Supplemental Security Income: Long-Standing Problems Put Program at Risk for Fraud, Waste, and Abuse

Published by the Government Accountability Office on 1997-03-04.

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

                          United States General Accounting Office

GAO                       Testimony
                          Before the Subcommittee on Oversight, Committee on
                          Ways and Means, House of Representatives

For Release on Delivery
Expected at 10:00 a.m.
Tuesday, March 4, 1997
                          SECURITY INCOME

                          Long-Standing Problems Put
                          Program at Risk for Fraud,
                          Waste, and Abuse
                          Statement of Jane L. Ross, Director
                          Income Security Issues
                          Health, Education, and Human Services Division

Supplemental Security Income:
Long-Standing Problems Put Program at
Risk for Fraud, Waste, and Abuse
              Madam Chairman and Members of the Subcommittee:

              I am pleased to be here to discuss the Social Security Administration’s
              (SSA) Supplemental Security Income (SSI) program and our decision to
              designate the program one of our high-risk areas. As you know, the SSI
              program provides means-tested income support payments to eligible aged,
              blind, or disabled people. Since the program’s inception in 1974, the
              number of individuals receiving SSI cash benefits has grown significantly.
              About 6.6 million recipients now receive roughly $22 billion in federal
              benefits. In the past several years, a major reason for growth in the SSI rolls
              has been an increasing number of younger recipients with mental
              impairments who have limited work histories. Rapid growth in the number
              of children receiving SSI benefits has further contributed to changes in the
              program’s character. The increased number and diversity of SSI recipients
              have spurred criticism that the SSI program is increasingly susceptible to
              fraud, waste, and abuse. Through our work, we have also demonstrated
              that the SSI program has been adversely affected by internal control
              weaknesses, complex policies, and insufficient management attention. (A
              list of related GAO products dealing with SSI program vulnerabilities
              appears at the end of this statement.)

              Today, I would like to discuss several long-standing problems in SSI that
              have caused us to designate the program as high risk. These problems
              involve the methods SSA uses to verify recipients’ initial and continuing
              eligibility for SSI benefits and the agency’s efforts to get SSI recipients into
              the workforce. These deficiencies have placed the program at
              considerable risk and contributed to significant annual increases in
              overpayments to SSI recipients. Overpayments include payments to people
              ineligible for the program, as well as to those receiving higher benefit
              payments than their income and assets warrant. During 1996, SSA had $2.3
              billion in overpayments that was owed to the agency, including
              $895 million in newly detected overpayments during the year. In that year,
              the agency was successful in recovering only $357 million of the total
              outstanding debt.

              To briefly summarize our findings, the SSI program has had significant
              problems in determining initial and continuing financial eligibility because
              of the agency’s reliance on individuals’ own reports of their income and
              resources and failure to thoroughly check this information. Moreover, the
              judgmental nature of SSA’s disability determination process and SSA’s past
              failure to adequately review SSI recipients to determine whether they
              remain disabled have also exposed the program to fraud, waste, and

              Page 1                                                         GAO/T-HEHS-97-88
             Supplemental Security Income:
             Long-Standing Problems Put Program at
             Risk for Fraud, Waste, and Abuse

             abuse. Finally, SSA is at risk of paying some SSI recipients benefits for too
             long because it has not adequately addressed their special vocational
             rehabilitation needs nor developed an agencywide strategy for helping
             recipients who can enter the workforce. The Congress has recently made
             several changes that address program eligibility issues and increase the
             frequency of SSA’s continuing eligibility reviews. SSA has also begun
             addressing its program vulnerabilities and has made the prevention of
             fraud and abuse a part of its plan for rebuilding public confidence in the
             agency. However, our concerns about underlying SSI program
             vulnerabilities and the level of management attention devoted to these
             vulnerabilities continue. As part of our high-risk work, we are continuing
             to evaluate the underlying causes of long-standing SSI problems and the
             actions necessary to address them.

             SSI provides cash benefits to low-income aged, blind, or disabled people.
Background   Currently, the aged SSI population is roughly 1.4 million and the blind and
             disabled population more than 5.2 million. Those who are applying for
             benefits on the basis of age must be age 65 or older and be financially
             eligible for benefits; those who are applying for disability benefits must
             qualify on the basis of two criteria: financial and disability eligibility. To
             qualify for benefits financially, individuals may not have income greater
             than the current maximum monthly SSI benefit level of $484 ($727 for a
             couple) or have resources worth more than $2,000 ($3,000 for a couple).
             To be qualified as disabled, applicants must be unable to engage in any
             substantial gainful activity because of an impairment expected to result in
             death or last at least 12 months.

             The process SSA uses to determine an applicant’s financial eligibility for SSI
             benefits involves an initial determination when someone first applies and
             periodic reviews to determine whether the recipient remains eligible. SSI
             recipients are required to report significant events that may affect their
             financial eligibility for benefits, including changes in income, resources,
             marital status, or living arrangements, such as incarceration or residence
             in a nursing home. To verify that the information provided by a recipient is
             accurate, SSA generally relies on matching data from other federal and
             state agencies, including Internal Revenue Service form 1099 information,
             Department of Veterans Affairs benefits data, and state-maintained
             earnings and unemployment benefits data. When SSA staff find
             discrepancies between income and assets claimed by a recipient and the
             data from other agencies, they send notices to SSA field offices to
             investigate further.

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                         Supplemental Security Income:
                         Long-Standing Problems Put Program at
                         Risk for Fraud, Waste, and Abuse

                         To determine a person’s qualifications for SSI as a disabled person, SSA
                         must determine the individual’s capacity to work as well as his or her
                         financial eligibility. To determine whether an applicant’s impairment
                         qualifies him or her for SSI benefits, SSA uses state Disability Determination
                         Services (DDS) to make the initial assessment. Once a recipient begins
                         receiving benefits, SSA is required to periodically conduct Continuing
                         Disability Reviews (CDR) to determine whether a recipient’s condition
                         remains disabling.

                         Regarding returning recipients to work, the Social Security Act states that
                         to the maximum extent possible, individuals applying for disability
                         benefits should be rehabilitated into productive activity. To this end, SSA is
                         required to refer SSI recipients to state vocational rehabilitation agencies
                         for services intended to prepare them for returning to work. The act also
                         provides various work incentives to safeguard cash and medical benefits
                         while a recipient tries to return to work.

                         To correctly determine an individual’s initial and continuing financial
SSA Pays Inadequate      eligibility, SSA needs accurate and timely information because it is much
Attention to Verifying   easier to prevent overpayments than to recover them. SSA tries to get this
Recipients’ Financial    information directly from applicants and recipients but also supplements
                         these data through the use of computer matches with other federal and
Eligibility              state agencies. To do this, SSA compares federal and state data with
                         information claimed by SSI applicants. In many instances, these matches
                         allow SSA to detect information that SSI recipients fail to report; in other
                         cases, they provide more accurate information. However, our prior
                         reviews have found that data from computer matches are often quite old
                         and sometimes incomplete. For example, computer matches for earned
                         income rely on data that are from 6 to 21 months old, allowing
                         overpayments to accrue for this entire period before collection actions can
                         begin. This puts SSI at risk because it collects only about 15 percent of
                         outstanding overpayments. Another weakness in this process is that SSA
                         does not conduct some matches that could help to detect additional
                         overpayments. For example, SSA has not matched data from Aid to
                         Families With Dependent Children (AFDC) to detect SSI recipients who may
                         be receiving benefits from this program.

                         Our work in the last few years suggests that recipients do not always
                         report required information when they should and may not report it at all.
                         For example, last year we reported that about 3,000 current and former
                         prisoners in 13 county and local jails had been erroneously paid $5 million

                         Page 3                                                        GAO/T-HEHS-97-88
Supplemental Security Income:
Long-Standing Problems Put Program at
Risk for Fraud, Waste, and Abuse

in SSI benefits, mainly because SSA lacked timely and complete information
on their incarceration. Recipients or their representative payees did not
report the incarceration to SSA as required, and SSA had not arranged for
localities to report such information. SSA told us that it has begun a
program to identify SSI recipients in jails who should no longer be
receiving benefits.

Our ongoing SSI work is identifying similar program problems and
weaknesses as those noted in prior reports. For example, SSA staff have
indicated that recipients’ reporting of changes in living arrangements is
frequently subject to abuse. One common scenario involves recipients
who become eligible for SSI benefits and shortly thereafter report to SSA
that they have separated from their spouse and are living in separate
residences. SSA field staff suspect that these reported changes in living
arrangements take place because recipients become aware that separate
living arrangements will substantially increase their monthly benefits.
Another ongoing study of SSI recipients admitted to nursing homes has
found that despite SSA procedures and recent legislation to encourage
reporting such living arrangement changes, thousands of SSI recipients in
nursing homes continue to receive full benefits, resulting in millions of
dollars in overpayments each year. This happens because recipients and
nursing homes do not report changes in living arrangements and because
computer matches with participating states to detect nursing home
admissions are not done in a timely manner and are often incomplete.
Consequently, these admissions and the resulting overpayments are likely
to go undetected for long time periods.

In a final area related to financial eligibility, we recently reported that
between 1990 and 1994, approximately 3,500 SSI recipients transferred
ownership of resources, such as cash, houses, land, and other items valued
at an estimated $74 million, to qualify to SSI benefits. This figure represents
only transfers of resources that recipients actually told SSA about.
Although these transfers are legal, using them to qualify for SSI benefits
raises serious questions about SSA’s ability to protect taxpayer dollars from
waste and abuse and may undermine the public’s confidence in the
program. SSA has acknowledged and supports the need to work with the
Congress to develop legislation to address this problem.

To obtain more timely and accurate recipient data, SSA is currently testing
the use of online access to state databases to supplement the information
it receives. Online access provides direct connections between SSA’s
computers and the databases maintained by certain state agencies. Data

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                         Supplemental Security Income:
                         Long-Standing Problems Put Program at
                         Risk for Fraud, Waste, and Abuse

                         can be obtained immediately by SSA staff as soon as requested and used for
                         a variety of purposes, including verifying the amount of AFDC or other
                         benefit income a client reports. After reviewing this SSA initiative, we
                         concluded that nationwide use of online access to state computerized data
                         could prevent or more quickly detect about $130 million in overpayments
                         due to unreported or underreported income in one 12-month period.
                         Online access could save program dollars by controlling overpayments
                         and reducing the administrative expense of trying to recover them. In
                         responding to our review, SSA noted that it was exploring options for
                         expanding online access and was examining the cost-effectiveness of
                         doing so. Although some states can currently provide online access to
                         their data inexpensively and easily, SSA has moved slowly in this area. In
                         addition to state data, online access to other federal agencies’ data may
                         help SSA save program dollars. SSA has also moved slowly in this area,

                         In addition to financial eligibility, for those who apply for disability
Program                  benefits, SSA must also determine their disability eligibility or their
Vulnerabilities Are      capacity to work. SSA’s lengthy and complicated disability decision-making
Associated With          process results in untimely and inconsistent decisions. Adjudicators at all
                         levels of this process have to make decisions about recipients’ work
Determining Disability   capacity on the basis of complex and often judgmental disability criteria.
Eligibility              Determining disability eligibility became increasingly difficult in the early
                         1990s as younger individuals with mental impairments began to apply for
                         benefits in greater numbers. Generally, mental impairments are difficult to
                         evaluate, and the rates of award are higher for these impairments than for
                         physical impairments.

                         SSA’s processes and procedures for determining disability have placed the
                         SSIprogram at particular risk for fraud, waste, and abuse. For example, in
                         1995, we reported that SSA’s ability to ensure reasonable consistency in
                         administering the program for children with behavioral and learning
                         disorders had been limited by the subjectivity of certain disability criteria.
                         To address these problems, recent welfare reform legislation included
                         provisions to tighten the eligibility rules for childhood disability and
                         remove children from the rolls who have qualified for SSI on the basis of
                         less restrictive criteria. It is too early, however, to tell what impact the new
                         legislation will ultimately have on SSI benefit payments and SSA’s ability to
                         apply consistent disability policies to this population.

                         Page 5                                                         GAO/T-HEHS-97-88
                       Supplemental Security Income:
                       Long-Standing Problems Put Program at
                       Risk for Fraud, Waste, and Abuse

                       In addition, we reported in 1995 that middlemen were facilitating
                       fraudulent SSI claims by providing translation services to non-English-
                       speaking individuals who were applying for SSI. These middlemen were
                       coaching SSI claimants on appearing mentally disabled, using dishonest
                       health care providers to submit false medical evidence to those
                       determining eligibility for benefits, and providing false medical
                       information on claimants’ medical and family history. In one state alone, a
                       middleman arrested for fraud had helped at least 240 people obtain
                       $7 million in SSI benefits. SSI’s vulnerability to fraudulent applications
                       involving middlemen was the result of the lack of a comprehensive
                       strategy for keeping ineligible applicants off the SSI rolls, according to our
                       review. SSA told us that half of all SSI’s recently hired field office staff are
                       bilingual, a step that it believes will reduce the involvement of fraudulent

                       In light of the difficulty of determining disability and SSI’s demonstrated
                       vulnerability to fraud and manipulation, periodic reviews are essential to
                       ensure that recipients are disabled. Our work has shown, however, that
                       SSA has not placed adequate emphasis on CDRs of SSI cases. In 1996, we
                       reported that many recipients received benefits for years without having
                       any contact with SSA about their disability. We also noted that SSA
                       performed relatively few SSI CDRs until the Congress mandated in 1994 that
                       it conduct such reviews. Furthermore, SSA’s processes for identifying and
                       reviewing cases for continuing eligibility did not adequately target
                       recipients with the greatest likelihood for medical improvement.

                       Currently, SSA is implementing new review requirements in the welfare
                       reform law. In addition, SSA had about 2-1/2 million required CDRs due or
                       overdue in the Disability Insurance (DI) program and 118,000 SSI CDRs due
                       or overdue as of 1996. Despite the importance of CDRs for ensuring SSI
                       program integrity, competing workloads from implementing welfare
                       reform legislation will challenge SSA in completing the required number of
                       SSI CDRs.

                       As mentioned previously, the Social Security Act states that as many
SSA Has Not            people as possible who are applying for disability benefits should be
Emphasized Return to   rehabilitated into productive activity. We have found, however, that SSA
Work and Vocational    places little priority on helping recipients move off the SSI rolls by
                       obtaining employment. Yet, if only a small proportion of recipients were to
Rehabilitation         leave the SSI rolls by returning to work, the savings in lifetime cash
                       benefits would be significant.

                       Page 6                                                         GAO/T-HEHS-97-88
Supplemental Security Income:
Long-Standing Problems Put Program at
Risk for Fraud, Waste, and Abuse

Technological and societal changes in the last decade have raised the
possibility of more SSI recipients returning to work. For example,
technological advances, such as standing wheelchairs and synthetic voice
systems, have made it easier for people with disabilities to enter the
workplace. Legislative changes, such as the Americans With Disabilities
Act, and social changes, such as an increased awareness of the economic
contributions of individuals with disabilities, have also enhanced the
likelihood of these individuals finding jobs. During the past decade, the
proportion of middle-aged SSI recipients has steadily increased.
Specifically, the number of SSI recipients between the ages of 30 and 49 has
increased from 36 percent in 1986 to about 46 percent in 1995 to about
1.6 million people. Thus, many SSI recipients have many productive years
in which to contribute to the workforce.

Despite these factors, SSA has missed opportunities to promote work
among disabled SSI recipients. In 1972, the Congress created the plan for
achieving self-support (PASS) to help low-income individuals with
disabilities return to work. The program allows SSI recipients to receive
higher monthly benefits by excluding from their SSI eligibility and benefit
calculations any income or resources used to pursue a work goal. SSA pays
about $30 million in additional cash benefits annually to PASS program
participants. Despite these cash outlays, almost none of the participants
leave the rolls by returning to work.

SSA has poorly implemented and managed the PASS program. In particular,
SSA has developed neither a standardized application containing essential
information on the applicant’s disability, education, and skills nor ways to
measure program effectiveness. We have recommended that SSA act on
several fronts to control waste and abuse and evaluate the effect of PASS on
recipients’ returning to work. In general, SSA has agreed with our
recommendations and taken some steps to more consistently administer
the PASS program.

In the past several months, however, some efforts have begun to place a
greater emphasis on returning disabled people to work. The
administration is seeking statutory authority to create a voucher system
that recipients could voluntarily use to get rehabilitation and employment
services from public or private providers and is also seeking legislation to
extend medical coverage for recipients who return to work. The Congress
has also put forth several proposals in these areas.

Page 7                                                      GAO/T-HEHS-97-88
               Supplemental Security Income:
               Long-Standing Problems Put Program at
               Risk for Fraud, Waste, and Abuse

               The problems we have identified in the SSI program are long-standing and
Conclusion     have contributed to billions of tax dollars being overpaid to recipients.
               They have also served to compromise the integrity of the program and
               reinforce public perceptions that the SSI program pays benefits to too
               many people for too long. Although many of the changes recently enacted
               by the Congress or implemented by SSA may result in improvements, the
               underlying problems still exist.

               Our work has shown that SSI’s vulnerability is due both to problems in
               program design and inadequate SSA management attention to the program.
               Revising SSA’s approach to managing the program will require sustained
               attention and direction at the highest levels of the agency as well as
               actively seeking the cooperation of the Congress in improving the
               program’s operations and eligibility rules. One challenge for the new SSA
               Commissioner will be to focus greater agency attention on management of
               SSI and the future viability and integrity of this program.

               This concludes my prepared statement. I will be happy to respond to any
               questions you or other members of the Subcommittee may have.

               For more information on this testimony, please call Jane Ross on
Contributors   (202) 512-7230 or Roland Miller, Assistant Director, on (202) 512-7246.

               Page 8                                                      GAO/T-HEHS-97-88
Supplemental Security Income:
Long-Standing Problems Put Program at
Risk for Fraud, Waste, and Abuse

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Supplemental Security Income:
Long-Standing Problems Put Program at
Risk for Fraud, Waste, and Abuse

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Page 11   GAO/T-HEHS-97-88
Related GAO Products

              Social Security Disability: Improvements Needed to Continuing Disability
              Review Process (GAO/HEHS-97-1, Oct. 16, 1996).

              Supplemental Security Income: SSA Efforts Fall Short in Correcting
              Erroneous Payments to Prisoners (GAO/HEHS-96-152, Aug. 30, 1996).

              Supplemental Security Income: Administrative and Program Savings
              Possible by Directly Accessing State Data (GAO/HEHS-96-163, Aug. 29, 1996).

              SSADisability: Return-to-Work Strategies From Other Systems May
              Improve Federal Programs (GAO/HEHS-96-133, July 11, 1996).

              Social Security: Disability Programs Lag in Promoting Return to Work
              (GAO/T-HEHS-96-147, June 5, 1996).

              SSADisability: Program Redesign Necessary to Encourage Return to Work
              (GAO/HEHS-96-62, Apr. 24, 1996).

              Supplemental Security Income: Some Recipients Transfer Valuable
              Resources to Qualify for Benefits (GAO/HEHS-96-79, Apr. 30, 1996).

                 Program: SSA Work Incentive for Disabled Beneficiaries Poorly
              Managed (GAO/HEHS-96-51, Feb. 28, 1996).

              Supplemental Security Income: Disability Program Vulnerable to Applicant
              Fraud When Middlemen Are Used (GAO/HEHS-95-116, Aug. 31, 1995).

              Social Security: New Functional Assessments for Children Raise Eligibility
              Questions (GAO/HEHS-95-66, Mar. 10, 1995).

(105158)      Page 12                                                      GAO/T-HEHS-97-88
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