oversight

Social Security Disability: Reviews of Beneficiaries' Disability Status Require Continued Attention to Achieve Timeliness and Cost-Effectiveness

Published by the Government Accountability Office on 2003-07-24.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

             United States General Accounting Office

GAO          Report to the Chairman, Subcommittee
             on Social Security, Committee on Ways
             and Means, House of Representatives


July 2003
             SOCIAL SECURITY
             DISABILITY

             Reviews of
             Beneficiaries’
             Disability Status
             Require Continued
             Attention to Achieve
             Timeliness and Cost-
             Effectiveness




GAO-03-662
                                                July 2003


                                                SOCIAL SECURITY DISABILITY

                                                Reviews of Beneficiaries' Disability
Highlights of GAO-03-662, a report to the       Status Require Continued Attention to
Chairman, Subcommittee on Social
Security, Committee on Ways and Means,          Achieve Timeliness and Cost-
House of Representatives
                                                Effectiveness


The Social Security Administration              SSA will likely face a backlog of about 200,000 continuing disability review
(SSA) has had difficulty in                     (CDR) cases by the end of fiscal year 2003. SSA officials attribute the
conducting timely reviews of                    pending backlog to its decision to reduce the number of cases reviewed as a
beneficiaries’ cases to ensure they             result of the delay in obtaining fiscal year 2003 funding. In addition, the
are still eligible for disability               pending backlog resulted from putting more emphasis on initial applications
benefits. SSA has been taking
steps to improve the cost-
                                                over CDRs. To ensure CDRs receive adequate attention, SSA has requested
effectiveness of its review process.            some fiscal year 2004 funds be “earmarked” for these reviews. Given SSA’s
SSA has linked the review process               ability to eliminate its previous CDR backlog using targeted funds, this
to eligibility for a new benefit that           maneuver could help SSA. Over the next 5 years, SSA has estimated that 8.5
provides return-to-work services.               million CDRs, costing about $4 billion, are needed to stay current. If SSA
                                                generates another backlog, cost savings and program integrity may be
This report looks at SSA’s ability to           compromised by paying benefits to disability beneficiaries who are no longer
stay current with future reviews,               eligible to receive them.
identifies potential improvements
to the review process, and assesses             SSA is not making the best use of available information when conducting its
the review process–return-to-work               CDRs, leaving opportunities for improvement. First, SSA’s decisions on the
link.
                                                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
GAO recommends that the                         requires an in-depth review for all beneficiaries who, upon entering the
Commissioner of SSA                             program, are expected to medically improve even if current information on
• pursue a more comprehensive,                  certain of those beneficiaries indicates that improvement is unlikely and that
  data-driven approach to the                   the review would be better handled through a shorter, less expensive
  method it uses to decide when                 method. Third, SSA has not fully pursued medical treatment data available
  to assess individuals for on-
                                                from the Medicare and Medicaid programs despite their potential to improve
  going eligibility;
• rely more readily on current                  SSA’s decisions regarding which review method to use. Fourth, SSA’s CDRs
  assessments of beneficiary                    continue to be hampered by missing or incomplete information on
  information rather than on                    beneficiaries’ case history.
  assessments made at time of
  program entry when deciding                   SSA delays the provision of new return-to-work benefits to beneficiaries
  which review method to use;                   expected to medically improve based on the assumption that such
  and                                           beneficiaries are least likely to need them. However, according to SSA
• study, and incorporate if cost-               data, about 94 percent of such beneficiaries are not found to have
  effective, the more
  comprehensive use of                          medically improved upon completion of a disability review. As a result,
  Medicare/Medicaid data into                   some individuals who might benefit from return-to-work services are
  SSA’s decisions about the                     initially denied access to them. SSA is reviewing this policy and while
  review method to use.                         doing so, will need to consider how to best balance its financial
                                                stewardship and return-to-work goals.
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.
Contents


Letter                                                                                     1
               Results in Brief                                                            3
               Background                                                                  5
               End of Targeted Funding and Other Issues Could Contribute to
                 Another Backlog, Threatening Cost Savings                               10
               Further Opportunities Exist for SSA to Improve CDR Cost-
                 Effectiveness                                                           17
               SSA’s Rationale for Postponing Return-to-Work Services to Some
                 Beneficiaries Is Not Well-Supported by Program Experience               24
               Conclusions                                                               27
               Recommendations to the Commissioner of SSA                                28
               Agency Comments and Our Evaluation                                        29

Appendix I     Scope and Methodology                                                     32



Appendix II    Comments from the Social Security Administration                          34



Appendix III   GAO Contacts and Staff Acknowledgments                                    38
               GAO Contacts                                                              38
               Staff Acknowledgments                                                     38


Tables
               Table 1: Estimated CDR Activities, Fiscal Years 2004-08                   13
               Table 2: DDS Directors’ Reported Likelihood, If Any, of
                        Experiencing an Event That Jeopardizes Meeting CDR
                        Workload During Fiscal Years 2004 and 2005                       14
               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                                                         15
               Table 4: Summary of SSA’s CDR Activities During Special Funding
                        Period, Fiscal Years 1996-2002                                   16




               Page i                                  GAO-03-662 Social Security Disability
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




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Page ii                                             GAO-03-662 Social Security Disability
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




                                   Page 1                                      GAO-03-662 Social Security Disability
targeted exclusively for CDRs from fiscal year 1996 through 2002 to
eliminate the CDR backlog and conduct new CDRs as they became due.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.




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.”




Page 2                                               GAO-03-662 Social Security Disability
                   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.


                   With the expiration of CDR-targeted funds at the end of fiscal year
Results in Brief   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.


                   Page 3                                       GAO-03-662 Social Security Disability
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


Page 4                                     GAO-03-662 Social Security Disability
             to improve the process. SSA also provided a number of technical
             comments, which we incorporated where appropriate.


             The DI and SSI programs are the two largest federal programs providing
Background   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.2 DI cash benefits are paid from the Federal Disability Insurance
             Trust Fund.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.4 In the same year, federal SSI
             cash benefits paid to SSI beneficiaries with disabilities equaled $26 billion,



             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.




             Page 5                                                  GAO-03-662 Social Security Disability
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.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.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


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).




Page 6                                             GAO-03-662 Social Security Disability
              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;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.



              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.




              Page 7                                              GAO-03-662 Social Security Disability
              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.”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.9 In addition, The Personal



              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.




              Page 8                                               GAO-03-662 Social Security Disability
                         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.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.




                         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.




                         Page 9                                                GAO-03-662 Social Security Disability
                            In the midst of its first year following the cessation of CDR-targeted funds,
End of Targeted             SSA appears to be developing another CDR backlog; the agency estimates
Funding and Other           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
Issues Could                current projections, the agency will likely face a backlog of 200,000 CDRs,
Contribute to Another       though the characteristics of the backlog may mitigate its negative effects.
                            SSA attributes the mounting backlog to the management decisions it made
Backlog, Threatening        at the beginning of the fiscal year during budget deliberations, as well as
Cost Savings                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       At the end of March 2003—six months after the expiration of separate
Reemerge, Though Its        authorized CDR funding—SSA was on a pace to generate a CDR backlog
Characteristics May         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
Minimize Negative Effects   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.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



                            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).




                            Page 10                                              GAO-03-662 Social Security Disability
achieved during the first 6 months of the fiscal year.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.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


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.




Page 11                                              GAO-03-662 Social Security Disability
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,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.




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.




Page 12                                               GAO-03-662 Social Security Disability
                          Table 1: Estimated CDR Activities, Fiscal Years 2004-08

                                                                CDRs to be
                                                        processed during                        CDR expenses             Cessationsa
                              Fiscal year              year (in thousands)                 (dollars in millions)      (in thousands)
                              2004                                           1,637                        $716                     61
                              2005                                           1,682                        $729                     59
                              2006                                           1,632                        $787                     61
                              2007                                           1,769                        $896                     65
                              2008                                           1,793                        $857                     62
                          Source: SSA’s Office of the Chief Actuary, May 2000 estimates.
                          a
                          Estimated ultimate cessations after all appeals.


                          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   Several of the issues that have contributed to the pending fiscal year
Concerns about Their      2003 CDR backlog will also appear, in the views of DDS directors, in the
Ability to Meet Future    future. First, nearly all directors expect to process a higher number of
                          initial disability claims than in the past. Most DDS directors have a
CDR Workload              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



                          Page 13                                                                GAO-03-662 Social Security Disability
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
                                                         Not at all   Somewhat         Very
 Event                                                      likely        likely      likely
 Higher number of initial disability claims than in
 past (n=51)                                                     2            35         63
 State budget shortfalls causing constraints (e.g.,
 personnel restrictions) (n=49)                                 25            29         47
 Difficulties hiring disability
 examiners (n=51)                                               28            31         41
 High turnover of disability examiners due to
 reasons other than retirement (n=51)                           35            51         14
 Large number of disability examiner retirements
 (n=51)                                                         39            39         22
Source: GAO survey of DDS directors, February 2003.




Page 14                                               GAO-03-662 Social Security Disability
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

                                                                                             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)
                                                               Percentage of DDSs
                                                             anticipating event that
                                                                    have a strategy                   Not at all likely            Somewhat likely
 Event                                                            currently in place                     or not sure                 or very likely
 Higher number of initial disability claims than
 in past (n=50)                                                                     78                                8                            92
 State budget shortfalls causing constraints
                                                                                                                       a
 (e.g., personnel restrictions) (n=37)                                              57                              17                             83a
 Difficulties hiring disability
 Examiners (n=37)                                                                   70                                8                            92
 High turnover of disability examiners due to
 reasons other than retirement (n=33)                                               79                                3                            97
 Large number of disability examiner
 retirements (n=31)                                                                 81                                3                            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).


Cost Savings and Program                              To the extent that funding, staffing, and other issues limit SSA’s ability to
Integrity Could Be                                    process its CDR workload, the full realization of CDR cost savings could
Jeopardized If CDR                                    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
Backlog Grows Again                                   Congress summarizes its average CDR cost-effectiveness during fiscal year
                                                      1996 to 2000 at about $11 returned for every $1 spent on CDRs.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.



                                                      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.



                                                      Page 15                                                 GAO-03-662 Social Security Disability
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.16

Table 4: Summary of SSA’s CDR Activities During Special Funding Period, Fiscal
Years 1996-2002

                                                                                                                      10-year
                                                                                                                   estimated
                                         Number of                                         CDR Costs                 savingsb
                                             CDRs                 Estimated                 (dollars in            (dollars in
                                                                           a
    Fiscal year                          processed               cessations                   millions)              millions)
    1996                                     498,400                     26,500                     $208                $2,040
    1997                                     690,478                     49,700                     $330                $3,555
    1998                                   1,391,889                     70,300                     $462                $4,435
    1999                                   1,703,414                     87,300                     $547                $5,185
    2000                                   1,836,510                     76,000                     $609                $5,060
    2001                                   1,730,572                     63,600                     $603                $4,245
    2002                             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.


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



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.




Page 16                                                                   GAO-03-662 Social Security Disability
                         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.

                         While SSA has taken a number of actions over the past decade to
Further Opportunities    significantly improve the cost-effectiveness of the CDR process,
Exist for SSA to         opportunities remain for SSA to better use program information in CDR
                         decision making. While DDS personnel study available information on
Improve CDR Cost-        beneficiaries to decide when they should undergo a CDR, they do not
Effectiveness            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   While DDS personnel review available information on beneficiaries to
CDRs Are Not Based on    establish a diary date indicating when beneficiaries should undergo a CDR,
Systematic Analysis of   they do not conduct a systematic analysis of this information. Diary
                         decisions are inherently complex because DDS personnel must assess a
Available Information    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


                         Page 17                                      GAO-03-662 Social Security Disability
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 category17 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.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



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.




Page 18                                              GAO-03-662 Social Security Disability
                           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          SSA’s process for determining what method to use for a CDR is not always
Determining CDR Method     based on the best information available. In the 1990s, SSA introduced a
Not Always Based on Best   system that develops a “profile score” for each beneficiary. The profile
                           score indicates the beneficiary’s likelihood for medical improvement
Information Available      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.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.




                           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.




                           Page 19                                             GAO-03-662 Social Security Disability
                            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),20 even if the profile score indicates a
                            relatively high likelihood of medical improvement.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.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.23


SSA Has Not Fully Studied   SSA has not fully studied and pursued the use of medical treatment data
and Pursued the Use of      on beneficiaries available from the Medicare and Medicaid programs
Medical Treatment Data      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
from Medicare and           2000, an SSA contracted study found that the use of Medicare data from
Medicaid                    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,


                            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.




                            Page 20                                               GAO-03-662 Social Security Disability
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.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



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.




Page 21                                              GAO-03-662 Social Security Disability
                             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        SSA continues to be hampered in its CDR decisions by missing or
Case Folders May Result in   incomplete information on beneficiaries’ case history, which may prevent
Fewer Benefit Cessations     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.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




                             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.




                             Page 22                                              GAO-03-662 Social Security Disability
that a large proportion of cases were missing information.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.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


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.




Page 23                                              GAO-03-662 Social Security Disability
                        was committed to building a system of electronic folders28 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-2005.29 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 issuance of a ticket to beneficiaries
SSA’s Rationale for     expected to medically improve—those who are assigned an MIE diary
Postponing Return-to-   category—is not well-supported by program experience. In issuing
                        regulations implementing the ticket act, SSA decided to postpone issuance
Work Services to        of tickets to MIE beneficiaries who have not yet had a CDR based on the
Some Beneficiaries Is   premise that these beneficiaries could be expected to regain their capacity
                        to work without SSA assistance.30 However, our analysis of SSA data
Not Well-Supported      indicates that the vast majority of MIE beneficiaries in the DI and SSI
by Program              programs—about 94 percent—are not found to have medically improved
Experience              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.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


                        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.




                        Page 24                                                  GAO-03-662 Social Security Disability
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.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,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.34 However, they noted
that their policy of limiting ticket issuance reflects congressional interests
in striking an appropriate balance between program stewardship and


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.




Page 25                                             GAO-03-662 Social Security Disability
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,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



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.




Page 26                                             GAO-03-662 Social Security Disability
              SSA from conducting a CDR while a person is using a ticket.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.


              Failure to cost effectively process CDRs as they become due could
Conclusions   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


              36
                   However, the prohibition on CDRs for all other ticket users could remain in effect.




              Page 27                                                 GAO-03-662 Social Security Disability
                          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.


                          To further improve the cost-effectiveness of the CDR process, we
Recommendations to        recommend that the Commissioner of SSA take the following actions:
the Commissioner of
                      •   Pursue more comprehensive enhancements of the CDR diary process—
SSA                       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



                          Page 28                                     GAO-03-662 Social Security Disability
                         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.

                         In commenting on a draft of this report, SSA agreed with our
Agency Comments          recommendations. SSA noted that our review represents a comprehensive
and Our Evaluation       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




                         Page 29                                    GAO-03-662 Social Security Disability
clear that SSA’s integrity reviews37 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.


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.




Page 30                                                GAO-03-662 Social Security Disability
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




Page 31                                    GAO-03-662 Social Security Disability
             Appendix I: Scope and Methodology
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


             Page 32                                    GAO-03-662 Social Security Disability
Appendix I: Scope and Methodology




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.




Page 33                                    GAO-03-662 Social Security Disability
              Appendix II: Comments from the Social Security Administration
Appendix II: Comments from the Social
Security Administration




              Page 34                                           GAO-03-662 Social Security Disability
Appendix II: Comments from the Social Security Administration




Page 35                                           GAO-03-662 Social Security Disability
Appendix II: Comments from the Social Security Administration




Page 36                                           GAO-03-662 Social Security Disability
Appendix II: Comments from the Social Security Administration




Page 37                                           GAO-03-662 Social Security Disability
                  Appendix III: GAO Contacts and Staff
Appendix III: GAO Contacts and Staff
                  Acknowledgments



Acknowledgments

                  Shelia D. Drake, Assistant Director (202) 512-7172
GAO Contacts      Brett S. Fallavollita, Analyst-in-Charge (202) 512-8507


                  The following individuals also made important contributions to this report:
Staff             Mark Trapani, Melinda L. Cordero, and Corinna A. Nicolaou.
Acknowledgments




(130194)
                  Page 38                                     GAO-03-662 Social Security Disability
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