oversight

SSA Disability Redesign: Actions Needed to Enhance Future Progress

Published by the Government Accountability Office on 1999-03-12.

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


March 1999
                 SSA DISABILITY
                 REDESIGN
                 Actions Needed to
                 Enhance Future
                 Progress




GAO/HEHS-99-25
      United States
GAO   General Accounting Office
      Washington, D.C. 20548

      Health, Education, and
      Human Services Division

      B-277774

      March 12, 1999

      The Honorable E. Clay Shaw
      Chairman
      Subcommittee on Social Security
      Committee on Ways and Means
      House of Representatives

      Dear Mr. Chairman:

      This report responds to your Subcommittee’s request that we (1) assess SSA’s efforts to redesign
      its disability claims process and (2) identify actions that SSA could take to better ensure future
      progress.

      We are sending copies of this report to The Honorable Kenneth S. Apfel, Commissioner of
      Social Security; appropriate congressional committees; and other interested parties. We will
      also make copies available to others upon request.

      Please contact me on (202) 512-7215 if you or your staff have any questions concerning this
      report. Other GAO staff who contributed to this report are listed in appendix V.

      Sincerely yours,




      Cynthia M. Fagnoni
      Director, Income Security Issues
Executive Summary


             In administering its disability programs, the Social Security Administration
Purpose      (SSA) is still struggling to cope with workloads that resulted, in part, from a
             dramatic growth in the number of applications for disability benefits in the
             early 1990s. In the 3-year period between fiscal years 1991 and 1993, initial
             claims for these benefits climbed by almost one-third—from 3 million to
             3.9 million. As a result, SSA began experiencing increased difficulty
             processing disability claims in a timely manner. For example, claimants
             who were dissatisfied with their initial determination and filed an appeal
             often had to wait as long as 1-1/2 years for a final decision. Moreover, as
             many as two-thirds of claimants who filed an appeal eventually received a
             favorable decision at the hearing level, which indicates potential problems
             with either initial or appellate decisions and raises questions about the
             fairness and efficiency of the process. SSA concluded that the only way to
             effectively respond to these problems was to fundamentally overhaul the
             process for deciding whether or not a claimant is eligible for disability
             benefits. In 1994, SSA set forth an ambitious plan to redesign the process
             over a 6-year period.

             Concerned about the need to improve SSA’s disability claims process, the
             Chairman of the Subcommittee on Social Security, House Committee on
             Ways and Means, asked GAO to (1) assess SSA’s efforts to redesign its
             disability claims process and (2) identify actions that SSA could take to
             better ensure future progress.


             Depending on the number of times a claimant files an appeal, SSA’s process
Background   can include up to four decision points: (1) the initial disability
             determination; (2) a second independent review, called reconsideration;
             (3) a hearing decision by an administrative law judge; and (4) a review of
             the hearing decision by SSA’s Appeals Council—an independent review
             group composed of administrative appeal judges. The process involves a
             large number of diverse components, including SSA’s 1,298 field offices,
             where initial claims are taken; 54 state agencies, where doctors and
             examiners work as teams to make initial and reconsidered determinations
             on medical eligibility; and 140 hearing offices, where attorneys and
             administrative law judges consider appeals.

             With its September 1994 redesign plan, SSA hoped to achieve five goals that
             would improve the process, including making it more efficient and
             user-friendly. The plan originally included 83 initiatives to be
             accomplished over 6 years—38 of which were to be completed within the
             first 2 years. GAO concluded in a 1996 report that SSA’s plan was overly



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                   ambitious. At that time, SSA had made little progress toward meeting its
                   goals, lacked demonstrable results, and faced difficulties obtaining and
                   keeping the support of some stakeholders. In response to these and other
                   concerns, SSA issued a scaled-back redesign plan in February 1997. The
                   new plan focused on testing and implementing eight key initiatives—each
                   representing a major change to the system—within 9 years instead of the
                   original 6.

                   Five of the eight initiatives had near-term milestones; that is, they were to
                   be tested, implemented, or both by the close of fiscal year 1998. Two of
                   these initiatives involved establishing new decisionmaker positions
                   intended to help make disability decisions faster and more efficiently.
                   Each of these new positions was to be tested in a “stand-alone”
                   fashion—that is, not in the context of other proposed and related changes.
                   A third initiative combined in a single test the two new decisionmaker
                   positions and several other process changes, including a proposal to
                   eliminate the reconsideration and Appeals Council review levels. The two
                   remaining initiatives with near-term milestones aimed to provide essential
                   supports for the entire disability claims process—one by improving the
                   consistency of disability decisions between the initial and appellate levels
                   of the process and the other by improving SSA’s quality assurance process.


                   Even with its scaled-back plan, SSA has been unable to keep its redesign
Results in Brief   activities on schedule and to demonstrate that its proposed changes will
                   significantly improve the claims process. While SSA has made some
                   progress, overall, it has not met most of the milestones for testing or
                   implementing its five near-term initiatives. Moreover, its stand-alone tests
                   of the two new decisionmaker positions consumed valuable resources and
                   provided marginal or inconclusive results. As a result, the tests did not
                   support the wider implementation of the positions. The inability to keep
                   on schedule was caused, in part, by SSA’s overly ambitious plan, which
                   involved numerous large tests and required SSA to move forward on many
                   fronts simultaneously. In addition, SSA’s strategy for testing proposed
                   changes independently, rather than together with other related changes
                   and key supports, contributed to the disappointing test results. Finally,
                   other problems with the design of its tests further weakened the agency’s
                   ability to predict how the initiatives would operate if implemented.

                   The problems that led to SSA’s redesign effort persist, and as SSA continues
                   its efforts to improve the disability claims process the agency has an
                   opportunity to learn from its experience and the best practices of other



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                       organizations with reengineering experience. To its credit, SSA has already
                       taken steps in response to the problems encountered in its redesign effort
                       by, among other things, strengthening its executive oversight. However,
                       delays and limited progress to date suggest that these steps, while
                       important, are not enough to ensure success. SSA could improve its
                       chances of making future progress by further scaling back its near-term
                       efforts to include only initiatives that are critical to improving the
                       disability claims process. In addition, by testing related process changes
                       together, rather than on a stand-alone basis, and at a smaller number of
                       sites, SSA could free up resources while still obtaining valuable data.
                       Moreover, experiences of other organizations suggest that SSA faces
                       perhaps its greatest challenge after it completes testing of a process
                       change and begins to implement it in a “real world” environment. Because
                       a process change might function differently under actual operational
                       conditions than it did in a test environment, SSA will need to take
                       additional action to ensure that it achieves hoped-for results. For example,
                       SSA will need to revise its performance measures to better monitor and
                       more fully assess the impact of changes on the entire process. Further, SSA
                       will need to ensure that an adequate quality assurance process is in place
                       so that any changes SSA makes to the process do not compromise the
                       quality of decisions.



Principal Findings

Progress Has Been      Even under its revised plan, SSA has made limited progress in redesigning
Hindered by Redesign   its disability claims process. As of October 1998, the agency was behind
Strategy               schedule on all five of its near-term initiatives. SSA postponed
                       implementation of its two new decisionmaker positions, is behind
                       schedule with its evaluation of its integrated test, and was behind on its
                       efforts to improve its quality assurance process. While the agency is also
                       behind schedule in addressing the high number of claims that are allowed
                       on appeal, it has made some progress in this area. For example, SSA
                       provided uniform training to over 15,000 decisionmakers from all
                       components of the disability claims process. Agency officials believe this
                       training and other related efforts have contributed to 90,000 people
                       receiving deserved benefits earlier in the process. However, other factors
                       can also influence the decision-making process, and it is difficult to isolate
                       the effects of SSA’s efforts with certainty.




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                            In addition to missing milestones, SSA has not clearly demonstrated the
                            efficacy of its proposed changes. Its stand-alone tests of the two proposed
                            decisionmaker positions did not demonstrate clear improvements to the
                            process and, in one case, produced unreliable results. Consequently, SSA
                            decided to wait for data from its integrated test—which will show the
                            efficacy of these two positions in combination with other process
                            changes—before making implementation decisions. Preliminary results
                            from this test are more promising for some, but not all, of the proposed
                            changes.

                            SSA’s limited progress under its revised plan is due at least in part to the
                            plan’s overly ambitious scope and the agency’s strategy for testing its
                            proposed process changes. SSA’s approach of moving ahead on many
                            fronts simultaneously—including conducting several large tests—was
                            difficult to manage within established time frames. For example, in fiscal
                            year 1998, SSA had five tests ongoing at over 100 sites involving over 1,000
                            test participants. Our field visits to a variety of sites and our discussions
                            with stakeholder groups underscored the challenges of keeping the
                            redesign effort on schedule. Each test included time-consuming activities,
                            such as coordinating the activities of many state and federal offices and
                            building consensus among stakeholder groups. By diluting the redesign
                            team’s energies among so many different tests, SSA limited its ability to
                            keep its plan on track. In addition, SSA’s decision to conduct stand-alone
                            tests contributed to disappointing and inconclusive results because key
                            supports and related initiatives were not in place during the tests. Finally,
                            other limitations in SSA’s test design and management made it difficult for
                            SSA to assess how an initiative would operate if actually implemented. For
                            example, in one test of a new decisionmaker position, SSA did not ensure
                            that test cases and control cases were similarly handled; as a result, SSA’s
                            test results were not meaningful.


SSA’s Experience and Best   The problems that led to SSA’s redesign effort persist, and future workloads
Practices Suggest Actions   are likely to increase as a result of demographic changes. As a result, the
to Increase Chances of      agency must continue to seek ways to improve its work processes,
                            enhance its workforce skills, and make more effective use of technology.
Future Success              As it proceeds with steps to improve its disability claims process, it has an
                            opportunity to learn from its past mistakes. To its credit, SSA has begun to
                            apply some lessons it has learned. For example, it created a new
                            executive-level committee to oversee progress and direct resources and
                            energies where they are most needed. But the extent of the problems
                            experienced up to this point suggest that this and other steps taken by SSA



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Executive Summary




will probably not be enough to keep its redesign plan on track, and more
significant changes in its reengineering approach will probably be needed.
Relatedly, SSA will need more concrete and positive results to assuage the
persistent concerns of stakeholders regarding the wisdom of specific
process changes.

Reengineering experts agree that successful reengineering efforts require
sharp focus, and SSA’s own experience confirms that additional focus is
needed. As with its original redesign plan, SSA’s 1997 redesign plan called
for moving forward on so many fronts that SSA continued to miss
milestones and experience difficulty in making concrete improvements to
the process. Prioritizing SSA’s five key redesign objectives would provide
additional focus, and concentrating the agency’s efforts on the initiatives
most likely to achieve critical redesign objectives would improve its
chances of making concrete progress in crucial areas.

SSA’s testing approach has not been adjusted to capture lessons learned
from SSA’s previous experiences and commonly accepted reegineering
practices. For example, SSA’s planned test of yet a third decision-making
position involves many sites and does not include a number of key
supporting initiatives, such as the simplified decision methodology and
redesigned computer system. Conducting this test at fewer sites would
free up resources and help SSA keep its initiatives on track. SSA could also
reduce the likelihood of disappointing test results by developing these key
supports before testing the initiative. Also, before investing significant
resources on testing this particular initiative, SSA could explore
alternatives on a small scale, so that feasible options would be available if
this proposed initiative proved ineffective or difficult to implement.

SSA is currently considering whether to broadly implement certain
proposed changes to the claims process. The experiences of other public
and private organizations that have attempted to significantly change a
process indicate that implementing change is more difficult than testing it.
Organizations naturally resist change, and new processes may function
differently when they are no longer operating in a test environment.
Therefore, SSA will need to closely monitor the results of changes that are
implemented to determine whether the changes are achieving the intended
improvements to the process. To do so, SSA will need a more complete set
of performance goals and measures than it currently has. It will also need
a fully developed quality assurance process before it implements major
system changes. The quality assurance process is especially important




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                  because of uncertainty that the newly tested decisionmaker positions will
                  perform as effectively outside the test environment as in it.


                  This report makes a number of recommendations to improve SSA’s
Recommendations   approach to redesigning its disability claims process by focusing its
                  resources on those initiatives that are most likely to achieve SSA’s most
                  critical redesign objectives, modifying its testing approach to avoid
                  previously experienced pitfalls, and taking steps to put in place a
                  comprehensive set of performance goals and measures and adequate
                  quality assurance procedures. The full set of recommendations can be
                  found in chapter 4.


                  SSA agreed with GAO’s observations that the redesign efforts to date have
Agency Comments   not resulted in the magnitude of benefits projected in the original redesign
                  plan and with GAO’s recommendation that SSA focus on those areas that
                  will make the greatest contributions to the agency’s redesign objectives.
                  On the other hand, SSA maintains that its large-scale, stand-alone testing
                  strategy was both necessary and effective, and that its current approach to
                  testing a third position is consistent with GAO’s concerns and
                  recommendations. However, GAO continues to believe that SSA could make
                  better use of limited resources by first exploring the efficacy of this third
                  position, and alternative concepts, on a smaller scale. SSA also stated that it
                  will continue to use its current approach and measures to monitor and
                  evaluate redesign changes, whereas GAO believes that a more carefully
                  crafted set of performance measures and goals is needed to effectively
                  monitor and evaluate changes. SSA also provided technical comments,
                  which were incorporated as appropriate. The full text of SSA’s comments is
                  included as appendix IV.




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Contents



Executive Summary                                                                                   2


Chapter 1                                                                                          12
                      Problems With SSA’s Disability Claims Process Came to the Fore               13
Introduction            in the Early 1990s
                      SSA’s Initial Efforts to Redesign the Process Moved Slowly                   20
                      SSA Scaled Back Its Redesign Plan                                            25
                      Objectives, Scope, and Methodology                                           31


Chapter 2                                                                                          33
                      Progress Under Revised Plan Has Been Limited                                 33
Progress Under        Limited Progress Is Related to SSA’s Testing and Implementation              39
Revised Plan            Strategy
Hindered by Overly
Ambitious Strategy
and Problems With
Test Design
Chapter 3                                                                                          46
                      Many Steps Remain Under the Revised Plan                                     46
Actions Needed to     SSA’s Actions to Revise Its Approach Have Been Helpful but                   50
Improve Chances for     Insufficient to Ensure Success
                      Sharper Focus Is Needed on Most Critical Areas                               52
Future Progress       A Modified Testing Approach Could More Efficiently Provide                   54
                        Valuable Information
                      Implementation Will Require Careful Monitoring                               58


Chapter 4                                                                                          63
                      Conclusions                                                                  63
Conclusions,          Recommendations                                                              65
Recommendations,      Agency Comments and Our Evaluation                                           65
and Agency
Comments and Our
Evaluation
Appendixes            Appendix I: Descriptions of Near-Term Redesign Initiatives and               68
                        Their Test and Implementation Schedules




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                       Appendix II: SSA’s Efforts to Meet Near-Term Milestones                       78
                       Appendix III: Results of SSA’s Tests                                          82
                       Appendix IV: Comments From the Social Security Administration                 88
                       Appendix V: GAO Contacts and Staff Acknowledgments                            93


Bibliography                                                                                         94


Related GAO Products                                                                                 96


Tables                 Table 2.1: Milestones and Status for Near-Term Initiatives                    35
                       Table 2.2: Results of Tested Redesign Initiatives                             37
                       Table 2.3: Projected Redesign Savings in Staff-Years for 1998 and             38
                         1999 President’s Budgets
                       Table 2.4: SSA’s Test Schedule and Number of Sites and                        41
                         Participants
                       Table 3.1: Steps Remaining for the Eight Initiatives in SSA’s                 48
                         February 1997 Plan


Figures                Figure 1.1: SSA’s Disability Claims Process as of October 1998                16
                       Figure 1.2: SSA’s Proposed Disability Claims Process                          22
                       Figure 1.3: The Eight Initiatives and Milestones Under the                    28
                         February 1997 Redesign Plan




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Abbreviations

AC         Appeals Council
ALJ        administrative law judge
AO         adjudication officer
DCM        disability claims manager
DDS        disability determination service
DI         Disability Insurance
FPM        full process model
HHS        Department of Health and Human Services
HO         hearing office
NPRM       notice of proposed rulemaking
OHA        Office of Hearings and Appeals
OQA        Office of Quality Assurance
PDI        predecision interview
POMS       Program Operations Manual System
QA         quality assurance
RDS        Redesigned Disability System
RFC        residual functional capacity
SDM        single decision maker
SSA        Social Security Administration
SSI        Supplemental Security Income
SSR        Social Security Ruling


Page 10                       GAO/HEHS-99-25 Disability Claims Process Redesign
Page 11   GAO/HEHS-99-25 Disability Claims Process Redesign
Chapter 1

Introduction


               The Social Security Administration (SSA) manages two major federal
               disability programs that provide cash benefits to people with long-term
               disabilities: the Disability Insurance (DI) and Supplemental Security
               Income (SSI) programs. The DI program was enacted in 1954 and provides
               monthly cash benefits to severely disabled workers. SSI was enacted in
               1972 as an income assistance program for aged, blind, or disabled
               individuals whose income and resources fall below a certain threshold.
               For both programs, disability for adults is defined as an inability to engage
               in any substantial gainful activity because of a severe physical or mental
               impairment.1 Both programs also use the same procedures for determining
               whether the severity of an applicant’s impairment qualifies him or her for
               disability benefits. In 1998, almost 11 million people received a total of
               over $73 billion in disability benefits from these programs.

               SSA’s complex process for determining whether an individual qualifies for a
               disability benefit—the disability claims process—has been plagued by a
               number of long-standing problems. For example, claimants who have been
               dissatisfied with the initial determination and have filed an appeal
               frequently have had to wait more than 1-1/2 years for a final decision.
               Moreover, as many as two-thirds of these determinations were
               subsequently allowed by an administrative law judge (ALJ). In the early
               1990s, SSA had difficulty keeping up with a rapidly growing workload, and
               backlogs of appealed cases waiting for a hearing grew. In response to
               these problems, SSA concluded that minor improvements to the disability
               claims process would be insufficient and embarked on an effort to
               fundamentally reengineer, or redesign, its process.2 In 1994, the agency
               issued an ambitious plan for redesigning the process within 6 years.
               However, 2 years into implementing the redesign plan, SSA had not made
               much progress, and we and SSA concluded that the scope of the plan was
               too large. The agency reevaluated its approach and, in February 1997,
               issued a scaled-back plan with revised milestones.




               1
                The legal definition of disability for adults is the inability to engage in any substantial gainful activity
               by reason of any medically determinable physical or mental impairment that can be expected to result
               in death or to last for at least 12 months. A child is considered disabled if the child has a medically
               determinable physical or mental impairment that results in marked and severe functional limitations
               that can be expected to result in death or to last for at least 12 months.
               2
                SSA consistently uses “redesign” to describe its efforts to improve the disability claims process,
               although it considers this term synonymous with “reengineer.” In this report, we also use “redesign” to
               refer to SSA’s reengineering effort.



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                         Chapter 1
                         Introduction




                         SSA’s disability claims process has long been recognized as complex and
Problems With SSA’s      fragmented. The decision about whether an individual is disabled is based
Disability Claims        on standards set forth in the Social Security Act and extensive SSA
Process Came to the      regulations and rulings. Moreover, disability decisions involve a multilevel
                         process that spans many diverse components, including SSA’s 1,298 field
Fore in the Early        offices, 54 state agencies, and 140 hearing offices. This organizationally
1990s                    complex structure has contributed to a number of problems. For example,
                         through the years a high percentage of claimants who were dissatisfied
                         with their initial determinations received favorable decisions on appeal.
                         Claimants have also waited a long time for final decisions on their
                         eligibility. In the early 1990s, these problems were aggravated by mounting
                         workloads, as applications for disability benefits escalated at the same
                         time that SSA was experiencing a decline in its workforce. This, in turn,
                         caused workloads to back up and increased the time it took claimants to
                         receive decisions on their claims.


The Disability Claims    SSA’s disability claims process, which has not changed fundamentally in
Process Is Complicated   over 40 years, is inherently complex and fragmented. The process contains
and Fragmented           several opportunities for appeal, and the organizational unit involved,
                         professional background of the adjudicator, and procedures for making a
                         decision on appeal are all different from those of the initial determination.
                         Each organizational unit has separate lines of authority and goals without
                         responsibility for the overall outcome of the process.

                         The claims process starts when an individual contacts one of SSA’s 1,298
                         field offices across the country to apply for benefits. Field office personnel
                         help claimants complete their applications; obtain a detailed medical and
                         work history; and identify other, nonmedical eligibility factors.3 Field
                         office personnel then forward the claims to one of 54 disability
                         determination service (DDS) agencies that are administered by the 50 states
                         and the District of Columbia, Guam, Puerto Rico, and the Virgin Islands.

                         Under a unique federal-state arrangement, SSA pays state DDSs to determine
                         whether claimants are disabled.4 At the DDS, a team consisting of a


                         3
                          Nonmedical eligibility factors include such considerations as whether the applicant has paid Social
                         Security taxes for enough years and recently enough to be covered under Social Security for DI
                         benefits and whether the applicant has sufficiently low income or resources to be eligible for SSI
                         benefits.
                         4
                          This arrangement was instituted, in part, because the states had prior experience in administering
                         various disability-related programs and had established working relationships with the medical
                         community. DDSs are required to follow SSA policy guidelines but are not under the direct
                         administrative control of SSA.



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Chapter 1
Introduction




specially trained disability examiner and an agency physician or
psychologist reviews the available medical evidence and gathers
additional medical evidence, if necessary. In making the disability
determination, the team follows official guidance found in SSA’s Program
Operations Manual System (POMS), which is based on applicable laws and
SSA’s regulations and rulings and also includes detailed instructions for
processing cases. If the claimant is dissatisfied with the initial
determination, the claimant may request a reconsideration review within
60 days of receiving the determination. Reconsideration is also performed
by the DDSs and is based on the same guidance as the initial determination
but is carried out by a new adjudicative team.

If the claimant is dissatisfied with the determination, he or she has 60 days
to appeal and request a hearing before an ALJ. ALJs are hearing officers
located at 140 hearing offices around the country that are administered by
SSA’s Office of Hearings and Appeals (OHA). ALJs review the file to
determine if additional medical evidence is needed, conduct a hearing, and
render a decision.5 ALJs conduct de novo hearings; that is, ALJs may
consider or develop new evidence and are not bound by DDS
determinations. These hearings often present the first opportunity for
face-to-face contact between claimants and the individuals deciding their
eligibility. In rendering a decision, ALJs do not follow the POMS but rely
directly on applicable laws and SSA regulations and rulings. ALJs are subject
to the Administrative Procedure Act, which affords them some
independence in making a disability decision.6

Finally, if the ALJ denies the claim, the claimant has 60 days to request a
review by the Appeals Council, an independent review group attached to
the OHA and composed of administrative appeals judges. The Appeals
Council may decide to dismiss the request for review, grant the request
and issue its own decision, or remand the case back to the ALJ. The
Appeals Council is the claimant’s fourth and final level of administrative
review. Upon exhausting these administrative remedies, the claimant may
file a complaint with a federal court. Figure 1.1 shows the four decision
points in SSA’s current disability claims process.




5
Under a temporary measure directed at reducing hearing office workloads, a request for a hearing
may be reviewed and the claim fully allowed by a senior staff attorney.
6
 The Administrative Procedure Act protects the ALJ’s independence by restricting the extent to which
SSA management can exert control over these adjudicators. For example, ALJ salaries are determined
by the Office of Personnel Management, not by SSA.



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Page 15        GAO/HEHS-99-25 Disability Claims Process Redesign
                                          Chapter 1
                                          Introduction




Figure 1.1: SSA’s Disability Claims Process as of October 1998




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Page 17        GAO/HEHS-99-25 Disability Claims Process Redesign
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                          Introduction




                          SSA’s approach to reviewing the quality of the disability decision reflects
                          the complex and fragmented nature of the process. As we have previously
                          reported, current quality assurance reviews focus on DDS determinations
                          and ALJ decisions in isolation from one another, and the approach for
                          reviewing DDS determinations differs from the approach for reviewing ALJ
                          decisions.7 Reviews of DDS determinations are conducted by staff from
                          SSA’s Office of Quality Assurance (OQA). These reviews focus heavily on DI
                          claims that have been allowed.8 In conducting their quality review, OQA
                          staff use the same approach, policy, and procedures that the DDSs use in
                          reaching a determination; that is, they rely on the POMS. In contrast, only a
                          small number of ALJ allowance decisions are selected for review by SSA’s
                          Appeals Council. For the most part, reviews of ALJ decisions
                          predominantly consist of reviews of claims denied by ALJs and appealed by
                          claimants to the Appeals Council. In reviewing ALJ decisions, the Appeals
                          Council relies on the same laws and SSA regulations and rulings as those
                          used by ALJs.


Long-Standing Problems    SSA’s disability claims process has long suffered from problems associated
Are Associated With the   with its complexity and fragmentation. Among these problems are the high
Claims Process            allowance rates by ALJs of appealed DDS determinations. In fiscal year 1993,
                          before SSA issued its redesign plan, 68 percent of determinations that were
                          appealed received favorable decisions at the hearing level. High ALJ
                          allowance rates have been attributed to a number of factors. According to
                          SSA, an ALJ might arrive at a different decision than a DDS because the
                          claimant’s condition has worsened, or because ALJs are more likely than
                          DDS decisionmakers to meet with claimants face-to-face, and thus have
                          access to more or different information. However, SSA studies have also
                          found that DDS and ALJ adjudicators often arrive at different conclusions
                          even when presented with the same evidence.9 Disability decisions require
                          difficult judgments, and adjudicators sometimes reach different
                          conclusions. Further, DDS and ALJ adjudicators use medical expertise

                          7
                          Social Security Disability: SSA Must Hold Itself Accountable for Continued Improvement in
                          Decision-Making (GAO/HEHS-97-102, Aug. 12, 1997).
                          8
                           On the basis of statutory requirements, OQA staff review 50 percent of all allowed DI claims and, if
                          they find errors, return these claims to the DDSs for correction before the determination becomes
                          final. These reviews—called pre-effectuation reviews—are conducted in order to avoid erroneously
                          awarded claims and to protect the DI trust fund. Also, SSA’s OQA staff randomly select a small
                          percentage of claims awarded or denied by the DDSs and use the results to compute the accuracy
                          rates of DDS offices.
                          9
                           SSA, Office of Program and Integrity Reviews, Findings of the Disability Hearings Quality Review
                          Process (Washington, D.C.: SSA, Sept. 1994) and Secretary of Health and Human Services,
                          Implementation of Section 304 (g) of Public Law 96-265, Social Security Disability Amendments of
                          1980 (the Bellmon Report) (Washington, D.C.: HHS, Jan. 1982).



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                          Chapter 1
                          Introduction




                          differently and rely on different documents for guidance when making
                          decisions. Finally, training has not been delivered consistently or
                          simultaneously to all groups of decisionmakers.

                          This high rate of allowances at the hearing level has raised questions about
                          the fairness, integrity, and cost of SSA’s disability program. In fiscal year
                          1998, the cost of making a determination at the DDS level was $547 per
                          case, while the cost of an ALJ decision was an additional $1,385. In general,
                          the costs of administering these disability programs reflect the demanding
                          nature of the process: in fiscal year 1998, SSA spent about $4.3 billion, or
                          almost 66 percent of its administrative budget, on the disability programs,
                          even though disability beneficiaries are only 21 percent of the agency’s
                          total number of beneficiaries.

                          Another long-recognized problem with SSA’s claims process is that many
                          claimants must wait a long time for their final decisions. Because of the
                          multiple levels and decision points in the process, a great deal of time
                          passes while a claimant’s file is passed from one employee or office to
                          another. Delays are also caused by the need to obtain extensive medical
                          evidence from health care providers to document the basis for disability.10
                          One SSA study conducted in 1993 showed that an average claimant waited
                          up to 155 days from initial contact with SSA until receiving an initial
                          determination notice, during which time 16 to 26 employees might have
                          handled the claim. Only 13 hours of these 155 days were spent on “task
                          time”—that is, time spent working directly on the case. Further, the study
                          found that it could take up to 550 days from initial contact to receipt of a
                          hearing decision, with only 32 hours of this time spent on task time. As a
                          result of these multiple handoffs and the general complexity of the
                          process, SSA believes claimants do not understand the process and have
                          had difficulty obtaining meaningful information about the status of their
                          claims.


The Mounting Disability   In the early 1990s, SSA’s problems with its disability claims process came to
Workload in the Early     the fore as the growing workload placed additional pressure on SSA’s
1990s Exacerbated         already inefficient process. The number of initial claims had been rising
                          steadily, but it increased dramatically between fiscal years 1991 and
Problems                  1993—from about 3 million to 3.9 million, or almost 32 percent.11
                          Moreover, future increases were expected. At the same time, SSA had to

                          10
                           According to SSA, these providers often do not understand the requirements, find the forms
                          confusing, or feel burdened by the requests for evidence.
                          11
                            This increase does not include applications for SSI by aged claimants.



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                           Introduction




                           manage this growing workload with staffing levels that had been falling
                           since the 1980s. As a result, SSA’s disability workload began to accumulate
                           during this period. Most dramatically, the number of pending hearings
                           almost doubled between 1991 and 1993—from 183,471 to 357,564.


                           To address these long-standing problems and dramatically improve
SSA’s Initial Efforts to   customer service, SSA embarked on a plan in 1994 to radically redesign its
Redesign the Process       disability claims process by completing 83 initiatives over 6 years. We
Moved Slowly               concluded in a 1996 report, however, that 2 years into the plan, SSA had yet
                           to achieve significant progress.12 SSA’s slow progress was due in part to the
                           overly ambitious nature of the redesign plan, the complexity of the
                           redesign initiatives, and inconsistent stakeholder support and cooperation.


SSA’s Initial Redesign     Concerned about the inefficiency of the disability claims process and its
Efforts                    effect on the quality of service to the public, SSA’s leadership decided in
                           1993 that the agency needed a strategy for radically improving the process.
                           SSA reviewed reengineering efforts and approaches in other organizations
                           and concluded that process reengineering was critical to achieving its
                           strategic objective of providing world-class service.13 SSA then created a
                           Disability Process Redesign Team composed of 18 SSA and state DDS
                           employees with varied experience and backgrounds and charged it with
                           fundamentally rethinking and redesigning SSA’s claims process from start
                           to finish.14 Consistent with commonly held reengineering principles, the
                           team collected extensive information on the process itself and options for
                           improving it.15 These efforts culminated in a redesign proposal that was
                           widely distributed throughout SSA and the state DDSs and to interested
                           public and private individuals and organizations to solicit comments,
                           concerns, and ideas for improvement. The proposal was also published in
                           the Federal Register, and a comment period elicited 6,000 written

                           12
                            SSA Disability Redesign: Focus Needed on Initiatives Most Crucial to Reducing Costs and Time
                           (GAO/HEHS-97-20, Dec. 20, 1996).
                           13
                             The agency decided to follow reengineering principles championed by Michael Hammer and others at
                           the time. Reengineering was, therefore, defined as the fundamental rethinking and radical redesigning
                           of business processes to bring about dramatic improvements in performance.
                           14
                            Several aspects of the process were designated to be outside the scope of this reengineering
                           project—for example, the use of an ALJ as the presiding officer at administrative hearings.
                           15
                             The team received briefings from staff in all components involved in the disability claims process,
                           visited and interviewed experts and interested parties both within and outside SSA, held focus group
                           sessions with claimants, studied the claims process in successful organizations to identify best
                           practices and process innovations, researched and documented the current process, and used
                           computer models to compare the current processes with possible alternatives.



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responses, which were considered as SSA finalized its initial redesign
proposal.

In September 1994, SSA issued its vision for fundamentally redesigning the
disability claims process. SSA’s vision included five objectives for the
redesigned process: (1) making the process “user-friendly,” (2) allowing
claims that should be allowed at the earliest possible level, (3) making the
disability decision as quickly as possible, (4) making the process efficient,
and (5) providing a satisfying work environment for employees. SSA’s
vision was based on more consistent guidance and training for all
adjudicators; an automated and simpler claim intake and appeal process; a
single, comprehensive quality review process; and a simplified method for
making disability decisions. From the claimant’s perspective, the
redesigned process was to offer a range of options for filing a claim;
provide a single point of contact; and have fewer decision points, as
shown in figure 1.2.




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Figure 1.2: SSA’s Proposed Disability Claims Process




                                          Page 22        GAO/HEHS-99-25 Disability Claims Process Redesign
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                          Introduction




                          SSA had high expectations for its proposed redesigned process. The agency
                          projected that the combined changes to the process would, by fiscal year
                          1997, result in a 25-percent improvement in productivity and customer
                          service over projected fiscal year 1994 levels, and a further 25 percent by
                          the end of fiscal year 2000—all without a decrease in decisional accuracy.
                          SSA did not expect the overall redesigned process to alter total benefits
                          paid to claimants, but it estimated that the changes would result in
                          administrative cost savings of $704 million through fiscal year 2001, and an
                          additional $305 million annually thereafter.

                          After putting forth its broad vision, SSA issued in November 1994 a more
                          detailed plan for developing, testing, and finally implementing proposed
                          disability process improvements. The plan originally included 83 initiatives
                          to be accomplished over 6 years. SSA recognized in its implementation plan
                          that most, if not all, of the proposed process changes were interdependent,
                          and that the development, testing, and implementation of related changes
                          would need to be properly sequenced. For example, SSA recognized that all
                          activities and associated benefits were dependent on improvements to its
                          computer system, which were not expected to be completed until the end
                          of the 6-year time frame.


Progress on the Initial   In 1996 and 1997, we issued several reports that raised concerns regarding
Redesign Plan Was Slow    SSA’s redesign effort. These concerns included, among other things, a lack
                          of progress and demonstrable results. For example, we reported that SSA
                          had not fully completed any of the 38 near-term initiatives it had hoped to
                          accomplish in the first 2 years.16 As a result, SSA did not have any concrete
                          results available to demonstrate the efficacy of its proposed initiatives.

                          SSA’s slow progress was due in part to its overly ambitious redesign plan
                          and the complexity of some of its redesign initiatives. We reported that SSA
                          did not follow best practices when it decided to take on a large number of
                          initiatives concurrently.17 Specifically, we reported that successful
                          reengineering calls for focusing on a small number of initiatives at one
                          time, whereas SSA decided to tackle 38 initiatives in the first 2 years of its
                          redesign effort. Moreover, some of these initiatives were large in scope
                          and very complex. For example, scheduled implementation of SSA’s large
                          and complicated initiative for redesigning its computer system was
                          delayed because of problems identified during testing.


                          16
                            GAO/HEHS-97-20, Dec. 20, 1996.
                          17
                            GAO/HEHS-97-20, Dec. 20, 1996.



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                      Some aspects of SSA’s redesign plan faced considerable opposition. As part
                      of its redesign effort, SSA had identified over 100 individual groups—both
                      internal and external to SSA—as having a stake in the process and whose
                      involvement was, in many cases, critical to the entire disability claims
                      process. These stakeholder groups—which included various SSA employee
                      unions and associations, state entities and organizations, congressional
                      committees, other federal agencies, and advocacy groups—had a wide
                      variety of views on SSA’s plan, and some opposed specific initiatives. For
                      example, SSA’s plan called for a new position—a disability claims manager
                      (DCM)—that would combine the duties of field office and DDS personnel
                      into one position. The DCM represented significant change to the current
                      process, and SSA faced numerous challenges in obtaining stakeholder
                      cooperation for this key initiative.

                      In light of these difficulties and in order to increase SSA’s chance of
                      success, we recommended in our December 1996 report that SSA reduce
                      the scope of its redesign effort by focusing on those initiatives considered
                      most crucial to improving the process and testing those initiatives
                      together, in an integrated fashion, at a few sites. In another 1996 report, we
                      recommended that, concurrent with the first phase of its DCM test, SSA test
                      alternatives that we believed were more feasible and compare their
                      relative costs and benefits with those of the DCM before deciding to
                      increase the number of DCM test positions.18 Later, we supported SSA’s
                      redesign efforts associated with its initiative to improve the consistency of
                      disability decision-making and recommended, among other things, that SSA
                      establish a performance goal for this key redesign initiative.19


                      As a result of our input, the overall lack of progress, and stakeholder
SSA Scaled Back Its   concerns, SSA reassessed its approach to redesign and issued a revised
Redesign Plan         plan in February 1997. The new plan focused on eight key initiatives, each
                      one intended to effect a major change to the system.20 The plan also
                      included updated tasks and milestones for each key initiative and
                      expanded the time frame for the entire redesign project from 6 to 9 years,



                      18
                       SSA Disability Redesign: More Testing Needed to Assess Feasibility of New Claim Manager Position
                      (GAO/HEHS-96-170, Sept. 27, 1996).
                      19
                        GAO/HEHS-97-102, Aug. 12, 1997.
                      20
                        Some initiatives in the original implementation plan were deferred. Still others, considered to be
                      good business practices, were “institutionalized”; that is, SSA shifted responsibility for implementing
                      them from the Disability Process Redesign Team to front-line components without further testing or
                      development.



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ending in 2003. The eight initiatives and their milestones are described in
figure 1.3.




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Page 27        GAO/HEHS-99-25 Disability Claims Process Redesign
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Figure 1.3: The Eight Initiatives and
Milestones Under the February 1997
Redesign Plan




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a
See app. I for a complete description of the eight subinitiatives.


As shown in figure 1.3, five of the eight initiatives had relatively near-term
deadlines—that is, before the end of fiscal year 1998—for completing a
key test or beginning implementation. Two of these initiatives involve



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testing new positions and, if test results warrant, implementing new
positions on a stand-alone basis—that is, independently of other, related
initiatives. One new position, the single decision maker (SDM), would
expand the DDS disability examiner’s authority to determine certain claims
without relying on the DDS physician; the SDM would instead use the
physician as a consultant on an as-needed basis. The SDM was expected to
make the initial determination process faster and more efficient by
eliminating handoffs to DDS physicians in those cases in which the
appropriate determination was clear.21 Another new position, the
adjudication officer (AO), would review cases that were appealed to the
hearing level. The AO was to help claimants understand the appeals
process and would have authority to grant disability benefits in cases in
which it was clear that the claim merited a fully favorable decision. In all
other cases, the AO was to make sure that all pertinent information was
included in the case file and was fully explained, thus facilitating its use by
the ALJ at the next level of appeal. By performing these tasks, the AO was
expected to improve customer service and make the appeals process
faster and more efficient.

A third near-term initiative is the full process model (FPM) test. The FPM
combines five proposed changes into a single test to investigate their
interactive effects on creating a more efficient process and better
customer service. The five tested changes are (1) creating the SDM position;
(2) creating the AO position; (3) establishing a new predecision interview,
in which the SDM would interview claimants when the evidence did not
support a fully favorable determination in order to obtain any additional
information before making the final determination; (4) eliminating the
reconsideration step; and (5) eliminating the Appeals Council step—that
is, removing the claimant’s option to request a review by the Appeals
Council of an ALJ decision.

The two other near-term initiatives—process unification and quality
assurance—are considered essential elements for achieving correct
decisions in the new disability claims process. The intent of the process
unification initiative was to achieve similar results on similar cases at all
stages of the process. To this end, SSA planned a number of activities,
including conducting ongoing training; clarifying policies; and developing
unified guidance, called a single presentation of policy, for making
disability decisions across all levels of the process. SSA also planned to


21
  Under both SSA’s original and revised plans, the responsibilities of two positions, the SDM and the
field office representative, would eventually be combined into a new position, the DCM. This position
would be the initial point of contact for claimants, as depicted in fig. 1.2.



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                     complete eight additional subinitiatives—all designed to help reduce
                     inconsistencies in decision-making between the DDS and ALJ levels.

                     SSA’s quality assurance initiative included near-term activities in two areas.
                     First, as part of each of the other major redesign initiatives, SSA planned to
                     develop and test “in-line” quality assurance approaches—such as training,
                     mentoring, and peer review—in order to build quality into the process
                     before decisions are made. Second, SSA planned to develop and test a
                     single “end-of-line” quality review mechanism that covered the entire
                     adjudicatory process from beginning to end and provided data on
                     problems or failures in a component’s in-line quality assurance process.
                     Appendix I provides additional information on SSA’s five near-term
                     redesign initiatives.


                     The Chairman of the House Subcommittee on Social Security, Committee
Objectives, Scope,   on Ways and Means, asked us to (1) assess SSA’s efforts to redesign its
and Methodology      disability claims process and (2) identify any actions needed to better
                     ensure future progress. We agreed to focus our work on the five initiatives
                     in SSA’s scaled-back plan that have relatively near-term dates for testing,
                     implementation, or both: the SDM, AO, FPM, process unification, and quality
                     assurance initiatives.

                     In assessing SSA’s redesign experience, we obtained documents from and
                     interviewed SSA officials responsible for planning, managing, and
                     evaluating redesign efforts. We visited several DDS and hearing office test
                     sites and interviewed test participants and managers in Richmond,
                     California; Brooklyn, New York; Raleigh, North Carolina; and Providence
                     and Warwick, Rhode Island. We also interviewed SSA regional officials with
                     responsibility for overseeing or coordinating redesign efforts within their
                     regions as well as representatives of nine major stakeholder groups to
                     obtain their views on SSA’s specific initiatives and general approach for
                     redesign. Finally, we reviewed the literature and interviewed experts on
                     business process reengineering.

                     We conducted our work between August 1997 and November 1998 in
                     accordance with generally accepted government auditing standards with
                     the following exception: we did not independently verify agency data,
                     including test data on redesign initiatives. We did obtain information from
                     SSA on steps it took to obtain and verify the test data and any problems
                     associated with them. We have noted our concerns regarding the validity
                     and reliability of the data in the report, where appropriate. We obtained



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comments from SSA officials responsible for the redesign tests, which we
have summarized in chapter 4.




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Progress Under Revised Plan Hindered by
Overly Ambitious Strategy and Problems
With Test Design
                        After 4 years of redesign efforts, SSA has made only limited progress
                        toward improving its disability claims process. While narrowing the focus
                        of its redesign plan has helped, SSA has continued to miss milestones and
                        has not clearly demonstrated that the proposed initiatives would
                        significantly improve the current process. As a result, SSA has had to defer
                        service improvements and reduce estimated savings. The agency’s limited
                        progress has resulted, in part, from SSA’s overly ambitious strategy for
                        testing and implementing its redesign initiatives. Conducting a number of
                        tests and other redesign activities simultaneously proved to be too difficult
                        to keep on track. In addition, problems with SSA’s approach to designing
                        and managing its tests of new initiatives contributed to marginal and
                        inconclusive test results and made it more difficult for SSA to discern how
                        a tested initiative would operate if implemented on a widespread basis.


                        SSA has made only limited progress in improving its disability claims
Progress Under          process, despite having fewer initiatives in its revised redesign plan than in
Revised Plan Has        the original plan. The agency has not met most of its adjusted milestones
Been Limited            for testing and implementing its five near-term initiatives.22 Moreover,
                        results from SSA’s stand-alone tests of two new decisionmaker positions,
                        the SDM and the AO, were not compelling and did not support broader
                        implementation. Therefore, SSA decided to wait for preliminary results of
                        its integrated test, which has in fact produced some promising results. In
                        addition, SSA has made progress under its process unification initiative,
                        such as providing training and clarifying policy, and agency officials
                        believe the actions taken thus far have had a positive effect on customer
                        service. Overall, however, as a result of missed milestones and
                        disappointing test results, SSA has deferred many other process
                        improvements and reduced its redesign expectations for administrative
                        savings.


Delays Continue Under   Even under its scaled-back plan, SSA continues to experience delays. As of
Revised Plan            October 1998, the agency was behind schedule on all five of the plan’s
                        near-term initiatives. After more than 3 years of testing, SSA had yet to
                        complete its test of the AO decisionmaker position and, for reasons
                        discussed in the next section, SSA has delayed its decision on whether to
                        implement both the SDM and AO decisionmaker positions. Also, SSA did not


                        22
                         While SSA has issued various testing and implementation schedules over time, this report compares
                        SSA’s progress against the dates for testing and implementing initiatives laid out in its February 1997
                        plan. In many cases, these revised dates provided the agency with additional time to complete its
                        planned activities.



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complete its assessment of the FPM test results in fiscal year 1998 as
scheduled.

SSA has completed some of its planned activities under its process
unification initiative, but it has missed other key implementation
deadlines. The agency has clarified key policies and, since 1996, has issued
policy instructions in the same format for all adjudicators. SSA has also
provided an unprecedented training program involving 15,000
decisionmakers and quality reviewers from key components of the
disability claims process and has adopted process unification principles
for its ongoing training program by providing the same training to all
adjudicators. However, SSA has experienced delays in several other
planned activities. For example, the agency is behind schedule on a test to
study the effect of requiring DDS adjudicators to more fully document the
rationale they used in making particular disability determinations. SSA
hopes this more detailed explanation will reduce decisional
inconsistencies.

SSA has begun work on its quality assurance initiative, but this effort has
also been delayed. As part of its tests of other redesign initiatives, SSA has
been exploring “in-line” quality assurance approaches—such as training
and mentoring—that are intended to build quality into the process before
decisions are made. SSA planned to institute these practices nationwide
when it implemented the other redesign initiatives; however, delays in
implementing the initiatives have delayed the widespread use of these
quality assurance practices. In addition, SSA is more than a year behind in
developing a single end-of-line review mechanism.23 The agency planned to
develop one quality standard for its end-of-line reviews in fiscal year 1997
and to test its use in fiscal year 1998. However, as of the end of fiscal year
1998, SSA had not reached internal agreement on what that single quality
review standard should be.

Key milestones and the status of SSA’s five near-term initiatives are
summarized in table 2.1. Additional information on SSA’s efforts to meet
near-term milestones—including specific actions taken to date and the
nature and extent of delays—can be found in appendix II.




23
 As discussed in ch. 1, SSA quality reviewers currently use different criteria for reviewing disability
decisions depending on the level at which the decision was made.



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Table 2.1: Milestones and Status for
Near-Term Initiatives                  Date for planned                            Milestones (through FY 1998)
                                       action                     Planned action                    Status as of October 1998
                                       SDM initiative
                                       4/1997                     Complete phase I test and         Completed 11/1997
                                                                  evaluation.
                                       FY 1998                    Begin implementation.             Not started
                                       FY 1998/1999               Complete phase II test.           Ongoing
                                       AO initiative
                                       FY 1997                    Complete test.                    Not completed
                                       1/1998                     Begin nationwide rollout.         Not started
                                       FPM initiative
                                       1/1998                     Complete test case selection.     Completed 1/1998
                                       FY 1998                    Complete assessment of four       Not completed
                                                                  of five process changes.a
                                       Process unification initiative
                                       FY 1997                    Complete training of 15,000       Completed FY 1997
                                                                  adjudicators and quality
                                                                  reviewers.
                                       FY 1997                    Implement eight subinitiatives.   Three completed (FY 1997 and
                                                                                                    1998); five not completed
                                       Quality assurance initiative
                                       FY 1997                    Develop end-of-line review        Not completed
                                                                  mechanism.
                                       FY 1997                    Develop in-line QA procedures Completed FY 1997
                                                                  to support testing of AO and
                                                                  SDM initiatives.
                                       FY 1998                    Test review mechanism.            Not started
                                       FY 1998                    Develop QA procedures to          Not completed
                                                                  support testing of FPM and
                                                                  DCM redesign initiatives.
                                       a
                                        The four changes being assessed under FPM are the SDM, AO, predecision interview, and
                                       elimination of reconsideration.

                                       Sources: SSA planning documents and officials.




Efficacy of Redesign                   As of October 1998, SSA had not clearly demonstrated that its proposed
Initiatives Has Not Yet                changes would achieve the desired improvements in the disability claims
Been Fully Demonstrated                process. SSA had expected the new SDM and AO positions to significantly
                                       improve the efficiency and processing time without sacrificing the quality
                                       of decision-making. However, results from the stand-alone tests of these
                                       positions have been largely disappointing and, in some cases,




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inconclusive. As a result, SSA decided to postpone implementation
decisions on these two initiatives until results from the agency’s integrated
FPM test were available.


As an example, SSA had hoped that permitting the SDM to make disability
determinations independently, using the DDS physician only on an
as-needed basis, would reduce the time spent on the determination
process. However, early test results revealed that the SDM position would,
on average, reduce by only 1 day the time claimants waited for an initial
determination and by only 3.6 minutes the time personnel actually spent
working on the case. Moreover, SDM determinations for certain impairment
categories were less accurate than under the current system. However,
early results from the test of the FPM initiative, where the SDM was tested
with other process changes, have shown more promise for the SDM. SSA’s
final evaluation of the FPM test for four of the five process changes will not
be available before October 1999.

Table 2.2 shows the final or most recent results of the tests of the three
initiatives. Appendix III contains more detailed information on test results
for these three initiatives.




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Table 2.2: Results of Tested Redesign
Initiatives                                                                                        Test results
                                        Redesign objectives          SDM                      AO                     FPM
                                        Allow claims that            Increased                Increase in            Increased allowances
                                        should be allowed at         allowances (by 1.2       allowances made        (by 4.7 percent) and
                                        the earliest possible        percent), but            earlier at the         improved accuracy
                                        level.                       reduced accuracy         appellate level was    (mostly denial
                                                                     (mostly denial           not demonstrated,      determinations) at the
                                                                     determinations) at       but improved           initial level, but
                                                                     the initial level.       accuracy of some       improvements at the
                                                                                              allowance              appellate level not
                                                                                              decisions was          demonstrated.
                                                                                              demonstrated.
                                        Make decisions as            Marginal                 Did not achieve        Improvement
                                        quickly as possible          improvement (1           targets;               demonstrated at the
                                        (that is, reduce days        day faster) at initial   improvement over       DDS level due to
                                        needed to make a final       level.                   the current            elimination of
                                        decision).                                            process not            reconsideration step,
                                                                                              demonstrated.          but extent of this
                                                                                                                     improvement has not
                                                                                                                     been determined.
                                                                                                                     Improvement at the
                                                                                                                     appellate level, or
                                                                                                                     overall, not
                                                                                                                     demonstrated.
                                        Make process more            Marginal                 Did not achieve        Improvement
                                        efficient (for example,      improvement              targets;               demonstrated at the
                                        by reducing task time,       (3.6-minute              improvement over       DDS level due to
                                        administrative costs, or     reduction in task        the current            elimination of
                                        both).                       time) at the initial     process not            reconsideration step,
                                                                     decision level.          demonstrated.          but extent of this
                                                                                                                     improvement has not
                                                                                                                     been determined.
                                                                                                                     Improvement at the
                                                                                                                     appellate level, or
                                                                                                                     overall, not
                                                                                                                     demonstrated.
                                        Make process                 Not tested.              Mixed results:         Customer input
                                        user-friendly.                                        customer input         neutral regarding
                                                                                              shifted from           predecision interview.
                                                                                              positive to neutral
                                                                                              over time.
                                        Provide a satisfying         Generally positive       Mixed results: test Generally positive for
                                        work environment for         for SDM test             participants were   SDM and AO test
                                        employees.                   participants.            more satisfied with participants.
                                                                                              AO position than
                                                                                              OHA staff were.
                                        Note: SDM test results were reported in Nov. 1997 and are final. AO test results are from different
                                        time periods and generally reflect the most recent and complete data available. FPM test results
                                        were reported in Oct. 1998 and are preliminary, because not all of the cases have been
                                        processed through the AO and ALJ levels.

                                        Source: SSA test evaluation documents.




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                                        SSA has not made enough progress on its two other near-term initiatives,
                                        process unification and quality assurance, to fully assess their efficacy.
                                        Although SSA has not completed many of its planned measures for these
                                        two initiatives, some of the early process unification actions may have had
                                        a positive effect on customer service. SSA reported that it has accurately
                                        paid benefits to approximately 90,000 people 500 days earlier in the
                                        process than otherwise might have been the case. While SSA generally did
                                        not test these process unification initiatives before implementing them,
                                        officials believe that the increase in allowances made earlier in the process
                                        is in large part due to the agency’s process unification efforts. At the same
                                        time, these officials noted that other factors can influence allowance rates.
                                        Therefore, without conducting carefully structured tests, it is difficult to
                                        isolate the effects of actions taken by the agency.


Delays and Disappointing                As a result of the delays and disappointing test results, SSA has decreased
Test Results Led to                     projected administrative savings and postponed the anticipated date for
Decreased Expectations                  realizing any savings. In 1997, SSA projected savings of 12,086 staff-years
                                        for fiscal years 1998 through 2002, resulting from implementing several
for Redesign                            process changes. SSA planned to use some of these staff-year savings to
                                        help with other workloads. Instead, in 1998, SSA both decreased its savings
                                        projections and postponed the date it expected to realize savings, which
                                        changed its projected staff-year savings to 7,207 through fiscal year 2003.
                                        Table 2.3 shows how SSA’s projected staff-year savings changed from its
                                        1998 to its 1999 President’s budget.

Table 2.3: Projected Redesign Savings
in Staff-Years for 1998 and 1999                                                  Staff-year savings
President’s Budgets                                                     1998 President’s        1999 President’s       Difference (1998
                                        Fiscal year                              budget                  budget                to 1999)
                                        1998                                           (861)a                 (654)                      207
                                        1999                                          1,684                   (741)                (2,425)
                                        2000                                          3,551                  1,850                 (1,701)
                                        2001                                          3,683                  2,236                 (1,447)
                                        2002                                          4,029                  2,187                 (1,842)
                                                                                            b
                                        2003                                                                 2,329                  2,329
                                        Total                                       12,086                   7,207                 (4,879)
                                        a
                                        Numbers in parentheses represent additional staff-years needed.
                                        b
                                         The 1998 President’s budget provided projected redesign savings for fiscal years 1998 through
                                        2002.

                                        Source: SSA budget documents.




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                           More importantly, test results have not provided a compelling case for SSA
                           to make these changes and thereby improve customer service as quickly
                           as it had hoped. Overall processing times have not significantly changed
                           since the beginning of redesign; that is, while processing times have
                           decreased at the initial level, they have increased at the ALJ level.24 On the
                           other hand, more allowances are being made earlier in the process, and
                           SSA attributes this to its process unification efforts, which were planned to
                           improve customer service without significantly increasing the overall cost
                           of providing benefits.


                           SSA’s difficulties in achieving appreciable improvements in its disability
Limited Progress Is        claims process have been caused, in part, by the scope of SSA’s revised
Related to SSA’s           plan and the agency’s strategy for testing its proposed process changes.
Testing and                Much like its original plan, SSA’s February 1997 plan was designed to
                           achieve quick and major improvements on many fronts simultaneously in
Implementation             response to the pressing problems with the claims process. However, as
Strategy                   with the original plan, SSA’s revised plan proved to be too ambitious and
                           difficult to manage within established time frames. Moreover, SSA’s
                           decision to conduct stand-alone tests contributed to marginal SDM and AO
                           test results, and weaknesses in how SSA designed and managed its AO test
                           contributed to unreliable AO test results. Finally, difficulties SSA
                           experienced with testing changes in an operational environment raised
                           questions about how a tested initiative would operate if implemented.


SSA’s Revised Plan Still   Like its original plan, SSA’s revised plan was designed to provide a number
Proved Too Ambitious       of near-term, visible improvements, while also laying the foundation for
                           long-term changes. To accomplish this, SSA acted to make progress on a
                           number of fronts simultaneously. For example, hoping to alleviate growing
                           workloads at the appellate level, SSA began testing and planned to
                           implement the AO position independently of other initiatives, even though
                           certain changes that could support the position, such as the redesigned
                           computer system, were still being developed. SSA also began testing and
                           planned to implement the SDM position by itself because SSA believed it
                           could achieve quick and decisive improvements through this position. The
                           agency believed these quick improvements would build momentum for
                           redesign and increase stakeholder support. While the AO and SDM tests
                           were still ongoing, SSA began its FPM test, which investigated the interactive

                           24
                            Between fiscal years 1994 and 1998, processing time decreased at the DDS level from 86.9 and 109.6
                           days (for the DI and SSI programs, respectively) to 72.6 and 75.4 days and increased at the ALJ level,
                           where data for the two programs are combined, from 305 to 341 days. SSA does not currently measure
                           overall processing time.



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effects of five process changes together: the new SDM and AO
decisionmaker positions, the predecision interview with the claimant,
eliminating the reconsideration step, and eliminating the claimant’s option
to request a review by the Appeals Council. In addition, SSA began testing
and developing subinitiatives under its process unification, quality
assurance, and the three remaining longer-term initiatives. Given the
urgent need to fix the process, SSA considered this ambitious approach
appropriate as well as consistent with reengineering theory. At that time,
reengineering theory generally called for short time lines for testing and
implementing major process changes.

In addition to this multifaceted approach, SSA decided for several reasons
to conduct its tests of the proposed redesign changes at many sites and to
involve numerous participants. First, officials believed this approach
would build trust among employees and other stakeholders, who feared
that redesign would negatively affect them. Second, SSA believed it needed
to use a large number of test cases to produce statistically valid
information in key areas. For example, SSA wanted sufficient data to
determine the impact of redesign initiatives on the accuracy of SDM
determinations in each major category of impairment. Finally, SSA wanted
to have enough data to demonstrate the impact that changes to the
process would have on benefit outlays. SSA officials told us that Office of
Management and Budget officials were concerned that the proposed
changes to the claims process could result in large, unanticipated
increases in benefit outlays. Because of the size of the disability programs,
even a small increase in the percentage of claimants awarded benefits can
result in a significant increase in program costs. For example, SSA officials
have roughly estimated that a 1-percent increase in allowances in the
disability programs for a period of 10 years could result in an increase of
$11 billion in the total benefits paid to beneficiaries—that is, program
costs—during that same period.

As a result of SSA’s decision to conduct many tests simultaneously, at one
point SSA was testing four near-term initiatives and training test
participants for another, longer-term initiative, the DCM. These tests were
being conducted at more than 100 sites and involved over 1,000
participants. Table 2.4 shows SSA’s testing schedule, including numbers of
sites and participants.




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Table 2.4: SSA’s Test Schedule and
Number of Sites and Participants                              Time period
                                     Initiative and         (in fiscal years)            Number         Number of participants
                                     phase                1996       1997      1998      of sites     Decisionmakers Clerical staff
                                     SDM, phase I             X          X                      10                    93               12
                                     SDM, phase II                       X         X            30                  337                44
                                     AO                       X          X         X        23-26                   191                110
                                     FPM                                 X         X            11                  134                22
                                     Process
                                     unification,
                                     expanded
                                     rationales                                    X            10                  209                93a
                                     DCM, phase I                                  X            33                  213                75
                                     Total                    2          4          5    117-120                  1,177                263
                                     a
                                     The amount of clerical staff time devoted to this test varied.

                                     Note: While some tests were conducted in the same fiscal year, the exact starting and ending
                                     dates of each test varied. The number of test sites and participants also varied over time. The
                                     number of participants represents SSA’s best estimate and does not include indirect support
                                     staff, such as supervisors and case consultants. The expanded rationales test also included
                                     physician and supervisor participants, which are not shown in the table. According to SSA, test
                                     participants were doing work comparable to what they would have been doing if they had not
                                     been in a test.

                                     Source: GAO analysis of data provided by SSA officials.



                                     Despite SSA’s good intentions, its scaled-back plan still proved to be too
                                     ambitious, and the agency had difficulty keeping it on track. Conducting
                                     several large tests that overlapped in time consumed a great deal of
                                     management attention and resources. In addition to developing the test
                                     plan, implementing and monitoring the test, and collecting and analyzing
                                     data, each test involved negotiating and coordinating activities with test
                                     sites, test participants, employee unions, and other stakeholders. This
                                     large array of testing and evaluation activities made it difficult for SSA to
                                     stay on schedule and simultaneously maintain sufficient focus on other
                                     redesign efforts—such as process unification and quality assurance.

                                     Unrealistic milestones for specific initiatives also contributed to missed
                                     deadlines. For example, SSA allowed itself only 17 months to conduct the
                                     FPM test and assess the results, even though it can take up to 21 months for
                                     a test case to make its way through the entire disability claims process. In
                                     addition, SSA’s milestones for the eight process unification subinitiatives
                                     were probably too ambitious (they did not include sufficient time to
                                     conduct needed tests or make procedural changes), especially given the
                                     overall magnitude of SSA’s redesign efforts and the complexity of the



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                          problems these subinitiatives are intended to address. Moreover, some of
                          the factors that contributed to differences between decisions made by the
                          DDS adjudicators and the ALJs have evolved over a number of years and
                          involve sensitive legal issues.

                          Finally, other competing workloads placed considerable strain on SSA’s
                          ability to manage the overall redesign effort. Besides the redesign
                          initiatives, disability program officials and staff had to cope with
                          additional unanticipated duties and responsibilities. For example,
                          legislation that reformed the nation’s welfare program in 1996 also
                          required that children receiving benefits under the SSI program meet a
                          stricter definition of disability than had been applied in the past. As a
                          result, during fiscal year 1997, when many redesign initiatives were being
                          tested, SSA’s disability staff also had to plan and execute a review of the
                          eligibility of over 288,000 children receiving SSI benefits.


Decision to Conduct       SSA’s decision to test its AO and SDM initiatives independently from related
Stand-Alone Tests         initiatives contributed to the disappointing test results. SSA conducted
Contributed to Marginal   these stand-alone tests because it wanted to institute these two positions
                          quickly. However, as initially envisioned, these initiatives were expected
Results                   to result in process improvements and administrative savings in concert
                          with other initiatives. Tested alone, these positions did not demonstrate
                          potential for significantly improving the process.

                          To illustrate, at the very early stages of its redesign effort, SSA developed
                          expectations for AO productivity assuming that the AO would be operating
                          in a completely redesigned environment. However, the AO test did not
                          include supporting initiatives, such as a redesigned computer system, and,
                          consequently, AO productivity was far below SSA’s expectations. Similarly,
                          the SDM was expected to be operating in a redesigned environment that
                          included, among other changes, the new responsibility of conducting a
                          predecision interview with claimants. The results of the stand-alone SDM
                          test indicated a decline in the accuracy of initial determinations; on the
                          other hand, the integrated FPM test indicated that adding the predecision
                          interview to the SDM’s responsibilities may improve accuracy, as compared
                          with the current process.25 This improved accuracy may have resulted
                          because SDMs collected more or better data during the predecision
                          interview or because SDMs performed their job more thoroughly in
                          preparation for a meeting with the claimant. While SSA could not have

                          25
                            The AO position continued to perform poorly under the integrated FPM test, which did not include
                          the redesigned computer system either.



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                            predicted the precise impact of not including a particular process change
                            in its stand-alone tests, the agency understood from the outset of its
                            redesign effort that proposed changes were closely linked and that they
                            depended on each other—especially on computer supports—to
                            dramatically improve the process.

                            Overall, the decision to conduct stand-alone tests caused delays, did not
                            result in the efficient use of resources, and did not achieve the agency’s
                            goal of quickly building trust and enthusiasm among those who resisted
                            the changes. For example, despite the improved performance of the SDM in
                            the FPM test, pockets of opposition to the SDM, particularly among groups
                            representing some DDS physicians, still existed. While groups that perceive
                            themselves to be negatively affected by change may not be swayed on the
                            basis of clear and positive test results, marginal or inconclusive results
                            provide detractors with a firmer basis to oppose change.


Test Design and             The AO test suffered from a number of design and management flaws that
Management Problems         raised questions about the reliability of certain test results. For example,
Contributed to Unreliable   to ensure that AO sites were staffed with the best employees possible, SSA
                            selected test participants from a national pool and temporarily relocated
AO Test Results             them to their preferred locations. Since the test lasted some time, many of
                            these employees decided to return to their home units, and SSA had to
                            replace them with new, less experienced employees. Replacing test
                            participants created instability in the test environment that negatively
                            affected the test results. In addition, SSA did not arrange for AOs to have
                            necessary supports (such as computers, clerical assistance, supervisors, or
                            feedback from ALJs), which contributed to poor results. Consequently, SSA
                            took steps to refine the AO test and provided additional supports, including
                            training and feedback, to test participants. Accuracy and productivity
                            subsequently improved, although productivity has not improved to the
                            level originally expected by SSA.

                            Despite these improvements, other problems with how the test cases were
                            handled made it difficult for SSA to assess the efficacy of the AO position.
                            Under the proposed process, an AO cannot deny a claim, so, when an AO
                            does not allow a case, the AO is then required to make sure that all
                            pertinent information is properly arranged in the case file and to prepare a
                            thorough explanation of all medical evidence so that the case can move
                            expeditiously to an ALJ hearing. To fairly assess the impact that the AO had
                            on processing time at the appellate level, SSA planned to compare cases
                            prepared by AOs with a small group of control cases in which no AO had



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                             been involved. The two groups were to be handled in a comparable
                             manner; for example, both sets of cases were to be promptly scheduled for
                             hearings. However, in many instances OHA staff did not follow instructions
                             concerning how the cases were to be handled. Since the number of control
                             cases was relatively small, when the improperly handled cases were
                             excluded from the analysis, the number of useable control cases was too
                             small to permit a valid comparison. In addition, SSA did not design its test
                             to determine the overall impact of the AO-prepared cases on the quality of
                             decisions at the next appellate level.26 Without reliable data on its control
                             group or sufficient data on the impact on quality, SSA could not fully assess
                             the effect of the AO position on the claims process.


Valid Tests Were Difficult   SSA’s other tests—of the SDM and FPM—suffered from design problems that
to Conduct in SSA’s          stemmed largely from difficulties with trying to conduct a test in a “real
Operational Environment      world” operational environment. While the SDM and FPM tests provided
                             information and insight into the efficacy of these two concepts,
                             operational limitations made it difficult for SSA to conduct a statistically
                             valid test and conclusively demonstrate how a tested initiative would
                             operate if implemented.

                             To a lesser extent than with the AO test, SSA’s test of its SDM initiative also
                             provided incomplete information and limited assurance that the initiative
                             would perform as tested. For example, under the current process,
                             50 percent of DDS allowance determinations are reviewed by regional
                             quality assurance staff, and errors are returned to the adjudicator for
                             correction. However, under the SDM stand-alone test, 100 percent of all
                             determinations—allowances and denials—were reviewed by SSA quality
                             assurance staff and returned for correction. As a result, a large number of
                             cases were returned to SDM adjudicators even though, on average, there
                             was not a large difference in error rates between the SDM and the current
                             process. SDM test participants and other DDS officials told us that this
                             100-percent review probably caused test participants to rely more heavily
                             on agency physicians than they might have otherwise. In addition, because
                             SSA does not have administrative control over state DDS programs—which
                             are under the direction of state governors—the agency was not able to
                             select a strictly random group of test sites or participants; nevertheless,
                             SSA officials believe that the participant selection methods they used came
                             as close to random as possible, given the present constraints. Moreover,

                             26
                               In cases in which the AO had developed the case but could not allow the claim, the AO would certify
                             that it was fully developed and ready for hearing. Although SSA surveyed ALJ views on the quality of
                             AO certifications, SSA did not assess the overall impact of AO decisions and certifications on the
                             quality of appellate decisions.



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because workloads and production capacity varied at the sites, SSA could
not dictate the number of test cases at each site and was therefore unable
to distribute the test caseload in a representative manner. Finally, the test
was not initially designed to collect data on test cases as they moved
beyond the initial determination level to the appeals level—data that
would have helped determine the impact of the SDM on overall appeal
rates, processing time, efficiency, and quality of determinations. SSA has
since modified its approach to collect some of this information.

In designing the FPM test, SSA overcame some, but not all, of the problems
experienced with previous tests. For example, SSA was able to persuade
states that it believed were nationally representative, on the basis of an
analysis of state characteristics, to participate in the test. SSA also decided
to track cases through the entire disability claims process, rather than
through the initial determination level only. To further ensure a sound test
design, SSA hired a consulting firm to independently evaluate the design of
the test. While the firm found the test design to be basically sound, it made
several suggestions to improve the test and better ensure stakeholder
confidence in the validity of the test results. SSA was not able to make all
the recommended changes, however. For example, because of state
union-management agreements, SSA was unable to obtain data on the
qualifications of employees to ensure that test participants were
representative of all employees, as recommended by the consultant. In
addition, contrary to the consultant’s recommendation, SSA did not
mitigate the impact of the 100-percent review of SDM determinations for
quality, which may lead to some of the same problems experienced with
the SDM stand-alone test.




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                    While SSA has experienced, and continues to face, many difficulties with its
                    redesign effort, the agency can still take actions to increase its chances for
                    future progress. As SSA continues its redesign work, it has an opportunity
                    to apply lessons learned from its 4 years of reengineering experience, as
                    well as from other commonly accepted reengineering and management
                    best practices. SSA has already begun to apply some lessons it has learned,
                    such as strengthening executive oversight of its redesign effort. However,
                    the extraordinary difficulty of the task at hand and the performance
                    shortcomings previously experienced suggest that these steps might not
                    be enough. Other fundamental changes in SSA’s approach will probably be
                    necessary. In particular, although more focused than its original plan, SSA’s
                    current redesign plan is still very large in scope and difficult to manage,
                    and the successful completion of key initiatives will likely require that SSA
                    scale back its near-term efforts even further. SSA can also modify its testing
                    approach to avoid pitfalls encountered in the past. As it moves to
                    implement changes that appeared efficacious in a testing environment, SSA
                    can ensure that it has adequate performance measures and goals to assess
                    changes to the process and to provide early warning of problems as well
                    as adequate quality assurance processes to guard against unanticipated
                    results.


                    The need for SSA to improve its disability claims process continues today.
Many Steps Remain   SSA’s large pending workload persists, especially at the hearing level. The
Under the Revised   pending workload at the hearing level grew from 357,564 in 1993 to about
Plan                483,712 in 1997. In addition, the average length of time it took to receive a
                    hearing decision upon appeal also grew in the 1990s—from 238 days in
                    1993 to 386 in 1997. The dramatic growth in initial applications for
                    disability benefits that contributed to these increases and exacerbated
                    long-standing problems has ended. In fact, in recent years the number of
                    individuals applying for disability benefits has declined, which has in turn
                    helped reduce the 1998 appellate backlog to 384,313 and appellate
                    processing time to 371 days. However, no one knows how long this decline
                    will last. An economic downturn could increase unemployment and drive
                    up demand for disability benefits, and the number of applications, at any
                    time. Moreover, the number of applications for disability benefits can be
                    dramatically affected by court cases and changes in the law, such as the
                    possibility of congressional action to increase the retirement age. Finally,
                    SSA expects claims to increase again beginning in 2000, when the eligibility
                    age for full Social Security retirement benefits changes from 65 to 67
                    years, and more dramatically by 2010, as the baby boom generation
                    approaches its disability-prone years. Taken together, present and future



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workloads highlight the continuing pressure on SSA to move expeditiously
to improve its disability claims process.

Many steps remain to be taken under the agency’s February 1997 redesign
plan. As of October 1998, the agency was continuing to test the AO, SDM,
and FPM initiatives.27 Should SSA decide to implement any of these positions
or process changes, it will face innumerable steps ahead. For example, SSA
will need to seek changes in the law or develop new regulations for many
of the changes it is considering, a time-consuming and multistep process.
For some of the initiatives, such as the SDM, SSA will also need to provide
for training, facilities, equipment, and various clerical and managerial
supports. In some cases, SSA will need to develop plans for implementing
changes in phases, such as installing new positions at a small number of
sites each month. In addition, SSA must guard against unwanted effects
that could result from making changes to one part of the process without
adequately addressing their impact upon other parts. For example, should
SSA decide to eliminate the reconsideration step, SSA will need to be aware
of the possibility of, and take steps to guard against, the development of
more backlogs at OHA caused by the speedier movement of cases through
the process to that level.

While SSA has made important progress, much remains to be accomplished
on two other important near-term initiatives: process unification and
quality assurance. For example, under its process unification initiative, SSA
intends to review and revise established regulations to develop its planned
single presentation of policy—a time-consuming task to which SSA has not
yet been able to devote adequate resources. Also under process
unification, SSA intends to continue providing systematic ongoing training
to adjudicators at all decision-making levels and to continue work on
several remaining subinitiatives. Under its quality assurance initiative, SSA
still needs to ensure that adequate in-line quality assurance procedures are
in place for any changes it makes to the process. SSA is also still trying to
reach an agreement on a single “end-of-line” quality review mechanism for
the whole disability claims process. Once agreement is reached, SSA will
need to test this mechanism. As discussed in chapter 2, developing and
testing initiatives can involve a substantial amount of time and effort and
require the cooperation of numerous stakeholders.

If SSA continues its redesign effort as planned, the agency has even more
matters to contend with for its three longer-term initiatives: the DCM; a

27
 As discussed in chapter 2, stand-alone testing for the AO has been extended to work on improving
upon initial disappointing results; stand-alone testing continues for the SDM as a step toward
implementation. In addition, evaluation of FPM test results has not been completed.



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                                     simplified methodology for making disability decisions; and the
                                     Redesigned Disability System (RDS), SSA’s new disability computer system.
                                     All three involve major operational changes and are the furthest from
                                     implementation. The DCM combines the duties of SSA field office personnel
                                     and state disability examiners and will require legislative changes before it
                                     can be implemented. As of October 1998, SSA was still conducting the first
                                     of three lengthy test phases that precede full implementation of the DCM.28
                                     The simplified decision methodology initiative is still in the developmental
                                     stage, and much more research needs to be accomplished before SSA can
                                     begin laboratory testing. Finally, SSA is experiencing a number of problems
                                     with its proposed RDS, a system that is viewed as key to many of the
                                     planned process efficiencies. In January 1998, we reported that software
                                     development problems had delayed the scheduled implementation of RDS
                                     by more than 2 years.29 Later in 1998, we reported that SSA had
                                     experienced problems and delays in its RDS pilot effort initiated in August
                                     1997 to assess the performance, costs, and benefits of RDS.30 For example,
                                     systems officials stated that, using RDS, the reported productivity of claims
                                     representatives in the SSA field office dropped. Systems officials also stated
                                     that because the RDS software had not performed as anticipated, SSA had
                                     engaged an independent contractor to evaluate and recommend options
                                     for proceeding with RDS. This effort is expected to further delay SSA’s
                                     national rollout of the new disability computer system. See table 3.1 for
                                     the steps that have yet to be taken under the revised plan.

Table 3.1: Steps Remaining for the
Eight Initiatives in SSA’s           Initiative               Steps remaining
February 1997 Plan                   SDM                      Complete test and evaluation, prepare cost-benefit analysis, and
                                                              make go/no go decision (also see FPM). If warranted, prepare a
                                                              notice of proposed rulemaking (NPRM) and final regulations and
                                                              conduct phased rollout (including training, facilities, equipment,
                                                              and other support). To extend SDM to all cases, make legislative
                                                              changes.
                                     AO                       Complete test and evaluation, prepare cost-benefit analysis, and
                                                              make go/no go decision (also see FPM). If warranted, prepare
                                                              NPRM and final regulations; make organizational decisions; and
                                                              conduct phased rollout, including training, facilities, equipment,
                                                              and other support.
                                                                                                                              (continued)


                                     28
                                      The three phases are a preparation phase involving classroom and on-the-job training (Nov. 1997 to
                                     June 1999); a phase to formally test the concept without the support of RDS and the simplified
                                     decision methodology (June 1999 to Oct. 2000); and a preimplementation phase to assess the impact of
                                     implementation with RDS and the simplified decision methodology supports (Oct. 2000 to Oct. 2002).
                                     29
                                      Social Security Administration: Software Development Process Improvements Started but Work
                                     Remains (GAO/AIMD-98-39, Jan. 28, 1998).
                                     30
                                      Social Security Administration: Technical Performance Challenges Threaten Progress of
                                     Modernization (GAO/AIMD-98-136, June 19, 1998).
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Initiative            Steps remaining
FPM                   For AO, SDM, PDI, and eliminating reconsideration, complete test
                      and evaluation and make go/no go decisions. If warranted,
                      prepare NPRM and final regulations for eliminating reconsideration
                      and conduct phased rollout of PDI (including training and other
                      support) and elimination of reconsideration. Complete test and
                      evaluation for eliminating Appeals Council review. (Also see AO
                      and SDM.)
Process unification   For single presentation of policy, begin consolidating established
                      policies and regulations. For training, continue to develop and
                      provide ongoing training to support process unification. For four
                      pending subinitiatives: (1) clarify and finalize policies and
                      procedures for weighing treating source opinion; (2) complete
                      testing and implement expanded rationales; (3) draft final rules for
                      weight of DDS medical consultant opinion; and (4) clarify and
                      finalize procedures for assessing residual functional capacity for
                      less than the full range of sedentary work. For two subinitiatives
                      that SSA has to some extent implemented, the following steps
                      remain: (1) continue oversight of new procedure for quality review
                      of hearing decisions and (2) monitor new acquiescence action
                      plan.
Quality assurance     For in-line QA, complete development and implement in-line QA
                      processes for redesign initiatives. For end-of-line QA, reach
                      agreement on a single standard for an end-of-line review
                      mechanism and test and evaluate review mechanism. If warranted,
                      implement end-of-line quality review mechanism.
Simplified decision   Complete development and studies of new methodology, conduct
methodology           lab tests of functional assessment instruments, integrate various
                      research projects into a single paradigm for disability
                      decision-making purposes, and establish “methodology lab”
                      studies to determine the administrative impact of
                      recommendations on the results of disability decisions. If
                      warranted, publish NPRM and final rules and implement new
                      decision methodology.
RDS                   Contingent on results of consultant review, continue piloting and
                      enhancing functionality of RDS to support redesign vision,
                      incorporate disability applications and forms into SSA’s expanded
                      Internet capabilities for use with third parties, identify additional
                      opportunities for electronic medical evidence, and roll out RDS.
DCM                   Complete first phase of testing. Prepare and develop an evaluation
                      plan for second, formal test phase. Make go/no go decision on
                      whether to enter into a third or preimplementation phase of testing
                      with RDS and decision methodology supports. If warranted,
                      incorporate RDS and decision support, prepare final regulations,
                      and make any necessary legislative changes.

Source: SSA.



Even if SSA successfully tests and implements all of the redesign initiatives
included in the February 1997 updated plan, it is unlikely that all of the



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                         problems that gave rise to SSA’s redesign effort in the first place will be
                         satisfactorily resolved. As we have noted, test results to date show only
                         modest improvements in operations, and budgetary savings will not be as
                         large as originally anticipated. Moreover, except for the AO initiative, most
                         of SSA’s redesign efforts to date are focused on improving the process at
                         the initial determination level, leaving problems at the ALJ level largely
                         unresolved. These problems include length of processing times and the
                         large number of backlogged cases at hearing offices, which are among the
                         most pressing problems that SSA faces with the claims process and which
                         require additional solutions.


                         SSA has already taken actions to revise its approach and apply some
SSA’s Actions to         lessons learned from its early efforts with redesign, including formalizing
Revise Its Approach      high-level executive oversight, working to improve test design, and
Have Been Helpful but    rethinking its strategy for communicating with stakeholders. However,
                         these efforts may not be enough to ensure success. Because of the unique
Insufficient to Ensure   barriers to change inherent in governmental operations, redesign is
Success                  particularly challenging for government agencies, and SSA may need to
                         consider additional changes in its approach to improve its chances of
                         making tangible future progress.

                         In its 1997 plan, SSA established a new management structure to oversee
                         redesign efforts in order to make its senior managers more accountable
                         and involved. Specifically, SSA centralized authority for redesign efforts by
                         creating an Executive Committee for Disability Redesign, chaired by the
                         principal deputy commissioner. Such high-level oversight is critical, given
                         the organizational complexity of the disability claims process. It is also
                         consistent with government and industry best practices, which provide
                         that the individual in charge of a reengineering effort be responsible for
                         the entire process and its performance.31 Strengthening executive
                         oversight has already had a positive effect on the progress of redesign. For
                         example, by promoting timely processing of cases for the FPM test, the
                         Executive Committee has helped to expedite analysis of test results. SSA
                         officials told us they believe that Executive Committee oversight has
                         helped provide a new momentum by working to ensure that activities stay
                         on schedule and that critical policy decisions receive sufficient and early
                         high-level attention.




                         31
                          Michael Hammer and Steven A. Stanton, “The Reengineering Revolution,” Government Executive
                         (Sept. 1995), p. 7A.



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SSA is also applying some valuable lessons learned from conducting the AO
test. Because the AO test results were inconclusive as a result of problems
with the design and management of the test, SSA has taken greater care
with the design and management of subsequent tests. For example, SSA
enlisted the services of an independent consulting firm to review its
proposals for both the FPM and DCM tests. Also, for the DCM test, which is
similar to the AO test in that it is lengthy and involves testing the efficacy of
a new position, SSA is taking steps to ensure test participants receive
adequate training and support, and that the testing environment remains
stable.

SSA officials told us they have also learned a great deal about balancing the
need for open communication with stakeholders with the need to keep
initiatives on track and make tough and sometimes unpopular decisions.
Effective stakeholder communication is an important area according to
reengineering experts. Its importance was recently noted in a private
sector survey of 102 private and government organizations that found that
sending inconsistent signals and not communicating enough with
stakeholders were among the five most serious mistakes top management
sponsors made during a major change.32 However, communicating with
stakeholders is different from obtaining consensus on proposed changes, a
practice that can sometimes lead to management paralysis. The proposed
changes in SSA’s redesign plan affect most aspects of the disability claims
process, and it is unlikely that the agency can achieve across-the-board
support from all parties affected by the change. Early on in its redesign
efforts, SSA leadership took extraordinary steps to reach out to key
stakeholders to build acceptance and consensus for its redesign initiatives.
SSA officials told us they now understand that they cannot expect to satisfy
all stakeholders and believe they lost valuable momentum early in the
redesign effort trying to do so. Agency officials have continued with their
efforts to communicate with various stakeholder groups, however, and our
review showed that, although stakeholders do not unanimously support all
of SSA’s redesign initiatives, many of the stakeholders we contacted were
satisfied with the level of communication from SSA.

Nevertheless, these positive efforts and lessons learned may prove
insufficient for achieving appreciable progress. Even with strengthened
executive oversight since February 1997, milestones have continued to
slip. Compelling test results and improvements to the disability claims
process have also proven elusive. With so much remaining to be
accomplished, and many barriers to overcome, SSA will need to take

32
  ProSci, Best Practices Report for Managing Change (Loveland, Colo.: ProSci, 1998).



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                   additional steps to keep its redesign effort on track and achieve further
                   improvements to the disability claims process.

                   SSA is not the only government agency that has had trouble reengineering
                   its operations. According to reengineering experts, many federal, state,
                   and local agencies have failed in their reengineering efforts. One reason
                   for this high degree of failure is the unique environment of the government
                   workplace, which adds considerable complexity. For example, the
                   flexibility to reengineer a process is often constrained by laws or
                   regulations that require that processes follow certain procedures—such as
                   the requirement, in some cases, that a physician participate in disability
                   cases involving children or mental impairments. Also, government
                   agencies, unlike their private sector counterparts, cannot choose their
                   customers and stakeholders. Agencies must serve multiple customers and
                   stakeholders, who often have competing interests. In addition, following
                   government procedures, such as drafting and issuing new regulations and
                   complying with civil service rules, makes it difficult to implement changes
                   at the quick pace often considered vital for successful reengineering
                   efforts. Finally, public agencies must also cope with frequent leadership
                   turnover and changes in the public policy agenda. For example, as
                   discussed in chapter 2, SSA faced several policy changes during the last few
                   years, such as the need to redetermine the eligibility of thousands of
                   children receiving SSI benefits, at the same time that the agency was trying
                   to conduct large tests of process changes.


                   According to experts in the field, reengineering requires sharp focus and
Sharper Focus Is   enormous discipline, and organizations are more likely to succeed if they
Needed on Most     concentrate their efforts on a small number of initiatives at any given time.
Critical Areas     One way of focusing a reengineering effort is by prioritizing process
                   improvement objectives and identifying those initiatives most likely to
                   achieve those objectives. Basic reengineering precepts suggest that an
                   agency should decide which process or major subprocess should have
                   highest priority for agency action. This decision should be based on
                   selecting process changes that (1) have strong links to the agency’s
                   mission and would have a high impact on customers, (2) are likely to
                   provide a large return on invested resources, (3) enjoy a strong consensus,
                   (4) are feasible given the available resources and infrastructure, or (5) can
                   be achieved within a short period of time in order to gain experience in
                   reengineering.




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SSA’s own experience strongly underscores the need for focus. As
discussed in chapter 1, SSA realized early on that it could not effectively
manage the large number of initiatives in its original redesign plan within
established time frames, and later that scaling back its plan in
February 1997 was a step in the right direction. SSA’s experience was not
unlike that of others. Early reengineering theory called for large
systemwide changes over a short period of time; but experts now suggest
that achieving significant change takes longer and costs more than
generally believed several years ago. However, SSA has continued to miss
milestones and, with much remaining to be accomplished, additional focus
may be necessary to achieve significant and concrete improvements to the
process. As we reported in December 1996, process unification, quality
assurance, and enhanced information systems are among those initiatives
most crucial to producing significant improvements in the process. Other
initiatives could be explored on a limited basis or undertaken at a later
date once progress was ensured for critical initiatives or when additional
resources became available.33

Concern over the scope of SSA’s plan and the resources used for redesign
activities was similarly expressed by the independent, bipartisan Social
Security Advisory Board in an August 1998 report.34 The Board concluded
that the costs of the redesign project were significant and could not be
sustained indefinitely. The cost of SSA’s redesign efforts is difficult to
calculate. According to SSA officials, the agency spent approximately
$16.7 million from 1995 through 1998 on redesign activities—mostly on
travel associated with relocating test participants around the country, but
also on training, rent, supplies, and equipment.35 In addition to these
expenditures, the Advisory Board pointed out that the redesign effort
consumed the time and attention of a considerable number of the most
experienced and knowledgeable staff within both SSA and the DDSs,
diverting them from the routine disability claims process. In the context of
constrained administrative resources, the Board advised that resources
that had been diverted be returned as soon as possible to their usual
functions so that SSA and the state agencies could fulfill their basic
program responsibilities.



33
  GAO/HEHS-97-20, Dec. 20, 1996.
34
   Social Security Advisory Board, How SSA’s Disability Programs Can Be Improved (Washington, D.C.:
Social Security Advisory Board, Aug. 1998).
35
 This amount does not include the salaries of personnel participating in or managing the tests or the
cost of developing the new decision methodology.



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                             Prioritizing its key redesign objectives might help SSA to better focus its
                             efforts. As discussed in chapter 1, SSA’s redesign effort currently has five
                             key objectives: allowing claims that should be allowed at the earliest
                             possible level and improving efficiency, speed, and customer and
                             employee satisfaction. However, these objectives can work at cross
                             purposes; an improvement in one area can result in a deterioration of
                             performance in another. For example, focusing on efforts that speed up
                             the process and improve efficiency might reduce the amount of attention
                             given to developing evidence and documenting decisions. This, in turn,
                             might result in incorrect allowances (or denials) earlier in the process. On
                             the other hand, focusing on the objective of making the right decision at
                             the earliest possible level could add time at the initial level, which might
                             result in more accurate initial determinations and fewer appeals, which in
                             turn might improve the speed and efficiency of the overall process.

                             SSA officials told us that if they were to begin again, they would consider
                             dividing the redesign effort into smaller, more manageable segments. This
                             would be one way for the agency to better focus on specific initiatives and
                             perhaps be able to achieve more visible near-term gains. In fact, SSA may
                             end up taking this approach during the implementation phase by rolling
                             out small segments of the redesign plan one at a time.


                             Reengineering best practices, as well as SSA’s own experience to date,
A Modified Testing           suggest that modifications to SSA’s testing approach could help the agency
Approach Could More          to more efficiently demonstrate the likely result of proposed changes.
Efficiently Provide          Conducting smaller and more integrated tests could free up resources to
                             address critical initiatives while effectively demonstrating the efficacy of
Valuable Information         interrelated changes. In addition, some of SSA’s redesign initiatives face
                             considerable barriers to implementation because they represent
                             significant change, affect jobs, or depend on other changes or supports to
                             be effective. SSA could more effectively explore the viability of such
                             initiatives—as well as of alternative approaches—on a small scale or wait
                             until essential supports have been developed before investing significant
                             resources in testing these initiatives.


Small-Scale Testing Is an    Many reengineering experts believe that entities undergoing reengineering,
Effective Way to Initially   such as SSA, should conduct small tests of proposed initiatives.
Demonstrate Efficacy         Reengineering best practices caution against moving directly from concept
                             to large-scale testing or implementation and suggest that methods such as
                             limited pilot tests and prototyping are cost-effective means for evaluating



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the effectiveness and workability of proposed changes. As we
recommended in our 1996 report on SSA’s reengineering effort, SSA would
benefit from concentrating its efforts on first testing initiatives using a
smaller, more manageable scope at only a few sites across the country.36

SSA’s own experience with the AO and SDM tests confirmed that small-scale
testing is prudent. Significant resources and time were devoted to
large-scale tests of the AO and SDM, only to discover that their efficacy in a
stand-alone environment was marginal. The AO test in particular—which
lacked good design, disciplined management, and key supports—proved
costly and ineffective in proving the AO concept. SSA moved quickly from
concept to large-scale testing because it wanted to definitively
demonstrate the positive impact of these proposed changes so they could
be immediately implemented. But test results did not support immediate
implementation. Instead, the outcome has been continual testing that has
drained agency resources and energies. In hindsight, SSA could have
discovered the marginality of stand-alone initiatives with a much smaller
commitment of resources.

As noted in chapter 2, SSA officials continue to believe that the agency
must conduct tests involving a large number of cases. Given SSA’s desire to
collect a sufficiently large amount of data and move quickly to change the
claims process, SSA officials believe their approach for the AO and SDM tests
was correct, and that if the test results had been positive, all would be
well. However, we believe that SSA took a costly risk that may have eroded
support for the initiatives. SSA officials have said that in the future they
would consider reducing the number of sites that they use in tests by
concentrating test sites in a few states or within one SSA region to permit
more efficient use of resources and easier test management and oversight.

SSA’s current plans involve testing other initiatives, such as the DCM, on a
large scale. The DCM test currently under way has a start-up cost of
$20 million and involves 210 federal and state participants at 33 sites
across the country. Given the uncertainties inherent in this new position,
as well as SSA’s past experience with large-scale testing of the AO and SDM
initiatives, SSA runs the risk of learning on a large and expensive scale that
the DCM does not meet the agency’s redesign objectives. It would be more
cost-effective to test this initiative on a small scale and move on to a
large-scale test only if initial results suggested the potential for significant
gains. In the event of unforeseen difficulties or poor test results, it would



36
  GAO/HEHS-97-20, Dec. 20, 1996.



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                           be easier and less costly to make any necessary adjustments to a
                           small-scale test than to a larger one.


Integrated Testing Is      According to a reengineering expert we consulted, stand-alone testing of
Important for Assessing    interrelated initiatives is inefficient and unnecessary because it provides
the Effectiveness of       no synergy or learning across the whole process. In addition, as shown by
                           reengineering research, effectively evaluating the overall impact of a
Interrelated Initiatives   redesign effort requires studying the entire business unit or process being
                           reengineered. In fact, we recommended in our 1996 report that SSA
                           combine key initiatives into an integrated process and test that process at
                           a few sites.

                           SSA’s experience confirms the importance of integrated testing. Projected
                           benefits from reengineering were predicated on the assumption that most
                           process changes and supporting initiatives would be operational
                           simultaneously.37 However, as discussed in chapter 2, SSA has been testing
                           initiatives independently and without the benefit of some key supports. SSA
                           officials maintain that they have learned a great deal from the large-scale,
                           stand-alone tests, such as how to better run a test. They also maintain that
                           the stand-alone tests provided a baseline of information; for example,
                           testing the SDM in a stand-alone environment provided data to compare
                           with the SDM performance in an integrated environment. SSA officials also
                           believe that the tests contributed to improved communication among
                           operational units and opened the door for important cultural changes
                           needed to support redesign. Although SSA may have learned from its
                           stand-alone tests, these tests did not demonstrate dramatic improvements
                           to the process or provide valuable insight on how the AO and SDM would
                           ultimately work in concert with other initiatives. For example, only when
                           SSA began the FPM test did it become apparent that the SDM might have
                           performed differently if it had been tested in an integrated environment.
                           Rather than conducting large-scale testing of individual initiatives, such as
                           the SDM and AO, moving directly into integrated testing, even on a small
                           scale, or waiting until key supports were in place, might have been more
                           efficient.

                           SSA has the opportunity to apply these lessons in future tests of initiatives.
                           For example, the agency recently began testing expanded rationales —an
                           effort designed to more fully document, at the initial level, the reasons a
                           claim has been denied. These tests have been conducted outside of the FPM

                           37
                             According to SSA’s Nov. 1994 plan, most key initiatives were to be operational around 1998, except
                           for the DCM, simplified decision methodology, and some features of RDS, because these initiatives
                           needed much longer lead times.



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                            test, even though expanded rationales are closely related to other process
                            changes in the FPM. Officials are now taking steps to incorporate this
                            feature into the FPM. SSA will be conducting small pilot tests in four states
                            to gather information regarding the impact of expanded rationales when
                            they are added to other FPM process changes. Folding the expanded
                            rationales test into the FPM test will provide more valuable information on
                            the efficacy of this change in the environment in which it was intended to
                            be implemented. Similarly, a new simplified disability decision
                            methodology and computer software support are considered essential to
                            the success of the DCM position. However, since these important support
                            initiatives are not scheduled to be available in time to meet the current
                            schedule for testing the DCM, it is not clear what or how much SSA will learn
                            from this test about the viability or effectiveness of the DCM in a redesigned
                            environment.


Alternative Redesign        Reengineering best practices suggest that, before selecting a specific
Processes Should Be Fully   process change for implementation, an organization should develop
Explored                    several possible alternatives to the existing work process and consider the
                            costs and benefits of each. These alternatives should then be explored in
                            order to (1) convincingly demonstrate the potential of each option to
                            achieve the desired performance goals; (2) fully describe the types of
                            technical and organizational changes necessary to support each goal; and
                            (3) if possible, test key assumptions. Also, as part of a cost-benefit
                            analysis, an agency should take into consideration any barriers to and
                            risks in implementing each alternative.

                            SSA might have avoided some of the problems currently being experienced
                            with the AO initiative, which has engendered strong opposition, had other
                            alternative work subprocesses also been explored on a small-scale basis
                            before large-scale AO testing. Alternatives to the AO initiative for improving
                            the appellate process exist, such as SSA’s temporary program to permit
                            senior staff attorneys in hearing offices to allow benefits in clear-cut
                            cases.38 However, SSA did not adequately assess the merits of the
                            alternatives by obtaining concrete and comparable data on their relative
                            costs, benefits, and risks. After 3 years of testing, SSA must decide whether
                            to abandon the AO initiative, begin seriously exploring other solutions to
                            pressing problems at the appellate level, or both. Compounding matters,
                            opponents of the AO concept have pointed to its marginal test results to

                            38
                             In 1994, SSA began a plan to reduce the backlog of appealed cases. As part of this plan, SSA
                            established an expanded prehearing conference, at which OHA’s senior staff attorneys were given
                            quasi-judicial powers, or the authority to issue allowance decisions without an ALJ’s involvement or
                            approval.



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                      support their own favored, albeit untested, alternatives. SSA officials
                      agreed that they did not fully prepare themselves for the possibility that
                      their proposed changes might not work and thus did not adequately
                      pursue alternatives earlier in the redesign process or develop contingency
                      plans.

                      SSA may still be able to apply this important lesson in a remaining area by
                      more fully exploring feasible alternatives to the DCM initiative. As with the
                      AO, the DCM initiative is facing some strong opposition and has perhaps
                      even more barriers to full implementation standing in its way. According
                      to one high-level SSA official, test results would have to be very compelling
                      to support implementation of the DCM initiative. Nevertheless, SSA has
                      begun a 3-year large-scale test of the DCM without adequately exploring
                      feasible alternatives. For example, SSA could have—as we recommended in
                      our 1996 report—systematically tested alternatives such as sequential
                      interviewing to compare their relative effects on the process before
                      beginning the large-scale DCM test.39 Instead of testing this concept, SSA
                      allowed the individual operating units to decide whether or not they would
                      adopt this approach. SSA officials believe few, if any, units are actively
                      pursuing it. There is still time for SSA to explore such alternatives to the
                      DCM while the agency conducts its protracted test.



                      As of October 1998, SSA was considering widespread implementation of
Implementation Will   several changes to the disability claims process on the basis of some
Require Careful       promising results from its FPM test. While SSA has encountered
Monitoring            considerable challenges in testing its initiatives, the risk of further
                      difficulty during their implementation is very high. The experience of other
                      public and private organizations that have attempted business process
                      reengineering strongly indicates that, when compared with developing or
                      testing possible changes to a process, implementation of those changes is
                      more difficult. Moreover, it is possible that certain process changes may
                      not perform as expected outside the test environment. SSA, therefore,
                      needs adequate performance goals and measures for key initiatives and
                      objectives to monitor and assess the impact of any changes made to the
                      process. SSA also needs an adequate quality assurance process in place to
                      ensure the quality and accuracy of decisions.



                      39
                        Under sequential interviewing, after SSA field office personnel obtained the necessary nonmedical
                      information from the claimant, they would refer the claimant to disability examiners, who would
                      complete the medical portion of the application, often during the same interview. Claimants would be
                      able to talk to both parties that worked on their case, and time lost in hand-offs between the two units
                      could be minimized.



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Implementing a New              Experience has shown that implementation of a new process is extremely
Process Is Difficult            difficult and, compared with development and testing, is the most
                                failure-prone phase of a reengineering effort. During implementation, an
                                organization’s natural resistance to change must be overcome. According
                                to a reengineering expert we consulted, many reengineering efforts fail
                                because too little time and effort are allotted to implementation. The
                                numerous issues that need to be considered and planned for include

                            •   identifying all tasks, time frames, and needed resources for an orderly
                                transition;
                            •   structuring the rollout of the new process in a way reasonably suited to
                                the nature of the process and the work and structure of the organization;
                            •   assigning roles and responsibilities for implementation to the individuals
                                who will do the work of the new process;
                            •   providing a means for collecting and sharing information on
                                implementation problems and solutions; and
                            •   providing for close monitoring during implementation.

                                SSA’s implementation plans issued in 1994 and 1997 do not address many of
                                the above considerations. For example, the plans do not address the key
                                roles, responsibilities, and reporting relationships required by the new
                                process. In our discussions with stakeholders, we found increasing anxiety
                                over the fact that some key organizational decisions related to work space,
                                which unit would be responsible for managing the proposed AO positions,
                                and other infrastructure issues had not yet been made. Nor do the
                                implementation plans address how SSA will monitor the process to ensure
                                successful implementation and optimum improvements. Recognizing that
                                its current implementation plan is lacking in many specifics, SSA plans to
                                develop more detailed implementation plans as key decisions are made.


Adequate Performance            In order to be able to effectively monitor the results of its process changes
Goals and Measures Are          during implementation, SSA will need adequate performance goals and
Needed to Closely Monitor       measures. Researchers for the Harvard Business Review found that failure
                                to measure a new process can be particularly damaging to a reengineering
Results of Process              effort because, without a comprehensive measurement system that can
Changes                         track the new process’ performance, it is impossible to tell if
                                implementation is succeeding or failing.40 A National Academy of Public
                                Administration report similarly found that measuring and tracking
                                performance continuously was one of six critical success factors in

                                40
                                 Gene Hall, Jim Rosenthal, and Judy Wade, “How to Make Reengineering Really Work,” Harvard
                                Business Review (Nov.-Dec. 1993), p. 129.



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reengineering in the government sector.41 The report cites performance
management as a key characteristic in successful organizations because it
offers the only way for them to assess whether or not reengineering is
achieving the results they desire.

SSA currently collects a large amount of data related to the disability claims
process, but these data could be improved or better tracked for the
purpose of determining progress toward redesign goals. Key indicators
that SSA uses or could use to measure progress are fragmented,
incomplete, or entirely missing. For example, for its agencywide
performance plan, SSA is using separate performance measures for
disability claims processing times at the initial and appeal levels. This
fragmented approach ignores the interrelationship between the two levels;
that is, reducing processing time at the initial level might result in
premature or poor determinations; cause more cases to be appealed; and,
thus, cause overall processing times to increase. Conversely, implementing
steps that result in a longer initial processing time but also permit earlier
correct allowances could shorten the overall average processing time by
reducing appeals. In addition, although SSA has said that process
unification is the “cornerstone” in the foundation of the redesigned
disability claims process, SSA’s performance plan does not contain a goal
for this important initiative; rather, SSA continues to measure performance
in a disjointed manner.

SSA is collecting some appropriate data for its tests but still needs to make
sure they are linked to the agency’s strategic goals and integrated into the
agencywide performance measurement system. As stressed by the Chief
Financial Officers Council, an organization composed of representatives of
federal departments and agencies, government entities should integrate all
reform activities, including reengineering, into the framework of the
Government Performance and Results Act (commonly known as the
Results Act). According to the Council, one of the reasons this is
important is to ensure consistency and reduce duplication of effort.42 Our
review of SSA’s fiscal year 1999 performance plan pointed out that SSA’s
reengineering effort is not fully integrated into its Annual Performance
Plan.43 Although the Plan noted SSA’s efforts to improve the disability


41
 Sharon L. Caudle, Reengineering for Results: Keys to Success From Government Experience
(Washington, D.C.: National Academy of Public Administration, 1995), p. 53.
42
 Executive Guide: Effectively Implementing the Government Performance and Results Act
(GAO/GGD-96-118, June 1996).
43
 The Results Act: Observations on the Social Security Administration’s Fiscal Year 1999 Performance
Plan (GAO/HEHS-98-178R, June 9, 1998).



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                        claims process, the Plan did not include any useful discussion of SSA’s
                        major initiative to completely redesign its disability claims process, nor
                        did it indicate whether changes or improvements expected to result from
                        this effort were factored into the performance measures or goals.


Guarding Against        SSA cannot be certain that its initiatives will perform the same under “real
Unintended Results Is   world” conditions as they did in an artificial test environment, and the
Important               agency will need to take additional steps to guard against the possibility of
                        unintended results. For example, SSA’s test of the SDM included a quality
                        review of all cases decided under the test, whereas currently, far fewer
                        cases, most of which involve allowance determinations, are reviewed. In
                        the absence of this 100-percent review, the SDM might perform differently,
                        which could have a significant effect on the accuracy of determinations,
                        the number of allowances and appeals, and overall benefit outlays.
                        Possible unintended results could include inaccurate disability
                        determinations, unanticipated increases in benefit outlays, and increased
                        appellate workloads. When test results are marginal, there is a greater
                        chance that expected process improvements might not materialize.

                        SSA needs to be sure that, when implementing a change in the process such
                        as the SDM, an adequate quality assurance process is in place to ensure that
                        benefit eligibility decisions are accurate. Accuracy is important because
                        incorrect decisions can result in wrongful benefit payments, unnecessary
                        appeals, or hardship to the claimants caused by incorrect denials. Under
                        its quality assurance initiative, SSA is seeking to build quality into the
                        decision-making process using tools such as training, mentoring, peer
                        review, and feedback. SSA has been exploring approaches to in-line quality
                        assurance as part of its SDM phase II test, allowing individual test sites to
                        set up their own processes. During implementation of the SDM, and in the
                        absence of a uniform approach, SSA will need to take steps to ensure that
                        individual state processes are sufficient to maintain quality.

                        Ultimately, SSA will need to establish a final quality assurance process that
                        will both identify systemic problems with case decisions and measure the
                        success of SSA’s efforts to build quality into the process. As discussed in
                        chapter 1, current reviews of DDS determinations and ALJ decisions are
                        conducted in isolation from each other. SSA has recently instituted a
                        review of ALJ decisions that will help identify inconsistencies in
                        decision-making between the two levels. However, SSA has yet to develop a
                        single quality review mechanism applicable to both levels. SSA has had
                        particular difficulty getting its initial and appellate decision-making levels



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to agree on a consistent quality assurance process that cuts across all
phases of the decision-making process, including reaching agreement on
what constitutes a correct decision.




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              More than 4 years after releasing its original redesign blueprint, SSA is still
Conclusions   struggling to make significant improvements to its disability claims
              process. While the agency has made some progress with process
              unification, SSA has missed many of its redesign milestones, and the results
              of early tests did not support implementation of specific proposed
              changes. The agency is still conducting a number of tests, including yet
              another large, nonintegrated test at numerous sites. Also, top agency
              officials would like to begin making some implementation decisions about
              new decisionmaker positions and other proposed changes. With so much
              left to do, SSA still has a window of opportunity, which will not be open for
              long, to apply some lessons learned to help the agency achieve important
              improvements to its disability claims process. (SSA is no longer
              experiencing a dramatic growth in applications for disability benefits, but
              the agency can expect applications to increase again as the baby boom
              generation ages or if the economy suffers a downturn.)

              SSA’s ability to learn from past experience will be an important ingredient
              in the success of future efforts. For example, the size of SSA’s tests and the
              scope of redesign initiatives slowed SSA’s progress under its original 1994
              redesign plan. When the agency revised its redesign plan in 1997 to include
              fewer initiatives and increased executive oversight, similar problems
              continued to limit progress. Even this revised plan required the agency to
              move forward on a number of varied fronts simultaneously, and SSA
              continued to miss key milestones. Again, the agency may have
              underestimated the challenges of managing stakeholder input and keeping
              such an ambitious effort on course. Strong project oversight should
              continue, but it will probably not be enough to ensure timely progress.
              Therefore, SSA needs to further focus its efforts by prioritizing its
              objectives and concentrating its resources on the efforts most likely to
              achieve those objectives. Such efforts should include those that help to
              improve consistency in decision-making, ensure accurate results, and
              achieve large efficiencies through the use of technology.

              Past experience has shown that a large-scale test of an individual initiative,
              while providing an abundance of information on how well that initiative
              performs in isolation from other changes, does not clearly demonstrate
              how the initiative would function in a redesigned process and is not the
              most efficient and effective use of resources. Moreover, while SSA hoped
              that this testing approach would help gain the support of key stakeholders
              likely to be affected by the changes, it has not done so. To help free up
              resources and effectively demonstrate the efficacy of proposed changes,
              SSA should conduct relatively small tests that integrate several of the




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proposed changes to the process. Smaller tests will allow SSA to more
efficiently identify promising concepts before moving to larger-scale
testing or implementation. Integrated testing—testing related concepts
together and with key supports in place—will help SSA to demonstrate
whether proposed changes will perform as intended under the new
process.

SSA’sexperience with the AO test has also shown the risks inherent in
devoting considerable time and resources to a single unproven approach
or change. Results of AO tests have been consistently disappointing, and
SSA now finds itself faced with the same long-standing problems the AO was
intended to remedy without a tested alternative solution. Therefore, in the
future, before investing significant time and resources on any initiative, SSA
should explore feasible alternatives for changing the process on a small
scale. For example, as we have recommended before, SSA should explore
sequential interviewing as a feasible and less risky alternative to the
controversial DCM position. Exploring alternatives and conducting small,
integrated tests of related initiatives before making large investments are
sound reengineering and management practices, the wisdom of which has
been underscored by SSA’s experience to date.

Since other organizations have found implementation of process changes
to be the most failure-prone phase of a redesign effort, SSA is also likely to
encounter numerous pitfalls as it attempts to effect process changes in
such a complex environment. As a result, it is especially important for SSA
to take action to closely monitor the results of changes it makes to the
process and watch for early warnings of problems. It is possible that
process changes may not operate as expected outside the test
environment. It is also possible that some stakeholders who do not
support specific changes may act to undermine their success. If process
changes do not operate as expected, the results could include inaccurate
decisions, unanticipated program costs, increased appellate workloads,
and lack of improvement in service to the claimant. Therefore, SSA should
immediately establish a comprehensive set of performance goals and
measures—a set that cuts across the whole process and is also linked to
SSA’s overall strategic and performance plans—in order to assess and
monitor the results of changes to the process.

Finally, SSA’s tests of process changes have provided only limited
assurance that these changes would not degrade the quality of disability
decisions. Specifically, SSA’s tests included artificial steps, such as a quality
review of all test cases, that are not likely to be used outside the test



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                         environment. Quality is perhaps the most critical aspect of the
                         decision-making process because each inappropriate disability decision
                         does a disservice to claimants, taxpayers, or both. A wrongful denial
                         burdens the claimant and could result in unnecessary administrative costs
                         if the claimant appeals the decision, whereas a wrongful allowance results
                         in a continuous stream of inappropriate benefit payments. Therefore, as
                         changes are made to the process, SSA should ensure that it has a quality
                         assurance process in place that both promotes and monitors the quality of
                         disability decisions.


                         As SSA proceeds with further exploration and testing of redesign initiatives
Recommendations          and considers implementation options, it should take the following steps
                         to improve the likelihood of making key improvements to the disability
                         claims process:

                     •   further focus resources on those initiatives, such as process unification,
                         quality assurance, and computer support systems, that offer the greatest
                         potential for achieving SSA’s most critical redesign objectives;
                     •   test promising concepts at a few sites in an integrated fashion;
                     •   establish key supports and explore feasible alternatives before committing
                         significant resources toward the testing of specific initiatives, such as the
                         DCM;
                     •   develop a comprehensive set of performance goals and measures to assess
                         and monitor changes in the disability claims process; and
                     •   ensure that quality assurance processes are in place that both monitor and
                         promote the quality of disability decisions.


                         SSA mostly agreed with our report’s observations and the thrust of its
Agency Comments          recommendations. Specifically, SSA agreed that the tests conducted took
and Our Evaluation       longer than anticipated and did not result in the budgetary and operational
                         efficiencies originally hoped for in the 1994 redesign plan. SSA also agreed
                         that it should focus on those areas that will make the greatest
                         contributions to improving the quality and timeliness of decisions. As we
                         have recommended, SSA intends to pursue additional process unification
                         and quality assurance activities. The agency also indicated it will pursue
                         elements of the FPM that will significantly improve customer service.
                         Finally, SSA agreed that systems technology must continue to be an
                         important focus of resources.




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SSA took issue with our critique of its testing strategy. SSA believes that
stand-alone and FPM testing were both needed to gather data and
experience that are essential for making responsible decisions. Moreover,
SSA believes that testing at fewer sites would not have provided the
required information or allowed the agency to complete the tests in less
time. While we understand the agency’s desire to conduct large tests in
order to obtain statistically valid results, we continue to believe that
exploring the efficacy of initiatives initially on a smaller scale before
moving to large-scale testing or implementation would result in a better
use of resources. Also, because the various initiatives are interdependent,
we believe that integrated testing would provide more complete and useful
information on how the initiatives will perform in the new process.

SSA also stated that its current approach to testing the DCM is consistent
with our concerns and recommendations, in that it recognizes and builds
upon what SSA has learned from previous testing experiences. However,
we still have reservations about SSA’s current approach to testing the DCM.
First, SSA continues to test this new position on a rather large scale without
having explored the position’s potential efficacy through prototyping or
limited pilot testing. Second, SSA is testing this initiative without the
benefit of the key supports (such as a new simplified disability decision
methodology and computer software support) upon which its efficacy
relies. Finally, SSA is moving forward with the DCM test without having
explored the feasibility of alternative approaches.

While agreeing to focus on certain key initiatives, SSA believes that changes
to the decision-making process should precede major computer system
changes to enable technological developments to be crafted in the manner
most supportive of the new process. Similarly, SSA stated that changes to
the decision-making process should precede the development of a new
quality assurance process, the purpose of which will be to evaluate the
quality of the new process. However, we believe that SSA can make
substantial progress toward developing these critical supports before
finalizing the process changes. For example, certain key aspects of SSA’s
quality assurance initiative—such as ensuring the consistent application of
policy across all levels of the process and developing agreement on what
constitutes a correct decision—need not rely on final changes to the
process of making a decision.

Finally, SSA pointed out, and we agree, that the agency’s monitoring and
evaluation systems currently capture a significant amount of data related
to the disability claims process. However, as our report indicates, these



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data are not always translated into comprehensive and complete
performance goals and measures that look at the efficiency and
effectiveness of the process as a whole. As we asserted in our report, SSA’s
use of separate performance measures for disability claims processing
times at the initial and appeals levels in its agencywide performance plan
ignores the interrelationship between the two levels, thereby reducing the
usefulness of the performance measures. We also noted the lack of
integration of SSA’s redesign objectives with those found in the agencywide
performance plan. We believe SSA can do more to make better use of the
large amount of data it collects through a carefully crafted set of
performance goals and measures.




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Appendix I

Descriptions of Near-Term Redesign
Initiatives and Their Test and
Implementation Schedules
                       Five of the eight key initiatives in the Social Security Administration’s
                       (SSA) February 1997 plan had near-term milestones; that is, those initiatives
                       were to be tested or implemented before fiscal year 1999. At the time the
                       February 1997 plan was issued, SSA had already begun testing two of the
                       five initiatives—the adjudication officer (AO) and single decision maker
                       (SDM) positions—and planned to begin implementing them in fiscal year
                       1998. Another initiative—the full process model (FPM)—involved a more
                       complicated and lengthy test of several proposed changes to the process;
                       SSA expected to assess and implement some of these changes earlier than
                       others. The remaining two near-term initiatives—process unification and
                       quality assurance—involve a number of actions aimed at improving the
                       consistency and quality of decisions at all stages of the process. SSA
                       expected to complete many planned activities under these two initiatives
                       in time to support the other proposed changes to the process as they were
                       implemented.


                       The AO is a new position created both to facilitate the appeals process and
Adjudication Officer   to serve as the primary focal point for all prehearing activities when a
                       hearing request is filed. For appealed cases, the AO would be responsible
                       for (1) providing the claimants, claimants’ representatives, or both with an
                       in-depth understanding of the hearing process; (2) providing
                       unrepresented claimants with information about the hearing and their
                       right to representation; (3) developing the record for a hearing (that is,
                       obtaining additional evidence as warranted); (4) issuing fully favorable
                       on-the-record decisions when supported by the evidence; and
                       (5) narrowing issues and fully developing cases that are forwarded to the
                       ALJ for hearing.


                       According to the February 1997 plan, SSA planned to test the AO both in a
                       stand-alone fashion, without system supports such as the new computer
                       system in place, and, later, as part of the FPM test, which combined several
                       redesign features into a single test. The AO was the first initiative to be
                       tested because SSA felt that the AO position, if successfully tested and
                       implemented, would help reduce the backlogs and lengthy processing
                       times at the appellate level. Initially, the purpose of the stand-alone test
                       was to quickly demonstrate the viability of the concept. However, SSA
                       increased the number of test cases and added a control group for
                       comparison purposes after the Office of Management and Budget raised
                       concerns regarding the impact of process changes on benefit outlays.




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                        The objectives for the stand-alone test were to determine whether the AO
                        was an effective and cost-efficient method for (1) improving case
                        processing time, (2) accelerating case development, and (3) increasing the
                        ability of administrative law judges (ALJ) to adjudicate claims that require a
                        hearing. In addition, testing was expected to demonstrate that the AO
                        would not adversely affect benefit costs. Specifically, the test would
                        determine the AO’s impact on benefit costs (measured by allowance and
                        certification rates), decisional accuracy, productivity (measured by task
                        time), customer service (measured by processing time), and employee
                        reaction to the new process.

                        The stand-alone AO test began in November 1995. Test sites included nine
                        state disability determination service (DDS) sites and 16 federal sites
                        spread among Office of Hearings and Appeals (OHA) hearing offices, SSA
                        field offices, and processing centers. However, SSA was not satisfied with
                        early test results and decided in February 1997 to postpone
                        implementation while it refined and extended the test. Test refinements,
                        designed to improve efficiency, processing time, and quality, included
                        strengthening site management, improving clerical and computer support,
                        and providing additional feedback and training to AOs. Refinements were
                        to be accomplished within 120 days and to be followed by a second
                        monitoring phase.

                        According to the February 1997 plan, SSA expected to complete its
                        evaluation of test data, make a decision for rollout, and develop and
                        publish regulations for implementing the AO nationwide in fiscal year 1997.
                        SSA planned to begin nationwide implementation in January 1998 and to
                        complete the implementation process in fiscal year 1999.


                        The SDM position was designed to make the initial disability determination
Single Decision Maker   process more effective and efficient by allowing the disability examiner to
                        be solely responsible for making the determination. Currently, disability
                        examiners and DDS physicians are jointly responsible for making the
                        disability determination, and DDS physicians are required to sign disability
                        determination forms and to certify all determinations. Under the SDM
                        model, physicians would function as true consultants, providing
                        information and advice only on cases referred to them by the SDM.

                        Under its February 1997 plan, SSA planned to test the SDM position in both a
                        stand-alone environment (without other, related process changes included
                        in the test) and as part of the FPM (which would integrate several redesign



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                     Implementation Schedules




                     features into a single test). The SDM test was conducted early in SSA’s
                     redesign effort, and in a stand-alone fashion, because SSA felt that with the
                     SDM in place SSA could make some quick improvements to the process and
                     thus build momentum and support for the overall redesign effort.

                     SSA planned to test the SDM in a stand-alone fashion in two phases. The first
                     phase would test the viability of the concept—that is, whether the SDM
                     could improve productivity by reducing processing time and the cost of
                     processing cases while maintaining the current level of accuracy in
                     making disability determinations. More specifically, SSA would determine
                     the impact of the SDM on allowance rates, decisional accuracy, processing
                     time, productivity, and administrative costs. SSA planned to conduct this
                     test in eight states in a tightly controlled test environment (that is, with
                     100-percent quality review of the test cases). As specified in the
                     February 1997 plan, testing began in May 1996, and test evaluation was to
                     be completed in fiscal year 1997. A decision to implement the SDM would
                     be based on the results of this test.

                     The second phase would test approaches to implementation under more
                     “real world” circumstances, such as with lower levels of quality assurance
                     review. Specifically, SSA was looking for approaches to implementation
                     that would ensure the highest quality of customer service in terms of
                     accuracy, productivity, processing time, and costs. In the February 1997
                     plan, the second phase was scheduled to begin in May 1997 and, according
                     to other planning documents, to continue for at least 12 months.

                     Contingent on positive test results, the February 1997 plan called for
                     implementation of the SDM position by the close of fiscal year 1998. The
                     SDM was not expected to handle all cases initially, because statutes and
                     regulations currently require a DDS physician to review denials of claims
                     involving mental impairments or children. SSA planned to pursue legislative
                     changes in fiscal year 1999 that would permit the SDM to handle such cases
                     and to fully implement the SDM position in fiscal year 2000.


                     The FPM is not a single initiative but a combination of several redesign
Full Process Model   features to be tested as an integrated process. As noted by SSA, most, if not
                     all, of the proposed process changes are interdependent, and this test was
                     designed to assess the impact of combined changes. The redesign features
                     included in the FPM test are (1) the SDM position, (2) a predecision
                     interview by the SDM of the claimants in cases in which the evidence
                     obtained does not support a fully favorable determination, (3) the



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                      Implementation Schedules




                      elimination of the reconsideration step, (4) the AO position, and (5) the
                      elimination of the Appeals Council review step.

                      The objective of the FPM test was to determine whether, or the extent to
                      which, these redesign features could together produce an accurate and
                      appropriately documented disability determination more efficiently than
                      the current process. More specifically, the test would evaluate the impact
                      of the combined features on allowance rates, decisional accuracy, appeal
                      time, processing time, productivity, administrative costs, and employee
                      satisfaction. The evaluation would also compare the performance of the
                      SDM and the AO in an integrated test versus a stand-alone test.


                      SSA’s February 1997 plan called for the FPM test to be conducted at 11 DDS
                      sites in eight states and at two federal sites. SSA planned to complete its
                      selection of 30,000 test cases for the FPM test by January 1998. Also in
                      fiscal year 1998, SSA expected to complete its assessment of all redesign
                      features except the elimination of the Appeals Council review step and to
                      decide whether to institute these four features if test results supported
                      these changes. In fiscal year 1999, SSA planned to implement the
                      predecision interview and eliminate the reconsideration step. Also in fiscal
                      year 1999, SSA expected to complete its evaluation of eliminating the
                      Appeals Council step—which would take much longer because cases need
                      time to get to and through the appellate process. SSA did not expect to fully
                      implement the elimination of the Appeals Council review step until fiscal
                      year 2001.


                      The objective of this initiative was to achieve similar results on similar
Process Unification   cases at all stages of the process, through the consistent application of
                      laws, regulations, and rulings. Through this initiative, SSA hoped to address
                      long-standing inconsistencies in decision-making between the DDS and ALJ
                      levels that have contributed to high rates of appeal and allowances at the
                      hearing level. High appeal and ALJ allowance rates have, in turn, increased
                      case backlogs and processing times at the hearing level. In addition, ALJ
                      allowances have been used in class action law suits as an indication of DDS
                      errors in initial determinations. Process unification is considered by many
                      in SSA to be the most critical of SSA’s redesign initiatives.

                      In SSA’s early redesign plan, the process unification initiative consisted of
                      developing a single presentation of policy to replace the many vehicles
                      used by SSA to convey policy. After further review of the problem, SSA
                      expanded the scope of this initiative to include developing Social Security



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                              Initiatives and Their Test and
                              Implementation Schedules




                              Rulings (SSR)44 to clarify policy, providing training, and taking action on
                              eight subinitiatives that address key differences between the DDS and ALJ
                              decision-making processes. The objectives and planned activities for these
                              process unification efforts follow.


Single Presentation of        Currently, different vehicles exist for conveying policy and procedural
Policy                        guidance to decisionmakers at the different levels of the process. The
                              objective of this effort is to develop a single presentation of policy that is
                              binding on all decisionmakers and helps to ensure consistent application
                              of policy. In July 1996, SSA began issuing all policy instructions in the exact
                              same language to all adjudicators. SSA’s next steps involve addressing
                              differences in policy instructions issued before July 1996. Under its
                              February 1997 plan, SSA intended to develop a plan and procedures for
                              combining existing adjudicative policy documents into a “single book.”
                              According to one SSA official, integrating policy documents will be a
                              lengthy process because SSA will want to review and revise some of its
                              policies before integrating them.


Social Security Rulings       The objectives of this effort are to clarify policy in areas contributing to
                              inconsistent decision-making and to support planned process unification
                              training. In July 1996, in preparation for its first training initiative, SSA
                              issued nine SSRs. SSA believes these SSRs address the most significant
                              adjudicative issues:

                          •   applying federal circuit court and district court decisions,
                          •   clarifying when adjudicators must give the opinion of a treating physician
                              controlling weight,
                          •   considering allegations of pain and other symptoms in determining
                              whether an impairment is severe,
                          •   evaluating symptoms,
                          •   considering medical source’s opinions on issues that are the purview of
                              only SSA,
                          •   considering DDS physicians’ findings of fact at the ALJ and Appeals Council
                              levels,
                          •   assessing the credibility of an individual’s statements about pain or other
                              symptoms,

                              44
                                SSRs are precedential court decisions and policy statements or interpretations that SSA has adopted
                              as binding policy. SSRs are published under the authority of the commissioner of Social Security and
                              are binding on all components of SSA. SSRs do not have the effect of law or regulations, and they may
                              be based on case decisions made at any administrative level of adjudication, federal court decisions,
                              commissioner’s decisions, opinions of the Office of the General Counsel, and other policy
                              interpretations of the law and regulations.



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                                Initiatives and Their Test and
                                Implementation Schedules




                            •   assessing the residual functional capacity (RFC) for initial claims;45 and
                            •   explaining the impact of an RFC assessment of less than the full range of
                                sedentary work on an individual’s ability to do other work.


Training                        The objective of this effort is to provide consistent training to adjudicators
                                at all levels of the process in three of the most complex disability
                                areas—assessment of symptoms, treatment of opinion evidence, and
                                assessment of RFC—in order to help ensure consistent application of
                                policy. At the time SSA issued its February 1997 plan, SSA had already begun
                                training 15,000 disability adjudicators (including DDS examiners,
                                physicians, ALJs, and quality assurance staff). SSA planned to conduct
                                ongoing process unification training.


Eight Subinitiatives            SSA approved a second series of recommendations for process unification
                                in April 1996 and a set of action plans for implementing these
                                recommendations in July 1996. These recommendations involved eight
                                subinitiatives. According to its February 1997 plan, SSA expected to
                                implement the subinitiatives in fiscal year 1997. Although the
                                February 1997 plan did not cite specific activities for these subinitiatives,
                                some planned activities were specified in other planning documents.46 The
                                purpose of these subinitiatives and a description of any planned activities
                                relating to them are provided below.

Subinitiative 1: Treating       The objective of this subinitiative is to ensure that, in rendering a decision,
Physicians’ Opinions            adjudicators give appropriate weight to the opinions of the claimants’
                                treating physicians. Under SSA regulations, adjudicators must consider the
                                opinions of treating physicians and must give controlling weight to those
                                opinions regarding the nature and severity of the claimant’s impairment(s),
                                provided that the opinions are well-supported by medically acceptable
                                clinical and laboratory diagnostic techniques and not inconsistent with
                                other substantial evidence in the record. However, an SSA study found that
                                DDS adjudicators and ALJs respond differently to opinions of claimants’
                                physicians: ALJs appear to give more weight to the opinions of the treating
                                physicians than do DDS adjudicators, who are more likely to assess these
                                opinions in conjunction with other medical evidence in the file.



                                45
                                 When medical evidence does not show that an applicant’s condition meets or equals the severity
                                criteria in SSA’s Listing of Impairments, adjudicators assess the applicant’s RFC to determine whether
                                he or she can perform past relevant or other work.
                                46
                                  These planning documents are the July 1996 action plans and SSA’s February 1997 tactical plan.



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                                 Implementation Schedules




                                 As discussed above, SSA issued a ruling in July 1996 clarifying its policy on
                                 assigning appropriate weight to the opinions of treating physicians. In its
                                 planning documents, SSA indicated that it intended to develop other
                                 options for achieving the goal of this initiative.

Subinitiative 2: Complete        The purpose of subinitiative 2 is to more completely document subjective
Documentation in DDS Denials     and objective evidence in cases in which a DDS denies a claim. SSA requires
                                 DDS physicians to record explanations of their reasoning in assessing a
                                 claimant’s RFC. However, SSA has found that such explanations often are
                                 not well-documented. Improved explanations could be more useful to ALJ
                                 decision-making, especially since it is SSA’s policy that ALJs consider the
                                 opinion of the DDS physician in making an RFC assessment.

                                 To address subinitiative 2, SSA intended to prepare a program circular on
                                 documentation requirements and develop a revised quality assurance
                                 process to enforce those requirements by October 1996.

Subinitiative 3: More Detailed   The purpose of subinitiative 3 is to require more detailed explanations in
Explanations in                  all reconsideration denials—that is, more detail on how the determination
Reconsideration Denials          was made, especially addressing issues of treating physicians’ opinions,
                                 subjective symptoms (pain), and RFC. As with initiative 2, improved
                                 explanations of reconsideration denials could be more useful to ALJ
                                 decision-making.

                                 For subinitiative 3, SSA intended to provide training and implement new
                                 instructions on providing more detailed explanations of reconsideration
                                 denials by October 1996. Upon implementing this initiative, SSA also
                                 planned to evaluate these changes and their implications for other
                                 redesign initiatives.

Subinitiative 4: Remand          The purpose of this subinitiative is to return or remand selected appealed
Selected Hearing Cases           cases to the DDS for consideration of new evidence introduced at ALJ
                                 hearings. One SSA study indicated that 76 percent of appealed cases
                                 contain new evidence—generally medical in nature—and that 27 percent
                                 of hearing awards hinge on the additional evidence. For cases in which the
                                 DDS determined that benefits were indeed warranted, remanding cases
                                 with new evidence would avoid the need for a more costly and
                                 time-consuming ALJ decision. For cases in which the DDS did not believe an
                                 award was justified, the DDS physician would provide a revised assessment
                                 of the case’s medical facts and return the case to the ALJ for hearing.




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                                 Implementation Schedules




                                 In its February 1997 tactical plan, SSA expected to return 100,000
                                 cases—out of roughly 500,000 appealed cases per year—to the DDS for
                                 consideration of new evidence.

Subinitiative 5: Weight of the   The purpose of this subinitiative is to issue guidelines defining the specific
DDS Physicians’ Opinions         weight to be given by ALJs to the opinions or conclusions of the DDS
                                 physicians. SSA policy already requires ALJs to consider the opinions of DDS
                                 physicians when making RFC assessments. However, perceptions exist that
                                 ALJs have not sufficiently done so.


                                 SSA issued a ruling in July 1996 clarifying that ALJs must consider the
                                 findings of fact made by DDS physicians as expert opinion evidence. In its
                                 planning documents, SSA indicated that it intended to issue final
                                 regulations by April 1997 clarifying the weight to be given by ALJs to the
                                 DDS physicians’ opinions. SSA also intended to issue implementing
                                 instructions and conduct training on this subject by April 1997.

Subinitiative 6: RFC for Less    The objective of this subinitiative is to clarify regulatory language
Than Sedentary Work              regarding assessing a claimant’s RFC in cases in which the claimant is
                                 found capable of less than a full range of sedentary work. SSA has
                                 determined that differing DDS and ALJ assessments of a claimant’s capacity
                                 to function in the workplace are the primary reason for most ALJ awards.
                                 For example, for ALJ awards involving physical impairments, ALJs were
                                 significantly more likely than DDS physicians to find that applicants had
                                 very limited work capacity—that is, they could do “less than the full range
                                 of sedentary work.”47 Moreover, according to one study, ALJs were likely to
                                 arrive at different conclusions in this regard than DDS adjudicators even
                                 when presented with the same evidence.

                                 SSA issued a ruling in July 1996 clarifying SSA’s policies regarding RFCs of
                                 less than a full range of sedentary work. In its planning document, SSA
                                 stated that it intended to publish final regulations and issue operating
                                 instructions on handling RFCs of less than the full range of sedentary work
                                 by April 1997.

Subinitiative 7: Acquiescence    The objective of this subinitiative is to issue an SSR clarifying SSA’s
Policy                           acquiescence policy. The Social Security Act provides procedures for
                                 claimants to appeal a final SSA decision to the federal district court level. In
                                 some cases, the circuit court decision may conflict with SSA’s
                                 interpretation of the act. In such cases, if SSA does not seek further court

                                 47
                                   From Sept. 1992 through Apr. 1995, two-thirds of ALJ awards involved cases that merited a “less than
                                 the full range of sedentary work” assessment—a classification that often leads to an award.



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                                  Appendix I
                                  Descriptions of Near-Term Redesign
                                  Initiatives and Their Test and
                                  Implementation Schedules




                                  review or is unsuccessful on further appellate review, SSA must acquiesce
                                  to the decision of the circuit court. This can result in inconsistency in
                                  policy across the circuits if SSA does not take specific and timely steps to
                                  convey the new policy uniformly to all SSA components.

                                  SSA published an SSR in July 1996 clarifying its policy on acquiescence. In
                                  its planning documents, SSA indicated that it intended to develop an action
                                  plan for accelerated preparation and clearance of acquiescence rulings by
                                  October 1996.

Subinitiative 8: Quality Review   The objective of this subinitiative is to implement a quality review of ALJ
of Hearing Decisions              allowances under the Appeals Council’s own motion review authority. The
                                  current quality review mechanism for ALJs consists largely of Appeals
                                  Council reviews of denials at the request of claimants, which some argue
                                  causes a propensity for ALJs to allow cases. Moreover, quality reviews for
                                  the DDS and ALJ decision-making processes are conducted in isolation from
                                  each other, and there are no procedures in place for reconciling the
                                  differences between the processes. For example, DDS adjudicators do not
                                  receive feedback on why cases they denied were subsequently overturned
                                  at the appellate level. The new quality assurance process aims to provide
                                  more balance in reviewing ALJ awards and denials and to identify and
                                  reconcile factors that contribute to differences between DDS and ALJ
                                  decisions.

                                  In its planning documents, SSA stated that it intended to implement a
                                  process whereby disability examiners and physicians with SSA’s Office of
                                  Program Integrity Review48 would perform pre-effectuation reviews of ALJ
                                  allowances and forward cases they felt were unsupported to the Appeals
                                  Council. The Appeals Council would then, using its own motion review
                                  authority, review the case and decide whether to reverse the decision or
                                  remand the case to the ALJ. For cases in which the Appeals Council
                                  disagreed with the conclusions of the quality reviewers, the award would
                                  be allowed, but the case would be referred to an intercomponent panel
                                  that considers the need to clarify policies, issue new policies, or provide
                                  additional training. In its July 1996 action plan, SSA stated that it intended
                                  to implement the quality assurance process, including conducting training,
                                  by October 1996. Evaluation of this process to determine, for example, the
                                  need for regulatory change and implications for redesign activities, would
                                  be ongoing.



                                  48
                                   In 1998, the Office of Program Integrity Review changed its title to the Office of Quality Assurance
                                  and Performance Assessment, also called the Office of Quality Assurance.



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                    Initiatives and Their Test and
                    Implementation Schedules




                    The purpose of this initiative is twofold: (1) to develop in-line quality
Quality Assurance   assurance processes (approaches designed to build quality into the
                    process) and (2) to develop a single, end-of-line review mechanism that
                    looks at the whole adjudicative process. In-line quality assurance
                    processes would include procedures and tools—such as regular training,
                    mentoring, peer review, and real-time feedback—to ensure the right
                    decision is made the first time. The end-of-line quality assurance process
                    would include a final review and feedback mechanism that employed the
                    same standard of review for all cases and would become SSA’s primary
                    vehicle for monitoring and measuring the success of each component’s
                    front-line quality assurance process.

                    For in-line quality assurance, SSA expected to develop and incorporate
                    processes as part of its major redesign initiatives, including the AO
                    position, the SDM position, other FPM concepts, process unification, and the
                    disability claims manager position. Specifically, procedures and tools
                    would be developed during testing of these initiatives. For example, the
                    February 1997 plan called for quality assurance principles to be built into
                    the SDM process during the second phase of SDM testing, beginning in
                    May 1997. Participating test sites were asked to develop quality assurance
                    programs for safeguarding the accuracy of decisions. In addition, SSA
                    expected to continue development of quality assurance processes to
                    support the other FPM concepts—which include the AO, predecision
                    interview, and elimination of reconsideration—in fiscal year 1998. Finally,
                    SSA planned to develop a strategy for fully deploying initiatives, and their
                    quality assurance processes, in fiscal year 1999.

                    For end-of-line quality assurance, according to its February 1997 plan, SSA
                    expected to develop a prototype final review and feedback mechanism in
                    fiscal year 1997, test this mechanism in fiscal year 1998, and evaluate and
                    deploy it in fiscal year 1999.




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SSA’s Efforts to Meet Near-Term Milestones


                       SSA was not able to meet many of its near-term milestones for testing and
                       implementing key initiatives in its February 1997 plan. SSA had hoped to
                       begin implementing both the AO and SDM positions in fiscal year 1998 but
                       postponed the decision of whether or not to implement until fiscal year
                       1999. SSA also is not as far along with evaluating the results of its FPM test
                       as it had earlier hoped, and further implementation delays are likely. SSA
                       has taken some concrete steps on its process unification initiative, but
                       most of the activities occurred behind schedule, and many have yet to be
                       completed. SSA also missed most of its milestones under its quality
                       assurance initiative.


                       SSA missed milestones in its February 1997 plan for implementing the AO
Implementation         position. SSA planned to complete its stand-alone AO test—its test of the AO
Delays for AO and      position excluding other redesign changes—in fiscal year 1997. If test
SDM Positions          results warranted, SSA had planned to begin nationwide rollout of the new
                       position in January 1998. However, as of October 1998, SSA was still testing
                       the AO in a stand-alone fashion and had not yet produced a final evaluation.
                       SSA was also testing the AO as part of its FPM test—which integrates the AO
                       and other process changes—and waiting for results from the FPM test
                       before making a decision on whether to implement the AO.

                       SSA also missed its planned milestones for implementing the SDM position.
                       As with the AO initiative, SSA delayed SDM implementation until it had more
                       definitive results from the FPM test. SSA expected the FPM test to provide
                       better insight into the efficacy of the SDM position in conjunction with
                       other, related changes.


                       SSA is behind schedule in assessing the results of its FPM test. SSA had
Delays in Evaluating   planned to assess four of the five FPM process changes—the AO, the SDM,
FPM Test Results       predecision interview, and elimination of reconsideration—in fiscal year
                       1998. While SSA did not expect to process all its test cases until November
                       1999, it believed that it could use a smaller sample of cases to speed up
                       some of the analysis. Specifically, SSA planned to use the first 2 months of
                       test cases to analyze the effect of the four process changes on accuracy
                       and allowance rates at all levels and processing time at the DDS level.49
                       While this approach expedited the analysis, SSA was not able to complete

                       49
                         SSA believed these 2 months of cohort data would enable it to reliably assess the effect of FPM
                       because each month includes a randomly selected and representative group of cases. Without this
                       approach, SSA would have had to wait for all the cases to flow through the process to determine the
                       ultimate impact on allowance rates and the related cost, as was done with the tests of the AO and SDM
                       initiatives.



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                      SSA’s Efforts to Meet Near-Term Milestones




                      its assessment by the close of fiscal year 1998. As of October 1998, SSA
                      could assess the impact of three process changes—the SDM, predecision
                      interview, and eliminating reconsideration—on the initial level of
                      decision-making. However, data to assess their impact on the hearing level
                      and for the overall process, as well as data to assess the AO piece, were
                      still incomplete: 5 percent of the AO cases and 15 percent of the ALJ cases
                      had not yet been processed.

                      Moreover, these 2 months of sample cases did not allow SSA to fully assess
                      the impact of the proposed changes. SSA used another sample of cases
                      selected later in the test process to assess the impact of the proposed
                      changes on productivity (task time) at all levels and processing time at the
                      appellate level. This later sample was needed in order to give test
                      participants time to adjust to their new positions so that their productivity
                      could be fairly assessed. Data needed for this assessment are incomplete,
                      with approximately 15 percent of the AOs’ cases, 49 percent of ALJs’ control
                      cases, and 69 percent of ALJs’ test cases not yet processed. Therefore, as of
                      October 1998, SSA’s assessment of the impact of process changes on
                      productivity and processing time at the hearing level and for the overall
                      process was still preliminary and incomplete.


                      SSA has made important but incomplete progress with its process
Mixed Progress With   unification initiative to improve the consistency of disability decisions
Process Unification   between the initial and appellate levels. Concrete actions taken by SSA
                      under this initiative included completing nationwide process unification
                      training for 15,000 adjudicators and quality reviewers.50 This training
                      brought together staff from different offices and adjudicative levels in an
                      effort to give adjudicators consistent training and an opportunity to share
                      differing viewpoints. SSA has stated that it has also incorporated process
                      unification principles into its ongoing training program and has provided
                      additional cross-component training to adjudicators at all levels.
                      Regarding its goal of developing a single presentation of policy, SSA also
                      compared the guidance used by disability examiners with that used by ALJs
                      and identified small differences. Starting in July 1996, SSA has been
                      publishing new policies that are identical for all levels of adjudicators.
                      Although SSA has yet to make changes to more closely align its older
                      policies and procedures, SSA believes that instructions issued since 1996
                      address a substantial segment of important policy areas.



                      50
                       Before updating its plan, SSA issued in July 1996 nine SSRs to clarify policy in areas identified as
                      contributing to inconsistent decisions.



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SSA’s Efforts to Meet Near-Term Milestones




SSA has completed three of eight subinitiatives under process unification,
although two were completed somewhat later than planned. For one
subinitiative, SSA issued a final regulation in May 1998 that clarified its
process for acquiescing to—that is, modifying its policies as a result
of—court decisions. In addition, SSA has developed an action plan to
implement this regulation. For another subinitiative, SSA issued a
regulation in July 1998 establishing a new procedure for reviewing OHA
allowances in order to identify factors that contribute to differences
between DDS and ALJ decisions. SSA instituted these important changes 1
year behind schedule. SSA stated that it completed a third
subinitiative—ensuring complete documentation of evidence in cases in
which the DDS denies the claim—through its early process unification
training. However, SSA has not completed other actions included in its
original plan, such as developing a program circular on documentation
requirements and revising its quality assurance process to support those
requirements. SSA has been pursuing this subinitiative in concert with its
subinitiative that provides for more detailed explanations of
reconsideration denials. The combination of these two subinitiatives has
been referred to as the “expanded rationale initiative.”

As of October 1998, SSA had not completed, and had made mixed progress
with respect to, the other five subinitiatives. Final regulations that address
two subinitiatives—concerning the weight of DDS physicians’ opinions and
RFC for less than sedentary work—have been drafted, and SSA expects to
issue them in final form in the near future. SSA’s expanded rationale
subinitiative experienced a number of delays. After encountering
difficulties with an initial pilot test in 1997, SSA changed the focus of its
expanded rationale subinitiative from more fully documenting only denial
determinations to more fully documenting allowances as well. The agency
did not begin testing again until early 1998. After experiencing further
problems with deciding what information to include in the rationale, SSA
issued a notice of its intent to test this subinitiative as part of the FPM test,
beginning on or about October 29, 1998. For another subinitiative, SSA has
been unable to achieve the goal of, within 1 year, remanding 100,000
appealed cases that had new medical information from OHA to the DDS,
where medical experts reside to evaluate and reexamine the cases. SSA
began remanding cases on schedule in July 1997, but after 10 months it
had only remanded 8,488 cases to the DDSs. According to SSA, new evidence
was generally received too late to warrant remanding. Realizing that it
could not reach its goal of 100,000, SSA changed the remanding criteria to
assist OHA with processing old cases and plans to pursue the original
remanding goals through the other process unification subinitiatives.



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                    SSA’s Efforts to Meet Near-Term Milestones




                    Regarding its subinitiative on treating physicians’ opinions, SSA held a
                    symposium in June 1998 at which experts surfaced related policy issues on
                    this complex topic. In October 1998, SSA indicated it planned to develop a
                    final rule.


                    SSA missed key milestones for its quality assurance initiative as well. As
Delays in Quality   planned, SSA is developing “in-line” quality assurance procedures—
Assurance           approaches for building quality into the process at the beginning—as it
                    tests various redesign process changes. For example, as part of its SDM
                    preimplementation test, SSA asked state agencies to develop and test
                    approaches for improving the quality of SDM determinations. SSA planned to
                    implement these procedures at the same time that it implemented the SDM
                    and other process changes. However, implementation of in-line quality
                    assurance approaches for process changes such as the SDM has been
                    delayed along with implementation of the process changes themselves.
                    Moreover, as of October 1998, SSA had not assessed the impact that state
                    agency approaches have had on SDM quality.

                    In addition to in-line quality assurance efforts, SSA planned to develop one
                    standard for its end-of-line quality reviews in fiscal year 1997 and to test its
                    use in fiscal year 1998.51 However, as of the end of fiscal year 1998, the
                    agency had not reached agreement on what that single standard for quality
                    reviews should be.

                    Moreover, as of October 1998, SSA had identified additional and very
                    important issues and questions that should be addressed in the context of
                    the quality assurance initiative, including when, how, and by whom an
                    “end-of-line” review should be conducted; whether end-of-line quality
                    reviews should be balanced with respect to percentage of allowance and
                    denial decisions selected for review; whether the DDS performance
                    standard for quality reviews should be changed; and whether in-line
                    quality assurance approaches should be mandatory.




                    51
                     As discussed in ch. 1, SSA quality reviews reflect the fragmented approach to decision-making at the
                    two levels.



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Appendix III

Results of SSA’s Tests


                      SSA has not yet demonstrated that tested initiatives will significantly
                      improve the process. For the three tests conducted to date, SSA collected
                      data to assess whether the initiatives would help achieve its five redesign
                      objectives.52 To test its expectation that, overall, redesign would not
                      change total benefits paid to claimants, SSA also assessed the impact of
                      tested initiatives on the overall allowance rate. Results from SSA’s
                      stand-alone tests of the AO and SDM positions were disappointing and, in
                      the case of the AO, also inconclusive. FPM test results are still preliminary
                      but, as of October 1998, indicated some potential for improving the claims
                      process at the DDS level. For example, the combination of three process
                      changes—that is, the SDM, predecision interview, and elimination of
                      reconsideration—appears to improve accuracy of initial determinations
                      and to reduce processing time and administrative costs at the DDS level,
                      although SSA has not yet fully analyzed the extent of the improvement. On
                      the other hand, preliminary data on the AO’s performance in the FPM
                      context were inconclusive, and SSA has yet to demonstrate any
                      improvements at the appellate level. SSA has not yet determined the overall
                      impact of the four process changes together on the process.


                      Results from the stand-alone test of the AO position generally fell short of
AO Stand-Alone Test   SSA’s early targets, and SSA has not been able to demonstrate whether the
Results Were          AO position is meeting SSA’s redesign objectives. Regarding SSA’s objective

Disappointing and     of correctly allowing more claims at the earliest possible level, the AO
                      position appears to have improved the accuracy of allowances but did not
Inconclusive          increase the number of allowances made earlier in the process. SSA had
                      expected the AO to help meet this objective because each allowance made
                      correctly by an AO would represent a claim that would not require a
                      hearing. Early results from the AO test indicated that AOs were allowing
                      24 percent of cases. However, early AO allowances were not clearly more
                      accurate than comparable decisions made under the current process.
                      Comparable decisions are “on-the-record” allowances made by either ALJs
                      or other hearing office staff for claims that are relatively clear-cut and do
                      not require a hearing.53 However, after almost 3 years of testing—half of
                      which involved increased training and feedback for test participants—AO


                      52
                        SSA’s five redesign objectives are to (1) allow claims that should be allowed at the earliest possible
                      level; (2) make decisions as quickly as possible (reduce processing time, or the number of days needed
                      to make a final decision); (3) make the process more efficient (reduce task time spent working directly
                      on claims, administrative costs, or both); (4) make the process user-friendly; and (5) provide a
                      satisfying work environment for employees.
                      53
                        A comparison with all allowances made at the appeals level would be misleading because AOs were
                      expected to allow only those cases that were straightforward, whereas most allowances at the appeals
                      level are made by ALJs and generally involve more difficult adjudicative issues.



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Results of SSA’s Tests




accuracy has improved, and AO allowance decisions are currently more
accurate than comparable decisions made under the current process.54 On
the other hand, the percentage of claims allowed by the AOs has declined
over time, and SSA has not demonstrated that the current level of early
allowances made by the AO represents an improvement over the current
process. According to SSA officials, as of October 1998, AOs had been
allowing about 15 percent of appealed cases. Data we obtained from OHA
indicated that, as of October 1998, ALJs and OHA staff had together allowed
over 17 percent of appealed cases without a hearing.

Test results for two other redesign objectives—reducing processing time
and improving efficiency—fell short of SSA’s early targets and did not
clearly demonstrate an improvement over the current process. For
example, as of April 1998, AOs needed an average of 89 days to allow cases
and 103 days to prepare them for a hearing, compared with SSA’s early
targets of 45 and 60 days. In addition, SSA originally expected AOs to
process an average of two cases a day, but instead AOs processed, on
average, less than one case per day. Comparisons with SSA’s early targets
are somewhat misleading, according to SSA, because these targets assumed
that key supports for the AO would be in place, while the test did not
include such supports. To make a fairer assessment, SSA selected a small
group of control cases to be handled under the current process with
whose times the AO processing and task times could be compared.
However, as discussed in chapter 2, OHA staff did not handle AO and control
cases as instructed.55 Without control cases, SSA could not determine with
certainty whether, or the extent to which, the AO position reduced overall
processing or task time.56 On a positive note, judges considered 85 percent
of cases prepared by AOs to be fully developed and ready for a hearing.

Test results for the other two redesign objectives—to make the process
user-friendly and provide a satisfying work environment for
employees—were somewhat mixed. An early focus group study showed

54
  Different standards exist for reviewing the accuracy of disability decisions, and opinions differ
regarding which standard of review is appropriate to apply. SSA used three standards to assess the
relative accuracy of AO allowances and, as of September 1998, AO allowances were higher than
comparable decisions under the current process for all three standards.
55
 To fairly assess processing and task times, OHA staff were instructed to promptly schedule and hold
hearings for both AO and control cases.
56
  Comparing cases allowed or prepared by AOs with cases handled routinely under the current system
is inappropriate. Unlike AO cases, cases handled under the current system are generally placed in a
lengthy backlog of cases, which can increase both the processing and task times needed to reach a
final disposition. Comparing AO allowances with allowances for cases without a hearing under the
current process would be more appropriate; however, SSA has not collected the data needed to make
such a comparison.



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                        Results of SSA’s Tests




                        claimants preferred the AO process, but more recent survey data did not
                        show any clear preference. Two-thirds of claimants’ attorneys surveyed in
                        December 1997 viewed the AO process as an improvement over the
                        traditional hearing process.57 With respect to improving the work
                        environment, AO test participants surveyed by SSA generally liked the new
                        process, but other OHA staff were more neutral about the AO initiative.58

                        Finally, test results indicated that the AO position would significantly
                        increase overall allowance rates at the appellate level. Specifically, the
                        combined rate of AO allowances and ALJ allowances based on AO-prepared
                        cases was 56 percent as of March 1998, which is 4 percent higher than the
                        overall allowance rate for the appellate level under the current process.
                        Assuming no change in allowance rates at the initial level, such an
                        increase in allowances at the appellate level would translate into an
                        increase in overall benefit payments; however, SSA did not estimate the
                        impact on benefit payments.


                        Results of SSA’s stand-alone test of the SDM initiative were marginal and
SDM Stand-Alone Test    mixed and did not clearly indicate that, by itself, the SDM would
Results Were Marginal   significantly aid SSA in meeting its redesign objectives. SDM test results for
and Mixed               SSA’s objective to correctly allow more cases at the earliest level were
                        mixed. Although the SDM allowance rate was 1.2 percent higher than that
                        of the control group representing the current process, SDM accuracy was
                        slightly lower overall and significantly lower for denial determinations. In
                        particular, analysts identified nine impairments that were likely to be
                        associated with determination errors, such as diabetes and asthma, for
                        which the accuracy of SDM determinations was markedly lower than the
                        accuracy of determinations made under the current process. Maintaining
                        accuracy is critical because incorrect determinations can result in
                        unnecessary costs. For example, SSA staff unofficially estimated that the
                        relatively high number of inaccurate allowances by the SDM could result in
                        inappropriate benefits payments of $65 million, which would outweigh any
                        administrative cost savings. And inaccurate denials could cause
                        unnecessary reconsiderations and appeals, resulting in higher
                        administrative costs—which SSA estimated at $2 million—as well as
                        inconvenience, or even financial hardship, for some claimants. On the
                        other hand, SSA estimated that the increase in the number of allowances


                        57
                          However, a spokesperson representing an organization of SSA claimants’ attorneys that we contacted
                        indicated that the group does not support SSA’s AO initiative.
                        58
                         Six internal stakeholder groups that we contacted had the following views of the AO initiative: two
                        supported the AO concept, two opposed it, and two did not have a position but did have concerns
                        about its effectiveness.


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Results of SSA’s Tests




that the SDM made correctly could save $9.5 million as a result of fewer
reconsiderations and appeals.

The SDM’s contribution toward meeting two other redesign objectives was
marginal. By making the SDM solely responsible for the initial disability
determination, instead of jointly responsible along with a DDS physician,
SSA expected the SDM to reduce processing time and improve efficiency.59
However, test results indicated that the SDM process saved only 1 day,
compared with the current process. Test results also showed a marginal
decrease in task time (time spent working directly on cases). Specifically,
the DDS physician task time decreased by 7.1 minutes per case, offset
somewhat by an increase in SDM task time by 3.5 minutes, for an overall
decrease of 3.6 minutes per case. The potential administrative savings
associated with this process improvement was estimated by SSA to be
$16.1 million.

Test results for the objective of providing a satisfying work environment
for employees were generally positive. SSA’s survey of test participants
indicated the following: DDS managers believed the SDM model to be an
effective use of examiner and consultant resources, disability examiners
generally liked the process, and most medical consultants believed that
SDMs performed good work and required less input.60 SSA did not test
whether the SDMs would make the process user-friendly because this
process change is transparent to the customer.

With respect to the SDM’s impact on overall benefit payments, SSA
estimated that the increase in SDM allowances would translate into an
increase of $2.1 billion in program costs. SSA did not measure the impact of
SDM on the overall allowance rates—that is, by tracking SDM denial
determinations that were appealed through to the final decision—and the
associated program costs.

In its phase II test of SDM, SSA is exploring different approaches for
improving the accuracy, productivity, and processing time of the SDM.
Preliminary data from this test suggest that SDM accuracy and processing
time might be improving. However, as of June 1998, data from the phase II
test were not weighted to produce reliable estimates of accuracy or
productivity.

59
 SSA expected the SDM to consult with DDS physicians on an as-needed basis so that physicians
could concentrate on the more complex cases, thereby reducing task and processing time.
60
  Key stakeholder groups we contacted also supported the SDM concept, with the exception of groups
representing DDS physicians from two states.



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                  Results of SSA’s Tests




                  As of October 1998, preliminary results of the FPM test showed promise for
Preliminary FPM   achieving some of SSA’s five redesign objectives at the DDS level of the
Results Were      process; however, SSA has not determined the extent of potential
Promising but     improvements. As of October 1998, SSA had not processed enough cases,
                  and performed sufficient analysis, to demonstrate improvement at the
Inconclusive      appellate level.

                  Preliminary results indicate that, with the addition of the predecision
                  interview, the FPM brings SSA closer to its objective of correctly allowing
                  more cases earlier in the process—that is, at the DDS level; however,
                  progress toward this objective has not been demonstrated at the appellate
                  level. For initial determinations made under FPM, accuracy improved and
                  the allowance rate increased, compared with the current process.61 It is
                  unclear whether the 100-percent review of initial determinations in the FPM
                  test affected relative accuracy and allowance rates.62 Moreover, if
                  allowances made at the reconsideration step are included in the analysis,
                  the overall allowance rates at the DDS level under the current process and
                  under FPM are similar: 36.8 and 36.5, respectively. SSA preliminary findings
                  are less conclusive at the appellate level. As of October 1998, SSA had not
                  completely processed all the test cases through the appellate level.63 Also,
                  SSA did not completely assess the AO’s performance with respect to this
                  objective. For example, SSA compared the accuracy of AO allowances with
                  that of all other allowances made at the appellate level under the current
                  process. As discussed previously, a more appropriate comparison would
                  have been with those cases allowed under the current process—by either
                  ALJs or other OHA staff—that did not require a hearing: that is, similarly
                  clear-cut cases.

                  With the elimination of reconsideration, the FPM appears to contribute to
                  reductions in processing time (measured in days) and task time (measured
                  in minutes or work-years saved) at the DDS level. This analysis is
                  incomplete, however, and SSA has not determined the impact of changes at

                  61
                    Using a predecision interview, the SDM’s accuracy rate for initial determinations that resulted in
                  denials was 2 percent higher than under the current process; the accuracy rate for allowances was
                  comparable to that of the current process. In addition, the allowance rate was 4.7 percent higher than
                  that of the current process.
                  62
                    All initial determinations in the FPM test were reviewed for accuracy, whereas the comparison group
                  received its normal, lower level of review that focuses on allowance decisions. The difference in level
                  and focus of the reviews could have affected the relative behavior of FPM test participants.
                  63
                   As discussed in app. II, SSA used two different groups of cases for its assessment of the FPM. As of
                  Oct. 1998, 5 percent of the 2-month group of test cases used to assess accuracy and allowance rates
                  had still not been completed by AOs, and 15 percent had not been completed by ALJs. For the different
                  set of cases used to assess task time and processing time, as of Oct. 1998, 15 percent had not been
                  completed by AOs, and more than 50 percent had not been completed by ALJs.



                  Page 86                                     GAO/HEHS-99-25 Disability Claims Process Redesign
Appendix III
Results of SSA’s Tests




the appellate level or on the process overall. Because of the predecision
interview, the SDM required more days and task time to reach a final
determination, as compared with the current process.64 On the other hand,
the elimination of reconsideration under FPM has potential for significantly
lowering the overall number of days and task time needed to reach a final
determination at the DDS level. As of October 1998, SSA estimated that FPM
would save 2,600 staff-years valued at $185 million because of reduced
task time spent on cases at the DDS level. However, SSA’s test results did
not include an assessment of overall reductions in processing time at the
DDS level. Moreover, SSA had not demonstrated the impact of FPM changes
on processing and task time at the appellate level and on the process
overall. SSA’s test results were incomplete, in part, because it had not
processed all the test cases through the appeals process. In particular, SSA
lacked a sufficient number of cases to assess the impact of FPM on task
time at the appellate level. In addition, SSA results did not include a
comparison of the overall processing and task time needed at the appellate
level to reach a final decision under FPM—either by an AO or an ALJ using an
AO-prepared case—with the time needed under the current process.


Test results did not demonstrate whether FPM would make the process
more user-friendly, although there were indications that FPM might provide
a more satisfying work environment. Customer survey results indicated
that customer satisfaction was greater for those awarded after a
predecision interview than for those denied and that the predecision
interview did not alter the overall satisfaction of claimants who were
denied. The survey also revealed that claimants found the letter sent by SSA
to inform them of the interview to be confusing. With respect to the work
environment, a majority of FPM test participants indicated that they
believed that the new process offered them the ability to serve the
claimant better. In addition, most test participants felt that their new
duties had a positive effect on their job satisfaction.

Finally, preliminary test results indicated that the FPM might result in a
higher overall allowance rate and benefit payments, although more cases
need to be processed and evaluated to reach a final conclusion. As of
October 1998, SSA estimated an increase of 2 percent in the overall
allowance rate under FPM but had not yet estimated the impact on benefit
payments.



64
  With the predecision interview, the SDM required, on average, 11 more days to make initial
allowances and 24 more days to make denials than under the current process. Overall, the SDM’s task
time was 16.3 minutes longer than that of the current process for initial determinations.



Page 87                                    GAO/HEHS-99-25 Disability Claims Process Redesign
Appendix IV

Comments From the Social Security
Administration




              Page 88     GAO/HEHS-99-25 Disability Claims Process Redesign
Appendix IV
Comments From the Social Security
Administration




Page 89                             GAO/HEHS-99-25 Disability Claims Process Redesign
                Appendix IV
                Comments From the Social Security
                Administration




Now on p. 54.




                Page 90                             GAO/HEHS-99-25 Disability Claims Process Redesign
Appendix IV
Comments From the Social Security
Administration




Page 91                             GAO/HEHS-99-25 Disability Claims Process Redesign
Appendix IV
Comments From the Social Security
Administration




Page 92                             GAO/HEHS-99-25 Disability Claims Process Redesign
Appendix V

GAO Contacts and Staff Acknowledgments


                  Kay Brown, Assistant Director, (202) 512-3674
GAO Contacts      Michele Grgich, Evaluator-in-Charge, (415) 904-2183


                  In addition to those named above, Julie M. DeVault, Carlos J. Evora, John
Staff             M. Ortiz, and Robert T. Tomco made major contributions to collecting and
Acknowledgments   synthesizing data. Ms. DeVault, Mr. Tomco, and James P. Wright
                  contributed significantly to writing this report, and Sharon L. Caudle and
                  William E. Hutchinson provided valuable technical assistance throughout
                  the review.




                  Page 93                         GAO/HEHS-99-25 Disability Claims Process Redesign
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Page 95        GAO/HEHS-99-25 Disability Claims Process Redesign
Related GAO Products


              Social Security Disability: SSA Making Progress in Conducting Continuing
              Disability Reviews (GAO/HEHS-98-198, Sept. 18, 1998).

              Social Security Reform: Raising Retirement Ages Improves Program
              Solvency but May Cause Hardship for Some (GAO/T-HEHS-98-207, July 15,
              1998).

              Social Security Administration: Technical Performance Challenges
              Threaten Progress of Modernization (GAO/AIMD-98-136, June 19, 1998).

              The Results Act: Observations on the Social Security Administration’s
              Fiscal Year 1999 Performance Plan (GAO/HEHS-98-178R, June 9, 1998).

              Social Security Administration: Software Development Process
              Improvements Started but Work Remains (GAO/AIMD-98-39, Jan. 28, 1998).

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

              Business Process Reengineering Assessment Guide (GAO/AIMD-10.1.15,
              Apr. 1997, Ver. 3).

              SSA:Significant Challenges Await New Commissioner (GAO/HEHS-97-53,
              Feb. 20, 1997).

              SSADisability Redesign: Focus Needed on Initiatives Most Crucial to
              Reducing Costs and Time (GAO/HEHS-97-20, Dec. 20, 1996).

              Appealed Disability Claims: Despite SSA’s Efforts, It Will Not Reach
              Backlog Reduction Goal (GAO/HEHS-97-28, Nov. 21, 1996).

              SSA Disability Redesign: More Testing Needed to Assess Feasibility of New
              Claim Manager Position (GAO/HEHS-96-170, Sept. 27, 1996).

              Social Security Disability: Backlog Reduction Efforts Under Way;
              Significant Challenges Remain (GAO/HEHS-96-87, July 11, 1996).

              Executive Guide: Effectively Implementing the Government Performance
              and Results Act (GAO/GGD-96-118, June 1996).




(207007)      Page 96                          GAO/HEHS-99-25 Disability Claims Process Redesign
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