in this section, we are describing only those beneficiaries who have
not yet had a CDR.
[20] SSA officials told us that while it is their intention to do
mailers for all MINE beneficiaries, they may be unable in some years to
send mailers to all of these beneficiaries if their overall funding for
mailers is insufficient.
[21] In addition to sending mailers to high profile beneficiaries in
the MINE diary category, SSA has recently begun to send mailers to some
high profile beneficiaries in the MIP diary category.
[22] SSA also sends mailers to medium profile beneficiaries in the MINE
diary category. However, SSA has some evidence from its profiling
studies indicating that issuing mailers to medium profile beneficiaries
is likely to be cost-effective. No similar evidence exists regarding
high profile beneficiaries.
[23] Although a relatively small proportion of beneficiaries have their
benefits ceased based on a CDR, the savings from these benefit
cessations are substantial, as noted earlier in this report.
[24] SSA is using CMS Medicare data to reassess the prospects of
medical improvement for beneficiaries who, based on their initial CDR
profiling results, are considered to have a high or medium likelihood
of medical improvement. Typically, SSA would conduct full medical
reviews for these beneficiaries. However, SSA's reassessment may
indicate that some of these beneficiaries instead have a low likelihood
of medical improvement and therefore should receive mailers.
[25] Missing or incomplete case folders may also result in additional
administrative costs to the extent that SSA and DDS personnel spend
time attempting to locate or reconstruct missing information.
[26] Office of the Inspector General, Social Security Administration,
Case Folder Storage and Retrieval at the Social Security
Administration's Megasite Records Center, A-04-99-62006 (Washington,
D.C., 2002).
[27] Data are based on CDRs conducted from 1997 to 2001.
[28] SSA is currently developing a Disability Electronic Folder (EF)
which, when completed, will be the repository of all information used
in the disability process and should eventually replace the paper
folders. As a result, processing components should not have to rely on
a paper folder to take adjudicative actions. The EF is planned to be
linked to all existing and future systems that support the disability
case process. Information will be captured electronically during the
case intake process and transmitted to the EF. Documentation and forms
received from external sources (e.g., claimants, medical providers,
third parties, etc.) will be converted to an electronic format (e.g.,
scanning and imaging) and added to the EF. Electronic documents
received from medical providers will be indexed and added to the EF.
[29] SSA plans to begin rollout of electronic disability folders in
January 2004 and plans to achieve national implementation over an 18-
month period.
[30] The Ticket to Work Act gave the SSA Commissioner authority to
determine which disabled beneficiaries would be eligible to participate
in the ticket program.
[31] SSA's policy on ticket eligibility states that any MIE beneficiary
who has been on the disability rolls for at least 3 years will be
eligible for a ticket, even if they have not yet had a CDR.
[32] U.S. General Accounting Office, SSA Disability: Program Redesign
Necessary to Encourage Return to Work, GAO/HEHS-96-62 (Washington,
D.C.: Apr. 24, 1996).
[33] 66 Fed. Reg. 67370, Dec. 28, 2001.
[34] In May 2003, SSA announced in the Federal Register (Social
Security Administration: Semiannual Regulatory Agenda, 68 Fed. Reg.
31240, May 27, 2003) that its long-term plans include a proposal to
revise its rules to allow the immediate issuance of tickets to MIE
beneficiaries. However, SSA's Associate Commissioner responsible for
reviewing the ticket policy for MIEs told us that SSA has not made a
final decision regarding any changes to the current policy and that the
agency's review has not been completed.
[35] Given the recent implementation of the ticket program,
insufficient data were available during the period of our review to
conduct the analysis necessary to fully evaluate such alternatives.
[36] However, the prohibition on CDRs for all other ticket users could
remain in effect.
[37] Each year, SSA conducts integrity reviews in which it selects
samples of beneficiaries to whom mailers were sent and sends these
cases to DDSs for full medical reviews. The results of these full
medical reviews are intended to provide a basis for assessing the
reliability of using results from profiling formulas to identify
appropriate mailer recipients.
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