Disability Insurance
Preliminary Observations on SSA Efforts to Detect, Prevent, and Recover Overpayments Gao ID: GAO-11-756T June 14, 2011The Social Security Administration's (SSA) Disability Insurance (DI) program paid almost $123 billion in benefits in fiscal year 2010 to more than 10 million workers and dependents. The program has grown rapidly in recent years and is poised to grow further as the baby boom generation ages. GAO examined (1) what is known about the extent SSA makes work-related overpayments to, and recovers overpayments from, DI beneficiaries, and (2) SSA's policies and procedures for work continuing disability reviews (work CDRs) and potential DI program vulnerabilities that may contribute to overpayments to beneficiaries who have returned to work. To answer these questions, GAO reviewed work CDR policies and procedures, interviewed SSA headquarters and processing center officials, and visited 4 of 8 processing centers. We reviewed a random nongeneralizable sample of 60 CDR case files across those 4 centers to ensure we had a wide range of cases for our review (15 cases from each). These 4 centers received almost 80 percent of all work CDRs from SSA's Internal Revenue Service enforcement data match in fiscal year 2009.
Disability Insurance overpayments detected by SSA increased from about $860 million in fiscal year 2001 to about $1.4 billion in fiscal year 2010, though the full extent of overpayments to beneficiaries who have returned to work and are no longer eligible is unknown. Overpayments may also go to beneficiaries who are no longer eligible due to medical improvement, but SSA estimates about 72 percent of all projected DI overpayments were work related during fiscal years 2005 through 2009. While the agency collected, or recovered, $839 million in overpayments in fiscal year 2010, monies still owed by beneficiaries grew by $225 million that same year, and total DI overpayment debt reached $5.4 billion. SSA does not have agency-wide performance goals for debt collection, for example, the percent of outstanding debt collected annually. And while SSA does have a policy for full repayment within three years, 19 of the 60 continuing disability review (work CDR) cases we reviewed had repayment plans exceeding three years. SSA officials told us lengthy repayment plans are often the result of an individual's limited income, but SSA does not review or approve repayment plans which exceed agency policy. During the course of our review, we also found a limitation in SSA's Recovery of Overpayments, Accounting and Reporting (ROAR) system. Used to track overpayments and collections, ROAR does not reflect debt due SSA past year 2049 so the total balance due the program is unknown, and likely larger than the agency is reporting. SSA officials acknowledged this issue, but are unable to determine the extent of the problem at this time. They told us they have a work group which will recommend action to correct the problem. But until this issue is addressed, SSA officials told us the agency can only track and report on overpayments scheduled to be repaid through 2049. The amount owed after that year is unreflected in current totals even as it annually increases. SSA has numerous policies and processes in place to perform work CDRs, though two key weaknesses have hindered SSA's ability to identify and review beneficiary earnings, which affect eligibility for DI benefits. First, SSA lacks timely earnings data on beneficiaries who return to work. In 49 of the 60 CDR cases we reviewed, there was no evidence in the file that the beneficiary reported returning to work, as required by the program. To identify these unreported earnings, SSA primarily relies on data matching with the Internal Revenue Service (IRS), then sends these matches to staff for a work CDR. However, the IRS data may be more than a year old when received by SSA, and SSA says it is not cost effective to gain access to and use other sources of earnings information, such as the National Directory of New Hires database. In addition, we found cases may wait up to 15 additional months before SSA staff begin work on the CDR. Second, SSA lacks formal, agency-wide performance goals for work CDRs. While it targets 270 days to develop a case, actual processing time taken ranged from 82 to 992 days (with a median of 396 days) in the 60 cases we reviewed, and overpayments which accrued as a result topped $1 million total. SSA officials reported several initiatives to more effectively prioritize work CDR cases, for example, those with the largest potential overpayment amounts, but these efforts are in the early stages and we could not yet assess their effectiveness. GAO has ongoing work on this issue and has no recommendations at this time.
GAO-11-756T, Disability Insurance: Preliminary Observations on SSA Efforts to Detect, Prevent, and Recover Overpayments
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United States Government Accountability Office:
GAO:
Testimony:
Before the Subcommittees on Social Security and Oversight, Committee
on Ways and Means, House of Representatives:
For Release on Delivery:
Expected at 2:00 p.m. EDT:
Tuesday, June 14, 2011:
Disability Insurance:
Preliminary Observations on SSA Efforts to Detect, Prevent, and
Recover Overpayments:
Statement of Daniel Bertoni, Director:
Education, Workforce, Income and Security:
GAO-11-756T:
GAO Highlights:
Highlights of GAO-11-756T, a report to Subcommittee on Social Security
and Oversight, Committees on Ways and Means, House of Representatives.
Why GAO Did This Study:
The Social Security Administration‘s (SSA) Disability Insurance (DI)
program paid almost $123 billion in benefits in fiscal year 2010 to
more than 10 million workers and dependents. The program has grown
rapidly in recent years and is poised to grow further as the baby boom
generation ages. GAO examined (1) what is known about the extent SSA
makes work-related overpayments to, and recovers overpayments from, DI
beneficiaries, and (2) SSA‘s policies and procedures for work
continuing disability reviews (work CDRs) and potential DI program
vulnerabilities that may contribute to overpayments to beneficiaries
who have returned to work. To answer these questions, GAO reviewed
work CDR policies and procedures, interviewed SSA headquarters and
processing center officials, and visited 4 of 8 processing centers. We
reviewed a random nongeneralizable sample of 60 CDR case files across
those 4 centers to ensure we had a wide range of cases for our review
(15 cases from each). These 4 centers received almost 80 percent of
all work CDRs from SSA‘s Internal Revenue Service enforcement data
match in fiscal year 2009.
What GAO Found:
Disability insurance overpayments detected by SSA increased from about
$860 million in fiscal year 2001 to about $1.4 billion in fiscal year
2010, though the full extent of overpayments to beneficiaries who have
returned to work and are no longer eligible is unknown. Overpayments
may also go to beneficiaries who are no longer eligible due to medical
improvement, but SSA estimates about 72 percent of all DI overpayments
were work related during fiscal years 2005 through 2009. While the
agency collected, or recovered, $839 million in overpayments in fiscal
year 2010, monies still owed by beneficiaries grew by $225 million
that same year, and total DI overpayment debt reached $5.4 billion.
SSA does not have agency-wide performance goals for debt collection,
for example, the percent of outstanding debt collected annually. And
while SSA does have a policy for full repayment within three years, 19
of the 60 continuing disability review (work CDR) cases we reviewed
had repayment plans exceeding three years. SSA officials told us
lengthy repayment plans are often the result of an individual‘s
limited income, but SSA does not review or approve repayment plans
which exceed agency policy. During the course of our review, we also
found a limitation in SSA‘s Recovery of Overpayments, Accounting and
Reporting (ROAR) system. Used to track overpayments and collections,
ROAR does not reflect debt due SSA past year 2049 so the total balance
due the program is unknown, and likely larger than the agency is
reporting. SSA officials acknowledged this issue, but are unable to
determine the extent of the problem at this time. They told us they
have a work group which will recommend action to correct the problem.
But until this issue is addressed, SSA officials told us the agency
can only track and report on overpayments scheduled to be repaid
through 2049. The amount owed after that year is unreflected in
current totals even as it annually increases.
SSA has numerous policies and processes in place to perform work CDRs,
though two key weaknesses have hindered SSA‘s ability to identify and
review beneficiary earnings, which affect eligibility for DI benefits.
First, SSA lacks timely earnings data on beneficiaries who return to
work. In 49 of the 60 CDR cases we reviewed, there was no evidence in
the file that the beneficiary reported returning to work, as required
by the program. To identify these unreported earnings, SSA primarily
relies on data matching with the Internal Revenue Service (IRS), then
sends these matches to staff for a work CDR. However, the IRS data may
be more than a year old when received by SSA, and SSA says it is not
cost effective to gain access to and use other sources of earnings
information, such as the National Directory of New Hires database. In
addition, we found cases may wait up to 15 additional months before
SSA staff begin work on the CDR. Second, SSA lacks formal, agency-wide
performance goals for work CDRs. While it targets 270 days to develop
a case, actual processing time taken ranged from 82 to 992 days (with
a median of 396 days) in the 60 cases we reviewed, and overpayments
which accrued as a result topped $1 million total. SSA officials
reported several initiatives to more effectively prioritize work CDR
cases, for example, those with the largest potential overpayment
amounts, but these efforts are in the early stages and we could not
yet assess their effectiveness.
What GAO Recommends:
GAO has ongoing work on this issue and has no recommendations at this
time.
View [hyperlink, http://www.gao.gov/products/GAO-11-756T] or key
components. For more information, contact Dan Bertoni at (202) 512-
7215 or bertonid@gao.gov.
[End of section]
Chairmen, Ranking Members, and Members of the Subcommittees:
I am pleased to be here to present preliminary information on
overpayments in the Social Security Administration's (SSA) Disability
Insurance (DI) program. The DI program provides cash benefits to
workers who are blind or disabled and contributed to the DI Trust Fund
as workers. In fiscal year 2010, the DI program paid about $123
billion in benefits to more than 10 million workers with disabilities
and their dependents. The program has grown substantially in recent
years and is poised to grow further as the baby-boom generation ages.
Most importantly, the long-term solvency of the DI trust fund is
currently jeopardized, and the fund is projected to be exhausted in
2018.
SSA guidelines allow DI beneficiaries to work and earn up to $1,000
per month[Footnote 1] for a limited period of time without affecting
their benefits--a level of earnings called substantial gainful
activity (SGA). After completing a 9-month "trial work period"
beneficiaries who earn more than SGA are generally no longer entitled
to benefits, and may be overpaid if SSA does not stop their benefits
in a timely manner.[Footnote 2] To verify an individual's ongoing
eligibility for DI benefits, SSA conducts periodic reviews of a
beneficiary's earnings status called work continuing disability
reviews (work CDRs).[Footnote 3] These reviews typically involve SSA
staff querying centralized agency data systems to identify earnings,
sending forms to beneficiaries requesting they report earnings that
may affect eligibility for DI benefits, contacting employers to verify
earnings amounts, and assessing other factors such as employer
subsidies and work-related expenses.
If SSA does not obtain timely and accurate earning information, or
fails to act expeditiously to cease benefits to those no longer
eligible, overpayments can accrue over several years and become very
large--adding up to tens of thousands of dollars. Overpayments
adversely affect program integrity, but can also create economic
hardship for beneficiaries who have to repay them. In addition, the
prospect of having to repay an overpayment may be a disincentive for
some beneficiaries to return to work, which runs counter to SSA's goal
of helping beneficiaries become self-sufficient.[Footnote 4]
My testimony summarizes ongoing work we are performing at the request
of the Social Security subcommittee, and focuses on two main
questions: (1) What is known about the extent to which SSA makes work-
related overpayments to, and recovers overpayments from, DI
beneficiaries? and (2) What are SSA's policies and procedures for
performing enforcement work CDRs, including potential DI program
vulnerabilities that may contribute to work-related overpayments? We
reviewed DI overpayment debt collection and enforcement work CDR
performance data, external research studies, and our prior reviews of
the program. We randomly selected 15 work CDR cases from each of four
processing centers we visited (Baltimore, Maryland; Chicago, Illinois;
Kansas City, Missouri; and Queens, New York)--which were closed in
fiscal year 2009 with an overpayment. Together, the selected
processing centers received almost 80 percent of SSA's enforcement
alerts referred for work CDRs in fiscal year 2009. We reviewed each of
these 60 randomly selected cases to determine whether the case had
been processed in accordance with SSA program guidelines for
processing of work CDRs. We used random selection procedures to help
ensure we drew a wide range of cases for our review - however the
results cannot be generalized to the population of all work CDR cases
due to our limited sample sizes. Finally, we conducted in-depth
interviews with SSA management and line staff responsible for
performing work CDRs, and overpayment debt collection, at headquarters
and four of SSA's eight processing centers. We also assessed the
reliability of all databases used in our review, primarily SSA's
Disability Control File (DCF), Master Beneficiary Record (MBR), and
Recovery of Overpayment, Accounting, Reporting (ROAR). While we
identified a ROAR system limitation, we found the databases to be
sufficiently reliable for the purposes of our review. We are
conducting this performance audit from March 2010 to June 2011 in
accordance with generally accepted government auditing standards.
Those standards require that we plan and perform the audit to obtain
sufficient, appropriate evidence to provide a reasonable basis for our
findings and conclusions based on our audit objectives. We believe
that the evidence obtained provides a reasonable basis for our
findings based on our audit objectives.
Background:
SSA conducts periodic reviews called work continuing disability
reviews (work CDRs) to determine if beneficiaries are still eligible
or are working above the SGA level.[Footnote 5] While work CDRs can be
prompted by several events, most are generated by SSA's Continuing
Disability Review Enforcement Operation (enforcement operation). This
process involves periodic data matches between SSA's Master
Beneficiary Record database and IRS earnings data. The enforcement
operation generates alerts for cases that exceed specified earnings
thresholds,[Footnote 6] which are then forwarded to 1 of 8 processing
centers for additional development by SSA staff.[Footnote 7] In fiscal
year 2010, the enforcement operation flagged approximately 2 million
records of which more than 531,000 were sent to SSA's processing
centers and field offices for review.
Work CDRs can also be triggered by other events. For example, SSA
requires beneficiaries to undergo periodic medical examinations called
medical continuing disability reviews, or medical CDRs, to assess
whether they continue to have a physical disability.[Footnote 8]
During such reviews, the disability examiner sometimes discovers
evidence that a beneficiary is working, and forwards the case to an
SSA field office or processing center for earnings/work development.
Third-party reports from state vocational rehabilitation agencies,
federal agencies, or anonymous individuals may also trigger a work
CDR. Finally, some DI beneficiaries report their earnings to SSA as
set out in regulations[Footnote 9] by visiting an SSA field office or
calling the agency's 800 number. For each case identified for
development, SSA staff must review electronic case files in SSA's
eWork[Footnote 10] and associated data systems, conduct interviews,
and contact beneficiaries and their employers to verify earnings.
After initial review, cases indicating a cessation of benefits are
generally forwarded to a "disability processing specialist" for a
determination of whether benefits should be discontinued and an
overpayment assessed.[Footnote 11] (See figure 1)
Figure 1: SSA's Enforcement Work CDR Process:
[Refer to PDF for image: process map]
1) IRS data matching in February, May, and August.
2) Do the data meet screening criteria?
If yes, go to #3;
If no, go to #13.
3) Remaining matches distributed by Social Security number and age to
one of eight Processing Centers.
4) Does Processing Center screening identify work issues?
If yes, go to #5;
If no, go to #13.
5) Work Continuing Disability Review (CDR) assigned to SSA staff.
6) Earnings development: As needed, SSA staff will:
* Check SSA records;
* Send forms to beneficiary;
* Send forms to employer(s);
* Check Work Number;
* Check National Directory of New Hires;
* Contact bank for up to date beneficiary address.
7) Is the work determination outcome …cessation‘?
If yes, go to #8;
If no (and beneficiary not yet contacted), go to #13;
If no (and beneficiary has been contacted), go to #10.
8) Processing Center sends a proposed cessation decision to
beneficiary;
If not contested, go to #9;
If contested, go to #11.
9) Final cessation notice informs beneficiary of overpayment;
If not contested, go to #12;
If contested, go to #11.
10) Beneficiary notified that benefits will continue.
11) New evidence is considered;
If decision is reversed, go to #11.
If decision is upheld or modified, go to #12.
12) Overpayment debt recovery begins.
13) No action taken and no contact made with beneficiary.
Source: GAO analysis of SSA procedural guidance.
[End of figure]
When a DI work-related overpayment is identified, the beneficiary is
notified of the overpayment and may request reconsideration or waiver
of that overpayment. [Footnote 12] SSA may grant a waiver request if
the agency finds the beneficiary was not at fault and recovery or
adjustment would either defeat the purpose of the program or be
against equity and good conscience, as defined by SSA.[Footnote 13] If
SSA denies a reconsideration or waiver request, full repayment is
requested. If the beneficiary is also receiving DI or certain other
SSA benefits, SSA may withhold partial payment of these benefits to
recover the debt.[Footnote 14] However, if no SSA benefits are being
received, or if the beneficiary asserts that the proposed withholding
amount is too large, the agency generally requests repayment over 12
to 36 months. SSA policy requires a minimum monthly payment of $10
dollars. SSA may also attempt to recover payments due from the
individual's estate or subsequent survivor's benefits.[Footnote 15]
(See figure 2) The agency uses the Recovery of Overpayment,
Accounting, and Reporting (ROAR) system to track beneficiary
overpayments and collections.
Most DI Overpayments Are Work Related, and Their Recovery Can Take
Decades:
Medical and work-related overpayments in the DI program detected by
SSA grew from about $860 million in fiscal year 2001 to about $1.4
billion in fiscal year 2010.[Footnote 16] Though the true extent of
overpayments due to earnings is currently unknown, our review suggests
that most of them are related to beneficiaries who work above SGA
while receiving benefits. SSA officials estimate that from fiscal
years 2005 through 2009, about 72 percent[Footnote 17] of all
projected DI overpayments were work-related, or to beneficiaries who
returned to work and were no longer eligible. SSA officials attribute
increases in the percentage of overpayments that are work-related
during this period to improved detection by its enforcement operation,
and to changes in how the agency estimates the overpayment numbers.
Agency officials also explained that the approximately half of the
increase in overpayment dollars during the 10 year period may be due
to the increase in DI program benefit levels.
Beyond SSA's estimates, we found that detected overpayments could be
even larger than SSA's data reflect because some overpayments have
been accidentally removed from SSA records due to manual processing
errors.[Footnote 18] In our current review of 60 work CDR cases, we
found two manual processing errors which resulted in overpayments
totaling $53,097 being removed from agency records. In one case, staff
entered a code to correct an overpayment amount but instead deleted
the overpayment entirely. As a result of our detection, SSA officials
reentered the overpayment debts into the system and indicated they
would proceed with debtor notification and recovery. Because the
results of our case review are not generalizable, the incidence of
such occurrences is currently unknown and thus the potential impact on
total DI overpayments owed by ineligible beneficiaries is not clear.
SSA officials said that they do not have a mechanism for detecting, or
a process of supervisory review to catch, such errors.
A beneficiary's total DI overpayment debt can also increase because of
multiple periods of employment. DI beneficiaries may reenter and leave
the workforce based on their ability to perform SGA. As a result, a
beneficiary could be subject to multiple periods of DI overpayments if
he or she does not report increased earnings to SSA in a timely
manner, as regulations instruct. In 49 of the 60 cases we randomly
selected for review, there was no indication in the file that the
individual had reported his or her earnings to SSA, and in 15 of the
60, SSA had detected two or more separate periods of earnings which
resulted in overpayments. In one of these cases, the ineligible
beneficiary owed SSA a total of $69,976.
SSA Lacks Agency-Wide Performance Goals for DI Debt Recovery, and
Overpayment Debt Continues to Mount:
SSA does not currently have formal, agency-wide performance goals for
debt recovery. Specifically, the agency does not have goals for the
percentage of DI overpayment debt recovered within the 36 month
timeframe as required by its own policy. Under the Government
Performance Results Act of 1993 (GPRA), federal agencies are required
to establish performance goals to define level of performance and
establish performance indicators to be used in measuring relevant
outputs, service levels, and outcomes for each program activity.
[Footnote 19] SSA's policy manual (POMS) requires staff to ask for
full repayment within 36 months, but the agency has not made this time
frame a performance goal. SSA officials said they are currently
working to develop debt recovery goals. In the meantime, without
agency-wide performance goals for debt recovery, SSA cannot adequately
measure its performance or fully leverage and target its resources to
recover overpayments from ineligible beneficiaries and reduce the
total owed to SSA. Despite a substantial increase in DI debt
collections--$340 million to $839 million from fiscal year 2001
through fiscal year 2010--outstanding DI debt[Footnote 20] grew from
$2.5 billion to $5.4 billion during this time, including a $225
million increase in fiscal year 2010.[Footnote 21] (see fig. 2) Most
overpayment debt is collected by SSA through offsets, or the
withholding of future DI benefits for which a beneficiary is still
eligible. SSA attributes 77 percent of the approximately $839 million
of debt collected in fiscal year 2010 to withholding of DI benefits.
The amount withheld from benefits to recoup previous overpayments may
be negotiated with the debtor and based on a monthly amount the debtor
can afford. The remainder of overpayment debt is collected in a
variety of ways, including payments by the debtor and return of
uncashed DI benefit checks; withholding of other SSA benefits, such as
Supplemental Security Income (SSI); [Footnote 22] or through external
collection including federal salary offset, administrative offset
(other than against SSA benefits), tax refund offset, and
administrative wage garnishment. SSA estimates that only about 11
percent of collections is through external means. Of the 60 cases, 5
were referred for external collection at the time of our review, for a
total owed of $79,950, but just $2,478 had been recovered through
these methods.[Footnote 23]
Figure 2: Cumulative DI Overpayment Debt, Fiscal Years 2001-2010:
[Refer to PDF for image: line graph]
Outstanding debt balance at the end of the fiscal year:
Fiscal year: 2001;
Cumulative DI overpayment debt: $2.5 billion.
Fiscal year: 2002;
Cumulative DI overpayment debt: $2.7 billion.
Fiscal year: 2003;
Cumulative DI overpayment debt: $3.0 billion.
Fiscal year: 2004;
Cumulative DI overpayment debt: $3.2 billion.
Fiscal year: 2005;
Cumulative DI overpayment debt: $3.8 billion.
Fiscal year: 2006;
Cumulative DI overpayment debt: $4.3 billion.
Fiscal year: 2007;
Cumulative DI overpayment debt: $4.7 billion.
Fiscal year: 2008;
Cumulative DI overpayment debt: $5.0 billion.
Fiscal year: 2009;
Cumulative DI overpayment debt: $5.2 billion.
Fiscal year: 2010;
Cumulative DI overpayment debt: $5.4 billion.
Source: SSA.
[End of figure]
SSA Policy Does Not Require Supervisory Review of Repayment Plans:
SSA does not require supervisory review of repayment plans prior to
approval, including those in which repayment periods exceed the
recommended 36 months. The agency reported that in fiscal year 2010,
the median time to collect a DI overpayment debt in full was 48
months.[Footnote 24] However, in our review of 60 cases, we found that
SSA agreed to some initial repayment plans which will take many
decades. We analyzed the initial payment plans established for
individuals in these cases and found[Footnote 25] 42 of the 60 had a
payment plan in place, with a median repayment time for all 42 of
approximately 34 months. While SSA's POMS require that staff should
seek full repayment within 36 months, SSA officials reported that no
supervisory approval is needed to exceed the 36 months. Of the 42
cases with a payment plan, 19 had initial plans requiring more than 36
months for payment in full and 7 of these required 20 years or more.
Repayment time frames for the 42 cases ranged from less than 1 year to
nearly 223 years for a case with a 60-year-old debtor who was paying
$10 a month on $26,715 owed. (See fig. 3.) SSA officials told us they
are often unable to increase monthly payment amounts and thus shorten
repayment time frames because of a debtor's limited income. For
instance, in a case we reviewed with an initial repayment plan of 148
years for $44,465 in overpayments owed to SSA, SSA records show the
individual earned less than $100 in 2010.[Footnote 26]
Figure 3: Projected Years Needed for Payment in Full in 42 Cases with
Initial Payment Plans, of 60 Cases Reviewed:
[Refer to PDF for image: plotted point graph]
Goal: 3 years.
Size of debt: $1,126;
Number of years to repay: 0.1.
Size of debt: $3,842;
Number of years to repay: 0.2.
Size of debt: $2,620;
Number of years to repay: 0.2.
Size of debt: $3,218;
Number of years to repay: 0.2.
Size of debt: $3,299;
Number of years to repay: 0.2.
Size of debt: $8,005;
Number of years to repay: 0.4.
Size of debt: $2,677;
Number of years to repay: 0.5.
Size of debt: $7,372;
Number of years to repay: 0.5.
Size of debt: $4,116;
Number of years to repay: 0.5.
Size of debt: $6,660;
Number of years to repay: 0.6.
Size of debt: $10,957;
Number of years to repay: 0.7.
Size of debt: $20,641;
Number of years to repay: 1.
Size of debt: $9,976;
Number of years to repay: 1.
Size of debt: $3,202;
Number of years to repay: 1.
Size of debt: $11,320;
Number of years to repay: 1.1.
Size of debt: $4,898;
Number of years to repay: 1.2.
Size of debt: $11,935;
Number of years to repay: 1.2.
Size of debt: $15,911;
Number of years to repay: 1.2.
Size of debt: $17,010;
Number of years to repay: 1.8.
Size of debt: $29,089;
Number of years to repay: 2.4.
Size of debt: $47,606;
Number of years to repay: 2.7.
Size of debt: $38,734;
Number of years to repay: 2.9.
Size of debt: $16,904;
Number of years to repay: 3.
Size of debt: $5,134;
Number of years to repay: 3.3.
Size of debt: $1,933;
Number of years to repay: 3.9.
Size of debt: $3,096;
Number of years to repay: 5.2.
Size of debt: $12,482;
Number of years to repay: 5.2.
Size of debt: $42,301;
Number of years to repay: 6.6.
Size of debt: $8,442;
Number of years to repay: 7.9.
Size of debt: $19,843;
Number of years to repay: 8.3.
Size of debt: $5,062;
Number of years to repay: 8.4.
Size of debt: $7,392;
Number of years to repay: 12.3.
Size of debt: $15,429;
Number of years to repay: 12.9.
Size of debt: $17,509;
Number of years to repay: 14.6.
Size of debt: $22,830;
Number of years to repay: 19.
Size of debt: $22,582;
Number of years to repay: 25.1.
Size of debt: $16,938;
Number of years to repay: 28.2.
Size of debt: $21,539;
Number of years to repay: 30.
Size of debt: $52,749;
Number of years to repay: 30.
Size of debt: $10,314;
Number of years to repay: 30.
Size of debt: $44,465;
Number of years to repay: 30.
Size of debt: $26,715;
Number of years to repay: 30.
Also on the graph are 5 cases with the following projected repayment
times:
36 years;
44 years;
86 years;
148 years;
223 years.
Source: GAO analysis of SSA data.
[End of figure]
In the course of analyzing repayment plans, we found that the ROAR
system cannot capture and track overpayment debt scheduled to be
collected beyond the year 2049. As a result, the overpayment debt on
the agency's books, and reported to the Department of the Treasury for
the federal government's consolidated financial statements, is
understated to some unknown extent. This ROAR system limitation stems
from a program modification used to address the change of the century
(Y2K) computer issue, and which extended the debt recovery date in
ROAR from "1999" to "2049". Under existing SSA policies and
procedures,[Footnote 27] SSA staff manually remove from the ROAR
system the portion of any debt that cannot be collected before the
year 2050, and create a reminder in the system to recover that balance
beginning in the year 2050. However, because this is a manual process,
the intended recovery action could be potentially missed by staff. For
example, 3 of the 60 cases we reviewed had a total of $43,285 in
overpayments removed from ROAR system records because collection of
these payments will occur after the year 2049. Because the results of
our case review are not generalizable, we could not determine how many
additional disability overpayment cases detected by SSA fell into this
category. Unless corrected, more overpayments will likely to continue
to be underreported as the years progress. Since bringing this issue
to their attention, SSA officials told us that the agency has begun to
study this ROAR system limitation and an agency working group will
recommend a course of action to correct the problem. SSA officials
also reported several initiatives either planned or under way that
could improve the recovery of overpayment debt, including charging
interest and penalties, offsetting state payments, and eliminating the
10-year limit on making referrals of some debts for external
collection.
Lack of Timely Earnings Data and Inconsistent Processing of Work CDRs
Allow Overpayments to Accrue:
SSA conducts periodic computer matches with wage data from the
Internal Revenue Service to independently verify beneficiaries'
earnings. However, earnings data provided through the IRS match are
often more than a year old when SSA staff begin the work CDR prompted
by the IRS data. Managers and staff at the four processing centers we
visited cited this delay as a major obstacle to limiting the
occurrence and size of overpayments. Our work shows that this has
delayed processing of work CDRs. In the 60 cases we reviewed, the
earnings data were already between 6 and 26 months old by the time
they were available to SSA staff for performing work CDRs. (See figure
4).[Footnote 28]
Figure 4: Age of Earnings Data Provided to SSA by IRS Earnings Alerts,
of 60 Cases Reviewed:
[Refer to PDF for image: vertical bar graph]
Age of earnings data (in months): 0-12;
Number of cases: 3.
Age of earnings data (in months): 12-18;
Number of cases: 29.
Age of earnings data (in months): 18-24;
Number of cases: 24.
Age of earnings data (in months): 24 or more;
Number of cases: 4.
Source: GAO analysis of SSA data.
[End of figure]
While DI beneficiaries are responsible for notifying SSA when they
return to work as a condition of receiving benefits, they sometimes
fail to make such notifications. Our review of 60 cases found no
indication in 49 that the individual had reported earnings to SSA as
instructed by regulation. In the other 11 cases, beneficiaries had
reported returning to work, including the name of their employer and
the amount of their wages, at some point. Yet 6 of these cases
resulted in about $78,000 in total overpayments, even though the
beneficiary reported returning to work more than a year prior to
initiation of the work CDR. In the remaining 5 cases, the beneficiary
reported working only after the CDR was initiated.
Earnings data from IRS or from beneficiaries may age further once
received by SSA because staff sometimes do not begin a work CDR
immediately. From the date of the initial IRS alert to the date staff
begin work on the CDR, it is categorized as a case "pending
development". In the 60 cases we reviewed, the median time cases were
pending development was 205 days, or about 7 months, and ranged from 2
to 466 days, or more than 15 months.[Footnote 29] For example, in the
466-day case, the IRS alert came to SSA in September 2007, when
earnings (for 2006) were already 15 months old, then aged an
additional 15 months until SSA staff began developing the work CDR.
SSA officials could not explain what caused the delay in initiating
development of this case or of several others we reviewed.
The delays that occur when staff do not act promptly to begin a work
CDR, in combination with the initial delays in receiving beneficiary
earnings data (either from the IRS enforcement operation, or
beneficiaries' failure to self-report earnings), result in multiple DI
overpayments which may continue to accrue for extended periods of time
before they are addressed. For example, in the 60 cases we reviewed,
delays which occurred after IRS alerts were delivered to SSA resulted
in individual beneficiaries being overpaid for up to 38
months.[Footnote 30] Most received fewer than 12 months of
overpayments, but 19 of the cases received 18 or more months of
overpayments. According to an SSA official, staff shortages and the
need to focus resources on competing workloads, such as initial DI
claims and medical CDRs, are among the factors delaying development of
work CDRs in SSA's processing centers once earnings information is
received. (See figure 5):
[See PDF for image]
[End of figure]
Figure 5: Number of Months Overpayments Accrued As CDR Development
Pending, of 60 Cases Reviewed:
Months of overpayments: 0-6;
Number of cases: 18.
Months of overpayments: 6-12;
Number of cases: 14.
Months of overpayments: 12-18;
Number of cases: 9.
Months of overpayments: 18-24;
Number of cases: 9.
Months of overpayments: 24 or more;
Number of cases: 10.
Source: GAO analysis of SSA data.
[End of figure]
In 2004, we recommended that SSA seek to use large scale batch matches
with an alternative database of earnings, the National Directory of
New Hires (NDNH), which was originally established to help states
locate noncustodial parents for child support payments. The NDNH could
provide SSA with quarterly wage information on existing employees
within four months of the end of a calendar quarter.[Footnote 31]
Several federal programs and agencies currently use the NDNH to verify
program eligibility, detect and prevent potential fraud or abuse, and
collect overpayments. SSA already has the authority to obtain NDNH
earnings data on a case by case basis,[Footnote 32] but as we
previously reported[Footnote 33] lacks the authority to match SSA and
NDNH data on a large scale, or batch, basis. In 2009, SSA conducted a
cost effectiveness study on use of the NDNH, but SSA officials told us
the study showed such matches would generate a large number of alerts
needing development that were not of high quality due to data
reliability issues, or "false positives". They also said the study
found return on investment of only about $1.40 in savings for each $1
spent. SSA provided GAO with a limited overview of the study but we
were unable to independently verify its accuracy or completeness
because the information provided lacked sufficient detail. However,
the agency's experience with the NDNH in its SSI program suggests it
may be more cost-effective than indicated by SSA's analysis. The NDNH
provides SSA staff with access to more comprehensive and timely
employment and wage information, according to SSA officials, and the
match has resulted in an estimated $200 million in SSI overpayment
preventions and recoveries per year. Moreover, even if the benefit-to-
cost ratio of using the NDNH for identifying DI beneficaries' earnings
is only 1.4 to 1.0, as reported by SSA, this still represents a 40
percent rate of return.
SSA Lacks Agency-Wide Performance Goals and a Consistent Approach for
Processing Work CDRs:
SSA does not have agency-wide performance goals or a consistent
approach for processing work CDRs across its processing centers.
Specifically, the agency lacks performance goals for the number of
cases that are pending development or for number of days taken to
process a work CDR. While SSA has established an agency-wide goal for
processing a certain number of medical CDRs in a fiscal year, and
includes this goal in the agency's annual performance plan, SSA
officials told us they have not established similar goals for work
CDRs. Instead, they have established targets for the processing
centers. For example, SSA has set targets for 95 percent of IRS alerts
on earnings generated in 2008 or earlier to have a work CDR completed
by September 24, 2010, and for processing centers to complete
development of cases within 270 days.[Footnote 34] SSA officials said
work CDRs completed were generally not tracked prior to fiscal year
2010. We also found that while SSA's policies establish steps for work
CDR processing to be followed across all processing centers,
processing times across the four centers we visited varied widely once
development was initiated. More specifically, we found that processing
times for the 60 cases we reviewed ranged from 82 to 992 days (with a
median of 396 days) [Footnote 35] and resulted in combined
overpayments totaling more than $1 million. We also found processing
times varied depending on processing center. For example, while the
median processing time for the cases we reviewed from three centers
ranged from 307 to 397 days, median processing time at the fourth
center, which processes about 50 percent of all work CDRs, was 626
days. (See figure 6):
Figure 6: Variance in total case processing time across four
processing centers visited, for 60 cases reviewed:
[Refer to PDF for image: illustration]
Processing center A:
Minimum: 254 days;
Median: 397 days;
Maximum: 552 days.
254397552
Processing center B:
Minimum: 205 days;
Median: 307 days;
Maximum: 633 days.
205307633
Processing center C:
Minimum: 82 days;
Median: 314 days;
Maximum: 454 days.
82314454
Processing center D:
Minimum: 476 days;
Median: 626 days;
Maximum: 992 days.
Source: GAO analysis of SSA data.
[End of figure]
Within the last year, SSA has started work on some new initiatives to
identify CDR enforcement alerts that pose a greater likelihood of
resulting in large overpayments. These include prioritizing IRS alerts
with reported earnings that are greater than or equal to 12 times the
current SGA level in an effort to better target cases for work CDRs,
as well as working to update and streamline existing procedures
regarding the initiation, follow-up timeframes, and overall completion
of work continuing disability reviews for processing center personnel.
While these and other recent initiatives represent promising steps, it
is too early to assess what impact they may have on the prevalence and
size of DI overpayments.
Chairmen, Ranking Members, and Members of the Subcommittees, this
concludes my prepared statement. I would be pleased to respond to any
questions you or other Members of the subcommittees may have at this
time.
Contact and Staff Acknowledgments:
Daniel Bertoni at (202) 512-7215 or bertonid@gao.gov.
In addition to the contact mentioned above, Jeremy Cox, Assistant
Director; Arthur T. Merriam Jr., Analyst-in-Charge; Susan Aschoff;
James Bennett; David Forgosh; Monika Gomez; Angela Jacobs; Joel Marus;
Sheila McCoy; Cady Panetta; Nyree Ryder Tee; Vanessa Taylor; Walter
Vance; and Craig Winslow made key contributions to this statement.
[End of section]
Footnotes:
[1] 20 C.F.R. § 404.1571 (2011). The substantial gainful activity
level was $1,000 per month in 2010 for beneficiaries with disabilities
and $1640 per month for blind beneficiaries.
[2] 20 C.F.R. § 404.1592 (2011).
[3] 20 C.F.R. § 404.1589 (2011).
[4] SSA administers the Ticket to Work program, to provide eligible DI
beneficiaries with employment services, vocational rehabilitation
services, or other support services to help them obtain and retain
employment and reduce their dependence on benefits. See GAO, Social
Security Disability: Ticket to Work Program: Participation Has
Increased, but Additional Oversight is Needed. GAO-11-324, Washington,
D.C.: May 2011.
[5] 20 C.F.R. § 404.1589 (2011). We use the term "work CDRs" to
describe "full" work CDRs in which a case is fully developed and staff
fills out specific forms to receive work credit for completing a work
CDR, as well as instances in which SSA staff perform limited
development of beneficiary earnings because they determine that a full
work CDR is not necessary (an activity that SSA refers to as a "work
CDR action"). SSA also conducts medical CDRs to periodically assess
beneficiaries' continuing medical eligibility for benefits.
[6] SSA generally uses six times the monthly SGA amount, or $6,000 in
2010, as the annual earnings cutoff: Beneficiaries whose annual
earnings are $6,000 or less are likely to keep their DI benefits
because their monthly earnings are expected to be below program
earning limits.
[7] About half of the cases are sent to the processing center in SSA's
Office of Disability Operations (ODO) in Baltimore, Maryland. ODO is
responsible for handling beneficiaries who are less than 54 years of
age and live in the U.S. The remaining cases are sent to one of the
remaining 7 processing centers.
[8] 20 C.F.R § 404.1589 (2011). SSA contracts with state Disability
Determination Services that are responsible for assessing whether an
individual has a disability (a "medical" CDR). During the course of a
medical CDR, examiners sometimes find evidence that a beneficiary may
be working.
[9] 20 C.F.R. § 404.1588 (2011). Under the regulation, beneficiaries
are responsible for reporting certain events that may change their
disability status.
[10] In 2004, SSA implemented the eWork system, which is the primary
system for processing work CDR cases in headquarters and field
locations.
[11] "Earnings reviewers" in the processing centers are generally
responsible for initial analysis of a beneficiary's earnings; however,
only disability processing specialists have the authority to cease
benefits. In SSA's field offices, the claims representatives are
responsible for the duties performed by both the disability processing
specialist and the earnings reviewer.
[12] A beneficiary requests reconsideration when he or she disputes
the occurrence of the overpayment itself 20 C.F.R. § 404.907 (2011);
and requests a waiver when asserting he or she is both not responsible
for the overpayment and incapable of repaying the debt, 20 C.F.R. §
404.506 (2011). A waiver permanently terminates collection of a debt
and removes the debt from SSA's balance sheet.
[13] 42 U.S.C. § 404(b).
[14] 20 C.F.R. § 404.530 (2011).
[15] In addition, SSA reports overdue debts to consumer and credit
reporting agencies. 20 C.F.R. §§ 422.305 and 422.306 (2011). This does
not result directly in increased collections, but acts as a
disincentive to individuals who decline to establish a repayment plan
with SSA. The agency sends a notice indicating that a failure to
establish a repayment plan will result in such referrals. A poor
credit score can result in greater difficulty borrowing money on
favorable terms and other negative consequences for the debtor.
[16] DI benefits paid by the program increased from about $58 billion
to nearly $123 billion from fiscal year 2001 through fiscal year 2010.
Most overpayments are detected in the fiscal year, or years after,
they occur, so overpayment figures do not reflect overpayments made
during the fiscal year cited. Reported overpayments do not include
amounts removed from the record due to systems limitations, discussed
later in this report.
[17] Percentage applies to projected overpayment dollars, not
incidents of overpayments. The Office of Quality Performance reviews a
sample of work CDR cases each year to project total DI overpayments
for the year as well as the prevalence of types of errors resulting in
those overpayments. GAO last reported on the estimated share of work,
or SGA, related overpayments in 2004. GAO Disability Insurance: SSA
Should Strengthen Its Efforts to Detect and Prevent Overpayments.
[hyperlink, http://www.gao.gov/products/GAO-04-929]. Washington, D.C.:
September 10, 2004.
[18] This could affect all overpayment records, not just work-related
overpayment records.
[19] Pub. L. No. 103-62, § 4(b), 107 Stat. 285, 287 (codified at 31
U.S.C. § 1115(a)).
[20] Overpayment debt is comprised of existing debt carried forward
from prior years as well as new debt.
[21] The stated amounts for DI overpayment debt do not include
interest or penalties.
[22] Withholding from old age and survivor's (retiree) benefits is
limited to 10 percent of the monthly benefit and from SSI to the
lesser of the amount of the benefit or 10 percent of the beneficiary's
monthly income. 42 U.S.C. 1320b-17(b).
[23] Case file data were pulled between September 2010 and November
2010, or for roughly the first quarter of fiscal year 2011. Most of
these criteria were established for and by the Department of Treasury,
which administers external collection, per the Debt Collection
Improvement Act of 1996, Pub. L. No. 104-134. § 31001, 110 Stat. 1321,
1321-358 - 1321-380.
[24] Social Security Administration's Fiscal Year 2010 Performance and
Accountability Report.
[25] In the 60 cases we reviewed, we analyzed the number of years to
repay the initial work-related overpayment debt, less any initial
waivers or one-time payments, given the first recurring monthly
payment established in the ROAR record.
[26] DI does not have a cap on program benefit withholding. Instead,
debt specialists set withholding amounts on a case by case basis.
[27] Effective as of April, 2007.
[28] Alerts for 24 of the 60 cases were delivered in cycles prior to
2008, most in 2007. Deliveries were delayed that year as well to July
in the first cycle and September in the second cycle.
[29] Among the four processing centers we visited, the median time
spans from alert to beginning work on the CDR was 157, 165, 199, and
214 days.
[30] This is illustrative of how long overpayments occurred even
before the case was flagged for review by the enforcement operation.
[31] The NDNH contains quarterly state wage information which is more
recent than the annual wage information that SSA obtains through its
current IRS data match. SSA currently uses the NDNH to periodically
monitor the earnings of SSI recipients.
[32] 42 U.S.C. § 653(j)(4).
[33] GAO Disability Insurance: SSA Should Strengthen Its Efforts to
Detect and Prevent Overpayments, [hyperlink,
http://www.gao.gov/products/GAO-04-929] (Washington, D.C.: September
10, 2004).
[34] SSA begins measuring this target from the time staff begin work
on developing the case through the cessation was made.
[35] We measured processing time from the time the IRS alert was
generated through the time the cessation decision was made.
[End of section]
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