Social Security Disability: SSA Has Had Mixed Success in Efforts to Improve Caseload Management

Published by the Government Accountability Office on 1999-10-21.

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

                             United States General Accounting Office

GAO                          Testimony
                             Before the Subcommittees on Social Security and Human
                             Resources, Committee on Ways and Means, House of

For Release on Delivery
Expected at 10:00 a.m.
Thursday, October 21, 1999
                             SOCIAL SECURITY

                             SSA Has Had Mixed
                             Success in Efforts to
                             Improve Caseload
                             Statement of Cynthia M. Fagnoni, Director
                             Education, Workforce, and Income Security Issues
                             Health, Education, and Human Services Division

Social Security Disability: SSA Has Had
Mixed Success in Efforts to Improve
Caseload Management
               Messrs. Chairmen and Members of the Subcommittees:

               Thank you for inviting me here today to discuss the Social Security
               Administration’s (SSA) management of its disability caseload. The nation’s
               two major federal disability programs, Disability Insurance (DI) and
               Supplemental Security Income (SSI), provide an important economic safety
               net for individuals and families. Last year, about 11 million people received
               $77 billion in benefits from these programs. Yet both programs have long
               suffered from a set of serious problems. The process of applying for
               benefits is complex and can confuse or frustrate the applicants. Also, SSA
               has a backlog of applications and appealed cases, and people often have to
               wait as long as a year for a final decision on their eligibility. Moreover,
               there are concerns about the fairness of the decision-making process
               because of the high percentage of applicants who are initially denied
               benefits and then, upon appeal, are approved. Finally, once people begin
               receiving benefits, SSA’s reviews to determine whether these beneficiaries
               continue to be eligible have been inadequate.

               SSA,as the agency responsible for administering these disability programs,
               has recognized and taken action to address these problems. In 1994, the
               agency embarked on an ambitious plan to fundamentally overhaul the
               disability claims process. Since then, SSA has tested a number of significant
               process changes and has taken other steps intended to provide the public
               with better service, reduce the work backlog, and improve the consistency
               of decisions. SSA has also taken steps to catch up on overdue reviews to
               determine whether individuals remain eligible for their benefits over time.
               Now that several years have elapsed since SSA began these efforts, you
               asked us to assess its progress. Today I will discuss (1) the status of SSA’s
               efforts to improve its claims process, (2) lessons learned from the agency’s
               efforts to date that can be applied to its current and future claims
               processing improvement plans, and (3) SSA’s efforts to review the
               continuing eligibility of its beneficiaries. The information I am providing
               today is based primarily on our published reports (see the list of related
               GAO products at the end of this statement).

               In summary, SSA is only just beginning to make headway on improving its
               claims process but has been far more successful in catching up on overdue
               eligibility review of current beneficiaries. It is vital that SSA tackle its
               claims process problems now, before the agency is hit with another surge
               in workload as the baby boomers reach their disability-prone years.

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             Social Security Disability: SSA Has Had
             Mixed Success in Efforts to Improve
             Caseload Management

             The agency’s first ambitious plan to redesign its claims process in 1994
             yielded little. When the agency scaled back its plan in 1997, progress was
             slow, in part because even the scaled-back plan proved to be too large to
             be kept on track. In addition, SSA’s proposed changes initially showed
             disappointing and inconclusive results. We made a number of
             recommendations designed to improve SSA’s prospects for success as it
             continues its efforts to improve the claims process, and, in March of this
             year, SSA issued a new disability plan that is consistent with some of our
             recommendations. For example, it places emphasis on initiatives to
             improve the quality and consistency of decisions. However, much remains
             to be done. Moreover, the plan also includes a bold new initiative to revise
             operations at SSA’s hearings offices. For SSA to avoid repeating some of the
             mistakes of the past, this hearings office initiative, as well as the entire set
             of steps outlined to improve the disability claims process, will require
             concerted management oversight and diligence.

             SSA’s experience with catching up on its overdue disability reviews, on the
             other hand, has been more successful. The agency has exceeded its goals
             for the last 3 years and appears on track to complete the goals it laid out in
             a 7-year plan. However, the state agencies conducting these reviews must
             balance this large workload with their other work, such as determining
             eligibility for incoming claims. Unanticipated increases in any of the
             workloads could strain the agencies’ ability to keep up their current pace.

             DI and SSI both provide cash benefits to people with long-term disabilities.
Background   The DI program, enacted in 1954, provides monthly cash benefits to
             workers who have become severely disabled and their dependents or
             survivors. These benefits are financed through payroll taxes paid by
             workers and their employers and by the self-employed. In 1998, 6.3 million
             individuals received DI benefits amounting to $47.7 billion. SSI, on the other
             hand, was enacted in 1972 as an income assistance program for aged,
             blind, or disabled individuals whose income and resources have fallen
             below a certain threshold.1 SSI payments are financed from general tax
             revenues, and SSI beneficiaries are usually poorer than DI beneficiaries. In
             1998, 6.6 million individuals received SSI benefits of $27.4 billion.2 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. The standards for determining whether the severity of an
             applicant’s impairment qualifies him or her for disability benefits are

              In 1998, almost 900,000 disabled children received SSI benefits.
              About 14 percent of disabled DI benefit recipients have incomes that also qualify them for SSI.

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                          Social Security Disability: SSA Has Had
                          Mixed Success in Efforts to Improve
                          Caseload Management

                          spelled out in the Social Security Act and extensive SSA regulations and

Problems Are Associated   SSA’sdisability claims process has long suffered from problems associated
With Complex Disability   with its complexity and fragmentation. Figure I shows the complex
Claims Process            process, which is in part required by law. The process begins when a
                          claimant contacts one of SSA’s almost 1,300 field offices across the country
                          to apply for benefits. Once the application is completed, field office
                          personnel forward the claim to one of 54 state disability determination
                          service (DDS) agencies.3 At the DDS, a team consisting of a specially trained
                          disability examiner and an agency physician or psychologist reviews the
                          available medical evidence and determines whether the claimant is
                          disabled. If the claimant is dissatisfied with the initial determination, the
                          process provides for three levels of administrative review: (1) a
                          reconsideration of the decision by the DDS, (2) a hearing before an
                          administrative law judge at an SSA hearings office, and (3) a review by SSA’s
                          Appeals Council. Upon exhausting these administrative remedies, the
                          claimant may file a complaint with a federal court. The cost of
                          administering the disability programs reflects 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 its disability programs, even
                          though disability beneficiaries are only 21 percent of the agency’s total
                          number of beneficiaries.

                           Under a federal-state arrangement, SSA funds these DDSs, which are administered by the 50 states
                          and the District of Columbia, Guam, Puerto Rico, and the Virgin Islands.

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                                    Social Security Disability: SSA Has Had
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                                    Caseload Management

Figure 1: SSA’s Disability Claims
Process                                                                  Claimant Contacts SSA Field Office

                                        Application Process
                                                                         SSA Field Office Personnel
                                                                         · Obtain Information
                                                                         · Advise on Eligibility for Nonmedical Factors
                                                                              If Nonmedical Eligibility Factors Are Met,
                                                                              Application Is Forwarded to DDS

                                                                         State DDS Personnel
                                                                         · Gather, Develop, and Review Medical Evidence
                                              Determination              · Work-Related
                                                                           Decide on Eligibility on Basis of Medical and

                                                                              If Determination Is Not Favorable, Claimant Has
                                                                              60 Days to Request a Reconsideration

                                                                         State DDS Personnel
                                             Reconsideration             · Reexamine Prior and Any New Evidence
                                                                         · Render a New Eligibility Decision
                                                                              If Reconsideration Is Not Favorable, Claimant Has
                                                                              60 Days to Request a Hearing Before an ALJ

                                        Administrative Law               SSA Hearings Office Personnel
                                          Judge (ALJ)                    · Review for Additional Medical Evidence
                                                                         · Conduct a Hearing and Render a New Decision
                                                                              If ALJ Decision Is Not Favorable, Claimant Has
                                                                              60 Days to Request an Appeals Council Review

                                                                         SSA Appeals Council
                                             Appeals Council             · Decides  Whether to Review the Case
                                                                         · Reverse
                                                                           If Case Is Reviewed, Decides Whether to
                                                                                     Decision or Return Case to ALJ
                                                                              If Appeals Council Decision Is Not Favorable
                                                                              Claimant Can Appeal to Federal Court

                                                                         Federal Court
                                              Federal Court              · Renders a New Decision

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Social Security Disability: SSA Has Had
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The disability claims process has proved to be a lengthy one that can
confuse and frustrate applicants. Since the early 1990s, claimants applying
for disability benefits have often had to wait over a year for a final
decision on their eligibility. Delays can be caused by the need to obtain
extensive medical evidence from health care providers to document the
basis for disability.4 In addition, however, because of the multiple levels
and decision points in the process, a great deal of time can pass while a
claimant’s file is passed from one SSA employee or office to another.
Moreover, 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.

Long-standing problems with this process were exacerbated when the
number of claims for disability benefits increased dramatically between
fiscal years 1991 and 1993—from about 3 million to 3.9 million, or almost
32 percent.5 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. Since
that time, the number of people applying for disability has fallen to just
under 3 million per year; however, the hearings offices in particular have
yet to recover. At the end of fiscal year 1998, there were still over 380,000
backlogged hearings. Moreover, SSA expects claims to begin to increase in
the near future as the baby boom generation approaches its
disability-prone years.

The current process also permits inconsistent decisions between the initial
and appeal levels. In 1996, about two-thirds of all those whose claims were
denied at the reconsideration level filed an appeal, and, of these, about
65 percent received favorable decisions at the hearing level. SSA has
determined that, at the initial level, denial cases are more error-prone than
are allowance cases, while at the hearing level, allowance cases are more
error-prone. This inconsistency has been attributed to a number of factors.
According to SSA, an administrative law judge (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

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

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                            with the same evidence. 6 This is due, in part, to the fact that DDS and ALJ
                            adjudicators use different approaches in evaluating claims and making
                            decisions. This inconsistency of decisions 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.

SSA Was Behind on           In addition to determining whether a claimant is eligible to receive
Required Periodic Reviews   benefits, SSA is required by law to conduct continuing disability reviews
                            (CDR) for all DI and some SSI disability beneficiaries. These CDRs are
                            conducted by DDS personnel to determine whether beneficiaries continue
                            to meet the disability requirements under the law. If DDS personnel find
                            that a beneficiary’s medical condition no longer meets the disability
                            criteria, benefits will be terminated. SSA’s regulations call for CDRs to begin
                            anywhere from 6 months to 7 years after benefits are awarded, depending
                            on the beneficiary’s potential for medical improvement given impairment
                            and age. If a DDS terminates the benefits of a current beneficiary, the
                            individual may ask the DDS to reconsider the initial decision and, if denied
                            again, appeal to an ALJ and, ultimately, to federal court.

                            Budget and staff reductions and large increases in initial claims work have
                            hampered DDS efforts to conduct the required CDRs. Previously, budget
                            reductions in the late 1980s had led to DDS staff reductions, which in turn
                            interfered with DDSs’ ability to complete CDRs on time. By 1991, DDS staffing
                            levels had begun to increase; however, DDS resources were diverted away
                            from CDRs to process the growing number of initial claims. By fiscal year
                            1996, SSA had about 4.3 million DI and SSI CDRs due or overdue. As a result,
                            hundreds of millions of dollars in unnecessary costs were incurred each
                            year because ineligible beneficiaries were not identified and continued to
                            receive benefits, and program integrity was undermined.

                            SSA has been engaged in a concerted effort to streamline or redesign its
SSA’s Progress in           disability claims process for over 5 years. In 1994, it issued an ambitious
Improving the Claims        plan with a multitude of initiatives, which was followed by a scaled-back
Process Has Been            plan in early 1997. The agency’s progress throughout this period was slow,
                            in part because even the scaled-back plan proved to be too large and
Limited                     cumbersome to be kept on track. In addition, SSA’s strategy for testing

                             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.: Department of Health and Human Services, Jan. 1982).

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                         Social Security Disability: SSA Has Had
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                         Caseload Management

                         proposed changes initially led to inconclusive and disappointing results.
                         Moreover, SSA’s new information technology effort to support the
                         improved disability claims process ran aground. It is not uncommon for
                         government agencies to experience difficulty in similar attempts to
                         dramatically overhaul their operations, and we have made a number of
                         recommendations to SSA to improve the likelihood of its success. For
                         example, we recommended that SSA further sharpen its focus on those few
                         initiatives with the greatest potential for success and that the agency
                         rethink its testing approach.

SSA Has Made Little      To address long-standing problems and dramatically improve customer
Progress Under Initial   service, SSA embarked on a plan in 1994 to radically reengineer, or
Redesign Plans           redesign, its disability claims process. This plan included 83 initiatives to
                         be completed over 6 years, with 38 near-term initiatives. SSA planned to
                         provide an automated and simpler claim intake and appeal process, a
                         simplified method for making disability decisions, more consistent
                         guidance and training for decisionmakers at all levels of the process, and
                         an improved process for reviewing the quality of eligibility decisions.7
                         From the claimant’s perspective, the redesigned process was to offer a
                         single point of contact and a more efficient process with fewer decision
                         points. SSA had high expectations for its proposed redesigned process. The
                         agency projected that the combined changes to the process would result,
                         by fiscal year 1997, in a 25-percent improvement in productivity and
                         customer service over projected fiscal year 1994 levels, and a further
                         25-percent improvement by the end of fiscal year 2000—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

                         However, SSA did not actually realize these expected benefits. In our 1996
                         report on SSA’s progress in redesigning the claims process, we concluded
                         that, 2 years into the plan, SSA had yet to achieve significant progress.8 For
                         example, SSA had not fully completed any of the 38 near-term initiatives it
                         had hoped to accomplish in the first 2 years. As a result, the agency was

                          SSA has a 25-year-old process for reviewing the quality of disability decisions. Under this process,
                         teams of independent reviewers reexamine a portion of the decisions made by DDS personnel and
                         ALJs. However, the Social Security Advisory Board has reported that the current quality review
                         process is flawed and should be revised.
                          SSA Disability Redesign: Focus Needed on Initiatives Most Crucial to Reducing Costs and Time
                         (GAO/HEHS-97-20, Dec. 20, 1996).

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unable to demonstrate that any of its proposed changes would work. The
agency’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. In order to increase
SSA’s chance of success, we recommended in 1996 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.

As a result of our findings, the overall lack of progress, and stakeholder
concerns, SSA reassessed its approach to redesign and issued a revised
plan in February 1997. The new plan focused on eight key initiatives, each
one intended to effect a major change to the system.9 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,
ending in 2003. 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, while the others had longer-term milestones. Table 1 summarizes
these initiatives.

 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

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Table 1: Initiatives in SSA’s 1997 Plan
to Redesign Its Claims Process            Initiatives                        Description
                                          Single Decision Maker              New decisionmaker position that would give DDS
                                                                             examiner authority to determine eligibility without
                                                                             requiring physician input
                                          Adjudication Officer               New decisionmaker position that would help facilitate the
                                                                             process when an initial decision was appealed
                                          Full Process Model                 Process change that would combine the two above
                                                                             positions with a new requirement to interview the claimant
                                                                             before a denial and would eliminate the reconsideration
                                                                             and Appeals Council steps
                                          Process Unification                A series of ongoing initiatives that were intended to
                                                                             promote more consistent decisions across all levels of the
                                          Quality Assurance                  New procedures to build in quality as decisions were
                                                                             made and to improve quality reviews after decisions were
                                          Disability Claims Manager          New decisionmaker position to combine the disability
                                                                             claims responsibilities of SSA field office personnel with
                                                                             DDS staff
                                          Reengineered Disability            Initiative to develop a new computer software application
                                          (Computer) System                  to more fully automate the disability claims process
                                          Simplified Decision                Research to devise a simpler method for evaluating and
                                          Methodology                        deciding who is disabled

                                          The new decisionmaker positions were 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 together with other
                                          proposed and related changes. The Full Process Model initiative did,
                                          however, combine the two positions and other changes into a single test.

                                          Even under its scaled-back plan, SSA experienced problems and delays. In
                                          March 1999, we reported that SSA had made limited progress in redesigning
                                          its disability claims process. 10 On the positive side, under its process
                                          unification initiative, which contains a number of initiatives to improve the
                                          consistency of decisions, SSA had provided uniform training to over 15,000
                                          decisionmakers from all components of the claims process. Agency
                                          officials told us they believe this training and other related efforts have
                                          contributed to providing benefits to 90,000 eligible individuals 500 days
                                          sooner than they might have been provided over the last 3 years. However,
                                          overall, SSA had not met most of the milestones for testing or implementing

                                           See SSA Disability Redesign: Actions Needed to Enhance Future Progress (GAO/HEHS-99-25,
                                          Mar. 12, 1999). We reviewed only SSA’s progress on its near-term initiatives in this report.

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its five near-term initiatives, including its planned changes to its quality
assurance process.

Moreover, the agency had not yet demonstrated that its proposed changes
would significantly improve the claims process. SSA’s stand-alone tests of
the two near-term decisionmaker positions consumed valuable staff time,
and the results were marginal or inconclusive, thus not supporting the
wider implementation of the positions. For example, in one test, SSA hoped
that giving certain DDS staff (the Single Decision Makers) more authority to
make decisions without requiring the usual physician approval would
significantly reduce the time spent reaching an eligibility decision, but the
test results showed an average improvement of only 1 day. As a result,
rather than implement the two near-term positions, SSA decided to wait for
results of its integrated test. Full and final results of the integrated test are
not yet available, but current results show a higher percentage of
individuals were appropriately allowed benefits at the initial level, the
quality of decisions to deny benefits at the initial level improved, and
claimants who appealed their initial decisions had access to the hearing
process earlier (primarily because the test included eliminating the
reconsideration step).

As a result of the delays and less positive than expected results, SSA
decreased its projected administrative savings and postponed the date for
realizing any savings. Projections changed from saving 12,086 staff-years
from 1998 to 2002 to saving 7,207 staff-years from 1999 to 2003.

SSA’s inability to keep on schedule and disappointing test results were
caused, in part, by the agency’s overly ambitious plan and the strategy for
testing proposed changes. Like its original redesign plan, SSA’s revised plan
proved too large and unwieldy to be kept on schedule. SSA’s approach of
moving ahead on many fronts simultaneously—including conducting
several large tests—was difficult to manage. For example, in fiscal year
1998, SSA had five tests ongoing at over 100 sites involving over 1,000 test
participants.11 Each test included time-consuming activities, such as
coordinating the activities of many state and federal offices and building
consensus among such stakeholder groups as employee unions and
associations, state entities, and advocacy groups. In addition, SSA’s
decision to conduct stand-alone tests contributed to disappointing and
inconclusive results because key supports and related initiatives, such as
the improved information technology system, were not in place during the

 These tests included one of the Single Decision Maker, the Adjudication Officer, the Full Process
Model, Process Unification, and the Disability Claims Manager.

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                           tests. SSA conducted these stand-alone tests because it wanted to institute
                           the two near-term decisionmaker positions quickly, hoping to achieve
                           speedy process improvement and administrative savings. When tested
                           alone, however, these positions did not demonstrate potential for
                           significantly improving the process. Finally, other limitations in SSA’s test
                           design and management made it difficult for SSA to predict how an
                           initiative would operate if actually implemented. For example, in one test
                           of a new decisionmaker position, hearings office staff did not handle the
                           test cases and control cases as instructed; as a result, certain test results
                           were not meaningful.

Progress on Key            At the same time that SSA was working on its five near-term initiatives, the
Information Technology     agency was also working on the three longer-term initiatives (see table 1).
Initiative Has Also Been   We did not review two, which were still in the early stages. However, we
                           did assess the agency’s progress on its reengineered disability system,
Limited                    which was to develop a new computer software application to automate
                           the disability claims process.

                           This new software application was expected to automate and integrate the
                           many steps of the process: the initial claims-taking in the field office, the
                           gathering and evaluation of medical evidence in the DDSs, the payment
                           process in the field office or processing center, and the handling of
                           appeals in hearings offices. In the early 1990s, SSA began designing and
                           developing this software, which was expected to increase productivity,
                           decrease disability claims processing times, and provide more consistent
                           and uniform disability decisions. However, since its early stages, the effort
                           was plagued with performance problems and schedule delays. In July
                           1999, we testified before the Subcommittee on Social Security that after
                           approximately 7 years and more than $71 million reportedly spent, SSA no
                           longer planned to pursue this software development effort.12 This decision
                           was based on findings and recommendations reported by the consulting
                           firm Booz-Allen and Hamilton, which contracted in March 1998 to
                           independently evaluate and recommend options for proceeding with the
                           initiative. On the basis of its evaluation, Booz-Allen and Hamilton reported
                           that the reengineered disability software contained defects that would
                           increase, rather than decrease, case processing time at both field office
                           and DDS sites. First, the software had performance problems that would
                           increase field office interview time. Furthermore, implementing this
                           software at the DDS sites would require that the DDS examiners’ caseloads

                             Social Security Administration: Update on Year 2000 and Other Key Information Technology
                           Initiatives (GAO/T-AIMD-99-259, July 29, 1999).

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                        be reduced from 125 cases to 25 cases. Therefore, if this reengineered
                        disability system had been implemented, DDSs would have had to increase
                        their staff to maintain the current processing time.

Redesign Challenges     SSA  is not the only government agency that has had trouble overhauling or
Warrant Sharper Focus   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 difference between the
                        government and the private sector workplaces. 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. For example, as part of
                        its redesign effort, SSA had identified over 100 individual groups with a
                        stake in the process—both internal and external to SSA—whose
                        involvement was, in many cases, critical.

                        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, 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.13

                        In a March 1999 report, we made a number of recommendations to
                        enhance SSA’s prospects for future success. 14 We based our
                        recommendations on best practices from other reengineering efforts and
                        lessons learned from SSA’s experiences. We recommended that SSA further
                        sharpen its focus on those initiatives that offer the greatest potential for
                        achieving the most critical redesign objectives. Such initiatives include
                        those that improve consistency in decision-making, such as process

                         Through the Personal Responsibility and Work Opportunity Reconciliation Act, enacted in 1996 and
                        commonly referred to as welfare reform, the Congress made changes to the SSI program to ensure that
                        only needy children with severe disabilities receive benefits.
                          GAO/HEHS-99-25, Mar. 12, 1999.

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                        unification; those that help ensure accurate results, such as quality
                        assurance; and those that achieve large efficiencies through the use of
                        technology, similar to the goals of the reengineered disability computer
                        system. We also recommended that SSA test promising concepts in an
                        integrated fashion, so that the agency could judge how proposed changes
                        would work in synergy with other changes, and at only a few sites, to more
                        efficiently identify promising concepts. In view of the large investments of
                        time and resources involved in conducting tests, we also recommended
                        that SSA establish key supports and explore feasible alternatives before
                        committing significant resources to testing other specific initiatives.

                        In addition, implementing process changes can be even more difficult than
                        testing them, and process changes may not operate as expected outside
                        the test environment. Therefore, we recommended that SSA develop a
                        comprehensive set of performance goals and measures to assess and
                        monitor the results of changes in the disability claims process on a timely
                        basis. We also said SSA should take steps to ensure that quality assurance
                        processes are in place to both monitor and promote the quality of
                        disability decisions. SSA agreed with parts of our recommendations,
                        including the need to emphasize process unification and quality assurance.

                        After 2 years’ experience under its scaled-back redesign plan, SSA’s
SSA’s New Claims        Commissioner issued a new, broader disability plan in March 1999 that
Process Plan Has        outlined a comprehensive package of initiatives the agency planned to
Positive Features but   take to improve its disability programs. Among these initiatives are SSA’s
                        planned next steps for improving the disability claims process and the
Faces Continuing        integrity of the disability programs.15 Consistent with our previous
Challenges              recommendations, SSA’s plan places emphasis on certain areas most likely
                        to make a difference, such as process unification efforts to improve the
                        consistency of decisions between the DDS and hearing levels. In addition,
                        SSA is moving to test and assess more changes in an integrated fashion,
                        although the agency still continues large-scale, and in some cases
                        stand-alone, tests. Finally, SSA has laid out a bold plan to overhaul
                        operations at its hearings offices, which is a needed change but is likely to
                        prove challenging to implement.

                          The plan also includes initiatives to enhance beneficiaries’ opportunities to work.

                        Page 13                                                                            GAO/T-HEHS-00-22
                                      Social Security Disability: SSA Has Had
                                      Mixed Success in Efforts to Improve
                                      Caseload Management

New Plan Builds on Past               Under its new plan, SSA decided to build on the improvements identified
Success, but Much Work                through its 1997 plan and make changes in some areas where the earlier
Remains                               plan did not bear fruit. Table 2 summarizes the new plan’s initiatives to
                                      improve the process.16

Table 2: Initiatives to Improve the
Disability Claims Process in the      Initiatives                         Description
March 1999 Plan                       Enhance consistency of              Implement further process unification initiatives, such as
                                      decisions                           more training, unified policy and guidance, and better
                                                                          documentation of the reasons for DDS decisions.
                                      Enhance quality of decisions        Develop a more comprehensive quality review system.
                                      Improve information                 Develop and deploy a fully automated disability claims
                                      technology and support              process, using an electronic folder to transmit data from
                                                                          one location to another.
                                      Streamline the disability           — Test final prototype, which includes the successful
                                      claims process                      features of the integrated Full Process Model test and
                                                                          adds a new feature to better document reasons for DDS
                                                                          — Continue to test the Disability Claims Manager position.
                                                                          — Overhaul hearings office procedures.

                                      SSA’s new plan is consistent with some of our recommendations, but much
                                      remains to be done. The plan emphasizes three areas that we agree offer
                                      the greatest potential for improving the overall claims process: process
                                      unification, quality assurance, and improved efficiencies through the use
                                      of technology. The plan commits the agency to further process unification
                                      activities, such as more training, continued efforts to increase uniformity
                                      in the way policy and guidance for the DDSs and ALJs are written, and
                                      added steps to improve how thoroughly decisions are documented. For
                                      the remaining two initiatives, SSA is essentially stepping back and adjusting
                                      course on the basis of its experience over the last few years. The plan
                                      outlines steps the agency plans to take to offer a more comprehensive
                                      quality review system, and SSA officials told us they are going to use an
                                      outside contractor to review the agency’s approach to quality assurance.
                                      Finally, the plan outlines SSA’s next steps to improve information
                                      technology and support for the disability claims process. SSA plans to use
                                      the lessons learned from the failed computer support pilot to develop and
                                      deploy an automated disability claims process for use by SSA’s 1,300 field
                                      offices. This strategy includes using an electronic folder to transmit data
                                      from one processing location to another, rather than the current process
                                      of moving a paper folder from one location to another.

                                        This plan also includes provisions to update the medical and vocational guidelines for the disability
                                      eligibility process. See SSA, Social Security and Supplemental Security Income Disability Programs:
                                      Managing for Today, Planning for Tomorrow, Mar. 11, 1999.

                                      Page 14                                                                            GAO/T-HEHS-00-22
                           Social Security Disability: SSA Has Had
                           Mixed Success in Efforts to Improve
                           Caseload Management

                           SSA’s new approach to streamlining the claims process contains some
                           improvements over its prior approach, but it also contains some
                           drawbacks that could block or hinder the agency’s success. Consistent in
                           principle with our recommendations, SSA is testing a prototype that
                           incorporates a number of initiatives and process changes in an integrated
                           fashion. In addition to testing most of the features of the earlier integrated
                           test, the prototype also adds one new feature to improve documentation
                           on how decisions are made. This new feature is expected to improve both
                           the accuracy of decisions and customer service, which is consistent with
                           our recommendation to focus on quality. On the other hand, this feature is
                           also likely to add to the time and cost of processing a final decision.
                           Although we support integrated testing, by not adding this new feature
                           until the final test, SSA is again testing a new initiative on a large scale and
                           without a good idea of how the change will affect the entire process. This
                           prototype began on schedule this month, according to SSA officials.
                           However, the agency has not yet completed its evaluation plan for this
                           prototype test, so it is difficult to tell how or when the results will be

                           SSA  is also continuing some tests that run contrary to our recommendation
                           that it conduct more integrated tests at only a few sites. For example, SSA
                           is testing the feature designed to improve decisional documentation alone,
                           outside the prototype, as well as integrated within it. SSA is also continuing
                           to conduct a large stand-alone test of the proposed Disability Claims
                           Manager, the decisionmaker position that would combine the disability
                           claims responsibilities of SSA field office personnel and DDS personnel.17
                           This stand-alone test involves nearly 300 people at more than 30 sites. This
                           test is also inconsistent with our recommendation to establish key
                           supports and explore feasible alternatives before committing significant
                           resources to testing specific initiatives. SSA has not systematically explored
                           alternatives to the Disability Claims Manager—an initiative that would
                           require significant change from the current system.

New Initiative to Reform   Finally, the 1999 March plan introduces a new initiative to improve the
Hearings Offices Will Be   hearing process in order to significantly reduce processing time from the
Challenging to Implement   request for a hearing to final disposition. SSA issued a more detailed
                           description of this initiative, called the Hearing Process Improvement
                           Initiative, in August 1999. To develop this initiative, an SSA team worked
                           with a consultant group to, among other things, analyze current processing
                           and workload data and identify root causes for delays. The team found

                             SSA is incorporating the Disability Claims Manager position with its final prototype test at three sites.

                           Page 15                                                                             GAO/T-HEHS-00-22
Social Security Disability: SSA Has Had
Mixed Success in Efforts to Improve
Caseload Management

that processing delays were caused by multiple handoffs and a high degree
of functional specialization, by the fact that no manager had overall
responsibility for ensuring effective work flow in hearings offices, and by
inadequate automation and management information. This initiative
commits SSA to reduce hearing processing time from a projected level of
313 days in fiscal year 1999 to less than 200 days in fiscal year 2002
through a set of bold and significant changes in how the hearings offices
do business.

For example, SSA plans both to implement a new work flow model that will
result in fewer handoffs and speedier case handling and to set processing
time benchmarks for the overall hearing process and for certain tasks
within the process. SSA also plans to make significant changes in the
hearings office organizational structure by creating processing groups or
teams that will be held accountable for improved work flow. Finally, SSA
plans to improve the automation of data collection and management
information to better manage appealed case processing. Rather than
formally testing these changes, SSA plans to begin a phased implementation
at 37 of its 140 hearings offices located in 10 states in January 2000 and
then to assess the results to fine-tune the process before further

We have not yet fully assessed this new initiative, but the appeals level of
the process is an area that deserves attention. Most of the previous
initiatives focused on improving the process at the initial determination
level, leaving problems at the hearing level largely unresolved. SSA’s bold
plan for hearings office change contains some positive features but will no
doubt be a challenge to implement. On the positive side, most of the 37
sites scheduled for the initial implementation of the new hearing process
will be associated with the initial claims processing prototype sites, so that
SSA can see how these changes work together. However, this new initiative
involves a large-scale rollout of an untested concept. Rather than pilot test
this change over a number of years, SSA has decided to use a more speedy
approach to wholesale change. Organizations naturally resist change, and
some key stakeholders oppose this initiative. A lack of stakeholder
support could hinder SSA’s ability to effect change. SSA’s plan contains
specific and concrete steps to help promote change, such as establishing
accountability for benchmarked processing times. However, the large
number of sites involved, combined with the significant changes in
hearings office operations required to make this work, require top
management attention at each stage of implementation.

Page 16                                                      GAO/T-HEHS-00-22
                                      Social Security Disability: SSA Has Had
                                      Mixed Success in Efforts to Improve
                                      Caseload Management

                                      While SSA has experienced problems making changes to its claims process,
SSA Is Making Good                    it has made good progress in catching up on conducting required CDRs to
Progress in                           determine whether beneficiaries remain eligible for benefits. In fiscal year
Conducting                            1996, to reduce the unnecessary program costs that result from not
                                      performing CDRs, SSA and the Congress focused on providing funding to
Continuing Disability                 conduct overdue CDRs and keep up with new CDRs as they become due. SSA
Reviews                               developed a plan for a 7-year initiative to conduct about 8.2 million CDRs
                                      during fiscal years 1996 through 2002. To fund this 7-year initiative, the
                                      Congress authorized a total of about $4.1 billion. On the basis of the
                                      Congress’ commitment to fund increased CDR workloads, SSA negotiated
                                      with the DDSs to increase their efforts to hire new staff. During fiscal years
                                      1996 and 1997, the first 2 years of SSA’s CDR initiative, a total of 1.2 million
                                      CDRs were processed.

                                      In March 1998, SSA prepared a revised CDR plan because, among other
                                      reasons, the DDSs had completed more CDRs than expected under the
                                      original plan. Also, SSA revised the plan to include new requirements
                                      contained in the 1996 welfare reform law. Among other changes, this law
                                      tightened the criteria to be used to determine whether a child is disabled
                                      and required SSA to make a one-time redetermination of the eligibility of
                                      children already on the rolls who may not have met the new criteria.
                                      Under the new CDR plan, SSA set a goal of 8.1 million CDRs for fiscal years
                                      1998 through 2002. Including, the 1.2 million CDRs already processed
                                      during fiscal years 1996 and 1997, SSA planned to process a total of
                                      9.3 million CDRs for the full 7-year period.

                                      Now in the fifth year of the 7-year CDR plan, SSA is processing a rapidly
                                      growing volume of CDRs. For the last 3 fiscal years (1997-99), SSA has
                                      conducted slightly more CDRs than planned. According to SSA officials, DDSs
                                      have been able to complete these additional CDRs because they have
                                      received fewer initial claims applications than expected and because of
                                      improvements made by SSA to its process. In fiscal year 2000, SSA plans to
                                      complete an additional 1.8 million CDRs. Table 3 summarizes the number of
                                      CDRs planned and actually completed.

Table 3: CDR Workloads Under SSA’s
7-Year Plan, Fiscal Years 1996-2002   CDRs (in thousands)             1996   1997   1998    1999    2000      2001    2002
                                      Planned                         500    603    1,245   1,637   1,804     1,729   1,721
                                      Actual                          498    690    1,392   1,664
                                      Source: SSA reports and officials.

                                      Page 17                                                               GAO/T-HEHS-00-22
Social Security Disability: SSA Has Had
Mixed Success in Efforts to Improve
Caseload Management

In its most recent published Annual Report on CDRs, SSA stated that of the
approximately 690,000 CDRs processed in fiscal year 1997, over 89,000
resulted in termination of benefit eligibility because of medical
improvement and the renewed ability to work. SSA’s Office of the Chief
Actuary estimates that after all appeal steps are completed about 50,000
individuals will no longer receive benefits. By the end of fiscal year 2002,
the CDRs processed in fiscal year 1997 are expected to result in $2.1 billion
in reduced program outlays. Overall, SSA expects to realize, on average,
lifetime program savings of about $6 for every $1 in administrative costs.

DDSs  must balance their CDR workloads with their other work, and
unanticipated increases in any of these workloads could create
competition for DDS resources. For example, in our September 1998 report
to the Subcommittee on Social Security, we noted that SSA’s then-new CDR
plan made important assumptions about the numbers of initial disability
applications and requests for reconsideration.18 The plan assumes the
current pattern of economic strength and low unemployment will
continue. If SSA’s assumptions do not hold true, increases in the number of
initial disability applications above the currently estimated levels could
result. The plan also assumes that there will be no reconsideration request
workload during fiscal years 2000 to 2002 because, at the time the plan
was written, SSA’s plan for redesigning the disability process called for
eliminating the reconsideration step after fiscal year 1999. Because the
concept of eliminating the reconsideration step is still being tested in the
redesign prototype, it is not clear how SSA plans to make adjustments for
coping with this workload.

One remaining workload uncertainty involves the way that CDRs are
conducted. When a beneficiary’s medical condition is not expected to
improve, SSA sends the beneficiary a brief questionnaire, called a mailer.
These mailer CDRs cost about $50 each. The other CDRs involve full medical
reviews, in which the DDS obtains a new and updated medical assessment
of the beneficiary’s condition. These reviews are more costly (about $800
each in fiscal year 1996) because they are labor-intensive and involve work
by staff in headquarters and field offices as well as DDS personnel. Prior to
1993, all CDRs conducted by DDSs were full medical reviews. To streamline
the process, SSA began using mailers as a screening device. When using the
mailer, SSA takes an additional step to determine whether the responses,
when combined with other predictive data, indicate that medical
improvement may have occurred. If so, the beneficiary then receives a full

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

Page 18                                                                        GAO/T-HEHS-00-22
               Social Security Disability: SSA Has Had
               Mixed Success in Efforts to Improve
               Caseload Management

               medical CDR. About 2.5 percent of mailer cases are referred for the more
               extensive full medical review.

               When we completed our 1998 report, SSA’s ability to use the mailers to the
               full extent planned was not yet certain. The decision to conduct a CDR
               through a mailer is based on statistical profiles for estimating the
               likelihood of medical improvement derived from beneficiary information
               such as age, impairment, and length of time on the disability rolls. For
               several beneficiary groups, SSA was still working to develop statistical
               formulas for selecting appropriate mailer recipients. Officials told us
               recently that the agency is still working to perfect its mailer profiles but
               that they expected the ratio of mailers to medical reviews to be about
               50-50 in fiscal year 2000. If SSA found that it had to conduct more full
               medical reviews than expected, this, too, would increase the DDS

               Despite SSA’s good progress in catching up on its required CDRs, the agency
Observations   is still challenged to improve its disability claims process, which remains
               essentially unchanged outside the test environments. Today, SSA has a
               window of opportunity within which to improve its processes before
               claims again start to rise significantly. An economic downturn could
               increase unemployment, which in turn could result in more applications
               for disability benefits. Moreover, the aging baby boom generation is
               nearing its disability-prone years. Taken together, present and future
               workloads highlight the continuing pressure on SSA to move expeditiously
               to improve its disability claims process.

               Perhaps the single most important element of successful management
               improvement initiatives is the demonstrated commitment of top leaders to
               change. Top leadership involvement and clear lines of accountability for
               making management improvements are critical to overcoming
               organizations’ natural resistance to change and building and maintaining
               the organizationwide commitment to new ways of doing business. In
               addition, as SSA moves to complete testing of its prototype and implement
               changes at its hearings offices, it is vital that the agency take steps to
               enable it to closely monitor the results of changes and to watch for early
               warnings of problems. These steps include maintaining its momentum to
               improve the consistency in decisions, proceeding with plans to improve its
               quality assurance measures, and developing a more comprehensive and
               meaningful set of performance measures. Finally, SSA’s track record on
               developing and implementing its disability claims processing computer

               Page 19                                                      GAO/T-HEHS-00-22
                   Social Security Disability: SSA Has Had
                   Mixed Success in Efforts to Improve
                   Caseload Management

                   system has not been good, and it will be important for the agency to follow
                   industry best practices and apply lessons learned from past efforts to
                   increase its chances of successfully deploying a system that can support
                   its new process.

                   Messrs. Chairmen, this concludes my prepared statement. I will be happy
                   to answer any questions you or other Members of the Subcommittees may

                   For future contacts regarding this testimony, please call Cynthia M.
GAO Contacts and   Fagnoni at (202) 512-7215. Individuals making key contributions to this
Acknowledgments    testimony included Kay Brown, Yvette Banks, Julie DeVault, and William

                   Page 20                                                    GAO/T-HEHS-00-22
Page 21   GAO/T-HEHS-00-22
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              Supplemental Security Income: Progress Made in Implementing Welfare
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              SSADisability Redesign: Actions Needed to Enhance Future Progress
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              SSADisability Redesign: Focus Needed on Initiatives Most Crucial to
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(207083)      Page 22                                                      GAO/T-HEHS-00-22
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