oversight

Supplemental Security Income: Long-Standing Issues Require More Active Management and Program Oversight

Published by the Government Accountability Office on 1999-02-03.

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

                              United States General Accounting Office

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




For Release on Delivery
Expected at 3:00 p.m.
Wednesday, February 3, 1999
                              SUPPLEMENTAL
                              SECURITY INCOME

                              Long-Standing Issues
                              Require More Active
                              Management and Program
                              Oversight
                              Statement of Cynthia M. Fagnoni, Director
                              Income Security Issues
                              Health, Education, and Human Services Division




GAO/T-HEHS-99-51
Supplemental Security Income:
Long-Standing Issues Require More Active
Management and Program Oversight
              Mr. Chairman and Members of the Subcommittee:

              I am pleased to be here today to discuss the Social Security
              Administration’s (SSA) Supplemental Security Income (SSI) program. SSI is
              the nation’s largest cash assistance program for the poor. In fiscal year
              1998, the program paid about 6.6 million low-income aged, blind, and
              disabled recipients a total of approximately $27 billion. In that same year,
              current and former SSI recipients owed SSA more than $3.3 billion in
              overpaid benefits, including $1.2 billion in newly detected overpayments
              for the year. Since assuming responsibility for SSI in 1974, SSA has been
              significantly challenged in its efforts to serve the diverse needs of
              recipients while still protecting the financial health and integrity of the
              program. Our reports and those of oversight agencies have highlighted
              program abuses and mismanagement, increases in SSI overpayments, and
              SSA’s inability to recover outstanding debt. These and other problems
              documented over the years have spurred congressional criticism of SSA’s
              ability to effectively manage SSI workloads and have also served to
              reinforce public perceptions that SSA pays SSI benefits to too many people
              for too long. In February 1997, we designated SSI a high-risk program
              because of its susceptibility to fraud, waste, and abuse, and because of
              insufficient management oversight of the program. We also initiated a
              broad-based review of the program to determine the root causes of
              long-standing SSI problems and the actions necessary to address them.1
              Today I would like to discuss the findings of our review and the problem
              areas that currently pose the greatest risk to the SSI program. I would also
              like to discuss SSA’s recent efforts to improve SSI program integrity and
              additional actions that should be taken.

              In summary, our work shows that, to a great extent, SSA’s inability to
              address long-standing SSI program problems is attributable to two
              underlying causes: (1) an organizational culture that places a greater
              priority on processing and paying claims than on controlling program
              expenditures and (2) a management approach characterized by SSA’s
              reluctance to fulfill its SSI policy development and planning role in advance
              of major program crises. As a result, SSA has continued to experience
              significant difficulties with regard to verifying recipients’ initial and
              continuing eligibility for benefits, recovering SSI overpayments, combatting
              program fraud and abuse, and providing adequate program direction.
              Since SSI was designated high risk, SSA has taken a number of actions to
              improve the financial integrity of the program and revise its traditional

              1
               Supplemental Security Income: Action Needed on Long-Standing Problems Affecting Program
              Integrity (GAO/HEHS-98-158, Sept. 14, 1998).



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             Long-Standing Issues Require More Active
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             approach to program management. However, several of SSA’s initiatives are
             now in the early planning or implementation stages, or require the passage
             of new legislation before they can move forward. In other areas, SSA’s
             actions have been insufficient. Thus, it is important that SSA sustain and
             expand its efforts to address problem areas and strike a balance between
             meeting the needs of SSI recipients and fiscal accountability for its
             programs.


             SSI provides cash benefits to low-income aged, blind, or disabled people.
Background   Those who are applying for benefits on the basis of age must be at least 65
             years old and financially eligible for benefits; those who are applying for
             disability benefits must qualify on the basis of financial and medical
             criteria. To qualify for benefits financially in fiscal year 1998, individuals
             could not have income greater than the maximum monthly SSI benefit of
             $494 ($741 for a couple) or have resources that exceeded $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 moving
             into 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 1099 information,
             Department of Veterans Affairs benefits data, and state-maintained
             earnings and unemployment data. When 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.

             To determine a person’s medical 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 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 disabling
             condition has improved.



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                      Long-Standing Issues Require More Active
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                      To a significant extent, an agency’s culture emanates from and is shaped
Organizational        by top management officials who are charged with establishing the
Culture Has           priorities and performance goals that drive day-to-day program operations.
Perpetuated Several   Thus, over time, what is regularly emphasized, measured, and rewarded by
                      agency management becomes ingrained in the immediate workload
Long-Standing SSI     priorities of line managers and field staff. If agency priorities are not
Problems              adequately balanced, serious program vulnerabilities may arise.

                      In work spanning more than a decade, we have noted that SSA’s operations
                      have been heavily influenced by an organizational culture or value system
                      that places a greater value on quickly processing and paying claims than
                      on controlling program costs. Our most recent work has confirmed the
                      continued existence of an agency culture that views the SSI program in
                      much the same way as SSA’s Old Age and Survivors Insurance (OASI) and
                      Disability Insurance (DI) programs—where emphasis is placed on quickly
                      processing claims for individuals with an earned right to benefits—rather
                      than as a welfare program, where stronger income and asset verification is
                      necessary. SSA’s organizational culture has been most evident in the low
                      priority it has often placed on verifying recipients’ initial and continuing
                      eligibility for benefits, recovering SSI overpayments, and addressing
                      program fraud and abuse.


Verifying Recipient   In regard to verifying recipients’ initial and continuing eligibility for
Eligibility           benefits, our work has shown that SSA has relied heavily on recipients to
                      self-report important eligibility information relating to their financial
                      status and disabling condition. However, recipients do not always report
                      required information when they should and may not report it at all.
                      Although SSA has procedures in place to verify this information, they are
                      often untimely and incomplete. Over the last several years, we have
                      documented numerous examples of payments made to ineligible
                      recipients as a result of SSA’s inattention to the verification aspects of the
                      SSI program, including millions of dollars in benefit payments to prisoners2
                      and nursing home residents.3 These erroneous payments occurred because
                      incarcerations and nursing home admissions were not being reported as
                      required, and SSA lacked timely and complete automated verification data.
                      In the nursing home example alone, SSA has estimated that overpayments
                      may exceed $100 million annually.

                      2
                       Supplemental Security Income: SSA Efforts Fall Short in Correcting Erroneous Payments to Prisoners
                      (GAO/HEHS-96-152, Aug. 30, 1996).
                      3
                      Supplemental Security Income: Timely Data Could Prevent Millions in Overpayments to Nursing
                      Home Residents (GAO/HEHS-97-62, June 3, 1997).



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Long-Standing Issues Require More Active
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SSA also continues to rely heavily on computer matching with other federal
and state agencies to verify that recipient financial information is correct.
However, these matches are not always the most effective means of
verification, because information is often quite old and sometimes
incomplete. For example, SSA’s 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. We have
estimated that direct on-line connections (as opposed to computer
matches) between SSA’s computers and databases maintained by state
agencies—welfare benefits, unemployment insurance, and worker’s
compensation benefits—could have prevented or quickly detected
$34 million in SSI overpayments in one 12-month period.4 We also reported
in March 1998 that newly available Office of Child Support Enforcement
(OCSE) databases maintained by SSA could prevent or more quickly detect
about $380 million in annual SSI overpayments caused by unreported
recipient income.5 In addition, we concluded that opportunities existed for
SSA to prevent almost $270 million in overpayments by accessing more
timely financial account information via a nationwide network that
currently links all financial institutions. Such information would help
ensure that individuals whose bank accounts would make them ineligible
for SSI do not gain eligibility. Our September 1998 SSI report confirmed that
SSI verification problems continue. In that report, we recommended that
SSA enhance its ability to verify applicant and recipient eligibility
information by accelerating efforts to identify more timely and complete
financial verification sources.

SSA management has acknowledged that because of the rapidly rising
workloads of prior years, the agency decided to emphasize and prioritize
the expedient processing and payment of claims rather than delay final
decisions by requiring more thorough verification steps. Recently,
however, SSA has begun to take more decisive action to protect the
financial integrity of the SSI program. For example, SSA has started a
program to better identify recipients in jail who should no longer be
receiving benefits and is expanding its use of on-line state data to obtain
more real-time applicant and recipient information. In accordance with
one of our recommendations, SSA also plans to give field offices on-line
access to OCSE wage data, new-hire data, and unemployment insurance
data by the Spring of 1999. Once implemented, this should allow field staff

4
 Supplemental Security Income: Administrative and Program Savings Possible by Directly Accessing
State Data (GAO/HEHS-96-163, Aug. 29, 1996).
5
 Supplemental Security Income: Opportunities Exist for Improving Payment Accuracy
(GAO/HEHS-98-75, Mar. 27, 1998).



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                          Long-Standing Issues Require More Active
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                          to better prevent SSI overpayments by identifying undisclosed earnings at
                          application. In its fiscal year 1999 budget, SSA also requested an additional
                          $50 million to complete additional financial redeterminations of
                          individuals who have been designated as having a high probability of being
                          overpaid. Finally, in May 1998, SSA submitted a legislative proposal to the
                          Congress seeking statutory authority to expand its eligibility verification
                          tools, including the ability to more quickly obtain essential information
                          from financial institutions, state databases, and federal and state prisons in
                          order to determine an individual’s eligibility for SSI benefits.6 SSA’s proposal
                          also sought authority to use a new computer match with the Health Care
                          Financing Administration to more quickly identify SSI recipients residing in
                          nursing homes. If they become law, these and other provisions currently
                          under consideration by the Congress have the potential to improve SSA’s
                          ability to better verify initial and continuing eligibility and deter SSI
                          program overpayments.


Recovering Overpayments   In addition to problems associated with SSA’s verification of SSI eligibility
                          information, SSA has not always aggressively pursued the recovery of
                          overpayments. Thus, over time SSA’s recovery efforts have been outpaced
                          by outstanding SSI debt, which is becoming an increasingly large portion of
                          all debt owed to the agency. Between 1989 and 1998, outstanding SSI debt
                          and annual overpayments more than doubled to about $3.3 billion.
                          Although overpayment recoveries also increased each year during this
                          period, the gap between what is owed SSA and what is actually collected
                          has continued to widen (see fig. 1).




                          6
                           This proposal is entitled the Supplemental Security Income Program Integrity Act of 1998 and was
                          submitted to the Congress on May 4, 1998.



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                                   Supplemental Security Income:
                                   Long-Standing Issues Require More Active
                                   Management and Program Oversight




Figure 1: Gap Between SSI
Overpayments and Recoveries
                                   Millions of Dollars
Continues to Widen, Fiscal Years
1989-98                            3,500


                                   3,000


                                   2,500                           Overpayments

                                   2,000


                                   1,500


                                   1,000

                                                            Collections
                                    500


                                       0
                                       1989   1990   1991   1992    1993   1994   1995   1996   1997   1998


                                   Source: SSA’s Office of Finance, Assessment, and Management.




                                   As noted in our September 1998 report, to a great extent overpayment
                                   recoveries have remained low because of SSA’s reluctance to use debt
                                   collection tools already available to it or seek statutory authority for more
                                   aggressive tools. We reported that SSA only began using tax refund offsets
                                   in 1998 to recover overpaid SSI benefits, despite having had the authority to
                                   do so since 1984. The tax refund offset represents one of the few tools
                                   available to SSA for recovering overpaid benefits from former recipients. In
                                   the first 4 months of 1998, SSA reported that it had collected more than
                                   $23 million through this initiative. Waiting many years to move forward
                                   with this important recovery tool has likely cost the SSI program millions
                                   of dollars in collections. We also reported that, until recently, SSA had not
                                   pursued the authority to use more aggressive debt collection tools, such as
                                   the ability to administratively intercept other federal benefit payments
                                   recipients may receive, notify credit bureaus of an individual’s
                                   indebtedness, use private collection agencies, and charge interest on
                                   outstanding debt.




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                       Long-Standing Issues Require More Active
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                       Our work also identified another potential barrier to increased
                       overpayment recoveries: the law that limits the amount SSA can recover
                       each month from overpaid SSI recipients. Before 1984, SSA could withhold
                       up to 100 percent of an overpaid individual’s benefit amount. However,
                       pursuant to the Deficit Reduction Act of 1984 (P.L. 98-369), SSA was limited
                       to offsetting a maximum of 10 percent of a recipient’s total monthly
                       income. Thus, SSA lost the discretion to withhold larger amounts, even for
                       individuals who willfully and continually fail to report essential
                       information. Our September 1998 report recommended that SSA seek
                       legislative authority to withhold larger amounts than the current
                       10-percent maximum from recipients who chronically and willfully abuse
                       program reporting requirements.

                       Following a number of GAO briefings over the last year, and our April 1998
                       testimony before this Subcommittee in which we noted SSA’s continued
                       reluctance to pursue more aggressive debt collection tools, SSA submitted
                       a legislative proposal to the Congress seeking statutory authority to use
                       credit bureaus, private collection agencies, interest levies, and other tools
                       to strengthen its collection efforts. To date, SSA has taken no action on our
                       recommendation to withhold greater amounts for recipients who abuse
                       reporting requirements. However, SSA did include a provision in its
                       legislative proposal that would allow the agency to suspend for a period of
                       time the benefits of individuals who provide false information or withhold
                       information that affects their eligibility.


Addressing Fraud and   Over the years, we have documented the SSI program’s susceptibility to
Abuse                  fraud and other abusive practices. For example, we have reported that
                       “middlemen” were facilitating fraudulent SSI claims by providing
                       translation services to non-English-speaking individuals applying for SSI.7
                       We are also currently conducting a follow-up review of the activities of
                       middlemen in the SSI program. In prior work, we also found that thousands
                       of individuals had transferred ownership of resources such as cars, cash,
                       houses, land, and other items valued at an estimated $74 million to qualify
                       for SSI benefits.8 Although such transfers are legal under current law, using
                       them to qualify for benefits has become an abusive practice that raises
                       serious questions about SSA’s ability to protect taxpayer dollars from waste
                       and abuse. The Congressional Budget Office has estimated that more than

                       7
                       Supplemental Security Income: Disability Program Vulnerable to Applicant Fraud When Middlemen
                       Are Used (GAO/HEHS-95-116, Aug. 31, 1995).
                       8
                        Supplemental Security Income: Some Recipients Transfer Valuable Resources to Qualify for Benefits
                       (GAO/HEHS-96-79, Apr. 30, 1996).



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Long-Standing Issues Require More Active
Management and Program Oversight




$20 million in additional savings could be realized through 2002 by
implementing an asset transfer restriction.

The SSI program continues to be vulnerable to fraud and abuse. Although
SSI represents less than 8 percent of total agency expenditures, when
compared with SSA’s other programs—OASI and DI—the SSI program
accounted for about 37 percent of allegations received by SSA’s fraud
hotline and 24 percent of convictions obtained. However, SSA has begun to
take more decisive action to address SSI fraud and abuse since the program
was designated high risk. For example, the number of Office of Inspector
General (OIG) investigators have been increased significantly, and
combatting fraud and abuse was made a key goal of SSA’s 1997 agency
Strategic Plan. SSA has also established national and regional anti-fraud
committees to better identify, track, and investigate patterns of fraudulent
activity. Several OIG “pilot” investigations are also under way that are
aimed at detecting fraud and abuse earlier in the application process. In
addition, SSA has established procedures to levy civil and monetary
penalties against recipients and others who make false statements to
obtain SSI benefits. Finally, in its May 1998 legislative proposal to the
Congress, SSA included a provision aimed at preventing individuals from
transferring assets in order to qualify for SSI.

It is too early to tell what immediate and long-term effects SSA’s activities
will have on detecting and preventing SSI fraud and abuse. However, we
have noted that many years of inadequate attention to program integrity
issues have fostered a strong skepticism among both headquarters and
field staff about whether fraud detection and prevention is an agency
priority. Many staff believe constant agency pressure to process more
claims has impeded the thorough verification of claims and the
development of fraud referrals. Staff also have expressed concern that SSA
has not developed office work credit measures, rewards, and other
incentives to encourage employees to devote more time to developing
fraud cases—a process that often takes many hours. Our review of SSA’s
work credit system confirmed that adequate measures of the activities and
time necessary to develop fraud referrals have not been developed. Nor
has SSA developed a means of recording and rewarding staff for the time
they spend developing fraud cases. As a result, many staff may be
unwilling to devote significant time to more thorough claims verification
because they fear production—that is, cases processed—will be negatively
affected. Our report recommended that SSA reevaluate its field office work
credit and incentive structure to encourage better verification of eligibility
information and attention to fraud and abuse. SSA has initiated a review of



Page 8                                                       GAO/T-HEHS-99-51
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                         Long-Standing Issues Require More Active
                         Management and Program Oversight




                         its existing work measurement system with a specific focus on the kind of
                         work that is counted and how time values are assigned to units of work.
                         SSA expects to complete this review by mid-1999.



                         In addition to long-standing problems attributable to SSA’s organizational
Recent Changes in        culture, our work suggests that SSA’s management of the SSI program has
Management               often led to untimely and flawed program policies and inadequate program
Approach May             direction. Proactive program management requires a willingness on the
                         part of an agency to identify and decisively address problems before they
Improve Program          reach crisis levels. Where internal operational remedies are insufficient to
Direction                address a particular program weakness, the agency should then suggest
                         and develop legislative proposals for change. Proactive management also
                         requires a willingness to identify short- and long-term program priorities
                         and goals and to develop a clearly defined plan for meeting those goals. In
                         prior reports, we have noted that program direction and problem
                         resolution at SSA have been hindered by SSA’s continued reluctance to take
                         a leadership role in SSI policy development before major program crises
                         occur. We have also reported that program direction has been impaired by
                         a strategic planning process that has not sufficiently focused on the
                         specific needs of the SSI program and its recipients. However, recent
                         actions taken by SSA show that the agency has begun to take a more
                         proactive role in both SSI policy development and program planning.


SSI Policy Development   As the nation’s SSI program expert, SSA is uniquely positioned to assess the
                         program impacts of trends in the SSI population and initiate internal policy
                         “fixes” to address problems. If internal revisions would not be effective,
                         SSA is best qualified to identify areas where new legislation is needed and
                         assist policymakers in exploring options for change. However, we
                         concluded in our September 1998 report that SSA has not always been
                         sufficiently aggressive in this regard. Our report also included numerous
                         examples in which SSA did not take a leadership role in SSI policy
                         development before major crises occurred. An example of SSA’s approach
                         was evident in the congressional debate surrounding SSI for children in
                         which the Congress ultimately passed legislation limiting SSI childhood
                         eligibility. SSA did not develop and communicate timely information to the
                         Congress on the effects of prior legislative and court-mandated changes.
                         Nor did SSA develop its own proposals for revising childhood eligibility
                         policies, despite the fact that it had information that guidelines for
                         determining the severity of childhood mental and physical impairments
                         were difficult to interpret, unclear, and too subjective. At a much earlier



                         Page 9                                                      GAO/T-HEHS-99-51
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                         Long-Standing Issues Require More Active
                         Management and Program Oversight




                         time, this information could have been shared with the Congress for
                         consideration in reassessing whether the SSI program was meeting the
                         needs of the most severely disabled children.

                         SSA has acknowledged the need to play a more active policy development
                         role and has restructured its research and policy development components
                         to better address our concerns. In this regard, SSA has also made
                         conducting effective policy development, research, and program
                         evaluation a key agency goal. Additional staffing resources are also being
                         obtained by the newly created Office of Policy. Consequently, SSA should
                         ultimately be better positioned to develop policy options and proposals for
                         the SSI program. As noted earlier, SSA also recently developed and
                         submitted to the Congress its first major SSI legislative proposal aimed at
                         improving program integrity by ensuring that only eligible individuals
                         receive benefits. This proposal responds to many of our prior
                         recommendations and, if enacted, has the potential to significantly
                         improve SSA’s ability to deter and recover SSI program overpayments.


SSI Strategic Planning   Our earlier work has also shown that SSI program direction has suffered as
                         a result of SSA’s failure to develop program-specific goals, priorities, and
                         plans for addressing program weaknesses. The persistence of the
                         long-standing problems discussed today demonstrates SSA’s inability to
                         focus on its most critical program challenges. To a significant degree, this
                         may be due to SSA’s strategic planning efforts, which generally involve
                         agencywide goals and concerns with no programmatic focus. As required
                         by the Government Performance and Results Act of 1993,9 SSA issued its
                         current agency strategic plan in September 1997. This plan outlines SSA’s
                         strategic goals and objectives for the next 5 years. SSA also recently
                         published its fiscal year 1999 annual performance plan, which provides
                         more detailed information on how SSA intends to achieve its goals and
                         measure performance. In reviewing these plans, we found that SSA still had
                         not adequately developed programmatic goals, initiatives, and
                         performance measures to address the specific needs and problems of the
                         SSI program. Thus, we recommended that SSA move forward in developing
                         an SSI-focused plan with clearly defined goals and measures to gauge SSA’s
                         progress in addressing its SSI program challenges.

                         In response to our recommendation, SSA produced its first SSI management
                         report in October 1998, which discusses the need to take aggressive action

                         9
                          The Results Act requires federal agencies to implement results-oriented management reforms, such as
                         conducting strategic planning, establishing program goals and objectives, measuring progress in
                         meeting those goals, and reporting publicly on that progress.



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              Long-Standing Issues Require More Active
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              in four areas: improving overall payment accuracy, increasing continuing
              disability reviews, combatting program fraud, and improving debt
              collection. The management report established specific goals to measure
              the anticipated yearly impact of planned initiatives in each of these areas.
              In this report, SSA notes that a number of initiatives should achieve results
              in the near future, while others will take longer to produce significant
              impacts. The agency plans to closely monitor each initiative and make
              modifications when necessary to ensure that the best possible results are
              achieved.


              Because the SSI program is essential to the financial health and well being
Conclusions   of millions of low-income aged, blind, and disabled recipients, it is
              essential that the program is adequately protected from fraud, waste, and
              abuse. However, after more than 20 years of operation, the SSI program
              remains vulnerable and faces significant, long-standing challenges. To a
              large extent, the problems we have discussed today are attributable to an
              ingrained organizational culture that has historically placed a greater value
              on quickly processing and paying claims than on controlling program
              costs, and a management approach characterized by a reluctance to
              address SSI problems requiring long-term solutions and/or legislative
              changes. As a result, billions of dollars have been paid over the years to
              ineligible individuals and SSA has not always dealt proactively with its most
              pressing program problems.

              SSA has acknowledged the important role of management in defining
              organizational priorities and the need to strike a better balance between
              serving the public and fiscal accountability for its programs. As noted, SSA
              has begun to take steps internally and in coordination with the Congress
              to address a number of SSI program vulnerabilities. This includes seeking
              out more timely and complete automated sources for verifying recipient
              eligibility information, stepping up its efforts to combat fraud and abuse,
              and working with the Congress to obtain legislative authority for
              additional debt collection tools. We believe that this combination of
              internal program solutions and legislative proposals for change is essential
              to improving program integrity.

              All of the ongoing and proposed initiatives we have discussed have the
              potential to improve the integrity and financial health of the SSI program.
              However, many of the difficulties experienced by the SSI program are the
              result of more than 20 years of inattention to payment controls. Therefore,
              significantly revising SSA’s underlying culture and management approach



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           will require a concerted effort at the highest levels of the agency and a
           willingness by the Congress to provide SSA with needed legislative
           authorities.


           Mr. Chairman, this concludes my prepared statement. I will be happy to
           respond to any questions you or other Members of the Subcommittee may
           have.




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