59

Although SSA officials got the public's feedback, they missed
some key opportunities along the way to improve the statement.
While SSA conducted tests to ensure that the PEBES could be read at
a seventh grade level, it has not conducted formal comprehension
tests." For example, SSA could have administered either verbal or
written tests to a sample of readers to determine whether they
actually understood SSA's explanations of certain complex issues
These tests would have provided SSA with quantifiable, objective
information to use in revising the statement. SSA has also failed
to take advantage of information from its front-line workers who
answer the public's questions about the PEBES every day. SSA
currently has front-line workers record the reason why people call;
however, the information collected does not provide sufficient
detail for SSA to understand the problems people are having with
the PEBES.

No Consensus on the Best Model for the Statement

Although the public and benefit experts agree that the current
statement contains too mich information, neither a standard benefit
statement model exists in the public or private sector nor does a
clear consensus on how best to present benefit information. The
Canadian government chose to use a two-part document when it began
sending out unsolicited benefit statements in 1985. The Canada
Pension Plan's one-page statement provides specific individual
information, including the earnings record and benefit estimates.

A separate brochure details the program explanations. The first
time the Plan mails the statement, it sends both the one-page
individual information and the detailed brochure; subsequent
mailings contain only the single page with the individual
information.

Although some focus group participants and benefit experts
prefer a two-part format, others believe that all information
should remain in a single document, fearing that statement
recipients will lose or might not read the separate explanations
SSA has twice tested the public's reaction to receiving two
separate documents. On the basis of a 1987 focus group test, SSA
concluded that it needed to either redesign the explanatory
brochure or incorporate the information into one document. SSA
chose the latter approach. In a 1994 test, people indicated that
they preferred receiving one document; however, the single document
SSA used in the test had less information and a more readable
format than the current PEBES.

REDESIGN PLANS DO NOT FULLY CONSIDER COSTS

SSA, through the Government Printing Office, has awarded a 2-
year contract for printing the fiscal years 1997 and 1998
statements. These statements will have the same format as the
current PEBES with only a few wording changes. SSA is planning a
more extensive redesign of the PEBES for the fiscal year 1999
mailings but only if it will save money on printing costs.

By focusing on reduced printing costs as the main reason for
redesigning the PEBES, SSA is overlooking the hidden costs of the
statement 's existing weaknesses. For example, if people do not
understand why they got the statement or have questions about
information provided in the statement, they may call or visit SSA,
creating more work for SSA staff. Furthermore, if the PEBES
frustrates or confuses people, it could undermine public confidence
in SSA and its programs.

Our work suggests, and experts agree, that the PEBES' value
could be enhanced by several changes. Yet SSA’s redesign team is

“tn a 1988 telephone survey during the PEBES early development, SSA
asked a few questions to check for reader comprehension. The
statement has changed significantly since that time, however.


123

Furthermore, software improvements and increased computer
experience have allowed many Senior Attorney-Advisors to increase
their writing productivity to lessen the impact on OHA writing
capacity. Thus, any adverse impact of the SAA program on other
parts of the process has been minimal.

Current plans are to hire as many as 1200 Adjudication officers.
These people would all be current experienced DDS or SSA
employees. Therefore, the current Adjudication Officer
implementation plan will leave 1200 vacancies in the former
components of the new AO’s, Of course, this would severely
impair those components’ abilities to handle their remaining
regular workload. The AO’s are assigned to separate offices.
They will not be available to assist with any of their former
workloads. This is particularly problematic in: the DDS’s where
their workload has recently experienced major increases with the
implementation of the new continuing disability review [CDR],
drug and alcohol abuse (DAA], and childhood disability
legislation; and in OHA where the most experienced Attorney-
Advisors and/or Paralegal Analysts would be completely pulled out.
of the decision writing pool.

Finally, Adjudication Officers under the current plan will all
have to be extensively trained to function in this new position,
which is markedly different from their current position. They
will all go through a considerable learning curve before they
begin to have full impact. In contrast, the transition from
Attorney-Advisor to Senior Attorney-Advisor is much easier and of
course has already been completed for the current group of Senior
Attorney-Advisore. It does not require significant additional
training. Thus, expansion of the Senior Attorney-Advisor program
is much less expensive than full implementation of the
Adjudication Officer program.

Expanding the Senior Attorney-Advisor program will require hiring
of replacement, entry level, Attorney-Advisors at a much higher
number than in the past. I have addressed the advantages of
hiring new attorneys vs. promoting clerical workers as writers in
a previous submissions the Subcommittee dated June 5, 1995. I
would also add that the hiring of additional attorneys would be
especially advantageous in contrast to the expansion of the
centralized writing units. The fact that the Attorney-Advisors
are in the local hearing offices give them a critical advantage
over decision writers in centralized writing units. ‘The ease of
communications with the Administrative Law Judges goes far to
expedite decision writing. Many problems arise when a writer in
a central unit ie unable to understand an instruction and is not
able to easily contact the Administrative Law Judge for
clarification. This is compounded by the fact that the
Administrative Law Judges have no timely method to provide
feedback to the centralized writers. Having the writers in the
local office avoids these difficulties.

‘The approach I have described here has clear advantages for the
entire agency. It is less expensive and leas disruptive to other
Agency work. It will promote more effective prehearing case
handling. It will also act to improve post hearing decision
writing quality and capacity. It will effectively reduce
Processing time for the claimant, regardless of the impact on any
one component .

"SSA measure (d} the process from the perspective of the
component organizations involved, rather than from the
perspective of the claimant.* igabi
Claim Process, September 1994. SSA Pub. No. 01-005 at
Pp. n.

There are other advantages with using attorneys as
Adjudication Officers in contrast to filling the


25

Agency Budget $ Coverage
Agency (in millions) Auditors per Auditor
DOD $ 277,800 858 $ 323,776
HHS 318,900 447 713,422
Treasury/IRS 387,600 209/509* 539,832
EPA 7,300 303 24,092
USDA 64,000 450 142,222
SSA 363,000 120 3,025,000

*IRS internal audit

In addition to our own concerns with the number of auditors within the OIG, the General
Accounting Office (GAO) has expressed concern that we do not have sufficient resources
devoted to the audit of SSA's financial statements in either our systems audit team or
financial audit team. GAO has recommended an increase of 10 to 15 FTEs for our financial
audit team and a total of 10 to 15 FTEs in the systems audit team to be devoted exclusively
to support the audit of SSA's financial statements.

My predecessor was also concerned about the size of the automated systems audit group. AS
a result, a study was performed by Coopers and Lybrand to determine the appropriate
number of staff and expertise required for a systems audit group. Coopers and Lybrand
issued its report in February 1996. It recommended that the OIG increase its audit staffing
level in the automated systems area to a total of between 40 and 45 FTEs. The 40 to 45
FTEs are necessary to perform both systems audits of SSA's programs and to support the
annual audit of SSA's financial statements. The study stated that “the potential risks
associated with neglecting to increase resources for this function more than offset the
investment. Indeed, the investment may even be viewed as immaterial when compared to
billions of dollars in weekly transactions that the EDP function will assist in safeguarding.”

At the time of the establishment of the SSA OIG in April 1995, the Office of Investigations
had 76 criminal investigative positions (GS-1811s). In FY 1996, Commissioner Chater
successfully supported an increase of an additional 53 additional GS-1811 positions. As you
are aware, in FY 1997, the Office of Investigations’ ceiling was raised again to provide for
an increase of 75 more criminal investigative positions, and we are certainly grateful to the
Subcommittee for its interest and efforts on our behalf to obtain these additional investigative
Tesources.

The Commissioner is currently supportive of continued growth of the investigative staff.

Based on comparing the size of our investigative component against those of 16 other Federal
OlGs, we can state with sufficient confidence that, by contrasting our mission and


COMMITTEE ON WAYS AND MEANS
BILL ARCHER, Texas, Chairman

PHILIP M. CRANE, Illinois SAM M, GIBBONS, Florida

BILL THOMAS, California CHARLES B. RANGEL, New York
E. CLAY SHAW, JR., Florida FORTNEY PETE STARK, California
NANCY L. JOHNSON, Connecticut ANDY JACOBS, JR, Indiana

JIM BUNNING, Kentucky HAROLD E. FORD, Tennessee
AMO HOUGHTON, New York ROBERT T. MATSUI, California
WALLY HERGER, California BARBARA B. KENNELLY, Connecticut
JIM McCRERY, Louisiana WILLIAM J. COYNE, Pennsylvania
MEL HANCOCK, Missouri SANDER M. LEVIN, Michigan
DAVE CAMP, Michigan BENJAMIN L. CARDIN, Maryland
JIM RAMSTAD, Minnesota JIM McDERMOTT, Washington
DICK ZIMMER, New Jersey GERALD D. KLECZKA, Wisconsin
JIM NUSSLE, Iowa JOHN LEWIS, Georgia

SAM JOHNSON, Texas LF. PAYNE, Virginia

JENNIFER DUNN, Washington RICHARD E. NEAL, Massachusetts
MAC COLLINS, Georgia MICHAEL R. MCNULTY, New York

ROB PORTMAN, Ohio
JIMMY HAYES, Louisiana
GREG LAUGHLIN, Texas
PHILIP S. ENGLISH, Pennsylvania
JOHN ENSIGN, Nevada
JON CHRISTENSEN, Nebraska
PHILLIP D. MOsELEY, Chief of Staff

Janice MAYS, Minority Chief Counsel

SUBCOMMITTEE ON SOCIAL SECURITY
JIM BUNNING, Kentucky, Chairman

SAM JOHNSON, Texas ANDY JACOBS, JR., Indiana

MAC COLLINS, Georgia BARBARA B. KENNELLY, Connecticut
ROB PORTMAN, Ohio LF. PAYNE, Virginia

PHILIP S. ENGLISH, Pennsylvania RICHARD E. NEAL, Massachusetts

JON CHRISTENSEN, Nebraska
MEL HANCOCK, Missouri

ap


119

Elimination of the Requirement for a Medical or Psychological Consultant Sign-off

‘The state unions oppose the elimination of the requirement for a medical or
psychological consultant sign-off for each claim because this compromises the integrity
of a medically-based disability program. This scenario is being tested in the Single
Decision Maker pilot. State adjudicators or examiners who are participating in the pilot
have the option of requesting that a medical consultant review the application in
complicated cases. However, there is anxiety among DDS examiners that if they request
reviews too frequently, they will be subject to negative personne! actions. There is also
the concern that they are being asked to perform a function for which they have not
received adequate training, i.e., medical school. A high level of anxiety on the part of
the employces participating in the pilot undermines the credibility of the pilot's results.

Our members propose that this issue is one of such importance that the entire
notion of what constitutes medical disability is in question. If this system is to be
medically based, it must necessarily have the input of persons who are physicians. If a
decision is made that the system is not medically based, state adjudicators without a
medical degree can perform the determination with some basic training. However, we
would alert this Subcomminee that if the program is not going tbe based
with the mandatory involvement of physicians, the likelihood of fraud and abuse
increases.

‘State unions will continue to participate and monitor disability Redesign and will
be happy to provide this Subcommitee with our recommendations on Redesign
implementation in the future.


68

would like some more information, and over time, the form has
evolved to what they have today. And I think SSA lost sight of the
impact of providing too much information.

Chairman BUNNING. I think it is great that SSA sends it, but it
is confusing. 1 think everyone should get one, but it is detailed to
the point of confusion.

Ms. EISENSTAT. We agree that it can be improved.

Chairman BUNNING. Mr. Jacobs.

Mr. Jacoss. No questions.

Chairman BUNNING. May I make a suggestion that we imme-
diately go to the floor and vote and come back as quickly as pos-
sible because we have 10 minutes. We will recess until we get back
from the floor.

(Recess.]

Chairman BUNNING. The Subcommittee will reconvene.

Let me just follow up on a couple of things on the statement.
According to your testimony, it will cost about $80 million in the
year 2000 to send the PEBES to approximately 123 million work-
ers.

Ms. EISENSTAT. That is correct.

Chairman BUNNING. If we redesign it, cut it back to a more rea-
sonable statement, will that help lower the cost, if we do it quickly?

Ms. EISENSTAT. I do not know that a major redesign could be
done quickly. I think that, first of all, SSA has already contracted
for the mailings that are going to go out in 1997 and 1998. The
soonest they would be able to do a major redesign would be for fis-
cal year 1999 mailings, largely due to the lead time required to
contract something of this magnitude.

Chairman BUNNING. That is unacceptable. I am sorry. They are
going to have to do it quicker because they are confusing more
people with it than they are assisting.

Ms. EISENSTAT. They can—.

Chairman BUNNING. And we think it is very important. We do
not want to resort to legislation, but it can always come to that.

The way to solve the problem is to ask them to redesign it and
to make it readable and understandable because everybody likes to
get it, but it creates a lot of questions.

Ms. EISENSTAT. There are some changes that SSA can make now
to clarify some of the explanations that people are finding confus-
ing now, but anything major, we have learned in our discussions
with them, would take longer to do.

Chairman BUNNING. Workers do not realize what the maximum
taxable earnings are each year or the difference it makes. They
want to know what was reported in taxes and what they have paid.
That is important. They also want to know, what their benefits po-
tentially will be at age 65, and the same thing with Medicare.

Since we have uncapped Medicare, it is hard to predict how
much they are going to be paying in, and if we are going to actually
salvage Medicare, we have got to figure out a way that we can—
with the money available—continue to pay the benefits that we are
paying.

So, what you are saying is not acceptable to me; that it is going
to be 1999 before SSA can change PEBES. We will convey that to
the Social Security Administration. Lead time should not be 3


19

We agree with all other aspects of the Comptroller General's report,
al “SSA has uncletta complex tasks (sinmultant
priority to initatives most likely to reduce proces

specially his abservation
sly) and has not given sul
nd administrative co ts"

SECOND, you asked for comments on our views of SSA's disability redesign initiative. There are
three areas on which we would like to comment.

1) Many of SSA's proposed process changes seem unlikely to result in any significant
Program improvement. While we certainly agree with Commissioner Chater’s five
slated objectives, we generally see little relationship between the objectives aud the
specific prucess changes that SSA says it intends to implement. The proposed changes
‘seem to us to be generally more labor intensive, more complex, and muci. moi. costly than
the existin,, process while offering no realistic promise of better decision making or faster
case processing. We believe that the combination of the objectives and the specific
process changes comprise an excellent intended destination but a route that niot only won't
take the program there but will take it to a less desired destination than where it is now.

As just one illustration of this point, we offer the example of SSA's propusal for creating,
the position of the Disability Claims Manager (XCM).

‘The DCM would be created by combining duties presently performed by SSA \ aims
Representatives (CRs) in the field offices and Disability Examiners (DEs} in the DDSs.
Under the present process, CRs conduct the intake interviews and handle all the non-
medical aspuets of claims processing, and DEs compile a medical record for -ach case,
analyze the izets in each case in comparison with the requirements of the law, wd, with
the help of physicians and psychologists, make the determinations of eligibility. These are
very difficult jobs, and they require entirely different skills and interests. CRs must be
able to deal face-to-face with the public while DEs must possess analytical skins. The
proposal to vombine these two positions into one presumes that enough workers can be
found who pussess these two disparate types of skills. Our management experience in the
disability program has taught us that most individuals have strong personal preferences for
a narrower range of (asks. ‘Those who enjoy the public contact involved in ciaitus taking
and interviewing seldom also enjoy the isolative nature of performing a catcful
individualized analysis of a difficult case, Under the present process, the preser: e of one
skill or the other enables an individual to work successfully in the program. But with
DCM the auseuce of one of the skills would disablesan individual from successful work.
Thus, the DCM initiative accomplishes exactly the opposite of what should be our
intention in job design. It introduces needless complexity and narrows the proportion of
individuals in the available work force who can perform the work well.

Further, each job has a substantial front end training period (three or four months) before
any significant work is performed and each is estimated (0 require from one tu iwo years
experience I efore the worker is reasonably proficient. Combining the jobs approximately
doubles the ainvunt of training time required for each employee before they become
productive thercby substantially increasing case processing costs. And this increase in
down time due to training does not end with initial training. Presently, if program
change affects only benefit computation, then only the CRs are trained in, this «: ange, and
if another change affects only medical policy, then only the DEs are trained. 6. “fthe
two positions are combined into one, every employee must be trained in every citange
thereby doubling the ongoing and long term training costs.

When the DUM concept was first announced, the obvious problems were very well
explained to SSA by all field components including NCDDD, NADE, and SSA's own
front line workers. SSA attempted to deflect reservations about the ability of one person
to handle such a broad range of tasks by asserting that a complex system of “enablers”
would be developed. The enablers included a state of the art computer system, a
simplified methodology for eligibility determinations, a vastly improved relationship with
the medical community, transfer of responsibility for collection of evidence to claimants
‘and their representatives, and other improvements. Pending development of the enablers,
SSA proposed that DCM be preceeded by arrangements in which CRs and DEs would
‘work in teams to determine if closer cooperation would result in improved sevice.



15

Does the law need to be changed? Do we, Congress, need to give
a little more discretion in order to arrive at a commonsense solu-
tion in a situation like that?

Mr. WILLIAMS. Certainly. We absolutely believe that law enforce-
ment agents cannot be placed in more danger because we are
breasting our cards. We cannot permit someone’s life to be in dan-
ger or lost, and we do not want fugitives and escapees and other
people that are committing serious offenses out and about when we
could easily help the authorities apprehend them.

We believe we are doing something to address it, and I hope it
is adequate. We want most of our investigative resources to protect
the funds, but we have held back a few resources in light of the
Welfare Reform Act and initiatives of our own to work with law en-
forcement agencies, to receive those kinds of requests, and provide
very aggressive Support.

Mr. Jacoss. Well, now, Mr. Williams, in this case, there would
not be any request. It is in the newspaper. They are looking for
Charlie Smith or whomever. Here is the Social Security staffer,
“Gosh, I just talked to Charlie Smith today. He is out at 1409
Canal Street, and they could nab him right now,” but the regula-
tions are that this is Social Security private information and I can-
not call up and tell the sheriff or the DEA person that this guy who
is badly wanted is out there. So, it is not a request from the
agency.

The question is, does the law need to be changed, and if not the
law, do the regulations need to be changed so that such an em-
ployee could go to the supervisor of that office who I presume
would be a responsible enough person to exercise discretion in such
a matter and say here is what I have, don’t you think you ought
to call the high sheriff and give him the information and they can

et this guy today, whereas, in the meantime, he may be off to
imbuktu?

Mr. WILLIAMS. Actually, there is a solution, and I would like to
describe it to you. We would be glad to look at a legislative change,
though, that would make such cooperation more accessible.

The solution is that if they make that expression to my office,
there is nothing that bars my office from jointly working with the
law enforcement agencies, and that has some——

Mr. Jacoss. Your office would have the authority to disclose the
information in my private Social Security file if I am being sought
by the law enforcement people and they have probable cause to
arrest me; that the law allows you to do that now.

Mr. WILLIAMS. Yes.

Mr. Jacoss. And that is probably the answer to the problem out
in Indianapolis. The employee should have gone to the supervisor,
who should have gone to you, and you could have made the disclo-
sure.

That is comforting to know, because I know that there is an ex-
ception for tracking ple down for child support. And, we got
through a law a couple of years ago where if someone gives blood
and does not know he or she has Alps, you can go through the sys-
tem to notify that person, but this is another exception in the
discretion of your office.

Mr. WILLIAMS. It is, sir, and we would aggressively ——


74

Chairman BUNNING. It is a “Guide to Social Security and
Medicare.”

Ms. EIsENSTAT. I do not believe that it is.

Chairman BUNNING. OK. This is a Mercer publication. No, that
is not from SSA. I just wondered where it came from. It seems
rather elaborate.

Thank you for your testimony.

Ms. EISENSTAT. Thank you.

Chairman BUNNING. We would like for the DDSs to give their
testimony. Go ahead, GAO on the disability redesign testimony.

Ms. EISENSTAT. I would like to now turn my comments to the
status of another important SSA initiative, efforts to redesign the
disability claims process.

As you know, SSA operates two disability programs that provide
cash benefits to people with disabilities, the Disability Insurance
and the Supplemental Security Income Programs, DI and SSI.

While downsizing substantially, SSA has struggled to deal with
unprecedented growth and applications for disability benefits and
a number of appealed disability decisions.

Concerned about reducing administrative cost, saving time and
improving the quality of service to claimants, SSA’s leadership
turned to reengineering in 1993. The objective of reengineering is
to fundamentally rethink and radically redesign a business process
from start to finish so that it becomes more efficient and signifi-
cantly improves service to customers.

SSA’s broad-based plan to be completed by 2000 is focused on
streamlining the disability process by relying more on automation
and making more efficient use of its work force.

Our work suggests that SSA has taken steps to improve this
process and needs to continue with its efforts. However, it’s plan
to undertake a large number of initiatives at one time is proving
to be overly ambitious and complex.

Stakeholder support for the redesign effort is also diminished, in
part, because employees fear losing their jobs.

The increasing duration of the overall project and individual ini-
tiatives also heightens the risk of disruption due to turnover in key
executive positions.

The steps claimants go through in the current disability deter-
mination process have not changed in any significant way since the
DI Program began in the fifties. The process is slow, labor inten-
sive, and paper reliant.

In order to make the process more efficient, SSA will rely heavily
on additional information technology. It will also develop a simpler
method for making disability decisions.

Other key elements of the plan include combining the work of
State and Federal offices into one position, allowing the claimant
to meet with the decisionmaker, and creating a new adjudication
officer to expedite decisionmaking at the appeals level.

The overall complexity and scope of SSA’s implementation plan
is limiting the progress of the redesign effort. Experts suggest that
while a redesign project can be large and encompassing, organiza-
tions should segment projects, concentrating on a small number of
manageable initiatives at any one time.


32

reversals (OHA refers to these as allowances) of the cases previously denied by the DDS in
1995; the Hearing Office Tracking System; and the identification of best practices to help
OHA improve service delivery.

Performance Monitoring issue team; staff = 7.5 FTEs, located in New York, New York. In
Tecent years, there has been increasing emphasis from the Administration, Congress, and the
public for ail Federal agencies to measure their performance in implementing programs and
core business processes. This emphasis has resulted in two initiatives directly affecting SSA:
the National Performance Review (NPR) and GPRA.

GPRA seeks to systematically hold Federal agencies accountable for achieving program
results. This means they must set performance goals, measure performance against those
goals, and report publicly on performance. More specifically, GPRA calls for agencies to
have strategic and performance plans by September 30, 1997. The SSA is currently in the
process of establishing performance measures for FY 1998 and revising its strategic plan.
‘The audit activities in this area will focus on determining the appropriateness of SSA's
performance measures and service standards, assessing the validity of the performance
monitoring process, and benchmarking performance targets

servi L issue
team; staff = 10 FTEs, located in Chicago, Illinois. PSCs primanly house and service the
records of individuals who are receiving Title II Social Security benefits, as well as provide
back-up for the 800 number telephone service. The PSCs are located in seven cities and
serve principally as processing centers for Title [I postentitlement (PE) actions. In FY 1994
(the latest year for which PE statistics are available), SSA processed over 78 million Title I
PE actions at a unit cost of $8.69 for record changes and $48.46 for continuing eligibility
reviews. An estimated 43 million beneficiaries received $313 billion in benefits in FY 1994.
The PE workloads, which generally grow commensurate with the growth of the Social
Security beneficiary population, are projected to increase by about 19 percent from FY 1993
to FY 1999,

TSC operations were started in the 1980's to improve service to beneficiaries using the
telephone to conduct SSA business. The TSCs were established in large metropolitan areas
to receive general inquiry telephone calls from the public. By 1988, SSA was operating 34
TSCs across the country, each with a separate telephone number. These TSCs were only
able to service about 50 percent of the country. To meet the increased public demands for
the telephone service and to improve the capability of contacting SSA by phone, a national
800 number service was initiated on October 1, 1988. The national 800 number serves as
the primary telephone answering point for general inquiries and reports from beneficiaries
and the general public. In FY 1995, TSCs received over 121 million calls and processed
over 62 million telephone inquiries. The 800 number network funding for FY 1995 was over


1038

make the disability decision and effectuate payment. This would seem to eliminate the
safeguard often used in the private sector of establishing procedures so that two or more
individuals must take separate actions to permit the transfer of substantial funds. This
safeguard is based on the audit principle that collusion between individuals is much less
likely to occur than the dishonest act of a single individual. While SSA will likely
establish mechanisms to minimize the occurrence of such actions, it seems that the
likelihood will be substantially increased despite best efforts.

3. Your organization consists mostly of those who actually adjudicate disability
applications in the States. Do you believe your position could be successfully merged
with the claims representative position, which is currently a position as Social
Security field offices? How can we be sure that your real motivation is not just to
protect your jobs?

Until testing is completed there is no data to support a judgment regarding the merging
of the adjudicator and claims representative functions into a single position yet the
preliminary impression of a great number of observers, inside and outside DDS’s, is that
such a merger would be extremely difficult, if not impossible. Opinion of our informed
members divides between those who believe it is impossible and those who believe it
is possible under the nght circumstances, These circumstances include vastly enhanced
automated support systems, a simplified decision process, an unwavering commitment
to training by the SSA, and a willingness, to increase administrative costs because of
increased salaries for individuals with the willingness and capability to perform this
function and increased training costs, including training costs resulting from the
expected increase in turnover. What is lacking is a rationale for the change to the DCM
position, even if it were cost neutral. SSA’s sole stated reason for proposing the DCM
was that there was overwhelming public support for the position, a rationale which has
recently, when challenged, been withdrawn. Absent demonstrated public preference for
the single point of contact, we believe that SSA should do a zero base assessment of this

There is considerable skepticism that the melding of the specialized complex skills of
disability adjudication with the complex knowledge of eligibility factors required of
Claims Representative (after the specialized Title II and Title XVI CR positions are,
themselves, combined) will produce efficiencies, program integrity, and improved
customer satisfaction. None of us with interest in the disability program should commit
to implementation of the DCM concept until clear evidence of its efficacy is available.

The ancillary question regarding the possible motivation to protect our jobs is a fair one
and we appreciate the opportunity to address it in a forthright manner. Some of our
members are concerned about their jobs and our leadership takes all the concems of our
members seriously. These kinds of concerns do not, however, dictate our policies or
legislative positions. The best evidence of this is our record in the legislative arena. We


39

of criminal activity reported to OIG nationwide. The AMS output will permit more timely
management analysis of that data and enable OIG to more effectively focus its limited
resources on audit and investigative initiatives.

Additional OIG and other manpower and resources were identified and dedicated to the
establishment of the new SSA OIG Hotline. Presently, there are six operators. We plan to
add five operators to handle the increase in Hotline volume due to the wide-ranging fraud
awareness campaign of the Hotline within and outside SSA, and the workload generated by
the new AMS system described earlier. Full-time management of the Hotline is provided by
seasoned, career OIG employees who are experts in law enforcement and hotline operations.

Contact points at the SSA Deputy Commissioner level have been formally established with
the Hotline to coordinate communications concerning Hotline referrals to SSA field and
Headquarters components, expediting analysis and the implementation of corrective measures
(if necessary), and other matters requiring priority or special handling. This connection also
serves as a vital link in keeping senior SSA management officials informed of the types of
fraud, waste, and abuse being reported to the OIG Hotline, and may identify trends or
vulnerabilities requiring prompt action. After taking into account privacy and investigative
considerations, results of selected matters reaching the Hotline will be made available to the
Congress, SSA officials and other interested parties, such as the President's Council on
Integrity and Efficiency This basic communication step is designed to cement solid working
relationships between SSA components and the Hotline, and to publicize Hotline activities
and the disposition of allegations reported to it.

Presently, the average number of telephone calls received monthly by the Hotline is 4,000.
On average, 300 letters are also received. Further, about 300 allegations requiring input by
the Hotline to the AMS described previously are being received each month.

Generally, allegations reported to the Hotline fall into the following categories: employee
fraud, beneficiary fraud, waste, abuse, misconduct, mismanagement, conflict of interest, and
miscellaneous. Sources of calls and letters include (but are not limited to) SSA employees,
the public, other government hotlines, other Federal, state, and local agencies (including law
enforcement agencies), the Congress, GAO, and anonymous tips. The Hotline is growing and
expanding as a result of modest preliminary publicity efforts within and outside SSA. Early
results indicate that the volume of calls and letters reaching the Hotline will increase
exponentially as our fraud awareness campaign moves into high gear. Despite the six-fold
increase in the number of operators previously dedicated to the Hotline, our short-term plan
is to quickly acquire five additional Program Specialists to more effectively process calls and
letters in a timely manner. Long-range plans (late Summer) for fully implementing the
increased AMS technology should enable a more efficient use of resources.


APPENDIX I

APPENDIX

Your Earnings Record

dos Seta
ieep a cord ty
ruin?

‘What kinds of earnings
may be on my record?

Ie my work is covered
| Secartty

‘Are my military service
‘earnings 00 record?

Whaat about ralirosd
work?

We keep a record of the amount of eamings reported each year under your name and
‘Social Security number. When you apply for benefits. we check your record to see if
{You worked enough over the years to qualify. Then we base the amount of your
‘payments on your average earnings over your working lifeume.

‘Almost all kinds of employment and self-employment earnings are covered for Social
Security and Medicare:

“Moa wages ave ban covered by Sail Seer tte sine 1937 and mot
of sett

taxes, but most of them do pay Medicare taxes on their “Medicare qualified
‘government earnings."
If you work for wages, your employer reports the amount of your eamings to Social

eamings
sepa tow, you had roe than one employe ering the yur, your earings fom al
of them have been combi

Not necessarily. There are limits each year on how much earnings are uxable for Social
‘Security and for Medicare. If you earn more than the maximnum arount the extra
earings wil oot be shown,

‘The chart on page 2 shows the maximum amount that was txable for each year $0
ez, The asnount was the same for both Social Security and Medicare from 1966 through

‘wages und self-employment earnings. Thee is sill a limit oo taxable Social Security
‘camnings, however.

‘Yost sement shows asc miliary py you ert om aie fy or ave ty for

statement. We decide if yoo qualify for them when you apply for benefit.

yo word inh ond indy fr estan 10 yar you riod earings ae
‘included on the chart. We considered these earnings whea we counted your credits and
‘emimased your benefice. (If you have 10 or more years of railroad work, you should contact
«1 Raiktoed Retirement Bosrd office for information about ritroed pension benefit.)

Your Social Security Taxes

‘Why does the chart oa
page 2 say “Estimated
‘Taxes You Paid"?

Whaat are the tax rates
‘the year?

‘Tee Internal Revenue Service collects your Social Security and Medicare taxes. We do
‘ot keep that record. To estimate the Social Security and Medicare taxes you paid, we

yar, we estimate the combined Medicare axes you paid.

‘You and your employer each pay Social Security taxes of 6:2 percent om the first
$562,700 of covered wages. You each also pay Medicare tas of 1.45 perceat on all your
‘covered wages. If you ae self-employed. your Social Security tax is 124 percent and
Your Medicare tax is 2.9 percent on the tame amounts of eamings.

Form SSA-7005.5M-SI (2-96)

@ meme

I


35

Service (USS), the U. S. Postal Inspection Service (USPIS), the Federal Bureau of
Investigation (FBI), the Immigration and Naturalization Service (INS), the Internal Revenue
Service's (IRS) Inspection Service, the Department of State's Diplomatic Security Service,
and the City of New York Police Department in the investigation of these credit card crimes.
These agencies are organized into the “West African Task Force” under the aegis of the

U. S. Secret Service.

‘The Office of Investigations took the lead in uncovering the 16 SSA employees suspected of
involvement in these crimes. Of this number, eight have been arrested; two convicted; two
have been terminated from SSA employment and are awaiting judicial action; and four are
still under investigation.

There were 22 other individuals involved in this conspiracy who were not SSA employees.
Of this mumber, 14 have been arrested; four have been indicted; and four have been
convicted.

Most of the key leads in this investigation were uncovered by a special search of the SSA
data bases by a task force of Office of Investigations’ agents and SSA systems analysts
supplied with matching data from victims’ credit card issuers. This process quickly
identified crucial patterns of criminal activity for the special agents developing this
investigation for the United States Attorneys’ Offices for the Southern and Eastern Districts
of New York. These results were converted into the probable cause for the search and arrest
warrants that neutralized this complex conspiracy.

B. The Impact of How Counterfeiting Effects SSA Operations

Counterfeiting has a palpable impact on SSA programs and operations. The production of
counterfeit identification documents is one of the most serious crime issues confronting law
enforcement in the United States today. The new desktop publishing technologies have
brought the requisite expertise to produce counterfeit identification documents within the
capacity of anyone with access to a personal computer. These criminal activities serve as the
first step in a myriad of more involved economic fraud crimes and, in some instances, crimes
of violence. All government agencies that dispense benefits are susceptible to these criminals
with false identification. Counterfeiting Social Security cards and fraudulent use of SSNs are
“breeder crimes” for criminals engaged in a wide variety of other criminal activities that run
the spectram from bank frauds to illegal immigration crimes. The Office of Investigations
aggressively focuses on attacking the false identification rings that undergird these criminal
schemes in concert with local, state and other Federal law enforcement agencies. The
following are several examples of present efforts with respect to these violations:


67

Chairman BUNNING. Thank you.

Let me start out by saying a 5-page document sent out by SSA
is a little pretentious unless you are going to run for office nation-
ally and you want your name in every household that receives any-
thing from Social Security. Simplification of this statement, like
the total amount of money you have contributed toward Social
Security, is needed. But this mailing would confuse more people
than it would help, resulting in more people calling the Social
Security office or coming to the Social Security office unless they
are totally and completely familiar with the Social Security system.

Have you been able to convince or have some input on a redesign
of this personal earnings and benefit estimate statement?

Ms. EISENSTAT. Mr. Chairman, we briefed Social Security Admin-
istration officials in late August with our comments, all of which
you have heard today.

They were receptive to our message. They, in fact, made the deci-
sion to modify the Commissioner’s letter for the 1997 mailing after
that briefing. The team that is, day to day, responsible for thinking
about how they are going to approach redesign has asked that we
meet with them and provide more detailed information. So, I
believe they are open to our input.

Chairman BUNNING. Most people that come into our congres-
sional offices are completely unaware of how much money they
have contributed into the Social Security system, either the retire-
ment program or the Medicare Program. They are amazed when
they get one of these statements that shows that they have totally
contributed, like $7,000 or $4,000 total.

Like my father, before he passed away, found out that he had
contributed $3,200 and had received back some $200,000 prior to
his decease. The amazing part about it is that most people think
they have put in a lot more than they have. Some kind of a state-
ment that shows what they have put in and what their potential
benefits are would be, in my opinion, the correct approach, rather
than trying to cover every bell and whistle. There ought to be a lit-
tle block in here that says if you have any questions about how
much you have contributed either to the retirement plan or to the
Medicare, you ought to give your congressional office a call, rather
than the Social Security office, for the simple reason that we are
able to get it a lot quicker than getting it from the SSA.

Ms. EISENSTAT. The public has clearly stated that they like
receiving this information.

Chairman BUNNING. I understand.

Ms. EISENSTAT. But they do not understand it right now.

Chairman BUNNING. That is right, and at age 62, 65, or 70, this
information is very important, but why not give them what their
normal benefits are? I mean, 65 is normal.

Ms. EIsENsTAT. That is right.

Chairman BUNNING. Why do we estimate what their benefits are
going to be at age 70? They may work the additional 5 years and
increase their benefits and their quarters. I do not think Social
Security knows what their benefits are going to be at age 70.

Ms. EISENSTAT. The feedback that BA has gotten from focus
group participants and individuals who have received the state-
ment suggest that explanations were not clear or maybe they


104

have never advocated positions that relate to salaries, working conditions, job security
and other such matters that, though legitimate concerns, distinguish our professional
association from trade unions. Our on-the-record support for testing the DCM position
evidences our openness to any change which can be demonstrated to increase efficiency
and claimant equity in the disability program. Finally, even though all the concerns of
all our members have not been allayed by SSA’s assurances that DDS jobs might be
changed but will not be lost, organizationally, we accept these assurances at face value.

4. What features of the redesign plan do you support?

We strongly support process unification and support all current initiatives related to this
objective. These include cross-component training, work on a single presentation of
policy, review of ALJ decisions, and efforts to formulate a single standard of review for
DDS and ALJ decisions. We support the concept of the Reengineered Disability System
and upcoming plans to test this in a DDS. We support rigorous testing of the full
process model and of the DCM position. We continue to oppose any testing of any
features which includes in the testing protocol "a high presumption of success.” We
support the idea of a simplified decision methodology but, of course, withhold judgment
on particular versions until they are known. We also strongly support the promised
ongoing training program for all decision makers.

5. You said in your testimony that you are worried about the stability of the
disability Trust Fund. Isn’t the point of disability process redesign to allow the same
people but allow them sooner? In your view, how would redesign jeopardize the
Trust Fund?

Historically, SSA has shown its effectiveness in influencing the allowance and denial
rates or CDR continuance/cessation rates of DDS's through the issuance of instructions
and reinforcement of those instructions with the review process. It has not, however,
been effective in influencing ALJ decisions. Past experience shows—for example,
following the 1984 legislative reforms—that increases in DDS allowance rates are
generally followed by increases (not decreases) in ALJ reversal rates. Consequently,
absent concrete initiatives that would countermand the historical trend, an increase in
DDS allowances would be expected to bring about an increase in allowances overall.
Process unification, so far, does not seem to have sufficient vigor to reverse the historical
trend. Anecdotal evidence provided by many of our members who attended process
unification training sessions with ALJ's indicates that most of the judges do not
anticipate a change in the way they decide claims as a result of this training.

SSA has stated that if efforts such as process unification result in a 1-2% increase in DDS.
allowances, ALJ‘s must decrease their allowance rates by 4-7% to ensure that the impact
on the Trust Fund is neutral. We are hopeful, but not entirely optimistic, that sufficient
reinforcement through the review process, SSA reorganization, and other initiatives


126

Place a moratorium on any further implementation of SSA's Disability
Redesign until Congress receives adequate assurance that issues such as fraud
and abuse, Program intent and Trust Fund Integrity are resolved.

Establish time limited benefits in appropriate impairment categories.

Remove vocational considerations in disability decisions for applicants under
age $0 but provide a real commitment to vocational training and rehabilitation
initiatives for these younger workers.

Clarify the adjudicative weight given objective medical evidence vs.
subjective elements such as allegations, treating source opinions. This would
help achieve authentic Process Unification between the DDS's and the ALJ's.

Revise the Administrative Procedure's Act to give SSA the requisite authority
to manage the OHA‘'s, including an effective quality assurance system for
ALJIs. This was highlighted in GAO report GAO/HEHS.96-87.

Create a Social Security Court, to provide uniform review of SSA decisions
and consistent interpretations of regulations, replacing the current system of
89 Federal District Courts and 13 Circuit Courts each issuing disparate
decisions.

Close the cgse file after DDS actions are completed, unless there is good
cause for late submission of these reports, This should decrease the incidence
of individuals withholding relevant medical evidence which causes further
backlogs at OHA.

We appreciate the opportunity to discuss these ideas with you and applaud the
leadership of the committee in helping to resolve the problems in this national
Program.

°


45

I appreciate your commitment to our efforts to combat waste, fraud, and abuse in the context
of the Social Security Trust Funds, and your willingness to bring to Congress’ attention any
measures which might aid in that effort.

Proposals and implementation of additional tools to aid in combating SSA program fraud is
among my highest priorities. To that end, I have created a group charged with identifying
areas vulnerable to fraud within SSA's programs and with proposing solutions. The
Deterrence and Recovery Measures Task Force (DRM), which consisted of staff members
from each OIG component, fulfilled that purpose and created a plan to provide the OIG with
additional legislative and regulatory tools to combat fraud, All legislative proposals which
grow out of DRM’s work will, of course, have to follow established Agency policies for
development, review, and comment before they are submitted to Congress as part of the
Agency's legislative package. I appreciate your interest in such proposals.

In addition, as you may be aware, a statute known colloquially as the Weingarten Rule (5
U.S.C. 7114(a\(2)(B)), provides for the presence of a union representative under certain
circumstances when a union member employed by the agency is examined "by a
Tepresentative of the agency in connection with an investigatic (Emphasis added).

This office bas been named in an unfair labor practice complaint (ULP) before the Federal
Labor Relations Authority (FLRA) for refusing to allow a union representative in an OIG
investigative interview of an employee. In addition, several similar charges have been
leveled against this office by the AFGE and are under investigation by the FLRA.

Due to its statutory independence from SSA, an OIG investigator does not act as "a
representative of the agency" when conducting investigative interviews, so the Weingarten
Rule does not apply. Needless to say, the AFGE disagrees with this analysis and has
repeatedly filed charges with the FLRA.

These ULP cases are a significant drain on the resources of this office. Legislation
clarifying the Weingarten Rule would free those resources for the purpose for which they
were intended — the reduction of fraud, waste and abuse. Any assistance in this regard
would be most helpful.


87

Claim Manager (DCM), is to be responsible for both the technical and the medical decision the
single decision maker model currently being tested should have been extensively and objectively
evaluated to determine the viability of this concept and the impact on program costs before the
DCM concept is piloted. Instead, SSA has chosen to accelerate the process and pilot the DCM
concept without having the results of this study or essential enablers in place. For example,
Process Unification was described in the "Plan for a New Disability Claim Process" as a key
enabler. NADE considers it to be essential, both to the current process and to the Redesign effort,
yet success in achieving this goal has not been demonstrated and it does not appear to be one of
SSA's top priorities.

We do not agree with the GAO's statement that, “This labor-intensive and paper-reliant process
has changed little since the DI program began in the 1950's." In fact, extensive changes in the
process have occurred, including markedly increased documentation requirements mandated by
Congress and by the courts. These will not change under Phase I of the Redesign effort, and the
new process involving the Disability Claim Manager will be at least, ifnot more, labor intensive
than the current process.

Further, it should be noted that despite multiple changes in the disability program and in the
evaluation process the DDSs have demonstrated a remarkable capacity to meet the challenges
they have faced. Much of this has been due to the expertise of the DDS staff. We are, therefore,
‘concerned that as case processing pressures increase, training and intercomponent communication
are too often relegated to the role of "non-essential." Yet training is an integral part of the
Redesigned Disability Process. The "Plan for a New Disability Claim Process” states, "SSA will
make an investment in comprehensive employee training to ensure that all employees have the
necessary knowledge and skills to perform the duties of their positions...in addition to initial
program training, continuing education opportunities will be made available to employees to
enhance current performance or career development.” However, in reality, training and
intercomponent communication are always among the first things cut when workloads increase or
funding is reduced. Much of the impetus for Reengineering-the perception that disability
adjudication is a fragmented process--is a result of earlier "downsizing" which reduced
interaction and communication between the Field Offices and the state DDSs. Few DDSs
provide continuing, on-going training and even initial training is often curtailed in times of high
case receipts. Examiners attending training provided by NADE must frequently use personel
leave time in order to do so and even that option is sometimes denied when workloads increase.
Training and communication are necessary if we are to maintain and improve the current process.
‘They are essential to the Redesign effort. Regrettably, there is nothing to assure that they will
receive appropriate support in the future. Past practice indicates that they will not,

‘Again, thank you for providing us this opportunity to testify.


8

We are dedicated to the protection of Social Security Trust Funds
in which so many Americans have a stake. OIG agents face danger
every day, often without thanks or recognition, as they strike at
the predators who steal from the vulnerable elements of our society
and from the savings of our retired citizens. Today, Mr. Chairman,
you and the Members of the Subcommittee have recognized our
efforts, and I am extremely grateful.

I wish to thank the Subcommittee again for focusing on the im-
portant and serious topic of infrastructure for my office.

I would be pleased to answer any questions you may have at this
time.

[The prepared statement follows:]


RECOMMENDATIONS TO IMPROVE THE
PERFORMANCE OF THE SOCIAL SECURITY
ADMINISTRATION AS AN INDEPENDENT
AGENCY

THURSDAY, SEPTEMBER 12, 1996

HOUuseE OF REPRESENTATIVES,
COMMITTEE ON WAYS AND MEANS,
SUBCOMMITTEE ON SOCIAL SECURITY,
Washington, DC.
The Subcommittee met, pursuant to notice, at 10:30 a.m., in
room B-318, Rayburn House Office Building, Hon. Jim Bunning,
(Chairman of the Subcommittee) presiding.
[The advisory announcing the hearing follows:]

mM


42

To review these and other critical system development projects, the OIG is currently only
able to devote nine staff to audits in the systems area. We believe we need 21 staff members
to work in the systems area. This number is modest compared to the number suggested in a
recent study performed by Coopers and Lybrand. The study recommended that we have 40
to 45 staff perform systems audits to effectively assess the vulnerability of SSA’s systems
technology on an ongoing basis. We do not know if individual OPIR staff members have the
experience in the areas of ADP or auditing that are needed by the OIG.

Question 10. I was pleased to hear your mention of the disability program as an area of
focus, You mentioned that you will be reviewing and reporting on SSA’s progress in
improving the timeliness and cost effectiveness of its disability program. I am deeply
concerned about the differences in allowance rates between the State Disability Determination
Services and the administrative law judges. Are your people focusing on decisional
disparities? What other disability-related issues are you focusing on?

Answer:

The OIG is focusing on decisional disparities. Our FY 1997 Workplan includes the
following reviews:

©  ALJs’ Reasons for Reversing Disability Decisions. This review will determine what
factors influence ALJ’s stated reasons for reversing disability decisions.

© Comparison of OHA’s and DDS’s Decision Criteria. This review will address
inconsistencies between the DDS and the OHA decisions.

Our FY 1998 Workplan will include a review of:

© ALJ reversals to determine whether applicants presented different medical conditions
when appealing the denial decision than they presented initially to the DDS. The
DDSs did not consider these cases to be disabled based on the beneficiary's medical
condition during the initial review.

In addition, as part of reviewing SSA's Redesign Plan, we plan to review the success of the

process unification initiatives. Additional audit work related to the cost effectiveness of

SSA’s disability program is discussed in our answer to question number 11.

Question 11 Recently, as part of legislation to increase the earnings limit, Congress
authorized substantial additional funding to clear up the continuing disability review (CDR)


73

Ms. EISENSTAT. If they want to change what they have already
contracted for, there are, I am sure, in those contracts some
penalty clauses.

Mr. JOHNSON. OK. That is what I wanted to hear you say.

Now, please tell me again—you said they were open to change.
In your view, do they act like they are getting with the program,
or are they just blowing smoke at you?

Ms. EIsENsTAT. I believe that they are open to redesigning the
statement.

Mr. JOHNSON. Are they going to do it?

Ms. EISENsTAT. I do not know precisely when they are going to
do that.

Mr. JOHNSON. Are you all going to follow up on that?

Ms. EISENSTAT. We are going to be working with them, yes,
further. We have additional work.

Mr. JOHNSON. OK. Can it be done on one page?

Ms. EISENSTAY. It can be done. I can show you an example of
what the Canadian pension plan has done. They put on one page
the earnings and benefit information. There is a little bit of explan-
atory information on the back. They have a separate brochure that
contains the more detailed material.

Mr. JOHNSON. Do people write for that, or do they mail it to them
automatically?

Ms. EISENSTAT. They do this automatically in Canada, but they
do it every 3 to 4 years. This is not an annual mailing.

Mr. JOHNSON. Not every year.

Ms. EISENSTAT. That is right.

Mr. JOHNSON. That is interesting. Why didn’t we go talk to them
before we did our form? Did you ask them that?

Ms. FAGNONI. My understanding is that it was suggested that
SSA speak with the Canadian Government because this was one
model that was identified when the PEBES legislation was en-
acted, and I believe SSA may have had one discussion with
Canadian officials, but it is our understanding that they did not
solicit additional help.

We did meet with Canadian Government officials to understand
a little bit more about their process.

Mr. JOHNSON. OK, but can we state unequivocally that it can be
done on one form? You all would agree with that?

Ms. EISENSTAT. It can be done.

Mr. JOHNSON. And can we say that contractual arrangements
with contractors do not have to hold to the form itself? They could
have it done by the next cycle if they wanted to?

Ms. EIsENSTAT. I do not know precisely how much time it would
take to make a significant change, but assuming that they would
break the contractual arrangements they have now, it is possible
to make changes sooner.

Mr. JOHNSON. Good. Thank you very much. I appreciate your
testimony.

Thank you, Mr. Chairman.

Chairman BUNNING. Is this an official document of the Social
Security Administration?

Ms. EIsENsTAT. I have seen the document. I am not sure.


82

‘THIRD, you asked for suggestions as to how the redesign
present suggestions in three areas

ve could be improved. We

1) Asstated above, we believe that resolving the differences between the two levels of
adjudication 1s ihe most important initiative. The underlying problem and its day to day
effect on the lives of ordinary Americans overwhelms all other problems facing the
disability program. Therefore, we recommend that all available redesign resources be
focused un this part of the redesign plan. We believe that if process unification succeeds
in bringing reasonable consistency to the program and if all other aspects of redesign
prove inefiective, redesign will be seen as a success. Conversely, if ai other aspects
work, bul the two levels of decision making continue ta produce such cisjaiawe results,
then redesign will be seen by the American public as having failed, ‘Theravur, we feel
that SSA should unequivocally designate process unification as the nus iuct vis. vedesign
priority and devote to it all the resources necessary to produce the best possible results in
the shortest rcalistic time, Only those resources that are not necessary for cftective
process unification should be applied elsewhere. Given the long SSA hi.wiy «f profound
reluctance to address this problem, SSA may well need the continuing attentizn of your
committee tv assure continued emphasis and progress in this area

2) SSA should nove forward with large scale implementation only of those changes which
can be shown to have short term beneficial impacts on accuracy, processing time,
administrative costs, or other aspects of public service. Until the efficacy of process
changes can be proven through the use of carefully observed small scale pilots, large
scale implementation places the program at neediess risk

3) SSA shoutd successfully develop the severa) “enablers” identified in the redesign plan
before attempting to implement the concept of the DCM on any level other than the
smallest pilot that will produce useful data, A moratorium should be pla.d against the
creation of any additional DCM positions until the efficacy of the position is established
by the performance of DCMs in the pilot.

Mr. Chairman, anni members of the committee, thank you again for the opportunity te appear
here today to pres.int our views on SSA’s attempts to redesign the disability program


RECOMMENDATIONS TO IMPROVE THE
PERFORMANCE OF THE SOCIAL SECURITY
ADMINISTRATION AS AN INDEPENDENT
AGENCY

HEARING

BEFORE THE

SUBCOMMITTEE ON SOCIAL SECURITY

OF THE

COMMITTEE ON WAYS AND MEANS
HOUSE OF REPRESENTATIVES

ONE HUNDRED FOURTH CONGRESS
SECOND SESSION

SEPTEMBER 12, 1996

Serial 104-94

Printed for the use of the Committee on Ways and Means

te

U.S. GOVERNMENT PRINTING OFFICE
45-808 CC WASHINGTON : 1998

For sale by the U.S. Government Printing Office
‘Superintendent of Documents, Congressional Sales Office, Washington, DC 20402
ISBN 0-16-057041-7



108

‘You asked why the plan to develop 1500 DCM positions was characterized as “dangerous
adventuring that would have exposed the program to needless risk”, and you asked about
the negotiations with the SSA unions that resulted in the plan for 1500 positions,

‘The Memorandum of Understanding negotiated between SSA management and organized
labor did result in an agreement to create at least 1500 DCM positions between January of
1996 and January of 1998, That plan can be regarded as dangerous because it made an
astonishingly large commitment to the DCM concept before there was even a good
understanding of what would be required to train DCMs, because it was not based on a
carefully contemplated or widely shared understanding of what the specific job content
would be, because of its likely immediate adverse effect on workloads, and because its
scope was so large as to make turning away from DCM difficult if the position proved not
to be workable. As has subsequently been established by professionals in the business of
project evaluation, 1500 positions is far beyond what is necessary to test the viability of
the DCM concept.

NCDDD did eventually participate in a SSA sponsored work group to determine the
details of the DCM concept including the training process. NCDDD then agreed to a plan
to test the concept using between 230 and 290 DCMs. We feel that this test is wide
enough in scope to produce useful information about the (pre-enabler) viability of the
position while being narrow enough to not adversely affect workloads during the test, to
minimize the loss of resources, and to preserve the option to abandon the whole concept
if it doesn’t work.

With regard to the union negotiations, since NCDDD was not present at the negotiations,
‘we cannot comment on any aspect other than the outcome.

‘You asked about the enablers which SSA originally said would support the DCM, if the
enablers are in place, if SSA is moving forward anyway, and what our dialogue has been
with SSA about the enablers.

‘The enablers included state of the art computer hardware, a software system consisting
not only of case development and management information functions but also decision

improved
relationship with the medical community, and transfer of responsibility for collection of
evidence to claimants and their representatives. None of these enablers are now in place.
Although the computer system is the one most often criticized for its substantial delays,
the other enablers do not appear close to completion, and most lack the detailed timeline
schedule and statement of specifications that has been published for the computer system.




109

NCDDD has recommended that SSA adhere to the original plan of developing the
enablers before expecting the DCM to operate efficiently, but SSA does plan on testing
the DCM in FY’97 in a pre-enabler form.

‘You asked if claimants now have no responsibility for collecting evidence of disability

Under the existing system, claimants usually are asked at the time of application if they
have evidence in the form of medical reports to present in support of their claims.
Claimants also are asked to cooperate with the process of obtaining evidence, by
attending consultative examinations and, sometimes, by helping the program personnel
contact treating sources to encourage them to submit reports. However, the majority of
‘the effort in obtaining a medical record is the responsibility of the DDS employees. We
have expressed concern that permitting claimants or their representatives to develop the
medical record will result in a biased record since the claimants will tend to focus on
reports that support their claims and omit reports which might support a finding that they
are not disabled.

You asked about the extent to which DDSs are involved in redesign initiatives, whether
the workloads are suffering, and if SSA has provided resources for these activities.

‘The adjudicative officer project and the single decision maker test are being piloted in
several states. Nearly all DDSs and OHA staff have now participated in the first stage of
the process unification effort. Many DDS employees have had the privilege of
participating in work groups to lay the foundation for other redesign initiatives, and there
is much DDS involvement with determining the functional requirements of the computer
system. Since these projects are small in scope, there has been only a minimal adverse
effect on the workloads. In some ways, the AO and SDM projects have improved work
flow. SSA has done an excellent job in helping to assure that the resources needed to
support participation in these projects are available to the participating DDSs. However,
due to the urgency of completing the drug and alcohol addiction and child reviews, some
DDS participation in demonstration projects may have to be curtailed.

‘You asked about the combined effect on front line workers of SSA’s extremely optimistic
predictions in 1994 about the success of reengineering and the fact that little has
happened in the way of actual implementation.

The vast difference between prediction and outcome could not have favorably affected
the credibility with which messages are received in the field. The perception exists that
making overstated claims about dramatic improvements and dedicating resources to
impractical endeavors have imprudently diminished the energies available for solving the
‘more immediate “here and now” problems of the disability program.


30

SSURSI Disability issue team; staff = 6 FTEs, located in Boston, Massachusetts. The DI
program 1s designed to provide benefits to wage earners and their families in the event that
the family wage earner becomes disabled In 1974, the Congress enacted the SSI program
(Public Law 92-603), providing income to financially needy individuals who are aged, blind
or disabled. In 1995, nearly 5.9 million disabled individuals and their dependents received
$40.3 billion in benefits under the DI program, and approximately 5 million SSI blind and
disabled individuals were paid $22.8 billion. This issue team will focus on disability claims-
related areas contained in the Disability Redesign, payment accuracy, interim
assistance/presumptive eligibility, vocational rehabilitation, and the continuing disability
review process.

Earnings issue team; staff = 9 FTEs, located in Philadelphia, Pennsylvania. Social Security
benefits are based on an individual’s earnings as reported to SSA. Reports of earnings must
be filed annually (on paper or via electronic or magnetic media) by every employer who is
liable for Social Security and Medicare taxes. Through this earnings process, SSA
establishes and maintains a record of an individual's earnings for use in determining insured
status for entitlement to retirement, survivors’, disability, and health insurance benefits and
in calculating benefit payment amounts.

In FY 1995, SSA processed over 235 million earnings ems. This workload is projected to
increase to over 256 million items by FY 2001. Legislation requiring SSA to issue Personal
Earnings and Benefits Estimate Statements annually to individuals age 60, which began in
FY 1995, and to persons age 25 and over beginning in FY 2000 will generate additional
work for the Agency, mostly in the form of public inquiries and requests for earnings
corrections. This team will review the operational systems and control points utilized in the
processing, recording, safeguarding, and reporting of wage data.

Enumeration issue team, staff = 7 FTEs, located in Birmingham, Alabama. Enumeration is
the process by which SSA assigns Social Security numbers (SSN) to identify individuals,
i.e., beneficianes, workers, nonworkers and legal aliens; issue replacement cards to
individuals with existing numbers; and verify SSNs for employers and other government
agencies. The process for assigning SSNs and issuing cards has changed significantly since
the beginning of the program. In 1982, SSA undertook a systems modernization program to
improve operations and create a state-of-the-art computer system for the Agency. All field
offices now have the capability to take an SSN application using on-line screens rather than
using a paper application form.

In FY 1995, SSA processed 16.8 million requests for new or replacement Social Security
cards. About 37 percent of all SSN requests are for new numbers and 63 percent are for
replacement cards for people with existing numbers. Over 3.3 percent of SSA's

administrative resources are expended on enumeration activities. This team will examine
major concerns in the enumeration process that relate to the adequacy of controls over the


89

that person on hand in the first place. Under DCM, that time will
double.

Also, we are very concerned that we will not be able to find
enough people who simultaneously have the public contact skills
required in the field office and the case analysis skills required in
the DDS.

At present, an individual could make a useful contribution to the
program if he or she possesses one of those skills, but under the
DCM concept, the individual will fail if he or she lacks either of
those skills.

Chairman BUNNING. Are we trying to protect somebody’s job, or
are we trying to change the system to make it work better? I am
leery of someone who has created the problem over a period of time
being those who are trying to solve the problem on a large-scale
view.

If I were going to try to change three different areas rather than
38, the results would be much more positive. But, if I am going to
upscale and try to change the whole system of 38 different areas,
I am going to fail. I am not saying that the SSA is going to fail
on all 38, but they may not do as good a job.

First of all, this is the initial claims process we are talking about.
These are the people that are coming into the system and why we
have a 13-month backlog. The DDCs make a decision and eventu-
ally if they go through the whole process, the ALJs will reverse
three-quarters of the initial decisions.

So, if I am a claimant, I am going to ride the train.

Mr. WILLMAN. Exactly.

Chairman BUNNING. Until we get a body of evidence that can be
judged and not altered in the decisionmaking process until the end,
we will never have a real handle on this problem.

What we start with is what we ought to end up with in this deci-
sionmaking process. You should not be able to add evidence 4, 6,
or 8 months down the road, whether it be medical or legal. Until
we write, and I am afraid we are going to have to write legislation
if we are going to solve this problem, we are going to have discrep-
ancies between DDSs and ALJs.

Mr. WILLMAN. I agree with all of that.

Chairman BUNNING. I am glad the Social Security Administra-
tion is trying to solve 38 different programs, but it seems to me
that the redesign effort gets bogged down in its massive attempt
to do too many things.

Is that generally GAO’s approach and view of this?

Ms. EISENSTAT. Our view is that SSA has taken on too many
things at once and that they need to focus their efforts at this point

ose initiatives that are more likely to reduce administrative
cost and case processing time.

Chairman BUNNING. There are two major problems that I have
seen in my time on this Subcommittee. They are the entry level
and the exit level of the process. In other words, the claimant com-
ing in and the continuing disability reviews to get them out the
door. If they are back to normal, that is the reason we do the CDR.
Do we spend $2.3 billion on CDRs? I mean, that is a lot of money.
I think it is around that number.

Ms. EIsenstar. Yes.


84

on initiatives that would assist in reducing the current workload,
as well as testing and implementing the new redesign process.

If ultimately one person, the DCM, or the disability claims man-
ager, is to be responsible for both the technical and the medical de-
cision, the single decisionmaker model currently being tested
should have been extensively and objectively evaluated to deter-
mine the viability of this concept and the impact on the program
cost before the DCM concept is piloted.

Instead, SSA has chosen to accelerate the process and pilot the
DCM concept without having the results of this study or essential
enablers in place.

For example, process unification was described in the plan for a
new disability claims process as a key enabler. NADE considers it
to be essential, both in the current process and to the redesign ef-
fort. Yet, success in achieving this goal has not been demonstrated,
and it does not appear to be one of SSA’s top priorities.

We do not agree with the GAO statement that the labor-
intensive paper-reliant process has changed little since the DI Pro-
gram began in the fifties. In fact, extensive changes in the process
have occurred, including markedly increased document require-
ments mandated by Congress and the courts. These will not change
under phase one of the redesign effort, and the new process involv-
ing the disability claims manager will be at least, if not more, labor
intensive than the current process.

Further, it should be noted that despite multiple changes in the
disability program and the evaluation processes, the DDSs have
demonstrated remarkable capability to meet the challenges they
face. Much of this has been due to the expertise of the DDS staff.
We are, therefore, concerned that as the case processing pressures
increase, training and intercomponent communication are too often
relegated to the role of nonessential. Yet, training is an integral

art of the redesign disability process. Under the redesign plan,

SA will make an investment in comprehensive employee trainin,
to ensure that all employees have the necessary knowledge an
skills to perform the duties of their positions.

In addition to initial program training, continuing education op-
portunities will be made available to employees to enhance current
performance or career development. However, in reality, training
and intercomponent communication are always the first things cut
when workloads increase or funding is reduced. Much of the impe-
tus for reengineering, the perception that disability adjudication is
a fragmented process is a result of earlier downsizing which re-
duced interaction and communication between the field offices and
the State DDSs.

Few DDSs provide continuing, ongoing training, and even initial
training is often curtailed in periods of high case receipts. Examin-
ers attending training provided by NADE must frequently use per-
sonal leave time in order to do so, and even that option is some-
times denied when workloads increase.


12

Chairman BUNNING. Thank you, Mr. Williams.

I noted in your testimony that the Commissioner asked you to
assess what resources your office would need to work effectively.
Would you please tell us what you reported to her and her
response?

Mr. WILLIAMS. I reported, first of all, on the method that we used
in conducting the study, which consisted of a benchmarking effort,
that I alluded to in my testimony, of the other Inspector General
offices.

I also described to the Commissioner the audit universe and
what a proper audit cycle would be; in other words, the time it
takes to audit an office and then 5 years later return to that office.
And I described the other methodology for the study.

I concluded to her that our investigative resources needed to pro-
vide a credible deterrent and also coordinate properly with Social
Security's employees who are very well equipped to report their
suspicions to us.

On the audit side, I suggested that we need to move as close as
we were able to to the 5-year audit cycle that GAO has rec-
ommended. The Commissioner responded by saying that she under-
stood that the investigative resources were very small, and she has
agreed to seek to double those resources in a request to Congress.

We are continuing discussions on the audit side of things, and we
are looking at the internal relationship between the Office of
Inspector General and other program evaluation units inside the
Social Security Administration.

Chairman BUNNING. Is it true or not true that there is a huge
staff of auditors in SSA, approximately 1,200, that do similar or
duplicative work? Could you recommend that those resources be
shared and/or appoint some of those 1,200 people to your staff? I
mean, it seems to me that SSA has 1,200 other auditors presently,
in some respect, in a different section of SSA.

Mr. WILLIAMS. Yes, sir.

Chairman BUNNING. Wouldn’t it be a little more effective if you
could reallocate those resources into your shop and use them to do
the audits that you think are necessary?

Mr. WILLIAMS. If I may, I will provide just a moment of back-
ground on that office.

Chairman BUNNING. That is the OPIR, Office of Program
Integrity Review.

Mr. WILLIAMS. Yes, sir, that is correct.

They are led by an Assistant Commissioner within the Social
Security Administration, and it is correct that they have 1,200 per-
sonnel. They have an approximate $80-million-a-year budget.

They currently cover two broad areas. First, they do quality as-
surance checks within the agency to let us know that SSA’s work
is being done accurately.

Second, they conduct special studies, which are very similar to
audits. They look at the programs and make recommendations for
improvement.

IT have had the concern and I have expressed it to people at the
Social Security Administration that these programs do appear to be
similar, particularly with regard to the Special Studies Program.
Those seem to be audits, much as I conduct, and the Commissioner


54

STATEMENT OF DIANA S. EISENSTAT
ASSOCIATE DIRECTOR, INCOME SECURITY ISSUES
HEALTH, EDUCATION, AND HUMAN SERVICES DIVISION, GAO

Mr, Chairman and Members of the Subcommittee:

I am pleased to be here today to discuss the Social Security
Administration's (SSA) Personal Earnings and Benefit Estimate
Statement (PEBES). This six-page statement supplies information
about a worker's yearly earnings on record at SSA; eligibility for
Social Security retirement, survivor, and disability benefits; and
estimates of these benefits. The PEBES also explains Social
Security programs and benefits.’

SSA has provided a PEBES to individuals upon request since
1988. As required by the Congress, in 1995 SSA began sending the
statements automatically to workers who have reached age 60.
Starting in fiscal year 2000, statements will reach an estimated
123 million people each year--almost every U.S. worker age 25 and
older. SSA projects that this effort will cost more than $60
million in fiscal year 2000 alone.

Personal experience with a federal agency and its programs can
greatly influence public opinion about that agency. Receiving 3
PEBES is likely to be most workers only experience with SSA until
they retire or possibly become disabled. Both the sponsor of the
legislation requiring these statements and SSA officials hope that
the statements will help build confidence in Social Security
programs by informing the public about Social Security benefits and
serve as a useful financial planning tool.

In recent testimony before this Subcommittee,’ we noted that
legislative requirements for the PEBES present a significant
workload challenge for SSA. Today I would like to discuss our
ongoing work for the Subcommittee on how effectively the PEBES
conveys information to the public. Specifically, I will focus on
what SSA has done to improve the statement, the extent to which the
PEBES communicates its goals and information clearly, SSA's plans
to revise the statement, and actions we believe will improve it.

To develop this information, we reviewed SSA's documentation on the
PEBES and met with SSA officials and field office staff. We also
reviewed selected public- and private-sector pension benefit
statements and discussed them with recognized experts in the field.
Finally, we consulted an expert in document design and
communication to review and provide comments on the PEBES.

In summary, we found that SSA has taken steps to improve the
PEBES, and feedback indicates that, overall, the public feels that
the statement can be a valuable tool for retirement planning. The
statement fails to communicate clearly, however, the complex
information readers need to understand SSA's programs and benefits
‘The statement, for does not explicitly state its purpose.
In addition, the design and organization of the statement make it
difficult for the reader to locate and understand important
information. For example, the information needed to fully
understand the benefit estimates is spread over five pages. Public
feedback on the statement also indicates that readers are confused
by several important explanations, such as who in their family is
also eligible for benefits and how much these family members might
receive

SSA is considering redesigning the PEBES but only if the
redesign results in reduced printing costs. This approach
overlooks hidden costs, such as (1) the workload generated by
public inguiries when people do not understand the statement and
(2) ‘the possibility that a poorly designed statement can undermine,
rather than boost, public confidence. Issuing these statements is
a significant initiative for SSA, and the agency should take steps
now to redesign the statement to more effectively present PEBES

‘appendix I contains a copy of a 1996 PEBES, which has been
slightly reduced for photocopying purposes.



Stakeholder Support

To the extent possible. managers of redesign projects should
seek ané secure support from all stakeholders. SSA has tried to
involve interested parties in the redesign effort by identifying
more than 140 stakeholders, meeting with them to discuss redesign
issues, and including them on project task teams and work groups
Although its stakeholders generally support the need for redesign
SSA has had problems getting and keeping support from some of them
In fact, sone redesign proposals are beginning to cause major
concerns for stakeholders. We found, for example, that SSA's
decision to create the DCM position to adjudicate claims raised
fears that some employees would lose their jobs. Furthernore,
SSA's decision to temporarily promote to a higher pay grade federa?
employees selected for the position raised a major concern for
state employees who would be paid less for the same work.

Cone WUSTONS

SSA should be commended for initiating action to significantiy
improve its disability claims process and should continue its
efforts. Since 1993, however, SSA has made limited progress toward
fulfilling its redesign goal. Although SSA has begun many of the
planned initiatives it expected to complete by September 30, 1996,
many are behind schedule and none is far enough along for SSA to
know whether specific proposed process changes will achieve the
desired results. We are concerned that SSA has undertaken too many
complex initiatives--some are now lengthy endeavors that are lixely
to extend the overall project completion date. Before proceeding
further, SSA needs to reassess the number of initiatives it is
simultaneously undertaking and the time frames for completing them
Because SSA undertook this project to reduce processing time and
administrative costs and improve service to the public, it should
focus its efforts on fewer initiatives and emphasize those that
will have the greatest impact on accomplishing the project goals.
SSA should reevaluate the relative priority and contributions to
the redesign goals of the remaining initiatives and implement them
as resources permit.

Mr. Chairman, this concludes my formal remarks. I will be
happy to answer any questions from you and other members of the
Subcommittee. ‘Thank you.


75

In prioritizing its redesign initiative, SSA chose to work on 38 of
them simultaneously. Thousands of Federal, State, and contractor
employees are being used throughout the country to design, test,
and evaluate processes and training programs.

As of July 1996, it had not fully completed or implemented any
of the 38 initiatives and is running behind schedule in meeting its
testing milestones.

Moreover, SSA has had problems implementing some of the more
complex initiatives. For example, SSA has undertaken a technology
initiative to more fully automate the processing of disability claims.
Today, completion of this key initiative is falling behind schedule,
and software has been delayed by more than 2 years.

While organizations may undertake redesign projects that will
take 2 to 5 years to complete, experts suggest that individual
project initiatives should be completed quickly, generally taking no
more than 12 months to implement.

A number of SSA’s initiatives are beginning to expand in scope
and become lengthy endeavors. To illustrate, the scope of SSA’s ini-
tiative to achieve consistent adjudication results throughout all
stages of the disability process has expanded. It started with a plan
to develop a single policy manual for use by all SSA and State em-
ployees. It has evolved to also include conducting the same training
for 14,000 decisionmakers, developing a consistent quality review
process, and using medical and vocational expert input.

With this expansion of task, full implementation has been
extended from September 1996 to January 1998, or later.

The cornerstone of any redesign effort is a commitment in long-
term availability of its top leaders. Redesign initiatives may take
many years to complete, and they may face increased risk that
leadership change will occur. This is especially true in government
where there are frequent changes in leadership and policy. SSA
has already experienced turnover of key executives since implemen-
tation of redesign began.

SSA has tried to involve stakeholders in the redesign project by
including them on project task teams and work groups. While its
stakeholders are generally supportive of the need to redesign the
process, it has encountered problems obtaining and sustaining sup-
port from some groups. We found that SSA’s decision to create a
position to adjudicate claims raised fears that some people would
lose their jobs.

Furthermore, SSA’s decision to temporarily promote Federal em-
ployees selected for the position to a higher pay grade raised major
concerns for State employees who would be paid less for the same
work.

In summary, SSA should be commended for initiating action to
significantly improve its disability claims process and should con-
tinue its efforts. However, SSA has made limited progress. Many
of its planned initiatives are behind schedule, and none are far
enough along for us to know whether specific changes will achieve
the desired results.

We are concerned that SSA has undertaken too many complex
initiatives simultaneously. It should focus its efforts first on a
smaller number of initiatives and place emphasis on those that will


36

In one ongoing investigation, two individuals were arrested by the U.S. Customs Service in
early November 1996 in connection with the seizure of one the largest shipment of
counterfeit Social Security cards and other fraudulent documentation.

In April 1996, a United Parcel Service shipment from Mexico to Milwaukee, Wisconsin
containing over 6,000 counterfeit Social Security cards was intercepted by the U.S. Customs
Service. This seizure resulted in the criminal indictment of the intended recipient of these
cards.

In December 1996, the Office of Investigations executed multiple arrest and search warrants
in the St. Louis, Missouri area involving the production of counterfeit identification and
Social Security documents as part of a criminal scheme to smuggle illegal East Indian aliens
into the United States. In this operation, over 30 illegal aliens were arrested and $100,000
in contraband and counterfeit identification seized.

In a similar case, Office of Investigations’ and INS agents arrested four Polish immigrants in
Williamsport, Pennsylvania who were engaged in a scheme to illegally obtain valid Social
Security cards by producing counterfeit INS documents as a basis for identification. This
scheme was part of an interstate conspiracy to facilitate illegal immigration to the United
States.

C. Assessment of the Office of Investigations’ Mission with Respect to Criminal Fraud
Directed Against the SSA

Assessment of SSA’s vulnerability to criminal fraud is a priority project for the Office of
Investigations. As we are a new investigative organization, we are amassing the data from
‘our operational experience to make valid assessments about where the SSA is vulnerable to
criminal activity, and how best to combat these crimes with our resources. I would be
pleased to provide the Subcommittee with this vulnerability assessment when it is completed
in the near future. Despite the absence of this pending quantitative data, we can still make
some general statements about the nature of SSA's criminal fraud exposure. It is apparent
that the SSI and Disability benefit programs are particularly susceptible to fraud. There
appears to be substantial street level criminal expertise about how to defraud these particular
benefit programs. The other substantial areas for an investigative focus are the crimes
devolving from fraudulent or improper enumeration. Since the SSN is the de facto common
identifier for most financial and identification transactions in this country, these crimes will
continue to proliferate.

After a year’s experience as Inspector General, I can accurately state that there is a
substantial challenge facing the SSA OIG in safeguarding SSA's Trust Fund and General
Treasury monies. It is more difficult to determine the exact or correct size of our

investigative component. For most of the months of my tenure, our criminal investigator


48

that as many as 150 - 200 of these allegations may be from current or former SSA
employees.
The Office of Investigations has established the following two groups that are dedi

the deterrence and detection of emerging criminal schemes and sophisticated criminal
enterprises:

The Enforcement Operations Division coordinates the Joint Field Operations (JFO). The
JFO is staffed with highly experienced criminal investigators. These investigators draw upon
their experience and established contacts within the law enforcement community to focus on
significant fraud and enumeration violations against SSA programs. The JFO criminal
investigators are located in strategic sites throughout the United States with special emphasis
on States adjacent to the U.S. borders.

‘The Strategic Enforcement Team is staffed with intelligence analysts and technical experts
who support the OIG with research and early warning information about criminal schemes
and techniques, The team enhances the OIG's ability to identify crime patterns in a timely
manner or trends in the types of frauds being perpetrated, and in developing novel
approaches for combating complex fraud schemes.

‘One of the initiatives developed by the SET this year to detect and deter an emerging
criminal scheme has been the Southwest Tactical Operations Plan. This is a pilot program
designed to qualify and quantify fraud being perpetrated by large groups of individuals
applying for benefits to which they are not entitled. The program will examine recipients
who are fraudulently receiving SSI payments while residing outside the United States. This
concept will be tested along our southwest border due to the numerous allegations regarding
program fraud and abuse in this area. It may be utilized in other border areas at a later

time.

Another initiative underway by the team focuses on the problem of doctors and attorneys
who facilitate fraudulent applications for benefits. The team is currently targeting an
attorney/doctor situation and has received the cooperation of the U.S. Attorney in that
district. The pursuit of this investigation is intended to uncover the facilitators of this major
source of fraudulent disability benefits and will provide experience and direction for
application in several other areas.

Question 16. I understand that before coming to SSA, you were appointed by President
Bush as Inspector General for the Nuclear Regulatory Commission, where you served for 7
years. In addition, you also served.on the President’s Commission on Organized Crime and
as head of operations for the Department of Labor Office of Racketeering, both during the


117

Chairman BUNNING. With that, the hearing is adjourned.
(Whereupon, at 12:35 p.m., the hearing was adjourned.]
(Submissions for the record follow:]


53

In addition to revising the Commissioner’s message, SSA can
make some basic changes to improve the statement. However, more
extensive revisions are needed to ensure that the statement com-
municates effectively. SSA will need to start now to complete these
changes before its 1999 redesign target date. The changes include
making better use of layout and design, working to simplify certain
explanations, and testing reader comprehension.

t also needs to evaluate and test alternative formats for commu-
nicating the information presented in PEBES in a cost-effective
manner.

Mr. Chairman, this concludes my formal remarks. I would be
happy to answer any questions.

(The prepared statement and attachment follow:]


49

Reagan Administration. Based on your experience as Inspector General for both agencies,
and your background in criminal investigations, what are some of the consequences you have
seen of not adequately deterring waste, fraud and abuse?

Answer:

My public service career in law enforcement has provided me with an appreciation for the
challenges of designing and implementing enforcement programs to combat crime (or as in
the case of Inspectors General, in eliminating fraud, waste and abuse). Conversely, my
career has also provided me with an understanding of the consequences of failure to have
such a program in areas vulnerable to fraud.

In several agencies where I’ve served, I’ve participated in the introduction of investigative
operations where no prior enforcement operations existed. In these instances, the level of
criminal activities had usually increased to provocative, and certainly unhealthy levels,
requiring substantial law enforcement intervention.

The most dramatic of these instances involved my service with the Department of Labor,
Office of Racketeering, and the President's Commission on Organized Crime, where the
focus was on the infiltration of labor unions by organized crime. By the time the
government decided to act on this crime issue, certain elements of organized labor in the
United States were rife with corruption. Four international unions were completely
controlled by the mafia, as were various industries in certain regions of the country. Crime
in these mafia-controlled unions, as is the case with any enterprise or activity devoid of any
law enforcement focus (to include government benefit programs) was out-of-control. Many
of these criminal activities were so common and prolific that they were scarcely recognized
by the public as being crimes. The participants seeking and granting benefits understood the
schemes so well that they were perpetrated with a wink and a nod, rather than leaving behind
more normal trails of criminal evidence. These conditions made evidence gathering and
prosecution exceedingly difficult.

Decent union members witnessing the unchecked pillaging of union funds felt foolish for not
participating in these criminal acts or cowardly for not attempting to stop them. This culture
produced plummeting morale and cynicism among union members and even more damaging,
a fear of the workplace. This is also sometimes the case among honest government benefit
recipients and government workers where enforcement programs are failing. Government
employees are outraged about the fraud and abuse they witness within government. Our
challenge is to design and deploy our resources to combat this fraud in ways that make a
difference. This is a critical consideration because my experience has also prepared me to
understand that attempts to eliminate fraud or crime without a strategy to maximize the
impact or effectiveness of these operations are doomed to failure. In areas where little
enforcement has occurred over a long period of time, law enforcement attempts to attack


78

TESTIMONY OF

JERRY THOMAS, PRESIDENT
AND.
DOUGLAS WILLMAN, PRESIDENT-ELECT
NATIONAL COUNCIL OF DISABILITY DETERMINATIONS DIRECTORS:

BEFORE THE SUBCOMMITTEE ON SOCIAL SECURIT ¥
COMMITTEE ON WAYS AND MEANS:
UNITED STATES HOUSE OF REPRESENTATIVES

REGARDING IMPROVING THE PERFORMANCE OF SOCIAL SECURITY
‘AS AN INDEPENDENT AGENCY

SEPTEMBER 12, 1996

Chairman Bunning anu members of the sub-committee, on behalf of the members of the
NCDDP, thank you for the opportunity to appear here today to present our views regarding
SSA's efforts to redesign the disability program

The NCDDD is a pro:essional organization of the directors and other management stafT of the
state Disability Determination Services agencies, The DDSs participate in the disal
program by making the initial determinations of eligibility for disat
here today experiencing great concern about the future of the disability program, the declining
image of the program in the eyes of the public, and the solvency of the disability ‘rust sund, We
desire a program that produces correct and consistent determinations of eligibility, that makes
these determinations in the shortest possible time, and that operates at the least reavonaile cost
to the tax payer. By “correct” decisions, we mean that benefits are received by persons who are
tunable to work because of a medical impairment. By “consistent” decisions, we mean that
decision making should not substantially vary from state to state or between the initial and
appellate levels of determination, We know that the current process can be and must be
improved in terms of its ability to achieve these objectives. We want to work with SSA, with
other representatives of the DDS community and with Congress to increase tlhe ».cutucy of the
process, to reduce processing time, and to control costs.

Mr. Chairman, in your invitation (0 us to appear here today, you asked that we comment on three
matters — the testimony of the Comptroller General on July 25 regarding SSA's redesign

Our own assessment of the redesign initiative, and suggestions for improving redesign
We are pleased to provide the following comments.

EIRST, regarding the report of the Comptroller General dated July 25, 1996, we agree with all
aspects of the report except one. The report described the disability determination process as
being labor-intensive, paper-reliant, and nearly unchanged since the program began my the
1950's, This is a misconception which was first stated by the task team that SSA convened in
October of 1993 to devise a plan for a reengineered program. For a team charged wilt radically
redesigning the program, stating that there had been no real change for forty years was u useful
piece of fiction. But the reality is that the program has undergone constant incremental change
and adaptation as required by changes in the law, SSA policy, the demographics of the
population seeking benefits, office technology, and the practice of medicine, The strategies used
to coltect medical evidence, the type and amount of evidence collected, and the metheas for
analyzing the evidence in comparison with program standards are just a few examples uf the
ways in which the process has changed over the past few decades. Indeed, SSA officiuss, as late
as 1992, commented that there had been so much change in the disability program that what was
needed most in the DLSs was a period of stability to absorb all the changes and to incorporate
them into the routine. As individuals who have been employed in the program for more shan
twenty years, we can assure you that an employee who departed a DDS in, say, 1980, would
notice substantial improvements if he or she were to return to a DDS today. We regret not
having informed the CAO of the misconception stated by SSA in the original reengineering plan
and thus having contributed to the appearance of what we regard as an inaccurate statement in
the Comptroller Gein tal’s report



88

Chairman BuNNING. Let me start with Ms. Eisenstat.

I know your staff is separately auditing the plan to create the
disability claims manager position. Would you please elaborate spe-
cifically on the two positions that will be merged into this new posi-
tion. Also, what is your assessment of SSA’s plan to test the fea-
sibility of this new position? And finally, what has been the reac-
tion of those who have the most at stake if this position is
established?

Ms. EIsenstTaT. The disability claims manager position envisions
combining the duties and responsibilities that are currently per-
formed by claims representatives and disability examiners. SSA is
taking two functions and placing responsibility for them with one
person.

Our latest information from SSA is that they plan to begin test-
ing the DCM concept in January 1997. However, you have just
heard that the full position will not be tested, all of the necessary
enablers will not be in place, and that SSA has not completed the
design of some aspects of the revised process.

Nevertheless, SSA will be in a position to test a few components
of the DCM position. We believe SSA may learn something about
the feasibility of the work force to perform combined duties. They
may also learn something about the training needs that might be
required for the position.

There are also concerns about security issues for workers. Some
workers, for the first time, will be dealing face to face with claim-
ants, and I think SSA may be in a position to learn something
about that from a limited test.

SSA is also currently testing other initiatives that are related to
the DCM. SSA refers to them as teaming and sequential interview-
ing.

Chairman BUNNING. “Teaming” meaning what?

Ms. EISENSTAT. Teaming meaning that you have the claims rep-
resentatives and the disability examiners in their current positions
working more closely together to determine whether they can
improve the process.

Since these tests are underway, we are suggesting that SSA sys-
tematically gather information from them and compare test results
before moving forward. More specifically, this analysis should be
used to help decide a final course of action about whether to pro-
ceed with the DCM position or some other alternatives.

Chairman BUNNING. Would either of you gentlemen like to
comment?

Mr. WILLMAN. Yes, I would. The two positions that would be
combined together to create a DCM, each are very difficult, tech-
nical, highly skilled positions, and they involve the possession of
different kinds of skills.

The training period for each position is about 3 months up front
before any work is done, and for each position, we feel that it takes
1 to 2 years for an individual to become fully proficient.

By doubling the training time, it seems to me that we really take
down the efficiency of the process. As it is, with disability examin-
ers, if a fully trained examiner terminates employment in 18
months, it was probably not cost effective for us to have ever had


43

backlog. I believe it was a whopping $2.67 billion over 7 years. What role will your office
play in advising Congress whether this money -- or any other large sums it authorizes SSA --
is being well spent to achieve what Congress intended?

Answer:

In recent years, SSA’s backlog of CDRs that are overdue has grown and the Congress has
increased the number of CDRs and medical reviews that must be conducted. The GAO
estimated that 4.3 million Di and SSI beneficiaries were due or overdue for a CDR in 1996.
To meet this challenge, SSA has established a plan to eliminate the backlog by 2002. In
addition, Congress has mandated that SSA report annually on the CDRs conducted, the funds
saved and the cost of conducting these CDRs. Congress, with the support of the
Administration, provided specific funding for conducting certain kinds of CDRs.

To assess the effectiveness of SSA's actions to eliminate the CDR backlog and report on the
cost of specific legislation, the following reviews are planned for FYs 1997 and/or 1998:

© SSA's planned expansion of its profiling system to include Medicare and Medicaid
data in order to more reliably predict which beneficiaries would be cost effectively
served by a mailer CDR instead of a full medical review.

© SSA's backlog plan to determine whether SSA's emphasis is on saving program funds
in the most cost eftective manner and not just to reduce the number of CDRs
overdue.

© SSA's accounting for the specific funding provided by Congress to conduct certain
types of CDRs. SSA estimates it will complete its annual report in early 1997. We
will verify SSA's reported investment in CDRs and its related accomplishments.

‘Question 12. SSA has the responsibility for Old-age, Survivors and Disability Insurance and
Supplemental Security Income. In which of these programs are most of the investigations
conducted? Do your investigations indicate that any one program is more prone to abuse,
waste or fraud?

Answer:

During the 20 months since SSA became an independent agency, the percentage of our
investigative activities concentrated in the program areas were as follows:

SSN RSI DI SSI Other


113

Question 3:

Your testimony indicated that the cornerstone of any redesign
effort is the commitment and long-term availability of its top
leaders. What turnover of key executive level personnel has SSA
experienced since redesign implementation began? Has SSA taken any
action in response to this turnover which demonstrates their
realization of the importance of management stability and
continuity?

Since redesign implementation began, SSA has experienced turnover
in the following senior executive positions:

Principal Deputy Commissioner
Deputy Commissioner for Systems
Director, SSA Process Reengineering Program

Because turnover in executive positions occurs frequently in
government, we have expressed concern with the planned duration and
scope of SSA's redesign project. Thus far, reengineering has
remained an agency priority. However, in our testimony and
subsequent report we have cautioned that continued turnover could
result in a loss of momentum and further delays. To increase the
likelihood that SSA can accomplish rapid results, we have
recommended that the agency concentrate its efforts on endeavors of
smaller, more manageable scope. Specifically, SSA needs to select
those initiatives most crucial to producing significant, measurable
reductions in claims processing time and administrative cost--
including those initiatives intended to achieve process
unification, establishment of new decisionmaking positions, and
enhancement of information systems support.


122

work {much of which is unfamiliar to the AO’s), keeping them
from their primary duties of case analysis and
decisionmaking. Furthermore, some of the clerical personnel
assigned to the pilots have not had necessary training to
perform needed clerical tasks, exacerbating the workload
problems in the AO pilots.

Senior Attorney-Advisors have access to the full contingent
of experienced clerical staff at the OHA. Therefore,
medical records requests and other evidentiary development
can be delegated quickly and effectively.

to ALJ input

The separation of the Adjudication Officer from the OHA
office in the pilots has compelled the establishment of a
"firewall" between the Adjudication Officer and the
Administrative Law Judge. This often results in
Adjudication Officers having to overdevelop cases to assure
their acceptance by the most demanding ALJ’s in an office.
It also makes it much more difficult to obtain meaningful
feedback from the recipient of one of the AO’s principal
products: the case certified for hearing. This is contrary
to the original concept of the redesign, in which the AO and
ALJ were expected to “work closely". The redesign plan
specifically epvisions the AO consulting with the ALJ on a
regular basis.

In contrast, the Senior Attorney-Advisor remains an integral
part of the OHA office and has easy access to the ALJ's.
He/she is permitted and expected to consult with them on
appropriate cases. This contact helps expedite the handling
of many functions and fosters teamwork. The relationship of
the Senior Attorney-Advisor to the Administrative Law Judge
is much truer to the redesign’s vision for AO/ALJ relations
than what has been implemented in the AO pilots.

load management

AO’s in the pilots typically have caseloads exceeding 100
Pending cases, when the optimal caseload has been described
as 60 - 80. It is exceedingly difficult to manage a
caseload of this size. It is nearly impossible to maintain
timely follow-up contacts. I believe acquisition of LAN
ready contact manager software would help the AO’s
significantly, but 100 cases would still be unmanageable.
In contrast, Senior Attorney-Advisors have much smaller
caseloads and can release cases to other personnel much
faster. Thus they are able to keep much better track of
their cases.

These reasons should be enough to justify reworking the AO/SAA
programs to make the permanent program follow the Senior
Attorney-Advisor approach. There are other reasons, even more
persuasive. The most critical of these is the impact of full
implementation of the competing programs on the other disability
determination components. These competing programs will have a
very different impact on the overall workloads in the state
disability determination services [DS's] and OHA’s. The Senior
Attorney-Advisor program obviously has no impact on the DDS or
SSA field office workforce. It was expected to have some
negative impact on the capacity for regular decision writing.
This impact was markedly lessened since the Senior Attorney-
Advisors continue to draft decisions for Administrative Law
Judges in addition to their prehearing duties. Generally the
cases the SAA’s write are the most difficult in the office.

2 See, Plan for _a New Disability Claim Process, September
1994. SSA Pub. No. 01-005 at p. 33 - 34.


CONTENTS

Page
Advisory of September 5, 1996, announcing the hearing 2
WITNESSES

Social Security Administration, Hon. David C. Williams, Inspector General,
accompanied by Daniel Blades, Deputy Inspector General; Pamela
Gardiner, Assistant Inspector General, Audits; and James Huse,’ Assistant
Inspector General, Investigations . 5

General Accounting Office, Diana S. Fisenstat, Associate Director, Income
Security Issues, Health, Education and ‘Human Services Division;
accompanied by Cynthia M. Pagnoni, Assistant Director, Income Security
Issues, and Michael Blair, Assistant Director, Income Security Issues . 51

National Council of Disability Determination Directors, Douglas Willman,
and Jerry A. Thomas . 7 16

National Association of Disability Examiners, Larry DeVantier 83

SUBMISSIONS FOR THE RECORD

American Federation of State, County and Municipal Employees, AFL-CIO,
statement .. 118

Hitchcock, James R., Knoxville, TN, statement . 120

Public Employees Federation, New York, NY, Larry Jacks, statement 125

ap


106

December 20, 1996

The Honorable Jim Bunning
Chairman, House Subcommittee on Social Security
USS. House of Representatives

Washington, D.C. 20515

Dear Congressman Bunning

This responds to your letter to Jerry Thomas dated November 22, 1996, in which you asked eight
questions in follow up to testimony presented at a hearing on September 12, 1996.

Before turning to your particular questions, I want to make one brief comment in modification of
the written and oral testimony presented by NCDDD at the hearing, The testimony might be
interpreted to conclude that NCDDD does not feel that there have been any successes at all in
‘SSA's disability redesign. This is not the case. While there are serious disagreements on some
of the specific initiatives and on the pace, scope, and priority of some other initiatives, I was
remiss in not acknowledging the positive aspects of redesign in general and the progress that has
been made on some specific projects In particular, the cross component training that has taken
place as the first step in process unification, the information being obtained in the adjudicative
officer and single decision maker projects, and the developing plans to test what is known as the
fall process mode! should all be regarded as successes, Equally as importantly, since the summer
of 1994 — shortly after the release of the original reengineering report — the process for
developing the redesign initiatives has helped promote an effective working relationship between
the states and the SSA Disability Process Redesign Team. Mr. Chuck Jones in particular has
been instrumental in keeping DDSs informed of what has been happening in redesign and in
assuring opportunities for full participation and inclusiveness for DDS.

Responses to your specific questions are as follows

1, _ Relative to the creation of the position of Disability Claims Manager (DCM), you asked
why the NCDDD does not feel that the position can be successfully implemented, and
you asked if reluctance to endorse the position is just an attempt to protect state jobs.

According to SSA’s original plan, the DCM would be accomplished in two steps. First,
job tasks would be simplified through the development of a comprehensive system of
“enablers”. Second, the functions presently performed by SSA Claims Representatives
and DDS Disability Examiners would be combined into one position. Neither step seems
plausible to us. With regard to the enablers, state and federal personnel have worked
together on operational problems over the past few decades with much more modest
results than what the’ enablers were predicted to accomplish. The system of enablers
always appeared to be more of a wish list than an achievable set of program tools.


APPENDIX I APPENDIX

Disability Benefits
Tellin about dabtty Thee beets as pid i you become lly abled before you rah alretrement
dene age. To pt duality bene, ae necetary:

Yo aed a ceuie numberof work reared hy hd io beard during

specific period of time:
+ You mast ave a physic or mental contion ha bas Used, ris expected 0
lagt at least 12 months or to end in your death; and

+ Your disability must be severe enough 10 keep you from doing any substantial

‘work, not just your last job,
Benefits for Your Family
IU retir or become As you work. you als buildup protection fo your amily. Benefits may be payable to:
‘sable, can my family Niagara crag 18 adr might ry ae
fet beset wi me? disabled before age 2: and
+r sme ode ps 62 (tend, fees 8 oa
any og fearing for you quaied eld who i under 16 o iabed.

Usually. each family member qualities for a moothly benefit that is up to 50 percent of
{Your retirement or disability benefit, abject to the limit explained below.

may qualify for
payne, Woks py bem wow ad wae, aay
‘At age 50 if disabled;
* At age 60 (retuoed):

age: oF
“At any age if your widow or widower is caring for your qualified child who is
‘under age 16 or disabled.

Is here a Hit om the Yes. There isa limit on the amount we can pay 10 you snd your family aliogether. This

benefits we can get tonal depeads oa the amount of your besefit aad the nomber of family members who

‘cach month? also qualify. The toa varies, but ia generally equal to sbout 150 to 180 perceat of your
retirerent benefit. (t may be leas for disability benefits.) The family limit alo applies to
‘benefis for your survivars,

‘What if sy spouse aloo Your spouse cannot get both his or ber own benefit plus full benefit on your record. We
‘rected long emomgh can only py an cunt equal oc ler ofthe wo beta. Your spose sould call
‘under Social Security os and ask how to get a Personal Earnings and Benefit Estimate Statement like

‘to get benefit? Wn youth hos senat wc np et our spon fv baton
the two records,
‘If You Continue to Work

‘What if take my benefits Even if you are still working, you may qualify for benefits. Until you reach age 70. there

‘and thea want to work are limit on how auch you can earn without losing some or all of your Social Security

some more? ‘retirement benefits. These limits change every year. When you apply for benefits, we
will wll you what the limits are at that time and if work would affect your monthly
checks and those of your qualified family members

‘Whaat if my family Earnings limics also apply o family members who get any kind of benefits on your
members work? ‘ecord. Their earnings only affect their own benefi payments, however, ot yours.

‘Do these times also No, Different cules apply to people who get disability benefits. The disability program
spelt Tee dlebitey bas incentives to help beefciares eum to productive werk.

I


52

By providing PEBES, SSA’s goals are to give the public a better
understanding of Social Security benefits, assist workers in plan-
ning for their financial futures, and to better ensure that Social
Security earnings records are accurate and complete.

Our work has shown that SSA has taken steps to improve
PEBES, and the public reaction has been positive. However, the
statement fails to communicate clearly the complex information
readers need to understand SSA’s programs and benefits. Also, the
design and organization of the statement make it difficult to locate
and understand important information.

We believe that PEBES can be improved by making the purpose
of the statement more clear in the Commissioner's letter. As you
can see by looking at this first board, the presentation is
uninviting. The type is too densely packed. The lines are too long.
phere is not enough white space, and the key points are not high-
lighted.

eafter a recent briefing of SSA officials, the agency decided to
shorten and clarify the Commissioner’s letter for the 1997 mailing.
Comments from SSA’s public focus groups, SSA employees, and
benefit experts, also indicate that the statement contains too much
information and is too complex. This is especially true for younger
workers who have expressed a preference for a 2-page statement,
a simpler 1-page form containing their estimated benefits and
taxes paid, and a separate pamphlet containing the explanatory
information.

SSA has not made the best use of layout and design to help the
reader identify the most important points and move easily from one
section to the next. Information in PEBES does not appear where
needed.

By looking at the second board, you will note that the statement
contains a patchwork of explanations throughout the document.
This causes readers to flip from page to page repeatedly.

The blue highlighted material contains information needed to un-
derstand the benefit estimates, and the yellow highlighted material
contains information needed to understand the earnings record and
taxes paid.

Although the public and benefit experts agree that the current
statement is too long, there is no clear consensus on how best to
present benefit information. The Canadian Government, for exam-
ple, chose to use a two-part document. They provide the individual
earnings record and benefit estimates in a brief 1-page statement
and detail the program explanations in a separate brochure.

SSA is considering an extensive redesign of PEBES for the fiscal
year 1999 mailings, but only if it saves money on printing costs.
However, we suggest that SSA look at the hidden costs of not mak-
ing changes. For example, readers who have questions or do not
understand why they receive the statement may call or visit SSA
creating more work for its staff. Furthermore, if PEBES frustrates
or confuses people, receiving a statement could undermine public
confidence in SSA and its programs.

A number of complex decisions must be made which balance cost
and the public’s need for information with the risk of providing too
much. Our work suggests that improving PEBES will demand
attention from SSA senior leadership.


101

stated that he intended to allow the claim and defended his decision on the basis
that the claimant "is a good old boy.” This single anecdote, of course, proves
nothing in general. It would be counter-intuitive, however, to believe that
decisions which involve personal contact are not frequently influenced by factors
such as we've described.

To conclude our response to this part of the question, and to attempt to place the
discrepancy between DDS decisions and ALJ decisions in perspective, we would like to
cite a related fact: the largest discrepancy is not between DDS decisions and ALJ
decisions. Rather, it is between one ALJ's decisions and another. While current data is
difficult to obtain, allowance rates (often called reversal of DDS decisions) by individual
ALY’s as low as 10% and as high as 95% have been recorded. These data underscore the
extensive, some would say rampant, discretion which attends to the appeals process at
this time. On the surface, it would seem that a claimant for disability would have more
than a 9 times greater chance of being allowed if he appeared before one judge than
before another. The DDS's, with stricter rules and more stringent review, do not have
such dramatic discrepancies. Still, we believe that under improved circumstances the
two processes could complement each other in ways that would enhance efficiency and
equity. Now, they are seen as producing outcomes that are at odds with each other
rather than working in concert to provide correct decisions to disabled individuals in a
timely and cost effective manner.

All this leads to the second, and critical, part of the question—what is SSA really doing
about it, The answer, we believe, is that they are making some important first steps to
narrow the gap to an acceptable and appropriate level. The process unification training,
currently being provided to all components, can lay the groundwork for meaningful
improvement. We recognize that the doubts regarding the possibility that this training
will produce significant results are well founded; however, if SSA follows up
aggressively with other initiatives, meaningful change can occur. On the other hand, if
SSA views it as the end of the journey rather that its beginning, the impact will probably
be too little to measure.

We have learned recently that SSA has begun work on the single presentation of policy,
or the “one book,” to be used by all disability decision makers. We feel that this is a

step but, based on the premise that the discrepancy is related much more to
process than to policy, we expect little numerical impact. Still, it is correct and just that
any individual facing any decision maker have the same policy applied to his claim for
disability as any other individual.

SSA has recently expanded the review of ALJ allowances to include monitoring by its
Office of Program Integrity and Reviews (OPIR), the component which reviews DDS
decisions. If, however, OPIR identifies deficiencies under the preponderance of evidence
standard, the case will be referred for additional review by OHA where the more liberal


26

responsibilities against that of the OIG community on the basis of the overall budgets of these
agencies against that of the SSA’s, we believe we remain very small.

‘As the data indicate, the Office of Investigations has the smallest investigative component to
agency budget ratio. With all of this in mind, we are attempting to make reasonable
projections about the extent of SSA’s fraud vulnerability. This is still an active endeavor
because we are still a relatively new investigative entity and are simultaneously involved in
the effort to recruit and train the additional investigative resources we have obtained during
the past year. Despite this, during FY 1996 our investigative efforts were responsible for the
conviction of 568 individuals for crimes involving SSA funds or programs, and reported
‘$22,768,372 in fines, judgments, or restitution to the SSA, or to other Federal government
programs. During the same period, we opened 1,544 new criminal investigations. This
activity occurred in the same year as the government furlough, and also with a relatively
inexperienced investigative workforce.

For the present we are reasonably assured that our investigative capacity is certainly
warranted by comparison with the significant investigative mission presented by the SSA. We
are continuing to develop data about our operational record and the effect our investigators
are making with respect to fraud, waste, and abuse at SSA. From this performance data we
can make tighter projections about the potential or appropriate size of the Office of
Investigations. I will provide this data to the Subcommittee when it is available.

Question 2. Can you tell us more about the similarities and differences in responsibilities of
your office and OPIR? Has your office done any work to evaluate the quality of work done
by OPIR?

Answer:

The following information provides some differences and similarities between the OIG's
Office of Audit and OPIR.

Resources and Organizational Placement
OIG OA OPIR

FY 1996 Staffing 120 1,200

FY 1996 Budget $8 milion $80 million

Organizational placement Reports to Commissioner _Reports to Acting Deputy
and Congress Commissioner for Finance,

Assessment and Management


22

strategic enforcement team designs approaches to it. So, we are
trying to build in a proactive approach to fraud that perhaps has
not been used before.

Mr. NEAL. Thank you, Mr. Chairman.

Chairman BUNNING. Mr. Portman.

Mr. PorTMAN. Thank you, Mr. Chairman.

I want to thank you for having this hearing. The oversight is so
crucial, and often, we here in Congress do things, like we did with
setting up SSA as an independent agency, and do not follow up on
it. So, I want to commend Mr. Bunning for his diligence.

My questions really go to the whole staffing issue, Mr. Williams,
and the degree to which you think that you need more resources.

The statistic that I think is very interesting is that each inves-
tigator returned $181,000 in savings, each auditor returned
$990,000 in savings in your first year of operation. I do not know
what the cost-to-benefits ratio was in dollar amounts. Can you give
me that, roughly?

Mr. WILLIAMS. Yes, sir. For the audit side, it was $16.50 for
every $1 that we spent. The investigator side, justice is seldom a
for-profit business, but we were able to return $2.25 for each $1
that we spent.

Mr. PORTMAN. Does that compare favorably with other IGs
throughout the Federal Government?

Mr. WILLIAMS. It does, and this was an odd year for us. When
I say each investigator returned $2.25, that includes the 50 inves-
tigators that just arrived.

We are optimistic that when we start the next year with our full
staff, that those returns will go up.

Yr, also gave us the Civil Monetary Penalty Act, and that allows
us specifically to recover dollar amounts for criminal matters.

Mr. PORTMAN. So, we are getting our money’s worth.

Mr. WILLIAMS. We certainly believe so, and we are going to do
everything we can to deliver that.

Mr. PORTMAN. You have, what, about 313 people now on staff to
monitor about, what, $360 billion in benefits?

Mr. WILLIAMS. Yes, sir. We think it is about $330 billion in bene-
fits, and then as you said, there are about another $30 million that
we are monitoring in expenses.

Mr. PoRTMAN. I just wonder if you can, perhaps, give me your
objective appraisal. I am trying to get you to take off your hat,
which I know is difficult because you are part of a bigger Federal
Government, but at HHS, they now have 927 employees. They
monitor about $319 billion, which means they have three times the
people to monitor less money.

If you look back historically, SSA when it was part of HHS had,
of course, the IG Office of HHS, had about 1,200 employees. You,
in essence, have been downsized. In the first year that the SSA has
been independent of HHS, the HHS IG has had a staff of 927——
and if one does the math, you would see that SSA should have over
500 people, rather than 313.

Is that a problem? Do you need more people?

Mr. WILLIAMS. We are very concerned with our ability to keep up
with Social Security employees and the American public. They are
both very aggressive at detecting fraud, but then they need action


105

described in our response to your first question may bring about the needed shifts in
practice and attitude. If not, we will welcome legislative consideration of the use of state
or federal hearings officers and institution of a Social Security Court.

This, and exposure to fraud, are old concerns that process redesign has not yet shown
it can correct and has a clear potential to exacerbate. Ironically, redesign is also seen
as creating a new threat to the Trust Fund. Under the proposal, the DCM, when
reversed by an ALJ, will have the claim remanded to him for payment effectuation.
These remands will provide an incentive to DCM’s to anticipate which claims are likely
to be allowed by the ALJ and to preemptively allow them rather than create a delay for
the claimant and subsequent rehandling by the DCM. Since AL]’s often cite anticipated
reversal or remands by the courts as their impetus to allow certain kinds of claims, the
proposed system will create a channel which links the courts, indirectly through the
AL/’s, to the initial decision maker. For the first time, reversal of denials by courts, or
the anticipated threat of reversal, will set in motion forces that will be felt by the initial
decision maker. We are quite concerned about the implications of this proposal. We
urge a careful and sober look at these issues prior to implementation.


34

running mainframe and personal computer software programs to analyze data files copied by
SSA for OIG use; modifying files for audit sampling, downloading files to personal
computers, or transferring files to outlying offices; advising staff about data sources and
content pertaining to planned or ongoing reviews; assisting in the development of
sampling/estimation plans; and serving as the focal point for desktop publishing activities.

Question 6. According to recent news articles, your office recently broke up one of the
largest credit card fraud rings ever. Can you tell us about this - how SSA employees and its
data bank were involved in this fraud ring, what you did to break it up, including what other
agencies you worked in coordination with? Please provide more information on how
counterfeiting affects SSA operations. Based on your experience in your first year on the
job, what is your sense of the degree of criminal fraud out there, and are you adequately
staffed to prevent it, or at the least, detect and eliminate it? How many criminal
investigators do you estimate you might need, and how soon could they be hired and trained?
Please provide a regional breakout of the offices and suboffices you have nationwide,
including headquarters in terms of the number of investigative agents currently assigned to
each, and the states or areas each office is responsible for. In addition, please explain the
kind of work the regional offices and suboffices typically handle, and the volume they have
been experiencing. In your opinion, which areas face particularly critical staffing shortages
in the investigative area?

Answer:
A. The New York Credit Card Case

During the past year, the Office of Investigations has been engaged in a large scale criminal
investigation of an interstate credit card fraud ring comprised primarily of West African
conspirators who bribed SSA employees to assist them in furthering their criminal fraud
scheme, These criminals stole numbers of valid reissued credit cards from the U. S. mail.
For obvious security reasons, credit card companies require a telephone activation protocol
for card holders to follow in activating their replacement credit cards. This

normally requires that the card holder supply their mothers’ maiden names to the credit card
company to reinstate their credit cards. ‘These West African conspirators provided Social
Security numbers for specific persons to some SSA employees for the purpose of illegally
obtaining that person's mother's maiden name information from the SSA NUMIDENT data
base. This information was then used by the conspirators to illegally activate stolen credit
cards in order to fraudulently obtain goods and services.

‘These credit card thefts involved thousands of credit cards, and the credit card issuers
involved estimated their losses in the millions of dollars. We joined with the U.S. Secret


115

PEBES will require time to collect data and develop and test altematives. SSA
must be sure any changes result in improved reader comprehension and a
manageable level of public inquiries. {t will need to start now and adhere to a
rigorous schedule to complete these changes in order to meet its 1999 redesign
target.

How has SSA gone about making its decisions regarding PEBES development and
what has been the result up until now?

The PEBES has been developed piecemeal by a team of representatives trom
various SSA offices. Over time, the team revised and expanded the statement in
response to feedback on individual problems. As a result, SSA appears to have
lost sight of the cumulative effect of these changes to the document, and the
statement became too long and complex.

In your opinion, does SSA now clearly understand Congress's intent to send a
statement to workers that is clear, concise and useful? Are you confident that
SSA will make the necessary changes in time?

In response to a December 1996 GAO report summarizing the results of our work
‘on PEBES' usefulness to the public (SSA BENEFIT STATEMENTS: Well Received
by the Public But Ditficutt to Comprehend, GAO/HEHS-97-19, December 5, 1996),
Commissioner Chater said SSA officials “agree that the current format of the
statement can and should be improved to make it more understandable and user-
friendly for recipients. A workgroup chaired by the Associate Commissioner for
Program Benefits Policy has started examining the specific problem areas GAO
identified and will recommend several altemative formats for further agency
evaluation and testing."

SSA officials told us that they hope to (1) develop these alternative PEBES
prototypes, (2) test public reaction and determine the attendant workload for each
option, and (3) complete final selection of the revised PEBES by mid-1998--in time
tor the 1999 bidding and contracting cycle.

In your discussion with recognized experts in the field of private-sector pension
benefit statements, and document design and communications, what specific
suggestions did the experts make to improve the PEBES statement and make it an
effective financial planning toot? What was their reaction to the current SSA
PEBES statement?


58

Furthermore, to understand how the benefit estimates were developed
and any limitations to these estimates, a PEBES recipient must read
explanations spread over five pages.

The statement's spreading of benefit estimate explanations
over several pages may result in individuals missing important
information. This is especially true for people whose benefits are
affected by special circumstances, which SSA does not take into
consideration in developing PEBES benefit estimates. For example,
the PEBES estimate is overstated for federal workers who are
eligible for both the Civil Service Retirement System and Social
Security benefits. For these workers, the law requires a reduction
in their Social Security retirement or disability benefits
according to a specific formula.*® In 1996, this reduction may be
as much as $219 per month; however, PEBES' benefit estimates do not
reflect this reduction. The benefit estimate appears on page
three; the explanation of the possible reduction does not appear
until the bottom of page five. Without fully reviewing this
additional information, a reader may not realize that the PEBES
benefit estimate could be overstated.

Explanations Are Not Alwavs Easy to Understand

Because PEBES addresses complex programs and issues,
explaining these points in simple, straightforward language is
challenging. Although SSA made changes to improve the explanation
of work credits," for example, many people still do not understand
what these credits are, the relevance of the credits to their
benefits, amd how they are accumulated.

The public also frequently asks questions about the PEBES'
explanation of family benefits.” Family benefits are difficult to
calculate and explain because the amount depends on several
different factors, such as the age of the spouse and the spouse's
eligibility for benefits on his or her own work record. Informing
the public about family benefits, however, is especially important:
a 1995 SSA survey revealed that as much as 40 percent of the public
is not aware of these benefits.

Weaknesses of the PEBES Are Linked to SSA's Approach

A team of representatives from a cross section of SSA offices
governed SSA's decisions on the PEBES' development, testing, and
implementation. The team revised and expanded the statement in
response to feedback on individual problems. The design expert we
consulted observed that the current statement ‘appears to have been
the result of too many authors, without a designated person to
review the entire piece from the eyes of the readers. It seems to
have developed over time, piecemeal....*?

“This reduction, commonly known as the Windfall Elimination
Provision, was enacted 1983. Its purpose is to remove an
unintended advantage in the way benefits are calculated for workers
who qualify for Social Security benefits but have spent most of
their careers working in jobs that are not covered by Social
Security.

“These credits are earned by working for employers that pay taxes
to the Social Security system. The minimum number of credits
needed varies, depending on the type of benefit and the age of the
worker.

“SSA uses the term “family benefits" to discuss benefits paid to a
worker's spouse or young children when the worker is retired or
lisabled.

“pagin, p. 18.


112

GAO'S RESPONSES TO QUESTIONS FOR THE RECORD

DISABILITY REDESIGN

Question 1:

Based on your review, why has the SSA systems now critical to the
success to the disability redesign encountered such major delays in
implementation?

SSA's Disability Redesign System which is intended to allow SSA to
move from its current manual, labor-intensive disability
determination process to an automated process has been delayed by
28 months. SSA now plans to begin implementing this system in
April 1999. The delay is due to the following:

- 10 months of the delay is primarily due to software
development problems including (1) using programmers with
insufficient experience developing software for a PC-
based computing environment, and (2) using software
development tools that have not performed effectively.

- the remaining 18 months of this delay can be traced to an
unrealistic development schedule that left insufficient
time for system testing. For example, specific equipment
was scheduled to be acquired before ensuring the
equipment could adequately process claims in SSA's
redesigned environment.

Question 2:

In your testimony, you mentioned that SSA decided to work on 38
initiatives at the same time, requiring significant investment in
time and resources. To date, how much has been spent on redesign
since SSA published its implementation plan in 1994?

The investment of time and resources described in our report refers
to the thousands of federal, state, and contractor employees
throughout the country engaged in designing, developing, testing,
and evaluating processes and developing and delivering training
programs. During the course of our audit work, we did not obtain
specific and inclusive cost information.

However, we recently asked SSA to provide us with redesign cost
data from the time the implementation plan was published in 1994 to
the present. SSA officials believe that it is difficult to
attribute many costs directly to reengineering activities because
they are associated with other ongoing efforts as well. To date,
we have received no redesign cost information.


76

have the greatest impact on decreasing administrative cost and
processing time and improving service to the public.

SSA should reevaluate the relative priority of the remaining ini-
tiatives to the redesign goal and implement them as resources
permit.

That concludes my remarks. We will be happy to answer any
questions from you and other Members of the Subcommittee.

Chairman BUNNING. Who wants to speak first?

STATEMENT OF DOUGLAS WILLMAN, PRESIDENT-ELECT,
NATIONAL COUNCIL OF DISABILITY DETERMINATION
DIRECTORS; AND JERRY A. THOMAS, PRESIDENT, NATIONAL
COUNCIL OF DISABILITY DETERMINATION DIRECTORS

Mr. WILLMAN. I will do that, Mr. Chairman.

Chairman BUNNING. OK.

Mr. WILLMAN. On behalf of our organization, thank you for the
opportunity to appear here today and present our views regarding
SSA’s plan to redesign the program.

Mr. Chairman, in your invitation, you asked that we comment on
SSA’s redesign initiative and make suggestions for improvement,
and we are pleased to do so.

First, regarding the report of the Comptroller General on this
subject on July 25, we generally agree with the report, except for
the observation that the process is nearly unchanged since the pro-
gram began in the fifties. This misconception was first stated by
SSA's original reengineering task team and has gone unchallenged,
but the reality is that the program has undergone steady and con-
stant adaptation and presently bears little resemblance to what it
was in the fifties, and we regret not having commented to GAO
earlier on this matter.

We especially agree with the Comptroller General’s observation
that SSA has undertaken too many complex initiatives simulta-
neously and has not given sufficient priority to those most likely
to reduce processing time and administrative costs.

You asked for our views on SSA’s disability redesign initiative,
and there are three aspects in which we would like to comment.

First, we feel that the majority of the redesign initiative seemed
to us not to be useful in accomplishing the stated goals of redesign.
While we certainly agree with Commissioner Chater’s five stated
goals, we just do not see much relationship between those goals
and the process changes that SSA says it plans to implement.

The proposed changes seem to us to be unreasonably disruptive
and more labor intensive and more complex and much more costly
than the existing process while offering no realistic or sensible path
toward better, faster, or more economical case processing. Exam-
ples include SSA’s proposal for creating the position of disability
claims manager and for further fragmenting the current process by
having some cases decided at Social Security field offices. These
initiatives, in our view, would be expensive and disruptive, while
contributing little or nothing to improve public service.

Second, we are concerned that some aspects of SSA’s redesign
plan will make the program more vulnerable to fraud. For example,
the acceptance of treating physician certification and transferring
responsibility for collection of medical evidence from unbiased em-


28

Question 3. Please describe what action is being taken within SSA to resolve the apparent
‘overlap and duplication of responsibilities between the OIG and OPIR.

Answer:

Shortly after I was sworn in, I met with the Commissioner of Social Security to discuss
concerns of my predecessor and my own regarding dual program assessment organizations.
She suggested that I discuss the matter further with the Acting Deputy Commissioner for
Finance, Assessment and Management, Principal Deputy Commissioner, and Chief of Staff.
‘Asa result, I met with the SSA Chief of Staff and others (the Principal Deputy
Commissioner, and/or Acting Deputy Commissioner for Finance, Assessment and
Management) on 11 separate occasions between February 28, 1996 and November 18, 1996.
The purpose of the meetings was to cover a number of topics concerning how we would
resolve the relationship between the OIG and the other SSA offices with overlapping
responsibilities. Discussions regarding the OPIR issue will continue.

At your request, I will provide the status of any action taken in this regard on March 31,
1997 and June 30, 1997.

Question 4. If certain functions in OPIR that duplicate those in the OIG, and OPIR staff
became available for other duties, does OPIR staff have the kind of expertise that your office
needs? Would transferring OPIR staff to the OIG meet your current staffing needs? What
are your views on the idea mentioned at the hearing to share staff with OPIR?

Answer:

To the extent possible, the OIG would be open to accepting OPIR staff interested in
transferring to our office. However, we agree with the Comptroller General that the kind of
expertise needed is important to the Office of Audit rather than simply increasing the size of
our staff. He cited the need for auditors with backgrounds in automated systems as well as
Certified Public Accountants. At this time, we are not aware of the qualifications of OPIR
evaluators who might be interested in joining the OIG.

Concerning the proposal for OPIR staff to split time between the two offices, we agree with
the comments made by Congressman Jacobs at the September 12, 1996 hearing. He had
concerns about having "hybrids" who work for both offices, as opposed to building a
“firewall.” We believe he has valid concerns. Under the Inspector General Act of 1978, as
amended, our employees have a significant degree of independence. This statutory
independence permits our staff to properly audit and investigate Agency actions without
concerns about Agency interference. In contrast, OPIR reports to a principal auditee--the


94

aitiatives were to be completed or to be part of an operational

vest by September 30, 199

SSA's redesign effort is a major departure from the current
labor-intensive, paper-reliant process. Its ultimate goal is to
make the disability claims process efficient and user friendly and
to allow the agency to make the right decision the first time as
quickly in the process as possible. To that end, SSA will rely
heavily on information technology and will need to develop a
simpler methodology for making disability decisions. Other key
elements of the plan involve consolidating the duties, skills, and
knowledge of at least two current positions in state and federal
offices into one position, allowing the claimant to meet with the
decision-maker, and creating a new adjudication officer to expedite
decision-making at the appeals level

saingering Best Practi

Biss Lise. ccs for project Sui

Today's leaders in business process reengineering advocate a
variety of approaches and strategies; however, they frequently cite
certain best practices that increase the likelihood for success.
Reengineering experts have found that when redesign efforts fail to
achieve the desired change it is often because project managers
paid insufficient attention to these best practices.‘

Although a redesign project can be large and encompassing,
experts suggest segmenting the project and concentrating on
completing a few manageable initiatives, or tasks, at any one time.
‘These experts believe that working on a relatively small number of
initiatives with measurable performance outcomes at one time gives
managers better control over the initiatives and allows a faster
response if problems arise or deadlines are not met. They also
contend that concentrating on a few initiatives can produce results
in a short time frame that can help sustain key stakeholder
support

Furthermore, although the time frame for an overall
reengineering project may run from 2 to 5 years, in a government
environment, leadership turnover and frequent changes in the public
policy agenda necessitate designing the project so that progress on
individual initiatives can be made in relatively short time
periods. Finally, reengineering best practices call for
identifying all stakeholders and working to get and keep their
support. Stakeholder support is vital because opposition can
jeopardize the redesign effort's success

PROJECTS COMPLEXITY AND SCORE POSE
PROBLEMS FOR IMPLEMENTATION EFFORTS

‘The overall complexity and scope of SSA's implementation plan
is limiting the redesign effort's progress. In prioritizing its
redesign initiatives, SSA chose to work on 38 of them
simultaneously--a decision that requires a significant investment
in time and resources. Thousands of federal, state, and contractor
employees throughout the country are engaged in activities such as
designing, developing, testing, and evaluating processes and
developing and delivering training programs. Although we
identified six discrete tasks that SSA had completed as of July

During fiscal years 1995 and 1996, SSA adjusted the number of
near-term initiatives from 40 to 38 and the number of total
initiatives for the project from 83 to 80

igno has isqued several products that address several of these best
practices, and we refer to just of few of them in this work

Government Performance (GA0/T-0CG-95-2, Feb. 2, 1995) and
Process Reengineering Guide, Exposure Draft, Version 1.0, 1995.



‘STATEMENT OF DAVID C. WILLIAMS

Mr. Chairman and Members of the Subcommittee, I am pleased to
appear before you today to discuss the recently created Office
of the Inspector General (OIG) at the Social Security
Administration (SSA). The Subcommittee has asked that 1
describe the internal and external challenges facing our
office and discuss what resources are needed to adequately
perform our mission

‘The Subconmittee’s July 25, 1996, hearing focused on the
future of SSA and included’a discussion of the OIG. U.S.
Comptroller General Charles Bowsher testified as to the
importance of eliminating fraud, waste, and abuse in SSA
operations and programs. Mr. Bowsher expressed concern that
the new OIG lacked the expertise and resources to properly
audit computer initiatives and financial operations at SSA.
Congressman Laughlin echoed these concerns and the need to
preserve the integrity of SSA’s programs though a strong OIG
with adequate resources.

I want to begin by thanking this Subcommittee for its
unwavering support of the Social Security Independence and
Program Improvements Act of 1994, which created an independent
OIG for the SSA. The new OIG is’ able to devote its resources
exclusively to protecting the Social Security trust funds and
U.S. Treasury monies. The significance of a specifically
focused OIG cannot be overstated in light of the 50 million
Americans who rely upon SSA’s programs.

our new OIG is dedicated to helping build and maintain a
powerful and efficient organization at the SSA. At stake is
the reputation and financial viability of an Agency that
eventually provides benefits to nearly all Americans. Last
year, SSA issued 17 million Social Security numbers (SSN),
processed 235 million earnings records, and paid $331 billion
in recipient and benefit payments. In’Fiscal Year 1995, SSA's
programs accounted for almost one quarter of the $1.5 trillion
in federal expenditures. SSA employs nearly 65,000 people in
over 1,300 offices and large work processing centers
nationwide.

The mission of the OIG is to assess the Agency's program
efficiency and effectiveness through its 116 auditors and to
combat fraud, waste, and abuse through its 166 investigators.
Our Office of Audit consists of 14 teams that specialize in
SSA's core business processes. Our investigators are located
in six field offices that serve one or more of SSA’s 10
nationwide regions.

In evaluating the organization's effectiveness, the OIG has
focused on four fundamental activities critical to Ssa’s
success in achieving service level goals and stewardship of
government funds: enumeration, earnings, claims, and post-
entitlement services. In addition, we have focused on other
important programs such as information technology, financial
management, payment accuracy, disability programs, policy and
research, and the operations of the Office of Hearings and
Appeals.’ Let me discuss several of these critical areas.

(2) SSA's workload is increasing substantially as its staff is
decreasing. To meet this challenge SSA is, in part, relying
upon new and improved computer systems. The OIG needs to
independently assure both SSA and the Congress that the
Agency's initiatives will actually improve productivity, are
on schedule, and are protected from associated security risks.

(2) Recent legislation has changed the focus of financial
management from simply financial reporting to a much broader
focus, which includes performance measurement. We recognize
the importance of efficient and effective financial management
to protect SSA’s trust funds and U.S. Treasury monies. Our


17

ployees to claimants and their representatives are almost certain
to increase vulnerability to fraud.

Third, we, like GAO, are concerned that by attempting to move
forward on so many fronts at once, SSA will sacrifice progress to-
ward solving what we see as the most important task, and that is
bringing reasonable consistency to the decisionmaking processes
and outcomes between State DDSs and the SSA Office of Hearings
and Appeals.

We strongly believe that variance and decisionmaking between
the two levels is by far the most serious problem in the disability
program. When twice denied cases are appealed to OHA, about 75
percent of them are reversed from denial to allowance.

Now, our employees know that they would not be permitted to
allow the same kinds of cases that they see allowed on appeal.
Every day we deny benefits to persons whom we are quite sure will
be allowed if they just appeal their denials to OHA, hire a lawyer,
and then wait more than 1 year for an appeals-level decision.

This underlying problem and its day-to-day effect on the lives of
ordinary Americans overwhelms all other problems facing the dis-
ability program. Something is seriously wrong with this system
and urgent and energetic management attention is needed.

After a long history of failing to address this problem, SSA seems
at last to be taking some positive steps under a project called Proc-
ess Unification. We support this effort, but point out that it must
be regarded as only one small step toward unifying two almost un-
believably disparate processes. Much more needs to be done, and
we are concerned that attempting redesign activities in so many
areas at once will result in the depletion of resources, such that
there will be inadequate attention to the central problem.

Finally, you asked for suggestions on how we feel the initiative
could be improved. We offer two suggestions. First, we believe that
resolving the differences between the two levels if the most impor-
tant objective, and therefore, we recommend that all available rede-
sign resources be focused on this part of the redesign plan.

Given SSA’s long history of profound reluctance to address this
problem, SSA may well need the continuing attention of you and
your Subcommittee to make sure that attention is focused and
progress is made in this area.

Second, we feel that SSA should move forward with large-scale
implementation only of those changes which can be shown through
careful testing to have short-term beneficial impacts on accuracy,
processing time, administrative costs, or other aspects of public
service.

Mr. Chairman, Members of the Subcommittee, thank you again
for the opportunity to appear here today and to present our views.

[The prepared statement follows:]


83

STATEMENT OF LARRY DEVANTIER, PRESIDENT, NATIONAL
ASSOCIATION OF DISABILITY EXAMINERS

Mr. DEVANTIER. Chairman Bunning and Members of the
Subcommittee, on behalf of myself and the board of directors and
members of the National Association of Disability Examiners, we
thank you for this opportunity to present NADE’s views on the
Social Security Administration’s plan to redesign the disability
program.

We are concerned about the future of the disability program and
the integrity of the trust fund. We believe disability decisions
should be timely, accurate, and uniform throughout the country.
We agree that the current disability program is flawed.

We have supported efforts to correct problems in the past and
will continue to do so in the future. We do not believe we can con-
tinue business as usual. However, we have serious reservations
about SSA’s current plan to redesign the disability program.

On July 25, 1996, the testimony of the Comptroller General
addresses a number of our concerns. These will be discussed later.

Our fundamental concern, however, is the increasing confirma-
tion of our earlier reservations that SSA’s efforts at reengineering
are structurally flawed. They do not adequately address the most
basic problem with the current process which is the discrepancy
between DDS and ALJ, administrative law judge, decisions.

Process unification efforts provide a clear example of this, despite
the increasing discrepancy between State agency decisions which
are judged by SSA quality review components to be correct and the
unacceptably high reversal rates of those decisions by the Office of
Hearings and Appeals. SSA’s response Has been to provide super-
ficial cross-component training and to promise a single source of
policy, while leaving the conflicting premises which produce this
disparity largely undisturbed.

The critical element in unifying the process is a decisive resolu-
tion of the ambiguity within SSA as to whether disability is a med-
ical or a legal decision. SSA must have the organizational will to
resolve this ambiguity. To date, it has not been willing to do so.

Even if the plan itself were not structurally flawed, other issues
need to be addressed. Fraud, the integrity of the program, and the
stability of the trust funds are among the most significant of those
issues which need to be resolved.

The GAO report states that SSA has not done enough to combat
fraud and abuse in the SSI Program and address program weak-
nesses. We agree.

Many features of the redesign plan, particularly the increased in-
volvement of for-profit third parties and claimant-submitted medi-
cal evidence will increase the incidence of fraud. Effective actions
must be in place to combat fraud before proceeding further with
these initiatives.

We also agree with GAO’s assessment that SSA has undertaken
too many complex tasks and has not given sufficient priority to
those redesign initiatives most likely to reduce processing time and
administrative cost. SSA has begun a multitude of initiatives under
the redesign that are sapping needed resources. The disability pro-
gram would have been better served by placing greater emphasis


5

and Minority Leader get up and make their little comments at the
beginning of each Congress, but at this moment, I realize that such
exchanges do not necessarily have to be honey because I know
yours is heartfelt, and so is mine.

Chairman BUNNING. I thank Mr. Jacobs, and I would like to ask
the first panel if they would please take their seats at the table.

Hon. David C. Williams, who is the first Inspector General of the
independent Social Security Administration; accompanied by Dan-
iel Blades, Deputy Inspector General; Pamela Gardiner, Assistant
Inspector General, Audits; and James Huse, Assistant Inspector
General, Investigations.

Mr. Williams, if you will sit down and give us your testimony,
I would appreciate it. Take all the time you need.

STATEMENT OF HON. DAVID C. WILLIAMS, INSPECTOR
GENERAL, SOCIAL SECURITY ADMINISTRATION; ACCOM-
PANIED BY DANIEL BLADES, DEPUTY INSPECTOR GENERAL;
PAMELA GARDINER, ASSISTANT INSPECTOR GENERAL,
AUDITS; AND JAMES HUSE, ASSISTANT INSPECTOR GEN-
ERAL, INVESTIGATIONS

Mr. WILLIAMS. Thank you, Mr. Chairman and Mr. Jacobs.

Chairman BUNNING. We will have more Members joining us.
They do not start on time, but we do.

Mr. WILLIAMS. Thank you.

I am pleased to appear before you today to discuss the recently
created OIG, Office oP the Inspector General, at the Social Security
Administration. The Subcommittee has asked that I describe the
internal and external challenges facing our office and discuss what
resources are needed to adequately perform our mission.

The Subcommittee’s July 25 hearing focused on the future of SSA
and included a discussion of the OIG. U.S. Comptroller General
Charles Bowsher testified as to the importance of eliminating
fraud, waste, and abuse in SSA operations and programs. Mr.
Bowsher expressed concern that the new OIG lacked the expertise
and resources to properly audit computer initiatives and financial
operations. Congressman Laughlin echoed these concerns and the
need to preserve the integrity of SSA’s programs through a strong
OIG with adequate resources.

I want to begin by thanking this Subcommittee for its unwaver-
ing support of the Social Security Independence and Program
Improvements Act of 1994, which created an independent OIG for
the SSA. The new OIG is able to devote its resources exclusively
to protecting the Social Security Trust Funds and U.S. Treasury
moneys. The significance of a specifically focused OIG cannot be
overstated in light of the 50 million Americans who rely upon
SSA’s programs.

Our new OIG is dedicated to helping build and maintain a pow-
erful and efficient organization at the SSA. At stake is the reputa-
tion and financial viability of an agency that eventually provides
benefits to nearly all Americans.

Last year, SSA issued 17 million Social Security numbers, proc-
essed 235 million earnings records, and paid $331 billion in recipi-
ent and benefit payments. In fiscal year 1995, SSA’s programs ac-
counted for almost one-quarter of the $1.5 trillion in Federal ex-


ll

8. You asked for an opinion as to the major reason for such a high reversal rate at the OHA.
level.

SSA officials have, in their public responses to this issue, historically overstated the less
causative factors --- worsening of the condition, discovery of additional evidence, passage
of time, face-to-face contact with the decision maker, etc. ~~ and vastly underestimated
the real reason which is the combination of the absence of common training, the absence
ofa common policy guidelines, and the absence of any effective method of assuring that
OHA decisions conform to program regulations and policy. The variance of allowances
rates among individual decision makers in OHA constitutes definitive evidence that this
is the case. In addition, a quality assurance system which focuses primarily on reviewing
and returning allowances at the DDS level and almost exclusively on returning denials at
the OHA level actually pulls decision making between the two levels apart.

‘You may wish to refer to the recent GAO report (GAO/HEHS 97-28) for an excellent
discussion of this matter.

‘Thank you for the continuing opportunity to provide information and viewpoints on subjects
related to the Social Security disability program.

Sincerely,

Willa.

igias Willman
NCDDD President


81

without requiring supporting details. Day to day experience in case development reveals
‘numerous instances in which summary reports by treating physicians descuive a level of
severity clearly beyond that which is evident when detailed records are ubtained, This
phenomenon will become more common when the applicant public leav. that SSA will
pay hencfits based on a physician's statement Just as the local public hus learned which
physicians are most apt to prescribe desired pharmaceuticals, they will svon learn which
physicians are most cooperative in providing disability certifications. "Doctor shopping”
will become commonplace. Similatly, transferring responsibility for collection of
medical evidence from unbiased employees (0 claimants and their rep.eseustatives will
also increase vulnerability to fraud. ‘The interested parties will be able (o selectively
present evidence which supports a finding of disability and to suppress that which would
support denial. They will be able to “preview” reports from treating sousces and to
attempt to engineer amendments of the content such reports in order to present a stronger
case for being awarded benefits

‘We are coucerned that by attempting to move forward on so many fruats
simultaneously, SSA will sacrifice progress toward solving whi... .c sce as its most
important task — bringing reasonable consistency to the decis’ san..’g processes
and outcomes between the state DDSs and the SSA Office of Hexcingt...d Appeals
(OHA).

‘We believe that variance in decision making between the (wo levels is by far the most
serious probiem in the disability program. Without asserting which curiiy.. ent is
“right”, the facts are as follows; DDSs process initial and reconsideration level decisions
‘on average in about 70 days at a cost of about $300 per case. According (o SSA quality
reviews, DDS claims have a decisional accuracy of about 97%. However, when about
70% of tne reconsideration denial cases are appealed to OHA, the appeals are, on
average, not completed for over a year, the administrative cost per case is it. the
neighbortiocd of $1000, and about 75% of the cases are allowed. When these OHA
allowed cases are retumed to the DDSs for continuing disability review, vur employees
know that they could not possible have allowed the cases on the same facts, We
encounter this evidence of differing standards on a daily basis. Similarly, every day, we,
at the DUSs, deny disability benefits to persons whom we are quite sure will be allowed
if they appeal their denials to OHA, hire a lawyer, and wait more than a year for an
appeals level decision, Something is seriously wrong with such a system, cnd urgent and
energetic managemem attention is needed.

After a lung history of failing to address this problem, SSA seems, at last, ube taking
some positive steps under a project known as process unification. The fit. ep under
consists of a set of rulings by the Commissioner anc an ambitious
attempt to ttain adjudicators at all levels in the application of these rulings. We applaud
this training effort, but point out that this must be regarded as only the first small step
toward unifying two almost unbelievably disparate processes, Much mote needs to be
done, and we are concerned that attempting redesign activities in sc ...any areas at once
will result in the depletion of resources such that there will be inacicquave «..ention to the
central problem. For example, a key obstacle in bringing the two process.s . ether is
the question of reviewing the cases completed by the Administrative Law Juuges to
determine if they have applied the policies correctly and enforcing corrective action on
‘cases found to be in error. Without a means of enforcement, all other actions will be
ineffective. Yet SSA plans to review only about 10,000 OHA cases per yeat which, on
average, 1s only about one case per individual ALJ per month. This number 1s not high
‘enough to provide meaningful feedback to ALIs nor to establish useful enfi:rcement in
cases in which ALJs are not correctly applying agency policy.



107

With regard to combining jobs, both jobs are very complex already. Persons hired into
these jobs require approximately two years of training and experience in order to become
proficient. This makes longevity and low tum over essential in order to achieve
efficiency in service delivery. Combining the jobs would approximate double the amount
of down time spent in initial and ongoing training.

Further, the jobs require different types of skills. Presently, the presence of just one type
of skill enables an individual to perform successfully in the program. Under the DCM,
the absence of either type of skill would severely compromise an individual’s ability to
provide good service. Thus, creating the DCM will result in a less efficient and more
costly service delivery system and will reduce the range of individuals who can perform
the work.

Of course, you are correct to observe that DDSs want to maintain their place in the
administration of the disability program. Frankly, there is no way for you to be absolutely
sure that our concen for job security does not influence our response to some of the
proposed program changes. You can, however, observe that the historical and current
behavior of the DDS community is not characterized by preoccupation with self interest.
DDSs have often participated in the field testing of new ideas without regard to their
probable impact on long term DDS job security. A recent example would be the
Adjudicative Officer project. DDSs volunteered to try out this position with no up front
assurance that, if successful, it would not result in the loss of state jobs. Success of the
AO and subsequent creation of AO positions in both state and federal locations could
plausibly be regarded as a threat to the scope of the DDS role because of elimination of
the reconsideration step which is performed exclusively at the DDS. Still, DDSs are
willingly participating in AO demonstration projects because of the potential to improve
service delivery.

If job protection were the dominant DDS motivation, we would be tempted to strongly
endorse the DCM concept since it offers an opportunity for DDSs to aggressively expand
their role in the program. Given the certainty of the continuation of cost consciousness in
government, DDSs could attempt to exploit the substantial differences in state and federal
salaries, the historically high rate of DDS productivity, consequent cost effectiveness, and
other advantages as a basis for arguing that the great majority of DCM positions should
be placed in the DDSs.

But the reality is that the predominant reason for the DDS community not endorsing
DCM is because we believe that it will result in a less efficient and more costly process
without adequate offsetting advantages. And we are not alone. Skepticism about the
viability of the position was expressed by a wide range of commenters very soon after the
reengineering plan was first announced and the skepticism has continued through the
publication of the most recent GAO report on this subject.


92

STATEMENT OF DIANA S. EISENSTAT
\TE DIRECTOR, INCOME SECURITY ISSUES
HEALTH, EDUCATION, AND HUMAN SERVICES DIVISION, GAO

Requested by Representative Greg Laughlin

Mr. Chairman and Members of the Subcommittee:

I am pleased to be here today to discuss the Social Security
Administration's (SSA) efforts to redesign its disability claims
process. SSA operates two disability programs--che Disability
Insurance (DI) and Supplemental Security Income (SSI) programs
While downsizing substantially, SSA has struggled to manage
unprecedented growth in applications for disability benefits and in
the number of appealed disability decisions. Processing delays at
SSA have created hardships for disabled claimants, who often wait
more than a year for a final disability decision. In fiscal year
1995, SSA spent about $3 billion in administrative costs to pay
about $61.3 billion in cash benefits to program recipients.

Concerned about reducing administrative costs, saving time,
and improving the quality of service in the disability claims
process, SSA's leaders turned to business process reengineering in
1993. Leading private organizations have successfully used such
efforts to identify and quickly implement dramatic operational
improvements. The objective of reengineering is to fundamentally
rethink and radicaily redesign a business process from start to
finish so that it becomes mich more efficient and significantly
improves service to an organization's customers. SSA's broad-
based redesign project, to be completed by 2000, focuses on
streamlining the process of determining eligibility for disability
benefits by relying more on automation and more efficiently using
its workforce

You asked us to monitor SSA's progress in implementing its
redesign project. Today I will discuss issues related to the scope
and complexity of the project and the agency's efforts to maintain
stakeholder support. In our earlier work, we reported that SSA
would face formidable implementation challenges.’ 1 will also
discuss today some ways that could help SSA increase the likelihood
that its project will succeed. My comments are based on
informacion obtained from SSA officials responsible for
implementing the redesign project, reengineering experts, and
management and employee representatives involved in the disability
claims process.

In summary, given the high cost and long processing times of
SSA's current process, the agency needs to continue its redesign
efforts. Its redesign plan, which undertakes a large number of
initiatives at one time, is proving to be overly ambitious.
however. Some initiatives are also getting more complex as SSA
expands the work required to complete them. The agency's approach
is likely to limit the chances for the project's success and has
led to delays in implementation: testing milestones have slipped
and stakeholder support for the redesign effort has diminished. In
addition, the increasing length of the overall project and
individual initiatives heighten the risk of disruption from
turnover in key executive positions. We believe that as the agency
proceeds with its redesign project it should focus its efforts on
key initiatives, proceeding first with those that will quickly and
significantly reduce claims processing time and administrative
costs.

BACKGROUND

SSA's disability programs provide cash benefits to people with
long-term disabilities. The DI program was enacted in 1956 and
provides monthly cash benefits to severely disabled workers. SST
was enacted in 1972 as an income assistance program for aged,
blind, or disabled people. The Social Security Act defines
disability as an inability to engage in substantial gainful

‘social Security Administration: Risks Associated With Information
Technology Investment Continue (GAO/AIMD-94-143, Sept. 19, 1994).

Social Security Administration; Maior Chances in SSA‘s Business
Processes Are Imperative (GAO/T-AIMD-94-106, Apr. 14, 1994)


60

focusing on reducing printing costs without considering all of the
factors that would ensure that PEBES is a cost-effective document

OBSERVATIONS ON NEEDED PEBES IMPROVEMENTS

‘The PEBES initiative 1s an important step in better informing
the public about SSA's programs and benefits. To improve the
statement. SSA can quickly make some basic changes. For example,
SSA officials told us that, on the basis of our findings, they have
revised the Commissioner's message for the 1997 PEBES to make it
shorter and less complex. More extensive revisions are needed,
however, to ensure that the statement communicates effectively.
SSA will need to start now to complete these changes before its
1999 redesign target date. ‘The changes include improving the
layout and design and simplifying certain explanations. These
revisions will require time to collect data and to develop and test
alternatives. SSA can help ensure that the changes target the most
significant weaknesses by systematically obtaining more detailed
feedback from front-line workers. SSA could also ensure that the
changes clarify the statement by conducting formal comprehension
tests with a sample of future PEBES recipients.

In addition, we believe SSA should evaluate alternative
formats for communicating the information presented in PEBES. For
example, SSA could present the Commissioner's message in a separate
cover letter accompanying the statement, or SSA could consider a
two-part option, similar to the approach of the Canada Pension
Plan. To select the most cost-effective option, SSA needs to
collect and assess additional cost information on options available
and test different PEBES formats.

Our work suggests that improving PEBES will demand attention
from SSA‘S senior leadership. For example, how best to balance the
public's need for information with the problems resulting from
Providing too much information are too difficult and complex to
Fesolve without senior-level SSA involvement.

Mr. Chairman, this concludes my formal remarks. I would be
happy to answer any questions from you and other members of the
Subcommittee. Thank you.

For more information on this testimony, please call Diana S.
Eisenstat, Associate Director, Income Security Issues, at (202)
512-8562 or Cynthia M. Fagnoni, Assistant Director, at (202) 512-
7202. Other major contributors include Evaluators Kay Brown,
Nora Perry, and Elizabeth Jones.



56

‘SSA _HAS TAKEN STEPS TO ENHANCE THE PERES:
PUBLIC REACTION HAS BEEN POSITIVE

Since the PEBES was first developed. SSA has conducted several
small-scale and national surveys to assess the general public's
reaction to receiving an unsolicited PEBES. In addition, SSA has
conducted a series of focus groups to elicit’ the public's and SSA
employees’ opinion of the statement and what parts of it they did
and did not understand.

In response to this feedback and suggestions from SSA staff,
SSA revised the statement. For example, early statements routinely
provided retirement benefit estimates for age 65, the earliest age
at which workers could retire and receive their full Social
Security retirement benefit,’ and for delayed retirement at age 70
When SSA learned that many people were interested in the effect of
early retirement on their benefits, SSA added an estimate for
retirement at age 62.

Overall public reaction to receiving an unsolicited PEBES has
been consistently favorable. In a nationally representative survey
conducted during a 1994 pilot test, the majority of respondents
indicated they were glad to receive their statements.* In
addition, 95 percent of the respondents said the information
provided was helpful to their families. Overall, older individuals
reacted more favorably to receiving a PEBES than did younger
individuals. In addition, SSA representatives who answer the toll-
free telephone calls from the public have stated that most callers
are pleased that they received a PEBES and say that the information
is useful for financial planning.

Although SSA has taken steps to improve the PEBES, we found
that the current statement still provides too mich information,
which may overwhelm the reader, and presents the information in a
way that undermines its usefuln ‘These weaknesses are
attributable, in part, to the process SSA used to develop the
PEBES. Additional information and expanded explanations have made
the statement longer, but some explanations still confuse readers.
Moreover, @9A has not tested for reader comprehension and has not
collected detailed information from its front-line workers on the
public's response to the PEBES.

Research suggests that, in general, people find forms,
notices, and statements difficult to use and understand. For this
reason, many people may approach a PEBES-like statement with fear.
frustration, insecurity, and hesitation.’ To overcome this
challenge, the design expert we consulted suggested that such
statements have the following:

-- An obvious purpose: Readers need to know immediately why they
got the statement, what information it contains, and what they
are expected to do with the information.

-- An attractive and functional design and organization: The
statement should look easy to read, the sections should be

‘Individuals born in 1937 or earlier can retire at age 65 and
receive their full benefit. For individuals born after 1937, the
age at which they can retire and receive their full benefit
gradually increases, up to 67 for those born in 1960 and later.

‘as of September 6, 1996, the results of SSA's most recent public
opinion survey, conducted in 1995, had not yet been released.

‘carolyn Boccella Bagin,
(Rockville, Md.: July 1996). p. 6.


18

Mr. Huse. That is correct, and three of them have been charged.

Mr. LAUGHLIN. All right. I will hurry to the next question.

Earlier this year, the GAO completed a year-long preliminary
audit at the SSA on how official government time spent on union
activities is recorded and tracked at SSA. Because the job was so
labor intensive, the scope of GAO’s work was very limited and
showed, if anything, that a much more comprehensive and indepth
audit is in order.

Mr. Williams, would your office be able to undertake such an
effort, if asked?

Mr. WILLIAMS. Yes. Of course, we are barred from doing work
that duplicates the GAO’s work. We would be very pleased to take
any request from the Subcommittee.

Mr. LAUGHLIN. I understand you are barred, but if you are asked
by the GAO to use your expertise, then you are not barred from
supporting and assisting in that investigation; isn’t that correct?

Mr. WILLIAMS. That is correct, and we would be very pleased to
receive any request that you have, including that request.

Mr. LAUGHLIN. Thank you, Mr. Chairman.

Chairman BUNNING. Mr. Payne.

Mr. PayNe. Thank you very much, Mr. Chairman, and thank
you, Mr. Williams, for your testimony.

I want to follow up on what the Chairman was asking about in
terms of resources. In your statement, you said that the number of
people working with you had been increased by some, I think it
was, 50 people, as I remember the testimony —.

Mr. WILLIAMS. It was 50, sir.

Mr. Payne. So that it is now 315 people; is that correct?

Mr. WILLIAMS. That is correct.

Mr. PayNE. And you are now making a recommendation that
that be increased?

Mr. WILLIAMS. I have met with the Commissioner, after having
conducted the study, I made that recommendation to her, and I be-
lieve that she is interested in supporting a major increase on the
investigative side that would nearly double the number of inves-
tigators that we have.

Mr. PAYNE. So that the number, then, the number 315 would
nearly double to a number like 600 or so?

Mr. WILLIAMS. The number of investigators we have is 166. So
it would be a little over 300, which would bring our total to about
481 investigators.

Mr. Payne. And the amount of money required to do that is?

Mr. WILLIAMS. I believe it is another $40 million—no, I am sorry,
sir. It would bring our total from a little under $30 to $55 million.
I stand corrected.

Mr. Payne. Under $30 to $55 million. So, that is $25 million
additional for 150 additional people?

Mr. WILLIAMs. I believe that the investigators alone would be
about $22 million.

Mr. Payne. It is $22 million for 150 additional investigators?

Mr. WILLIAMS. Yes, sir.

Mr. Payne. So that is $150,000, roughly, per investigator. Is that
your——


al

We are working cooperatively with a task force including the USPIS and USSS into this
widespread credit card scam. In February 1996, this case was presented and accepted for
prosecution by the U.S. Attorney's Office for the Southern District of New York.

Southwest Tactical Operations Plan (STOP)

This operation was established to identify and suspend payments to SSI recipients
fraudulently receiving benefits while residing in another country. STOP will be tested along
our southwest border due to the numerous allegations regarding program fraud and abuse in
this area, It is anticipated that this operation will result in the elimination of substantial
numbers of illegal recipients and save the associated disbursements.

Presently, the operation's agents have selected 2,107 SSI recipients from El Paso zip codes
79901 and 79912. Each recipient was requested via mail to supply evidence of U.S.
residency in the form of rental receipts, utility bills, tax records, etc. Starting on December
19, 1996, the operation sent notices to recipients who have failed to respond to the request
for evidence of U.S. Residency, stating that their February 1997 checks will be suspended if
they do not comply. The OIG will investigate all cases in which the recipient fails to
respond. The operation is expected to be completed by April 15, 1997.

Question 15. I understand that one of your goals is to be more responsive to fraud
allegations you receive from SSA employees and the general public, and I commend you for
this. Can you tell us, on average, about how many allegations are coming into your office
monthly from SSA employees, and also from the public? What steps are you also taking to
deter emerging criminal schemes and sophisticated criminal enterprises that may be difficult
to detect?

Answer:

On average, prior to the inauguration of the expanded OIG Hotline operation on
November 25, 1996, between 5 and 10 percent of all allegations received were from present
or former SSA employees.

With the expansion of the OIG Hotline, coupled with our proactive fraud awareness
campaign, which includes posters, notices that accompany checks, news articles, and various
public announcements of the SSA OIG Hotline, the number of allegations of all types,
including reports from employees, has already sharply increased.

Since the official ribbon-cutting on November 25, 1996, more than 9,000 calls have reached
the 800 toll-free telephone number and resulted in over 800 fraud allegations. We anticipate


51

Chairman BuUNNING. I would like to ask the next panel to come
forward. Diana Eisenstat, Associate Director, Income Security
Issues, GAO; accompanied by Cynthia Fagnoni, Assistant Director,
Income Security Issues; and Michael Blair, another Assistant
Director, Income Security Issues from their Atlanta office. The
GAO has done a great deal of work for this Subcommittee and this
Congress, and we are grateful for their efforts.

Also joining the panel is Jerry Thomas of Decatur, Georgia,
president, and Douglas Willman of Lincoln, Nebraska, president-
elect of the National Council of DDS; and Larry DeVantier of
Springfield, Illinois, president of the National Association of
Disability Examiners.

Mr. Thomas testified before this Subcommittee on disability
issues last year. This panel will be testifying on two very different
issues, personal earnings and benefit estimate statements and
SSA’s disability program redesign initiatives.

In the interest of saving time, we would like GAO to present tes-
timony on PEBES and then have Members ask any questions that
they have on that. Then I would like the GAO to give their testi-
mony on disability redesign, followed by testimony on that issue
from the State DDS witnesses.

After all three witnesses have testified on disability redesign,
Members can ask questions of the panel on these issues.

Mr. WILLIAMS. Thank you very much.

STATEMENT OF DIANA S. EISENSTAT, ASSOCIATE DIRECTOR,
INCOME SECURITY ISSUES, HEALTH, EDUCATION AND
HUMAN SERVICES DIVISION, GENERAL ACCOUNTING
OFFICE; ACCOMPANIED BY CYNTHIA M. FAGNONI, ASSIST-
ANT DIRECTOR, INCOME SECURITY ISSUES; AND MICHAEL
BLAIR, ASSISTANT DIRECTOR, INCOME SECURITY ISSUES

Ms. EISENSTAT. Thank you.

Mr. Chairman and Members of the Subcommittee, I am pleased
to be here today to discuss how effectively —

Chairman BUNNING. Would you please put the mike a lot closer
so we can all hear you?

Ms. EIsenstaT. Is this better?

Chairman BUNNING. That is better.

Ms. EISENSTAT. I am pleased to be here today to discuss how ef-
fectively the Social Security Administration’s personal earnings
and benefit estimate statements, PEBES, convey information to the
public.

PEBES is a 6-page statement which provides workers with infor-
mation about their yearly earnings on record at SSA and the
amount of Social Security retirement, survivor, and disability bene-
fits they will receive. You have a copy of PEBES before you, and
I believe it is also going to be displayed over here on these boards.

SSA has provided PEBES statements to the public upon request
since 1988, but Congress required SSA to begin sending out
PEBES to workers automatically beginning in 1995.

Starting in fiscal year 2000, PEBES will be sent to almost every
U.S. worker, age 25 and older, an estimated 123 million each year.
SSA projects that this effort will cost more than $80 million in
fiscal year 2000 alone.


ay

80

NCDDD endorsed this teaming concept and acknowledeged that the DCM pusition
‘would be more realistic in the presence of this future system of enablers, At that time,
we also expressed concer that SSA might attempt to forge ahead with the DCM concept
prematurely (that is, without developing the enablers) and that this could lead ty a
deterioration in public service. In November of 1995, we were disappointed to fear that
this is exac.', the path which SSA then resolved to take. In an initiative knowit as the
Accelerated IDCM Project, SSA negotiated a Memorandum of Understanding with its
principle union calling for the creation of at least 1500 such positions (half each at the
state and federal level) at a salary grade of GS-12 for the federal emplo;ecs. In our
the creation of 1500 positions (about 25% of the positions currently uiilized to .nake the
eligibility determinations) for a completely untested concept of very dubious |». ciicality
was an example of dangerous adventuring that would have exposed the disability
program (o substantial and needless risk. Using the authority delegated {o the states
under Section 221 of the Social Security Act, the NCDDD declined to avzept the
proposal to transfer state work sufficient in scope to occupy 1500 DCMs. We proposed
instead that the concept be tested with only 120 participants. According to SSA’s
estimates, this would have reduced the cost of the test from $23.7 million 1 $1.7 million.
Apart from the dollars, a test of the narrow scope we proposed would not have taken
nearly so many employees out of productive work for the elongated training pusiod
necessary to lean DCM skills, Eventually, we were successful in changing the number of
DCM positions to be tested from “at least 1500" as originally negotiated bel ween SSA
and AFGE to 290. Even 290 is well beyond the number recommended by SSA's Office
of Program Integrity Review and Office of Workforce Analysis as the minimum needed
to determine the viability of the position.

Even though we have agreed (o a scaled down test of the accelerated DCM, we would
prefer that SSA return to the original quite sensible path toward the DCM (begin with
teaming, then develop the enablers, then test the DCM). SSA has been uiable to
demonstrate to our satisfaction any reasonable basis for concluding that, under ie
accelerated IDM, decisions would be made more accurately or that processing time
would decrease There is excellent reason to believe that the opposite will cppon.
Further, thé accelerated testing, in the absence of the enablers, will not even answer the
key question -- ‘is the DCM a viable position?”

‘And there is one other very troubling aspect about the concept of the DCM. When
discussing inz problems associated with developing the position, SSA u:ticials have
‘often sought tc terminate the deliberations by stating that the position mast be .. veloped
because it is what the public wants. Ostensibly, this public mandate was com: icated
10 the original zeengineering work group during focus group meetings and field
interviews However, any evidence that the public ever delivered a clear and consistent
message on this topic is strangely absent, We have been informed that n:uch of the
record of the focus groups has been destroyed. The records that we have been arte to
obtain simply do not include any basis for concluding that the ‘single point of contact”
was ever really demanded by the public representatives. Pethaps SSA shuuid be asked to
clarify and reconfirm that it correctly interpreted the public expression before 1 proceeds
with the DCM test of the accelerated DCM.

We offer the illustration of the DCM initiative as an example of a recurring phenomenon
in redesign --- SSA proposes costly, disruptive, and labor intensive changes which seem
‘unrelated to program improvement in general and to the Commissioner's five stated
objectives in particular. So many of the redesign process changes seem to be diferent,
but not better. We want change that can be related to improved service either for the
claimant or for the tax payer and hopefully for both. We don’t see that this is the case.

‘We also are concerned that some aspects of SSA’s redesign plan will make ine
program more vulnerable to fraud. SSA has historically been reluctant to recognize
the extent to which the disability program is abused by persons and organized groups of
persons who are not truly unable to work. Some aspects of the redesign plan will make
the program cven more vulnerable to fraud and abuse. The first is the acceptance of a
treating physician's certification of diagnostic and Functional assessment inforsi,ation



13

has directed us at the Deputy Commissioner level and at my level,
and the principal Deputy is involved as well, to engage in conversa-
tions much along the line that you have suggested, to try to get a
better understanding of how these two components are to go
forward.

Chairman BUNNING. Well, let me get down to the nuts and bolts
of the thing. OPIR has a budget of $80 million, staff of 1,200, while
the IG’s budget is $26 million, and a staff of 318. There ought to
be some discussions between you and the Commissioner and/or the
Deputy Commissioner, whoever is in charge of this, somehow to
combine the auditing sections. Is there no special program that will
combine some of that money and get more auditors into your sec-
tion where you need them? Could you get some kind of direction
by the Commissioner or the Deputy Commissioner in charge of that
section?

We are looking at over $100 million, and a staff of 1,500-plus
auditors. Is that correct? I mean, if you combine both sections?

Mr. WILLIAMS. Yes, combining them, that is right.

Chairman BUNNING. Well, if the IG’s office is lacking in numbers,
or seems not to be lacking, I would suggest that there be some kind
of communication going on between you and the Commissioner or
Deputy Commissioner in respect to those numbers. This should be
done as quickly as possible because doing the audits and stopping
the waste, fraud, and abuse we find in the Social Security system
ought to be a priority. It’s costing the taxpayers, retirees, and the
disabled, money, as you might suspect.

Mr. WILLIAMS. Yes, sir. We are focused on that, and we are meet-
ing later this month, in fact, and we have been meeting since my
arrival on the topic. It is one that——

Chairman BUNNING. I expect to hear from you shortly on this
matter.

Mr. WILLIAMS. Fair enough, sir.

Chairman BUNNING. I am a little surprised and somewhat
shocked at the numbers in your testimony. Auditors in other agen-
cies are responsible for safeguarding $260 million each. Your audi-
tors are safeguarding $3.2 billion each. Is that correct?

Mr. WILLIAMS. It is correct, sir.

Chairman BUNNING. What is being done to address that
presently?

Mr. WILLIAMS. We are concerned about the shortfall, as you are.
We are particularly much in line with what the Comptroller Gen-
eral told you. We are particularly concerned about the information
technology area and the CFO area that we have proper expertise.

We have divided all of the Social Security’s core business proc-
esses into 14 issue areas, and those teams do feel thin. We are wor-
ried that we are going to have to only concentrate on the most ur-
gent work, which is not what we would like to see. There will be
organizations and processes never audited, if that becomes our
approach.

We are coordinating very carefully with GAO, and I am pleased
to see my friends here today. We are working very carefully to
make sure we do not do anything that duplicates their efforts. We
are reaching into the bag of tricks as much as we can to leverage
everything we have got.


55

information. Active leadership from SSA's senior managers
needed to ensure the success of this important initiative.

OVERVIEW OF THE PEBES

Since the Social Security Act became law in 1935, workers 1
had the right to review their earnings records on file at SSA to
ensure that they are correct.’ In 1988, SSA introduced the PEBES
to better enable workers who requested such information to review
their earnings records and obtain benefit estimates. According to
SSA, less than 2 percent of workers who pay Social Security taxes
request these statements each year.

‘The PEBES legislation‘ requires SSA to begin sending
statements to eligible workers’ according to the schedule that
appears in table 1. SSA plans to mail some statements even sooner
than required. By fiscal year 2000. SSA plans to have mailed
statements automatically to over 70 million workers.

Table 1: Schedule for Distributing Benefit Statements

Fiscal year | Eligible individuals Volume estimated by
SSA.
1995 age 60 and over 6.7 _milliont
1996-1999 turning age 60 during 1.6 to 1.8 million
the year annually
2000+ age 25 and older 123 million annually

By providing these statements, SSA‘s goals are to (1) better
inform the public of benefits available under SSA's programs, (2)
assist workers in planning for their financial future, and (3)
better ensure that Social Security earnings records are complete
and accurate. Correcting earnings records benefits both SSA and
the public because early identification and correction of errors in
earnings records can reduce the time and cost required to correct
them years later when an individual files for retirement benefits.

Issuing the PEBES is a significant initiative for SSA. The
projected cost of more than $80 million in fiscal year 2000
includes $56 million for production costs, such as printing and
mailing the statement, and $24 million for personnel costs. SSA
estimates that 608 staff-vears will be required to handle the PEBES
workload in fiscal year 2000: SSA staff are needed to prepare the
Statements, investigate discrepancies in workers’ earnings records,
and respond to public inquiries.

YOverall, the chance of SSA incorrectly recording a wage is small.
According to SSA's 1, 98.7
percent of reported earnings are posted accurately to an
individual's record. Even this accuracy rate of almost 99 percent,
however, results in over 2 million earnings each year that cannot
be linked to specific individuals’ records.

‘P.L, 101-239 and P.L, 101-508.

‘SSA must send a PEBES to those who are at least 25 years old, have
a Social Security number, have wages or net earnings from self-

employment, are not receiving title II benefits, and have a current
address obtainable by SSA.

“This is SSA's total of mandated statements actually mailed in
1995. .


ADVISORY

FROM THE COMMITTEE ON WAYS AND MEANS
SUBCOMMITTEE ON SOCIAL SECURITY

FOR IMMEDIATE RELEASE CONTACT: (202) 225-9263

Bunning Announces Follow-up Hearing on
Recommendations to Improve the Performance of the
Social Security Administration as an Independent Agency

Congressman Jim Bunning (R-KY), Chairman of the Subcommittee on Social Security
of the Committee on Ways and Means, today announced that the Subcommittee will hold an
oversight hearing to further examine issues raised a its Tuly 25, 1996, bearing on the
performance of the Social Security Administration (SSA) as an is agency.
hearing will take place on Thursday, September 12, 196, in nous B-SlS ofthe Raybara
House Office Building, beginning at 10:30 a.m,

In view of the limited time available, oral testimony will be heard from invited
witnesses only. However, any individual or organization may submit a written statement for
consideration by the Committee and for inclusion in the printed record of the hearing.

BACKGROUND:

On July 25, 1996, the Subcommittee held a hearing to examine SSA's first-year
performance as an independent agency. At that hearing, the Comptroller General presented
testimony regarding the General Accounting Office (GAO) review and assessment of SSA's
performance in areas GAO regarded as critical to SSA's ability to meet future challenges.

In announcing the hearing, Chairman Bunning stated: "I am very interested in
following up on the recommendations made by the Comptroller General to help SSA better
prepare to meet both current and future challenges. In particular, I am deeply concemed that
the integrity of SSA’s programs and its operations, which maintain sensitive records on just
about all of the Nation's 260 million citizens, be adequately monitored and protected by the
new Office of the Inspector General from fraud and abuse. I have asked the new SSA

General to advise the Subcommittee on what steps need to be taken to maintain the

Inspector
integrity of SSA programs and operations.

“1 am also concemed that SSA more realistically focus its disability redesign efforts so
that there are measurable results in the near term, not the next century. Finally, I am
concemed that SSA be prepared to best take advantage of its statutory mandate to send a
Personal Earnings and Benefit Statement to each of the roughly 123 million working
‘Americans in the year 2000. I have asked GAO to present the results of additional work it
thas done on these issues at the hearing.”

FOCUS OF THE HEARING:

This hearing will provide a more in-depth focus on recommendations made by the
Comptroller General in three key areas: (1) SSA's need to limit opportunities for waste,
fraud, and abuse in both its programs and operations through its newly-established Office of
the Inspector General; (2) SSA’s need to adequately plan and prepare to meet most effectively
its statutory mandate to send a Personal Earnings and Benefit Statement to every worker age
25 and older beginning in the year 2000; and (3) SSA's need to limit and better focus its
isabiigy ian initiative.


72

mailings. They have committed to contractors to both print and
distribute that information.

Mr. JOHNSON. How do you know who those people are 2 years
ahead?

Ms. EISENSTAT. The people that should be receiving the
statements?

Mr. JOHNSON. Yes.

Ms. EISENSTAT. SSA has the necessary information in its
systems.

Mr. JOHNSON. They know who is going to go to work next year
already?

Ms. EISENSTAT. Well, no. They have information in their system
about the earnings for people who already have paid Social
Security —

Mr. JOHNSON. But if somebody went to work in this year, they
would not have them on that list, would they, if they had not
worked before?

Ms. EISENSTAT. The people they are sending these statements to
will have already paid into Social Security, I believe. So, if you
went——

Mr. JOHNSON. So, it is not going to everybody that is working at
60 or has worked up to that date. It is only those who are qualified
for SSA benefits. Is that true?

Ms. EISENSTAT. I am going to ask Ms. Fagnoni.

Ms. FaGNnont. It is anybody who had a work record.

Mr. JOHNSON. Whether they have qualified for benefits or not?

Ms. FaGnont. Right, that is true. Yes.

Mr. JOHNSON. OK. Then my point is, how do you perceive 2 years
ahead who is working and who is not working? If that is the cri-
teria, I think their system is faulted, and you all did not discover
that.

Ms. FaGNONI. Well, the 2-year contract is for the production and
mailing of the documents, but the front-end activity that the Social
Security workers will do each year to check the earnings records
and compile the mailing list is something they would do inhouse
and is not linked specifically with the contract.

Mr. JOHNSON. OK. When they contract out for these mailings,
what do they do? Do they send a disk to those people and say this
is what we want mailed, or do they have the contractor devise the
system and come up with the people and the names?

Ms. FaGNnonl. No. It is SSA which has to provide the list and the
names to the contractor, yes.

Mr. JOHNSON. So all the contractor is doing is mailing?

Ms. FAGNONI. Printing. Printing and mailing, right.

Mr. JOHNSON. Printing and mailing.

Ms. FAGNONI. Yes.

Mr. JOHNSON. And you are telling me that has to be 2, 3, 4, 5
years ahead of time. That is baloney.

Ms. FaGNONI. Well, that is currently. SSA currently has chosen
to have a 2-year contract.

Mr. JoHNSON. OK. So then, the SSA can back off and change
contractual arrangement and change the form. You said they could
not change the form.


—

OPIR's mission is to evaluate and assess the integrity and quality of SSA programs with
emphasis on the prevention of program and systems abuse, the elimination of waste, and the
increase of efficiency.

‘The OIG Office of Audit’s mission is to promote economy, effectiveness, and efficiency
within the agency; prevent and detect fraud, waste, and abuse in agency programs and
‘operations; review and make recommendations regarding existing and proposed legislation
and regulations relating to agency programs and operations; and keep the agency head and
the Congress fully and currently informed of problems in agency programs and operations.

Work Products

OPIR conducts quality assurance reviews and special studies. Quality assurance reviews
provide the agency with ongoing performance measures, while special studies are
assessments of program integrity and performance.

OA conducts audits of program efficiency and effectiveness in accordance with generally
accepted government auditing standards and evaluations and inspections in accordance with
the Quality Standards for Inspections issued by the President's Council on Integrity and
Efficiency

OIG Audits Concerning OPIR

The OIG completed three audits in 1996 of OPIR's work. We are awaiting comments from
SSA on our audit of OPIR’s Special Studies. The objective of the audit was to determine
whether OPIR’s Special Studies are used by management to improve SSA programs, are
cost-effective and efficient, and performed in accordance with standards

We issued final reports on OPIR’s Title II and Title XVI Index of Dollar Accuracy (IDA)
reviews. The IDA reviews assess the payment accuracy of newly awarded retirement and
survivors’ claims and the Supplemental Security Income (SSI) initial claims and field office
redeterminations. ‘These reviews involve the work of approximately 90 employees and the
results are used as the principal indicator under the Government Performance and Results Act
(GPRA) to show SSA’s benefit payment accuracy. We performed our audits to evaluate the
effectiveness of the IDA reviews in accurately measuring and reporting SSA's performance
in correctly paying initial and redetermined benefits and to evaluate whether the IDA reviews
effectively assisted management in administering the Title II and Title XVI program.


70

What is the difference between open versus doing something about
it?

Ms. EISENSTAT. We just met with SSA several weeks ago, and
they left us with the impression in the course of that meeting that
they understood what we had to say, thought we had some good
ideas, and were going to consider them. In fact, since that meeting,
SSA has made some changes and has asked us back to provide
more detailed information.

So, I believe they are receptive to thinking about change.

Mr. JOHNSON. Does that mean that they do not have the ability
to redesign those forms themselves? They have to lean on the GAO
to do it for them?

Ms. EISENSTAT. I think that they are interested in improving the
statements, and we have some information that we received from
some design experts that we used. We hope to share that with
them and hope that it will help them to improve the statement.

Mr. JOHNSON. Who did they use to design the form in the first
place?

Ms. EISENSTAT. SSA has done this inhouse. They have done it on
their own.

Mr. JOHNSON. Well, they did it through a bureaucratic process,
which it shows.

Ms. EISENSTAT. Yes.

Mr. JOHNSON. When are you supposed to get those forms? What
age group is getting them?

Ms. EISENSTAT. In 1995 individuals who were age 60 began to re-
ceive them.

Mr. JOHNSON, All individuals that are on the Social Security
rolls?

Ms. EISENSTAT. Well, all those who were workers who were
already at age 60 were to receive——

Mr. JOHNSON. In 1995.

Ms. EISENSTAT. In 1995.

Mr. JOHNSON. What timeframe was that?

Ms. EISENSTAT. Do you mean what time of year did they receive
them? The mailing was staggered.

Mr. JOHNSON. Staggered by what process? Do they stagger over
the whole year?

Ms. Ersenstat. I will ask Cindy Fagnoni to—

Mr. JOHNSON. Well, wait 1 minute. If you guys or GAO are get-
ting into this business and do not know how they are doing it, I
cannot believe that you have gone into it in enough detail. Do you
know that or don’t you?

Ms. FAGNONI. They do not mail them all at one time. They
stagger them.

Mr. JOHNSON. I understand that. How? What process do they use
to stagger them?

Ms. FAGNONI. Well, they contract out for somebody to do the
printing.

Mr. JOHNSON. So they cannot do it inhouse, and yet it requires
x number of employees to do this and to process this, and yet they
are contracting out. If they are contracting out, why do they need
the employees in the SSA?


APPENDIX I APPENDIX
‘Your Estimated ‘Your work under Sociat Security helps you und your family wo qualify for benefit
Social Security payments. The kinds of benefits you might get ure described below. For each benefit, you
Benefits feed a certain number of work credits (see page 5). Once you have enough credits, your

benefit amounts depend on your average earings over your working lifetime. We used the
‘earnings in the chant on page 2 to figure your credits and estimate your benefits. We
assumed that you will continue to work and make about the same asthe latest exmings
shown on your records for 1994 or 1995.

‘To get Socal Security retirement beaefits. you need 40 credits, Thats also how many vou
need for Medicare et age 65. Your record shows that you have enough credits

f

(On page 5. we explain about different ages when vou can retire. If vou worked at your
rev rt upto sac erent se. your oily aos woud be aout

‘At age 62 (reduced benett) : .$ 8
‘As Clrewirenenag (ag 68). . voces $1100
‘Atage 70. cee ceevtesee terseserescs $180

Disability (On page 6, we tel you about disability benefits. f you become disabled right now. you need

Benefits 37 credits to qualify for diablty benefits Of those credits. 20 had to be cared m the lst
10ers. Your rca shows tht vos have ered ecigh cai win he ight ie

Right now. your ssoathly disability beoefit amoust would be about 1.970

Faculty If you get retirement or disability benefits, your spouse and young children may also
Benefits ‘qty for benefit. See page 6 for more information about family benefits.

Survivor If you di, cerain members of your family may qaulify for mrvivor benefits oa your record
Beoefits ‘Sou page 6 for an explanation of who may qual.

If you dia this you, vou seed 37 credits for your survivors to get benefitx. Your record shows
tar snug they etal ote riemen, mou ei amounts wold be stot
For your child $810
: Ss 810

1.080
Forel your any somber if cer do anor ci for wal) L398
‘We may aloo be able 10 pay your spouse or eligible children a one-time death benefit of $255,

‘ou when yeu seh Repaid for cen Ks fw
Seen e cee aaa
yeu here ou may ay for Mie howl
65, pou mel wetng, Yay aly bien 6S fy ae tid he
peraneat Caey fae Yeap may 0 ually ft honped wearers 3
mom tayone who is 63a older or who quis or Medicare spi innantc an

; Tey a! roi wo rt: fe Mee
a Mrs indoration or Ts Corea Yor taco

‘After you reed ths tatemeat. please call 1-800-537-7005 if you bave any question if you need to report aay missing
‘or wrong earangs on your recar, it you want to apply for benefits. or if you want this statement in Spanish.
‘statement is nt a decision on a claim for Social Security or Medicare Benefits. You do not quality Cor any of these
‘benefits unleas you apply for thee aad meet ll the requirements, This seteoeat is jst an eximete of what you may get
ln ibe meantime, your record is updated wvery year. You can request a new sabement to spake sir it ays corret.

‘tooal Secor a ll ale conkdensly-nhhr te at made ou tele mur ota fe lac the Bu way want bese at vu
nr eure and cour rice. Tat ww have «acd Socal Seun oprah Laan Sona ncoaung nd cular Miers al

I


20

gram effectiveness and in terms of investigations priorities for
fighting fraud.

On the audit side, I have the same concern that the Comptroller
General did. The information technology and financial management
areas are very high priorities for us. We think they are most impor-
tant to the American people.

Payment accuracy is also another initiative that we want to take
on. We want to make sure that we are not giving out money that
is going to be very difficult to come back to us in terms of errors,
or that we are taking someone who is already in need and under-
paying them. The payment accuracy is a very big priority for our
office.

Disability programs are another area that we are focused on with
a large number of our small resources, and the growth in that area
concerns us. The fraud inside that area concerns us.

Mr. COLLINS. Have you been able to pinpoint anything, say, an
amount in any of these areas of fraud, like in the disability? Have
you gotten that far along with it that you can actually estimate
how much of the disability expenditures are fraudulent?

Mr. WILLIAMS. Actually, Jim Huse, our Investigative Assistant,
would be best to respond to that.

We do have some priorities with regard to investigations, and of
course, disability is one. Probably the one that we are most con-
cerned about, and then I will turn to Mr. Huse, is employee corrup-
tion. We would be very worried about that.

We just talked about the New York case. We do not want there
to be an undetected criminal presence in Social Security. We think
that that kind of culture would be very destructive.

Disability fraud does concern us, and we do have a number of
cases both on the SSI side and the Social Security side.

Service provider fraud offers a danger and an opportunity. With
a single strike against a service provider such as a doctor or an at-
torney or an interpreter, we can clean up an enormous number of
cases, so that those are attractive targets for us.

It is also important to us to support the law enforcement commu-
nity, as we discussed a moment ago, in terms of their investigation
of Social Security crimes, but also our ability to help them track
down violent offenders and fugitives.

Jim, you might talk a bit about what we are finding in terms of
the proportions of crimes.

Mr. HUusE. Our caseload with the experience we have gained, for
almost 1 year, seems to divide itself up this way: Most of our cases
that we open are in the SSI, the Supplemental Security Income
Program. The disability program is the area that is most subject
to fraud and abuse.

We have had—along with the fact that there has been a rapid
increase in the disability program outlays in general by Social
Security, that accounts for one of the reasons why this is so promi-
nent what seems to be from our experience, a broad street-level
knowledge on the part of people who want to find out ways to fake
medical symptoms or what have you to get some of this money.

Also, there are criminal service providers, corrupt service provid-
ers, who get into the picture there, too. The Inspector General men-
tioned that we have here a culture of criminal middlemen, inter-


37

staffing has been under strength with respect to the substantial mission we face. At creation
in April 1995, we had 76 investigators on staff. The Commissioner actively supported an
increase of 53 criminal investigators for the OIG by amending the FY 1996 budget request to
shaft funding and positions from other SSA components to the OIG. As the Subcommittee is
aware, we were granted authority to recruit an additional 75 criminal investigators in FY
1997. All of this is a complex process and the dynamics of recruitment and training require
an investment of time and resources that preclude us from making definitive detetminations
about our appropriate size, and more importantly our operational potential. As these new
resources reach their journeyman work potential, their efforts can be factored into an
assessment of the success of our overall agency performance vis-a-vis the SSA fraud
vulnerability universe. We will continue to carefully track these activities and update the
Subcommittee on the results of these efforts.

D. The Regional Breakout of the Office of Investigations

The Office of Investigations is organized into a Headquarters and eight field offices. Each of
these field offices has sub-offices in various cities within their respective districts where the
volume of work indicates that deployment of resources.

‘The Boston Field Office covers the New England States and has a staff of 12.

The New York Field Office covers New York and New Jersey and has a staff of 29.

The Washington, D.C. Field Office covers the District of Columbia, Maryland,
Pennsylvania, Delaware, Virginia, and West Virginia and has a staff of 25.

The Atlanta Field Office covers the States of Kentucky, Georgia, North and South Carolina,
Tennessee, Alabama, and Mississippi, and has a staff of 20.

The Tampa Field Office covers Florida and the Commonwealth of Puerto Rico, and has a
staff of 18.

‘The Chicago Field Office covers the States of Illinois, Michigan, Indiana, Ohio, Missouri,
Kansas, Nebraska, Iowa, Minnesota, and Wisconsin, and has a staff of 36.

‘The Dallas Field Office covers the States of Texas, Montana, North and South Dakota,
Colorado, Wyoming, Utah, New Mexico, Oklahoma, Arkansas, and Louisiana, and has a
staff of 33.

The Los Angeles Field Office covers the States of California, Washington, Oregon, Idaho,
Nevada, Arizona, Hawaii, and Alaska, and has a staff of 40.


57

clearly labeled, and the organization should be evident at a
glance. When readers need explanations to understand complex
information, the explanations should appear with the
information.

-- Easy-to-understand explanations: Readers need explanations of
complex programs and benefits in the simplest and most
straightforward language possible.

Commissioner's Message Does Not Effectively Convey Purpose

In the 1996 PEBES, the message from the Commissioner of Social
Security does not clearly explain why SSA is providing the
statement. Although the message does include information on the
statement ''s contents and the need for individuals to review the
earnings recorded by SSA, its presentation is uninviting, according
to the design expert we consulted. More specifically, the type is
too dense; the lines are too long; white space is lacking; and the
key points are not highlighted. If the PEBES' recipients do not
read the Commissioner's message. they may not understand why
reviewing the statement is important.

The message also attempts to reassure people that the Social
Security program will be there when they need it with the following
reference (from the 1996 PEBES) to the system's solvency:

The Social Security Board of Trustees projects that the
system will continue to have adequate resources to pay
benefits in full for more than 30 years. This means that
there is time for the Congress to make changes needed to
safeguard the program's financial future. I am confident
these actions will result in the continuation of the
American public's widespread support for Social Security.

Some participants in SSA focus groups, however, thought the message
suggested that the resources would not necessarily be there after
30 years. For example, one participant in a 1994 focus group
reviewing a similar Commissioner's message said, *...[the] first
thing I think about when I read the message is, [Social Security]
is not going to be there for me.*

Design and Organization Are Not User-Friepdly

Comments from SSA's public focus groups, SSA employees. and
benefit experts indicate that the statement contains too much
information and is too complex. In a 1994 focus group summary, for
example, SSA reported that younger workers aged 25 to 35 wanted ‘a
much simplified form--a single page--with estimated benefits and
how much in taxes they paid into the system with the remainder of
the information put in a pamphiet for future reference." Moreover,
given the length and complexity of the current statement, some
focus group participants and benefit experts suggested that SSA add
an index or a table of contents to help readers navigate the
statement .

SSA has not used the best layout and design to help the reader
identify the most important points and move easily from one section
to the next. The organization of the statement is not clear at a
glance. Readers cannot immediately grasp what the sections of the
statement are, and in which order they should read them, according
to the design expert with whom we consulted. The statement lacks
effective use of features such as bulleting and highlighting that
would make it more user-friendly.

In addition, the PEBES is disorganized: information does not
appear where needed. The statement has a patchwork of explanations
scattered throughout, causing readers to flip repeatedly from one
page to another to find needed information. For example, page two
begins by referring the reader to page four. and page three
contains six references to information on other pages.



23

to be taken, and we do not think we have enough resources to take
appropriate action in response to their concerns. As I have said be-
fore, it feels like we are holding a fire hose and I am trying to put
an eyedropper on the end of it with the number of resources we
have to address the fraud allegations we are receiving. The Social
Security people are very attuned to detecting fraud, and they are
very angered by it, and so is the American public. They are flood-
ing us with opportunities.

I am reminded of the old joke where Colonel Custer tells his
men, “We’re not surrounded, we're in a target-rich environment.”
It’s not enough for a few investigators to achieve impressive re-
sults. We want to send messages to criminal elements that we are
going to inflict certain injury if you defraud our trust fund.

Mr. PorTMAN. Ensure that you can get to it.

And just to restate what I am sure has already been stated, this
is about the trust funds. So, it is all the more important.

Thank you, Mr. Williams. Appreciate it, Mr. Chairman.

L yield back.

Chairman BUNNING. I would like to submit for the record addi-
tional written questions. There is one specifically in regards to
CDR backlog and some other things.

Before I close this panel, I would just like to assure you that this
Subcommittee is strongly committed to eliminating waste, or dupli-
cation of your efforts. We are strongly committed to making sure
that you succeed, and to work with you to get the staff and re-
sources that you need to carry out the responsibility that Congress
gave you by law, to protect the Social Security Trust Funds from
waste, fraud, and abuse. There is nothing more important to this
Subcommittee than that.

I know that you and your staff are using all your resources that
you can to safeguard the Social Security system from society’s
criminals and cheats, and on behalf of the Subcommittee, I want
you to know that your efforts are very much appreciated.

Thank you for your appearance here.

Mr. WILLIAMS. Thank you very much.

(The following questions and answers were subsequently re-
ceived:


90

Chairman BUNNING. The continuing disability reviews and the
money that we have allocated for that purpose may get one of the
problems solved. But it does not get the initial problem solved for
the incoming.

Ms. EISENSTAT. And this process is targeting that initial level.
You are right.

Chairman BUNNING. But, I am afraid if we are going to start ex-
perimenting with things before we have a total concept of what we
are trying to do, we are not going to accomplish what we set out
to do. To get it done, get the claimant in the system if they deserve
to be in the system, and have them totally and completely respect
the decisionmaking process. Right now a claimant knows the proc-
ess can be reversed.

In my own district offices, that is one of the biggest problems I
have. Constituents call saying, I was turned down before, but now
I am going through the process, J want to know what happened.
If they know there is not a turnaround of a decision at the end of
14 months, we may solve that problem.

Mr. Laughlin, do you have some questions?

Mr. LAUGHLIN. Thank you, Mr. Chairman.

Ms. Eisenstat, in your written testimony, you talk about the
November 1994 SSA announcement where they are going to imple-
ment a redesign plan with 83 initiatives to be implemented over a
6-year period of time, but with 38 of those initiatives to be com-
pleted that are to be part of an operational test by September 30
of this year, which is 18 days from now.

Are all 38 of those completed or in the test process?

Ms. EISENSTAT. No, sir.

Mr. LAUGHLIN. Can you tell us how many fit into either category
of being completed or part of the operational test of the 38?

Ms. EISENSTAT. Of the 38, they have not completed any of those
initiatives, and I believe that of the 15 that were supposed to be
in an operational test state, only 5 are currently being tested.

Mr. LAUGHLIN. What concerns me is, 2 years ago, when I was on
the Aviation Committee, before I got there, millions of dollars, hun-
dreds of millions of dollars had been authorized for a new computer
system to prevent our airplanes from running into one another in
the skies, and hundreds of millions of dollars had been squandered,
and then there was still no new computer system to help our pilots
and airlines operate. While I had not been there in a couple of
years, to my knowledge there is still no system in place. It occurs
to me that we are going to do the same thing here on this redesign
plan. We are just going to keep designing and keep designing and
spending money and wasting time and not taking care of the
people who need the help.

So my question to you is, with that concern, and you seem to ex-
press it, as do the other witnesses here, what do you recommend
this Subcommittee do to focus the SSA on at least narrowing down
what can reasonably be done with just a few initiatives and get
them in place and then go on to a few more? Is that going to be
Possible, and do you have a recommendation to us of how we get

re?


44

51% 15% 12% 20% 2%

‘The above numbers indicate that investigations have been predominantly enumeration fraud
(SSN) cases. Enumeration is the process by which SSA assigns original SSNs, issues
replacement cards to people with existing SSNs, and verifies SSNs for employers and other
government agencies. The expanded use of SSN’s as identifiers has given rise to the practice
of counterfeiting SSN cards, obtaimng SSN cards based on false information, and
fraudulently misusing SSNs to obtain benefits and services from government programs, credit
card companies, retailers and other businesses. Additional concerns relate to improperly
issuing SSNs for illegal work activity by non-citizens, to issuing multiple SSNs to
individuals, and to controls over third party involvement (i.e. hospitals, relatives, and other
governmental agencies) in the enumeration process.

Since the inception of the OIG, its investigative resources have been dedicated to fraud in the
following manner: 1) employees attempting to defraud SSA programs; 2) cases involving
monetary losses to the trust funds; and 3) SSN fraud. As the OIG continues to expand and
gain additional resources, we will be able to focus on employee and program fraud. The
OIG anticipates that more allegations will be referred to the office thus generating more
investigations of these fraud matters.

‘The Strategic Enforcement Team (SET), staffed with intelligence analysts and technical
experts who support the OIG with research and early information about criminal schemes and
techniques, has planned a fraud vulnerability study which will identify the types of fraud
currently perpetrated against the programs of SSA. The team plans to quantify the impact of
such fraud in terms of volume of activity and dollar loss incurred. The study will highlight
previously successful efforts used to combat fraud. Additionally, the study will present what
measures the Office of Investigations is currently taking or planning that will detect and
prevent future criminal activity involving SSA programs and operations.

Question 13. Protecting the Social Security Trust Funds from all manners of waste, fraud
and abuse is extremely important to the American public, and this Subcommittee is
‘committed to doing all that it can to assist you to succeed in doing that. In addition to
making sure that your office has the resources it needs, is there additional legislation that
Congress could provide to help you in this effort?


85

Training and communication are necessary if we are to maintain
and improve the current process. They are essential to the redesign
effort. Regrettably, there is nothing to assure us that they will re-
ceive the appropriate support in the future. Past practices indicate
they will not.

Again, thank you for providing us this opportunity to testify.

(The prepared statement follows:]


62

APPENDIX I APPENDIX I

‘Your Social Security _On poye 4. we caplain more about covered camings and Social Security and Medicare

Earniny taxes. The following chart shows your reported earings. W may not show some oF all of
your from last year they are no« yot “Thus year’s earings will
‘ot be reported 10 us uniil next year.

{f your owa records do not agree with the earnings amounts shown, please contact us cight
away.

~~~ seta eet

Maximum Tanabe Your Reported Estee anes
‘ear ‘ou Pad



86

STATEMENT
OF
THE NATIONAL ASSOCIATION OF DISABILITY EXAMINERS

PRESENTED
BEFORE THE

COMMITTEE ON WAYS AND MEANS
SUBCOMMITTEE ON SOCIAL SECURITY

By
Larry DeVantier, President

September 12, 1996

Chairman Bunning and members of the Sub-Committee, on behalf of myself, the Board of
Directors and the members of the National Association of Disability Examiners (NADE) thank
‘you for this opportunity to present NADE's views on the Social Security Administration's Plan to
Redesign the Disability Program.

As you know, NADE is a professional association whose membership includes the disabilit
examiners in the State Disability Determination Service agencies (DDSs) who make initial and
reconsideration decisions and conduct continuing disability reviews. Our membership also
includes physicians, attorneys, Administrative Law Judges, advocates and others interested in the
disability program. We are concerned about the future of the disability program and the integrity
of the Trust Fund. We believe disability decisions should be timely, accurate and uniform
throughout the country. We agree that the current disability program is flawed. We have
supported efforts to correct problems in the past and will continue to do so in the future. We do
not believe we can continue "business as usual." However, we have serious reservations about
‘SSA's current Plan to Redesign the Disability Program.

The July 25, 1996 testimony of the Comptroller General addresses a number of our concerns.
These will be discussed later. Our fundamental concern, however, is the increasing confirmation
of our earlier reservations that SSA's efforts at reengineering are structurally flawed. They do not
adequately address the most basic problem with the current process--the discrepancy between
DDS and ALI decisions. Process Unification efforts provide a clear example of this. Despite the
increasing discrepancy between State Agency decisions, which are judged by SSA's quality
review components to be correct, and the unacceptably high reversal rate of those decisions by
the Office of Hearings and Appeals (OHA), SSA's response has been to provide superficial,
‘cross-component training and to promise a single source of policy while leaving the conflicting
premises which produce this disparity largely undisturbed. The critical element in unifying the
processes is a decisive resolution of the ambiguity within SSA as to whether disability is a
‘medical or a legal decision. SSA must have the organizational will to resolve this ambiguity. To
date it has not been willing to do so.

Even if the Plan itself were not structurally flawed other issues need to be addressed. Fraud, the
integrity of the program and the stability of the Trust Fund are among the most significant of
those issues which need to be resolved. The GAO report notes that "...SSA has not done enough
to combat fraud and abuse in the SSI program and address program weaknesses." We agree.
Many features of the Redesign Plan, particularly the increased involvement of for profit third
parties and claimant submitted medical evidence, will increase the incidence of fraud. Effective
actions must be in place to combat fraud before proceeding further with these initiatives.

We also agree with the GAO's assessment that "..SSA has undertaken too many complex tasks
and has not given sufficient priority to those redesign initiatives most likely to reduce processing
times and administrative costs." SSA has begun a multitude of initiatives under Redesign that are
sapping needed resources. The disability program would have been better served by placing
greater emphasis on initiatives that would assist in reducing the current workload as well as
testing and implementing the new Redesigned process. If ultimately one person, the Disability


121

The Reports

As a Senior Attorney-Advisor I only needed to provide a
short report of one or two paragraphs highlighting the
critical issues of the case that will progress to a hearing.
Review of the case and completion of this report can be
completed in less than an hour. Typically the form requires
very little, if any revision. This is true even when there
is additional development. If development is needed I can
immediately obtain access to clerical help who will process
the development request, permitting me to focus on legal
analysis, report writing and decision drafting.

As an Adjudication Officer I have been instructed to
complete a two to five page form that: 1.) contains a
significant amount of irrelevant, inappropriate and/or
unneceasary information; and 2.) takes hours to complete and
often requires extensive revision. The Summary of Evidence
and Agreements [SEA] form requires summarization of all the
medical evidence, and a regurgitation of the information
already described in the DDS initial and reconsideration
determination forms. Both these requirements are very time
consuming. It is my understanding that these requirements
were intended to assist ALJ’s and decision writers. This
intent was commendable but the nature of the form reflects
ignorance of the true function of the judges and writers.

The nature of these requirements is especially frustrating
since such information is of little help to decision writers
or ALJ's. The exhibit by exhibit summary is unnecessary.
Both writers and judges are charged with reviewing the

, Not someone else’s summary of it. Neither can rely
on such a summary and properly carry out their duties. They
must review the record themselves. Furthermore, high
quality written decisions do not require an exhibit by
exhibit summary. They require a reasoned analysis of the
evidence and its application to the law.

The rehash of the information contained in the prior
determinations is doubly wasteful. First, the information
is already contained in a concise form in the file. Second
and more importantly, the information is largely irrelevant.
The review at the hearing is de novo!

Thie form was not contemplated in the original redesign.
The September 1994 plan contemplates the Adjudication
Officer as providing focus to the case by identifying the
issues, not by performing the largely clerical function of
summarizing medical evidence, especially when that clerical
function has been abandoned by OHA offices ae an inefficient
use of resources.

The claimant‘s representative is expected to sign this form
before the case can go forward. This further delays the
process by days or even weeks. It reduces the amount of
practical information available to the ALJ. Highlighting
any weak points of the case on the form would result in
objections by counsel [on the grounds that the Adjudication
Officer input was improperly influencing the Administrative
Law dudge’s decision).

Clerical Help

The Adjudication Officer pilot offices have all been
severely hampered by the lack of sufficient clerical help.
This was a major complaint raised at conference calls and
the recent site manager conference. Adjudication Officers
are thus forced to perform significant amounts of clerical

See, isabi i . September
1994. SSA Pub. No. 01-005 at p. 33 - 34.


124

I ask you to please reconsider the implementation of the current
proposal. While well intended, the current design will
exacerbate as many problems as it solves. My counterproposal is
much more likely to give you results in keeping with the
announced goale of the redesign. The Adjudication Officer
program should not be implemented as currently designed.
Instead, the Senior Attorney-Advisor program should be expanded
and made permanent.

Sincerely,

owes “EC

in
sara R. Hitchcock

Attorney-Advisor
Suite 1401

800 South Gay Street
Knoxville, TN 37929-1401
(625) 545-4205

currently detailed as an
Adjudication Officer

Suite 305
1001 Office Park Road

West Des Moines, Towa 50265
(515) 267-9183

positions with non-attorneys addressed in previous
letters including my June 5, 1995 submission
coauthored by Rebecca C. Brown.


31

issuance of SSNs, the integrity of the NUMIDENT file (SSA's file which records all
assigned SSNs and the identity of the number holder), the prevention and detection of
fraudulent use of Social Security cards, and SSA referrals of fraud to the Office of
Investigations.

Financial Management issue team; staff = 10 FTEs, located in SSA headquarters. Each
year, SSA must report annually to the Congress on its financial status and other information
needed to fairly present the Agency's financial position and results of operations. The
vehicle through which SSA meets this reporting requirement is its annual Accountability
Report, which consists of an overview of the Agency, the principal financial statements,
supplemental financial and management information, financial accountability information,
program and financial performance measures, and its Semiannual Reports to the Congress.

This issue team will review SSA’s overall financial management structure including
safeguarding assets; accounting for financial activity and reporting on the Agency’s financial
position; internal controls, both manual and automated; the accuracy and integrity of
financial, performance, and management information; trust fund financing, including the
Department of the Treasury data which serves as the basis for crediting the trust funds for
the $356 billion in employment tax revenue SSA reported in FY 1995; contract audits with
third parties; and financial program management ensuring benefit payments are paid
correctly.

General Management issue team; staff = 9 FTEs, located in SSA headquarters. The SSA
considers its 65,000 employees one of its most valuable assets. When considered in the
context of streamlining, additional statutory responsibilities and the increase in workloads,
SSA has made a commitment to its employees to help them meet these challenges. In order
to provide world-class service, SSA must have a flexible, well-trained workforce that can
perform in a technologically advanced and productive environment. These changes require
SSA to administer, manage, and support its workforce efficiently as SSA changes the way it
does business. The SSA has adopted a business strategy that will help accomplish these
changes and make a strong commitment to the integrity and professional standards of the
workforce, enabling them to more effectively deliver services and meet customer needs.
General Management reviews will encompass a wide range of SSA’s administrative
functions, analytical staffs, and management activities which directly support SSA’s
programs.

Office of Hearings and Appeals (OHA) issue team, staff = 12 FTEs, located in Dallas,
Texas, SSA’s OHA 1s responsible for hearing cases denied by a State DDS at both the initial
determination and/or reconsideration stages. The OHA Administrative Law Judges (ALJ)
hear these appealed cases and issue either an allowed or denied decision. The audits and
evaluations of OHA will focus on the Disability Redesign Initiatives used to streamline the
adjudicative process; ALJ decision-making processes that have led to a substantial number of


7

tions of these allegations are essential to rebuilding public trust
and the trust of the SSA employees.

Estimating fraud in government programs has never been done
with certainty. However, some estimates, including a recent study
by the American Board of Certified Fraud Examiners, reports that
fraud within any population ranges from 2 to 6 percent. Even with
a more modest estimate, SSA’s investigative workload would in-
volve tens of thousands of cases. Such a volume of work would
clearly overwhelm the 166 investigators in our office.

To meet this essential workload, we are concerned about whether
we have adequate resources in most locations. We have only 19
agents in our Western region, covering 7 States, including Califor-
nia. Here in the mid-Atlantic region, which includes Maryland,
Delaware, Pennsylvania, Virginia, West Virginia, North Carolina,
and the District of Columbia, we have only 13 agents. In our Den-
bal office, we have four agents to provide total coverage to seven

tates.

In 1995, the Commissioner added 50 investigators to the OIG.
Despite this increase, upon my arrival, the Commissioner sug-
gested that I conduct a more comprehensive assessment of OIG re-
source needs. One aspect of the assessment was to benchmark our
resources against 16 other OIGs. We discovered that our resource
levels were well below the OIG community averages.

For example, the Department of Defense OIG has over 1,300 per-
sonnel safeguarding $277 billion. The Department of Health and
Human Services OIG has over 1,000 personnel safeguarding $319
billion. By contrast, SSA/OIG has only 315 personnel safeguarding
$368 billion.

Each SSA auditor is responsible for safeguarding $3.2 billion.
The community average is under $260 million. Each investigator
must safeguard $3 billion, The OIG community average is $500
million.

Let me close by assuring you that resources to this new office
have been a good. public investigation. In the first year, our data
indicate that each investigator returned $181,000 and each auditor
returned $980,000. We also obtained 613 criminal convictions. Ad-
ditionally, I am confident that these recovery levels and criminal
convictions will rise as we mature as an organization and enter the
new fiscal year with our full staff on board.

I believe in the mission of the Social Security Administration. It
is vital that we as a society provide a financial safety net for our
disabled and for the survivors of deceased American workers, and
that we protect our citizens as they leave the workplace and rely
upon their Federal retirement funds for a decent life.


46

Question 14. Please tell us about cooperative work you are doing with other agencies, such
as Office of the Attorney General, and agencies within the Departments of Justice and
Treasury.

Answer:

We have conducted over 700 cases with other agencies since April 1, 1995. Specifically, the
Office of Investigations has worked jointly with the FBI on 78 cases; 155 cases with the INS;
149 cases with the USSS; 22 cases with the IRS; 83 cases with the USPIS; and more than
50 cases with other OIG's, such as the Departments of Agriculture, Treasury, Health and
Human Services, Energy, Housing and Urban Development, Labor, Education, Veteran’s
Affairs, and Defense; the Small Business Administration, and the General Services
Administration. In addition, we have worked cooperatively with State and local law
enforcement agencies on over 170 cases since its creation.

The following are some of the investigative operations that currently are being conducted
with other agencies:

Uh Cc it Card Proj

This project began in August 1996 as an effort to gather intelligence information regarding
the manufacture/acquisition/trafficking of counterfeit Social Security cards as well as other
identification documents and the use of those counterfeit SSA cards in the state of Utah. As
specific subjects have been identified, cases have been opened and investigated by the Office
of Investigations. This project is being worked jointly with the FBI and local law
enforcement agencies in Utah

Operation Fare Game

In September 1996, the Office of Investigations began joint investigation with the United
States Border Patrol aimed at identifying deportable aliens currently working as taxi drivers,
tour bus drivers and contract school bus drivers in Dade County, Florida. The targeted
subjects have been identified as suspected illegal aliens possessing counterfeit SSNs and using
false counterfeit social security documents.

Operation Pinch
The Office of Investigations is engaged in a nationwide, large scale investigation of a

fraudulent credit card operation. Aspects of this crime involve West Africans who have
bribed SSA employees to assist in the furtherance of their credit card fraud operation. The


6

penditures. SSA employs nearly 65,000 people in over 1,300 offices
and large work processing centers nationwide.

The mission of the OIG is to assess the agency’s program effi-
ciency and effectiveness through its 116 auditors and to combat
fraud, waste, and abuse through its 166 investigators. Our Office
of Audit consists of 14 teams that specialize in SSA’s core business
processes. Our investigators are located in 6 field offices that serve
1 or more of SSA’s 10 nationwide regions.

In evaluating the organization’s effectiveness, the OIG has
focused on four fundamental activities critical to SSA’s success in
achieving service level goals and stewardship of government funds.
Those are enumeration, earnings, claims, and postentitlement serv-
ices. In addition, we have focused on other important programs
such as information technology, financial management, payment
accuracy, disability programs, policy and research, and the oper-
ations of the Office of Hearings and Appeals. Let me discuss
several of these critical areas.

SSA’s workload is increasing substantially as its start is decreas-
ing. To meet this challenge, SSA is, in part, relying upon new and
improved computer systems. The OIG needs to independently as-
sure both SSA and the Congress that the agency’s initiatives will
actually improve productivity, are on schedule, and are protected
from associated security risks.

Recent legislation has changed the focus of financial manage-
ment from simply financial reporting to a much broader focus,
which includes performance measurement. We recognize the impor-
tance of efficient and effective financial management to protect
SSA’s Trust Funds and U.S. Treasury moneys. Our audits will as-
sess the adequacy of SSA’s overall financial management and
performance measurements.

Over 90 percent of the agency’s benefit payments are accurately
computed. However, annually, SSA processes almost $2.5 trillion in
wage reports and pays $331 billion in claims. This volume of work
means that even the slightest error rate can represent enormous
costs to SSA and to the American people. We are currently leading
an agency-wide task force to explore solutions for reducing these
marginal, though chronic, payment error problems.

Due to significant growth in the number of individuals on dis-
ability and the associated increase in benefit payments, a host of
problems have developed, such as CDR, continuing disability
review backlogs, disability determination problems, and associated
reports of fraud, waste, and abuse.

Congress has earmarked major additional funding to reduce the
agency's CDR backlog. Further, legislation was recently enacted
that discontinues disability payments to drug addicts and alcohol-
ics. We will review and report on SSA’s progress in improving the
timeliness and cost effectiveness of its disability programs.

Additionally, I believe that an adequate investigative force is nec-
essary to maintain credibility with the agency’s employees and,
most importantly, the American public. I have been impressed by
the dedication of SSA’s 65,000 employees in uncovering fraud and
referring these concerns to the OIG for action. The American public
is also active in reporting incidents of fraud to us. Our investiga-


40

Question 8. Your data indicate that each investigator returned $181,000 in savings, and
each auditor returned $980,000 in savings in your first year of operation. Tell us more about
this, in particular what the cost to benefit ratio was in dollar amounts.

Answer:

The estimated savings (recoveries) for investigators consists of an extrapolation of recoveries
for the period April 1, 1995 through March 31, 1996 from a baseline of 113 investigators.
This extrapolation was increased by 30 percent for the following factors: the base year
included furloughs and budget constraints, experienced investigators have now been hired,
investigators will obtain program/operations knowledge and experience, and Joint Field
Operations will be undertaken with other Federal, State, and local law enforcement agencies.

‘The $181,000 in savings per investigator was the amount of base year recoveries (through
fines, judgements and restivutions) and consisted of:

SSA Dollars Recovered:

Retirement and Survivors’ Insurance $2,294,787
Disability Insurance 2,992,184
Supplemental Security Income 3,560,479

Total SSA Dollars $8,947,450

Other Non-SSA Dollars (Primarily General Revenue Uncollected Taxes and Other
Federal Programs’ Benefits) Recovered Attributable to:

Social Security Number Fraud $11,356,454

Miscellaneous Fraud 213,716
Total Other Dollars $11,570,170

Total All Recoveries 20,51

+ Number of Investigators 113

Dollar Recoveries Per Agent $181,572

The $980,000 in savings per auditor is attributable to $112 million in recommendations from
20 reports issued during the base year that would result in reduced benefits or questioned
costs if the recommendations were all implemented. The OIG had 114 auditors for the base
year. Because the effort needed to implement could not be accomplished during the base
year, we did not attempt to guess the actual amount of savings that will be attained from
these specific recommendations. Fifteen of these 20 reports also contained recommendations


120

September 12, 1996

Subcommittee on Social Security
c/o Phillip D. Mosely

Chief of Staff, Committee on Ways and Means
1102 Longworth House Office Building
Washington, D.C. 20515

Re: Reforming the Social Security Disability Adjudication
Procesa - Critical Deficiencies in the Redesign

Dear Members of the Committee,

I am currently serving as an Adjudication Officer in the West Des
Moines, Iowa pilot site. I have previously served as an
Attorney-Advisor in Memphis and Knoxville, Tennessee and as a
Senior Attorney-Advisor in Knoxville, Tennessee. Prior to my
joining the Social Security Administration [SSA] I was in private
practice, which included some Social Security cases. This varied
background has provided me with a first hand view of the
potential impact of the Adjudication Officer [AO] and Senior
Attorney-Advisor [SAA] programs.

Both these programs were designed to essentially address the same
problems, 1.) how to ensure disability cases appealed to the
Office of Hearings and Appeals [OHA] receive appropriate
evidentiary development before hearing; and 2.) that cases
deserving of an award on-the-record, are issued promptly in the
form of a legally sufficient and defensible written decision.
Currently, the Adjudication Officer is scheduled to become a
Permanent position as part of the Redesign. In contrast, the
Senior Attorney-Advisor position is temporary and is expected to
end within the next four months, unless renewed.

Review of the upcoming SSA workload, test results, and the state
of the combined Federal and State workforces involved in
disability determination, leads to the conclusion we would be
better served by reversing the policy regarding the permanency of
the Adjudication Officer vs. Senior Attorney-Advisor programs.
Both programs have been effective in expediting case development
and issuing favorable decisions where appropriate. Recent
statistics have shown that Administrative Law Judge allowance
rates have been dropping since the implementation of th

Programs. Thus there has been little change in the overall
allowance rate.

In theory, both programs have the potential to reduce the
subsequent workload at the receiving Office of Hearings and
Appeals. However, the Senior Attorney-Advisor model actually has
much better potential to help overall processing time. It
develops cases more efficiently and in a manner more useful co
the OHA than the Adjudication Officer model. Furthermore, it
does not have the profound negative impact on the other workloads
within the overall process that will result from full
implementation of the current Adjudication Officer proposal.

In my own experience I find that I am able to complete review and
preparation of a case as a Senior Attorney-Advisor much faster
than I can as an Adjudication Officer. I attribute this to
several factors. 1.) The nature of written reports necessary for
cases that continue to hearing. 2.) The availability of clerical
help to assist with evidentiary development. 3.) Access to
Administrative Law Judge [ALJ) input. 4.) Caseload management
issues. The Senior Attorney-Advisor has the advantage in each of
these areas.


19

Mr. WILLIAMS. Yes. The salaries represent the lion’s share, and,
of course, we have program support for them which includes their
office and equipment and travel.

Mr. PayNE. Commissioner Chater is supportive of this type of
recommendation?

Mr. WILLIAMS. She is, sir.

Mr. PAYNE. The question, then, that the Chairman asked con-
cerning other people, resources, that might be available, does that
enter into this request, or would this request go forward, and there
are additional resources as well?

Mr. WILLIAMS. We are treating the two initiatives separately in
our meetings regarding the work of OPIR and ourselves. We are
not taking into consideration any implications on the budget.
Should there be one, of course, that would affect SSA’s overall
budget request.

Our request is separate from the agency’s, and of course, any ad-
justment to either component would affect the overall request that
we would make to you.

Mr. Payne. So, you are really working on two tracks. One is a
track that would have 150 new people that would be involved in
the investigative process, and the other would be working with the
people who are already involved in auditing in the Social Security
Administration to see if, perhaps, some of those people would not
better be utilized under your purview than where they are at
present. Is that an accurate summary?

Mr. WILLIAMS. That is an outcome that was suggested. Of course,
if that were to occur, we would merge the two efforts, and we
would not come to you with a double sort of request.

Until we realize there is a budget implication, we would not
begin to factor that into what it is we are suggesting.

If those discussions would lead to an adjustment downward for
Social Security and upward for us, we would immediately merge
those two so that it would be a single initiative.

Mr. Payne. Well, I would just like to support what the Chairman
has said, and that is that I think we are all very interested in see-
ing this function operate on an optimal basis so that we would
know what the right number of people and right amount of re-
sources are to minimize the fraud that may exist within the Social
Security Administration, and I thank you for your testimony.

Mr. WiLLiaMs. Thank you, Congressman Payne.

Chairman BUNNING. Mr. Collins.

Mr. CoLLins. Thank you, Mr. Chairman.

Mr. Williams, you have been the Inspector General now for
almost 1 year. Is that an accurate statement?

Mr. WILLIAMS. Yes, sir, it is.

Mr. COLLINS. You see the immediate need for more investigators,
and you have put in a request for more, a doubling of the number.
What do you see after this year other than the need for more inves-
tigators? Where will you use them? What are your top priorities?

at are the areas that need your most immediate attention?

Mr. WitLiams. Thank you, sir. Actually, I was sworn in, in
January, and I began my learning curve prior to that. So, I have
had at least 1 year to think through the question that you just
asked, and I would order them in terms of audit priorities for pro-


14

Chairman BUNNING. That is not going to get the job done if you
are not getting any more resources to do the job. So, you know you
can spin it any way you like, but it is not going to work unless
there are more resources devoted to those specific audits.

The four people in Denver cover—how many States?

Mr. WILLIAMS. There are seven States.

Chairman BUNNING. Seven States with four people? How much
waste, fraud, and abuse are you going to find with four people
covering seven States?

Mr. WILLIAMS. We are very concerned about that, and when I ar-
rived, it felt as though I was holding a fire hose and trying to at-
tach an eyedropper to the end of it. It is a very frustrating feeling.

We want to attack fraud. We feel like we have put together a
powerful team, and I am as concerned as you are, and I will dedi-
cate very energy I have to solving this problem that you have
Yraised.

Chairman BUNNING. Mr. Jacobs.

Mr. Jacoss. Is there an issue of independence within the inde-
pendent agency or your office? How much independence, if any, do
you have from the independent agency?

Mr. WILLIAMS. We are guided by the Inspector General Act of
1978 and its amendments. It provides a great deal of independence.

Mr. Jacoss. That leads to the point Mr. Bunning made about the
auditors and you. Are they a different bread of pups? I mean, do
you mix and dilute the independence if people directed by the Com-
missioner are in your section? In other words, if there is a change
to be made, ought it not be a firewall change? If they have too
many and you have too few, one would think that maybe some of
the many would go over and completely join the few and not be hy-
brids, not be somewhat beholding or directed by the administration
itself? What say you?

Mr. WILLIAMS. That is a good observation, Mr. Jacobs, and I see
that the Chairman agrees as well.

It is absolutely essential, because of my relationship with you,
that I become completely independent, and the Inspector General
Act had a lot of wisdom inside it that ensured independence. So
that would be a requirement.

Mr. JAcoss. We are not talking about good guys and bad guys.

Mr. WILLIAMS. No.

Mr. JAcoss. You just have a different job to do, and they have
a different job to do. It is like the separation of the departments
of the U.S. Government. It has proved to be a pretty smart thing.
So, I think that ought to be taken into account.

On balance, it might be that the auditors, the number of audi-
tors, could be diminished, but if they were transferred to your de-
partment or to your section, they ought to have the same independ-
ence you do. Well, the point is made.

We had a case out in our Indianapolis Social Security office re-
cently where the police, Federal and local, and the DEA were look-
ing for a significant drug offender. I do not mean a kid smoking

t. I mean a dealer. And a staffer at the Social Security office

ew where this person was, but only knew because of Social
Security records. refore, it was said to be barred from disclosing
to the authorities the location of this public enemy.


WAYS AND MEANS SUBCOMMITTEE ON SOCIAL SECURITY
PAGE TWO

DETAILS FOR SUBMISSION OF WRITTEN COMMENTS:

Any person or organization wishing to submit a written statement for the printed
record of the hearing should submit at least six (6) copies of their statement, with their
address and date of hearing noted, by close of business, Thursday, September 26, 1996, to
Phillip D. Moseley, Chief of Staff, Committee on Ways and Means, U.S. House of
Representatives, 1102 Longworth House Office Building, Washington, D.C. 20515. If those
filing written statements wish to have their statements distributed to the press and interested
public at the hearing, they may deliver 200 additional copies for this purpose to the
‘Subcommittee on Social Security office, room B-316 Raybumn House Office Building, at least

t fe ing bea

‘Note: All Committee advisories and news releases are now available on the World Wide
Web at "HTTP://WWW.HOUSE.GOV/WAYS_MEANS/’ or over the Internet at
*GOPHER.HOUSE.GOV’ under "HOUSE COMMITTEE INFORMATION’



110

The important fact however, is that the front line workers have continued to perform their
jobs with dedication, competence, and beneficial outcome to the American public.

You asked why we think that the difference in decision making processes and outcomes
between the DDS and OHA level is the most serious problem facing the disability
program.

‘There are four reasons.

First, and most importantly, is the effect on the day to day lives of the ordinary American
people that the program is supposed to be serving. Too many persons receive their
benefits only after a very long wait and must pay 25% of their back benefits to an attorney
or other representative. If these cases are good allowances, then the majority of them
should have been allowed at the earlier stages which are much quicker and less costly to
the tax payer.

Second, is the effect on the program personnel --- the phenomenon of such a high reversal
Tate saps employee morale. Front line Disability Examiners have come to expect as
common place the fact that cases not allowable at the initial and reconsideration level will
be allowed at the hearings level. In fact, encouraging claimants to exercise their appeal
rights is not unusual

Third, is the effect on the continuing disability review process. The combination of the
types of cases allowed at the OHA level and the medical improvement standard results in
enormous inequities when cases are processed at the continuing disability review level.
The problem is this -- many OHA allowances are based on findings that claimants with
moderate impairments have a capacity for only a restricted range of sedentary work. In
such cases, the medical improvement that is a prerequisite for cessation of benefits is
unlikely to be demonstrated since the medical condition was not at the extremely severe
stage when the case was first allowed. Simply stated, the less impaired the claimant is
when allowed, the less likely it is that benefits will ever be stopped. Conversely, the most
impaired claimants are also the most likely to show medical improvement because their
conditions have more room for improvement.

Fourth, is the fact that a high rate of allowance at the appeals level --- the most expensive,
most time consuming, and least efficient stage of the process --- guarantees a continuing
backlog of cases awaiting appeal. Claimants appeal to OHA not only because they have
been denied at the earlier levels, but also because of the high probability of success on
appeal.


69

years or 2 years. The contract will have to be altered because we
want to make sure that the statement is available and effective,
and what SSA has now is not either.

Ms. EISENSTAT. There are some things that SSA can be doing
now to start testing reader comprehension and getting a much bet-
ter handle on what an appropriate format would be and what level
of information is necessary to satisfy the public. So, there is work
that they can be doing now to improve the statement.

Chairman BUNNING. As Chairman of the Social Security
Subcommittee, when I got my statement, I had a devil of a time
getting through it and understanding exactly what it said. I want
everybody to realize that they are not incompetent when they get
their statement and they cannot understand it because the level of
understanding that I have of Social Security is just a little bit high-
er than the average person out there. So, we really need some
assistance from SSA on this matter.

Ms. EISENSTAT. We are going to be continuing to work with SSA.
We have some additional work to complete for you on this matter.

Chairman BUNNING. OK. Mr. Jacobs, go ahead.

Mr. Jacoss. Well, I do not have any questions. Somebody just
handed me the Private Industry Guide to Social Security for 1996,
and I have not had a chance to read the whole thing. It has some
nice pictures in it, but it runs to 47 pages. I realize these state-
ments relate to a specific account, rather than a general overview,
but I do think, Mr. Chairman, it is possible sometimes that we
write things at 3 o’clock in the morning and they make more sense
the next day to someone else.

My dad used to refer to work that he did as a judge when he
wrote an opinion—he was an amateur carpenter, and he used to
refer to it as sanding it down, and that is what happens. They say
probably Ted Sorenson’s—or Mr. Kennedy’s phrase, “Ask not what
your country can do for you,” probably stemed from constantly say-
ing that they want this and they do not want to pay taxes. They
probably kept sanding it until it got down. So, I think there was
always room for improvement, conciseness, and clarity.

That is all I have to say.

Chairman BUNNING. Craig.

Mr. LAUGHLIN. Thank you, Mr. Chairman.

The only thing I would say is if you do not accomplish anything
in your whole career in this position, if you can get them to send
out a simplified statement informing the American citizen what he
or she has paid and what they are entitled to by way of some sim-
ple accurate information, you will have earned every nickel multi-
plied by a thousand in your wages, and it would be a great service
to the American people if you can do that.

I know you will be more successful in additional areas than that.
Let me brag a second. I have a law degree, and I look at this and
it is wasted paper and wasted ink.

Thank you for your service.

Chairman BUNNING. Mr. Johnson.

Mr. JOHNSON. Thank you, Mr. Chairman.

You made the statement that the Social Security Administration
is open to your suggestions. Can you describe what that means?


24

QUESTIONS FOR THE RECORD SUBMITTED BY CHAIRMAN BUNNING FOR SSA
INSPECTOR GENERAL DAVID WILLIAMS

Question 1. Just how would you determine the appropriate number of staff -- particularly
auditors and investigators -- for your office, and how many is that in your opinion? Please
provide information on how the SSA OIG compares with other OIGs in terms of staffing and
workloads.

Answer:

The Social Security Admmustration (SSA) Office of the Inspector General (OIG) conducted a
thorough study to determine the appropriate staffing level for the SSA OIG. The SSA OIG
recognized early that the 259 positions transferred from the Department of Health and *
Human Services (HHS) OIG to the new SSA OIG were insufficient. While performing our
study, we considered a number of variables. For example, SSA’s programs account for
almost 25 percent of the $1.5 trillion in Federal expenditures. Also, the SSA OIG’s Office
of Investigations investigates fraud, waste, and abuse by external as well as internal parties,
unlike many OIGs that only cover internal wrongdoing.

‘One aspect of our study was to benchmark several resource ratios against 16 other OIGs.
Our benchmark effort included comparisons of the staffing levels, agency budget coverage
per auditor, agency budget coverage per investigator, agency investment in OIG FTE as a
percentage of its overall staff, and the OIG investment as a percentage of the overall Agency
budget. The results of every analysis demonstrated a need for additional OIG resources.

To further refine our results and determine the critical number of auditors required to
provide audit coverage of SSA’s programs, we identified the SSA audit universe. The audit
universe encompasses all of SSA’s programs, operations, and activities that are subject to
audit. Some of these audits are performed annually because of legislative requirements and
others are performed less frequently during the 5 year audit cycle depending on the degree of
risk or extent of vulnerabilities or problems to the Agency.

In our benchmarking exercise, we especially focused on other agencies that have large
budgets and widely dispersed operations, such as the Departments of Defense, Health and
Human Services, Agriculture, and Treasury. The following comparison confirmed that our
request for 193 auditors is very modest.


10

audits will assess the adequacy of SSA’s overall financial
management and performance measurements.

(3) Over 90 percent of the Agency’s benefit payments are
accurately computed. However, annually SSA processes almost
§2.5 trillion in wage reports and pays $331 billion in claims.
This volume of work means that even the slightest error rate
can represent enormous costs to SSA and the American people.
We are currently leading an agencywide task force to explore
solutions for reducing these marginal, though chronic payment
error problems

(4) Due to significant growth in the number of individuals on
disability, and the associated increase in benefit payments, a
host of problems have developed, such as Continuing Disability
Review (CDR) backlogs, disability determination problems, and
associated reports of fraud, waste, and abuse. Congress has
earmarked major additional funding to reduce the Agency's CDR
backlog. Further, legislation was recently enacted that
discontinues disability payments to drug addicts and
alcoholics. We will review and report on SSA‘s progress in
improving the timeliness and cost effectiveness of its
disability programs.

Additionally, I believe that an adequate investigative force
is necessary to maintain credibility with the Agency‘s
employees and the American public. I have been impressed by
the dedication of SSA‘s 65,000 employees in uncovering fraud
and referring their concerns to the OIG for action. The
American public is also active in reporting incidents of
fraud. Our investigations of these allegations are essential
to rebuilding public trust and that of SSA employees.

Estimating fraud in government programs has never been done
with certainty. However, some estimates, including a recent
study by the American Board of Certified Fraud Examiners,
report that fraud within any population ranges from 2 to 6
percent. Even with a more modest estimate, SSA’s
investigative workload would involve tens of thousands of
cases. Such a volume of work would clearly overwhelm the 166
investigators in our office

To meet this essential workload, we are concerned about
whether we have adequate investigative resources in most
locations. We have only 19 agents in our Western Region,
covering seven States including California. Here in the Mid-
Atlantic Region, which includes Maryland, Delaware,
Pennsylvania, Virginia, West Virginia, North Carolina and the
District of Columbia, we have only 13’agents. In our Denver
office, we have four agents to provide total coverage for
seven States.

In 1995, the Commissioner added 50 investigators to the orc.
Despite this increase, upon my arrival, the Commissioner
suggested that I conduct a more comprehensive assessment of
OIG resource needs. One aspect of the assessment was to
benchmark our resources against 16 other OIGs. We discovered
that our resource levels were well below OIG community
averages. For example, the Department of Defense/OIG has over
1,300 personnel safeguarding $277 billion. The Department of
Health and Human Services/OIG has over 1,000 personnel
safeguarding $319 billion. By contrast, the SSA/OIG has only
315 personnel safeguarding $368 billion:

Each SSA auditor is responsible for safeguarding $3.2 billion;
the community average is under $260 million. Each
investigator must safeguard $3 billion; the OIG community
average is $500 million.


29

Deputy Commissioner for Finance, Assessment and Management. Having OPIR staff split
their time between one independent function and one management function could create a
significant conflict of interest in conducting program assessments.

Question 5. Please explain what each team is responsible for, and what additional staffing
resources they would need to adequately cover their responsibilities.

Answer:

Fourteen issue teams are responsible for providing audit coverage of SSA's programs and
operations. We estimate that to adequately audit these areas will require an audit staff
consisting of 193 FTEs. Any additional FTEs over the current 120 would be placed in the
issue teams with the greatest needs. We would like to add at least 13 FTEs to the Financial
Management audit team, 12 FTEs to the Systems audit team, and 4 to the SSURSI Disability
audit team.

‘The Payment Accuracy task force; staff = 2 FTEs, located in SSA headquarters. In 1996,
the OIG initiated a formal effort to improve the accuracy of payments for SSA’s Old-Age
and Survivors Insurance (OASI), Disability Insurance (DI), and SSI programs, While SSA's
Accountability Report for FY 1995 indicates that payment accuracy has been consistently
high for several years, payment error rates have remained relatively constant. The Payment
‘Accuracy Task Force, which has the full support of the Commissioner, will examine the
nature of payment inaccuracies and explore solutions for improving SSA's ability to issue
payments accurately.

; staff = 8 FTEs, located in Kansas City, Missouri. Each State's DDS is
responsible for disability determinations under the DI and SSI programs in accordance with
Federal regulations. The DDSs are also responsible for developing medical evidence
regarding the severity of claimants’ impairments. The SSA reimburses the State agencies for
100 percent of necessary costs incurred in performing Federal disability determinations.
During FY 1995, initial disability claims numbered 2,611,622, and 3,786,535 total cases
were processed by 54 DDS agencies. Total dollars expended for administrative costs during
FY 1995 were $1,178,781,241.

This issue team will also review the Government Performance and Results Act (GPRA)
performance measures for DDSs, including the actual number of initial and total DDS cases
received, processed, and pending as compared to SSA goals. Other important performance
measures are workloads, production per work year, cost per case, case accuracy rates, and
claims processing times.


98

Response, Questions for the Record for the National Association of Disability Examiners

1. _In your testimony you expressed concems regarding what you believe is the
most basic problem with the current disability process, the discrepancy between State
Disability Determination Services (DDS) and administrative law judge (ALJ)
decisions. Given your unique perspective as front-line workers, why do you believe
this discrepancy exists, and what is SSA really doing about it?

A portion of the discrepancy can be accounted for by rational components of a multi-
tiered appeals process. One example that is frequently cited is the progression
(increased severity) of impairment from the time of the initial decision to the appeal
months later, sometimes longer, before an ALJ. Reasons such as this have been
historically given by SSA and other observers and are well-documented. We believe,
however, that structural aspects of this kind explain a small (and acceptable) proportion
of the difference between DDS and ALJ decisions. We will, therefore, devote most of
our comments to other factors, also structural, which are thought to make up an
unacceptably large part of the discrepancy and which seem to be amenable to
administrative or legislative remedy. These include:

© Different decision making processes. The two processes are fundamentally
different, one relying on a paper review of medical and other relevant evidence
considered within a set of complex, objective rules with limited or no contact with
the claimant and the other emphasizing face-to-face contact with the individual
and a subjective assessment of the credibility of the impaired individual's
statements. This second process also may include legal representation for the
claimant and testimony by medical and vocational experts.

© Different review process. To describe this in skeletal form, DDS's are held, by the
pre-effectuation review (PER), to strict accountability for favorable decisions while
the ALJ's must account to the Office of Hearings and Appeals (OHA) and the
courts for unfavorable decisions. Even the small (but, admittedly, increasing)
number of ALJ allowances that are subject to review lack the import for ALJ's
that they do for DDS decision makers because different standards of review are
employed and no meaningful sanctions for making incorrect decisions are in
place.

DDS decisions are submitted, by Federal quality components, to a preponderance
of evidence standard. This standard is frequently described by individuals within
‘SSA as one that ensures that the DDS makes the correct decision on a given claim.
This strict standard, in effect, ensures that a favorable decision that receives a
Federal review (one of every two) must be determined by two separate
individuals, a DDS examiner and the federal quality reviewer, to be correct in
order for an allowance at the DDS level to occur. Though substitution of
judgment is formally proscribed in the review process, in practical terms there is
very little to prevent “readjudication” of DDS allowances by the reviewing


91

Ms. EISENSTAT. I believe there could be some very constructive
dialog with the Social Security Administration now about
midcourse corrections that might be warranted.

We believe that, consistent with our statement and what you
have heard from the others, SSA is spreading themselves too thin,
and that the project would benefit from focusing their efforts on a
few of the initiatives that are more likely to achieve the goals that
they set out to accomplish.

Some of these are not quick fixes. Installing enhanced technology
and the process unification initiative that you heard about earlier
are not things that can be done in a matter of weeks or months.
We believe SSA might consider a different approach to even those
longer term initiatives by segmenting them into manageable tasks
that could be done quickly, so that SSA can demonstrate some
progress as opposed to designing the whole thing and testing it.

Mr. LAUGHLIN. Rather than ask you to come up with such a plan
today, could you consider this as a question for the record and sub-
mit your recommendations in writing to the Chairman outlining
the segmented approach and which parts of the initiatives ought to
be implemented first from your viewpoint? Would that be possible
for you and your staff?

Ms. EISENSTAT. We have not fully evaluated the 38 initiatives to
be in a position to tell you specifically which initiatives should be
implemented first.

I think, however, there is some consensus about some of the
more significant ones that we would be happy to talk to you about.

We are also in the midst of finalizing a report to this Subcommit-
tee that will explore this topic more fully.

Mr. LAUGHLIN. If you could do what you are comfortable
doing——

Ms. EISENSTAT. Sure.

Mr. LAUGHLIN [continuing]. Consistent with my request, I think
it would be very helpful to us.

Ms. EISENSTAT. We would be happy to.

[The following was subsequently received:]


n

Let me close by assuring you that the resources of this new
office have been a good public investment. In the first year,
our data indicate that each investigator returned $181,000 and
each auditor returned $980,000. We also obtained 613 criminal
convictions. Additionally, I am confident that these recovery
levels and criminal convictions will rise as we mature as an
organization and enter the new fiscal year with our full staff
on board.

I believe in the mission of SSA. It is vital that we as a
society provide a financial safety net for our disabled and
the survivors of deceased American workers, and that we
protect our citizens as they leave the workplace and rely upon
their Federal retirement funds for a decent life.

We are dedicated to the protection of the Social Security
trust funds in which so many Americans have a stake. OIG
agents face danger everyday, often without thanks or
recognition, as they strike at predators who steal from
vulnerable elements of our society and from the savings of our
retired citizens. Today, Mr. Chairman, you and the Members of
the Subcommittee have recognized our efforts and I am
grateful. 1 wish to thank the Subcommittee again for focusing
on the important and serious topic of the infrastructure of my
office. I would be pleased to answer any questions you may
have at this time.


97

Mr. LAUGHLIN. Thank-you, Mr. Chairman. That is all I have.

Chairman BUNNING. I am sorry to announce that I cannot ques-
tion anymore because I have got another Subcommittee meeting. I
would like to submit written questions to both sides of the panel.

I am deeply concerned that maybe solutions cannot be found
from within. Maybe it has to be done from without. To solve some
of these problems, we may need outside input. I am not saying nec-
essarily from the private sector, but I am saying we need someone
like GAO to look from without and say these are the things that
you can and cannot do to be successful. We must get input from
those people that are on the firing line on a daily basis.

We do have continuous flux in the management and key posi-
tions over at SSA. That does make the continuing changes more
difficult, or at least that is the information that I get from reading
the testimony.

We would appreciate being able to submit to you some further
questions, and we thank you for your testimony today.

[The following was subsequently received:]


102

substantial evidence standard will apply. We look forward to reviewing the data which
OPIR plans to gather based on the preponderance of evidence standard. We think this
might help quantify the problem and suggest additional remedies. We are concerned,
however, that the number of reviews will be too small and that the application of
different standards for reversing DDS and ALJ decisions will continue to militate against
unification of the two processes.

SSA has also recently announced plans to develop a single standard of review for DDS
and ALJ decisions. We believe that this is a sine qua non of process unification. We are
concemed, however, that if different components with different cultures, budgets,
staffing patterns, and leadership. conduct these reviews, the single standard may fall prey
to disparate interpretation and application.

Finally, SSA has accomplished a reorganization of the Agency along lines that are
intended to narrow the gap between OHA and other components. We do not have data
that would permit an independent assessment of the efficacy of this initiative.

2. You indicated that many features of the redesign plan will increase fraud.
Would you please elaborate?

Two proposals of the redesign are widely perceived as substantially increasing the
program’s vulnerability to unscrupulous claimants and even medical practitioners. One
has to do with third party collection and submission of evidence. It will be difficult to
verify the validity of evidence obtained by any vehicle other than direct submission from
a medical provider to the decision making component. In several areas of the country,
fraudulent medical evidence has already reached troublesome levels, often involving
physicians recruited by organized groups for the purpose of fraud, Extending the
involvement of third parties, while eliminating the safeguard of direct submission, could
result in an epidemic of such practices.

The second aspect of redesign which is troublesome in this regard is the tendering of
functional assessments by treating physicians with certification that they have, on
record, evidence which supports their conclusions. We appreciate the fact that most
physicians maintain the highest standards of ethical practice and demand the same of
staff; however, a relatively few doctors who will provide fraudulent statements can
cause enormous damage to the Trust Fund. In all SSA’s writings on redesign there is
no indication how this problem will be monitored and controlled. Ifa physician avers
that the medical evidence on record supports an assessment of function he has
submitted, how could it be proven, being a subjective judgment, that it does not?
Certainly it would be difficult, if not impossible, to demonstrate that such certification
was knowingly fraudulent.

Finally, there is concern about the plan to have the same individual, the DCM, both


118

Statement of

American Federation of State, County and Municipal Employees
Communication Workers of America
Service Employees International Union
Union of American Physicians and Dentists
United Auto Workers of America

‘Submitted to the Committee on Ways and Means
ittee on Social Security

September 26, 1996

‘This testimony is being submitted for the record by five unions who represent
workers employed by the state Disability Determination Service (DDS) agencies.
Collectively, we represent close to 10,000 DDS employees across the United States,
including examiners, adjudicators, medical and psychological consultants, and
technological and support staff. On their behalf, we would like to thank the Chairman
and members of the Subcommittee for this opportunity to comment on certain aspects
of the redesign process.

No group concerned with the disabled has been more aware of the growing
difficulties in the Supplemental Security Income (SSI) and Disability Insurance (DI)
programs than the DDS staff who process the claims. While applications for SSI and DI
have risen dramatically over the past few years, staffing has remained relatively flat.
Examiners routinely have caseloads of between 100 and 300 claimants, as compared with
average caseloads of 40-50 cases only ten years ago. Not surprisingly, state agencies face
a large backlog of cases.

Our members agree that this situation cannot continue and are strongly supportive
of measures to remedy it. Frontline DDS workers and their unions have been involved
in the redesign of the disability process since its very beginning. In addition to
commenting on many of the redesign proposals, unionized DDS workers have served on
the Disability Process Redesign Team's Internal Advisory Committee and participated on
task teams established to flesh out the details of Redesign. Frontline DDS workers and
their unions are participating in the Adjudication Officer and the Single Decision Maker
pilots and will be participating in the upcoming Disability Claims Manager (DCM) pilot.

In our last appearance before this Subcommittee, in May of 1995, we expressed
our concern about certain aspects of the Redesign. Some of those concerns have been
addressed, but some still remain. In what follows we want to review some of the key
issues that we believe the Subcommittee should be monitoring.

Disability Claims Manager (DCM) pilot

The first issue which concerns state union members is the accelerated
implementation of the Disability Claims Manager pilot. DDS workers are still not
convinced that this position is a viable position for just one employee to fill, but are
willing to participate in the pilot.

DDS workers’ main concern is that the test is being implemented prematurely.
‘The DCM is based on coordination of many other factors or "enablers" designed to make
the position workable. SSA will be implementing the DCM pilot without all of the
enablers in place. ‘This causes great concern for frontline workers who will be
participating in the pilots without the necessary supporting systems. Additionally, DDS
examiners are concerned that there will not be adequate technological and support staff
for the pilots and this will have an impact on the performance of the state DCMs.

Teaming Pilots

As an alternative to the DCM, state unions support the concept that a federal and
state employee can be teamed up to process claims more efficiently and is enthusiastic
about the redesign efforts on teaming. The teaming concept is a variation on the DCM
position, one which frontline DDS workers and their unions agree is more viable than
the DCM.


APPENDIX I APPENDIX I

Earning Social Security and Medicare Credits

‘What are “credits” and As you work and pay Social Security taxes. you en Socal Security credit:

how do I eara them? Before 1978, whea your employer reported your earnings every 3 months they
‘were called “quarter of coverage.” Back then, you eammed a quarter or credit if

quan
+ Starting with 1978 your employer reports your earings just once a year and
roi bdo hw el you ers Sgt ye Thx uc ato

credit changes each
+n 1996, you gt one credit for each S640 of your covered annua earning. vp
‘simul of 4 credit for tbe year, ao maer when You work tng the yea

Fecsperycreiiyde On age 3. we ilu how many cs ys ed or ech ind of a od wr

need for benefits? have enough. Most people need 40 credits (10 years of work) to qualify for benefits.
Younger pople ned fewer creda for dab or forthe fanaly members to get
survivors benefits if they should die.

‘What if do not have The credits you already eamed remain on your recond, and you aud to them as you
‘enough credits continue 1 work and pay Social Security taxes. Under certain conditions, we may also
use credits you earned under a foreign social security system to belp you qualify for

Win about ered for When you cam cre for Socal Serr beoei thy alo count fr Meier
Medicare benefits? if you bave on which you pay Medicare tes but not
Social Secarty tes, those
‘hae ering ge you ce fr Mato at ow cf Sal Sty

Estimating Your Benefits

Hore do yom gue cut canings om your recor not amount of ses you pa ofthe mbar of
the amount of my rene twtr fp fw ch you wil ph eth Te Soc
Sec Seer SeettstScuy tw hata pei orl fo ung bese Te mane our vege
‘earnings over your entire working life. For most retirement beneGt estimates, we will be

your 35 beat year of If you become or die before

reiemcat age. We aio assed you would Roep om earning the amount shown a2
“Estimated Annual Earmings 1995 On.” If that still does not give you 35 years, we will
‘tesco 270 year to Figure your average exmings.

‘We now show benefit estimates in current dollars. Ifyou requested a statement ike this
before September 1993. we had increased your retirement estimete amount on that

If your penaion is based on work not covered by Social Security, the amount of your
Social Seer benefia my e lowe thn shows on his aes

‘You can get reduced benefits as carly as age 62 or get full-etirement benefits at age 65,

‘retirement benefits? —_—_(Sturtng inthe year 2000 for people born in 1938 or later, this age will increase
‘dually. By 2027, fall-retirement age will be 67 for people bom after 1959.) Your
‘Denefits may be higher if you delay retiring until after full-retiement age.


71

Ms. FAGNONI. Well, there are some upfront activities that are re-
quired for people at SSA to get the addresses from IRS, to identify
the list of people to whom the statements will be sent, and to make
sure, as best they can, that the earnings records they are printing
are correct.

Mr. JOHNSON. And did you check the records? Do you know that
they are processing everybody that is on the roles?

Ms. FAGNONI. That was not within the scope of this particular
job.

Mr. JOHNSON. Well, how do you know how many they are doing
then, and how many they are supposed to do, and how can you
come up with a cost estimate if you do not know that?

Ms. FAGNONI. Well, the cost estimate that we cite is SSA’s own
cost estimate, and we have their figures that break down their esti-
mate of what the production costs are and the personnel cost for
the front-end and back-end efforts.

Mr. JOHNSON. The reason I am asking this question is because
I never got one, and I was 65 in 1995. Now, when am I supposed
to get one? Do you know the process? When am I supposed to get
it?

Ms. FAGNONI. There is a schedule between 1995 and the year
2000 where SSA over time will be mailing out statements each
year to individuals who turn 60. By the fiscal year 2000, every
worker age 25 and over will receive one.

Mr. JOHNSON. Now, wait 1 minute. You told me at 65, everybody
was getting one, and it was staggered throughout the year.

Ms. FaGNONI. At age 60. Only 60. I am sorry.

Mr. JOHNSON. Sixty.

Ms. FaGNonI. Right.

Mr. JOHNSON. And staggered over 1 year. Now you are telling me
it is to the year 2000. What is right, and what is wrong?

Ms. FaGNONI. Beginning in the fiscal year 2000, SSA will begin
sending these statements annually.

Mr. JOHNSON. OK. Disregard 2000. Tell me about right now.

Ms. FAGNONI. Right now they are sending statements each year
to workers who turn 60 in that year.

Mr. JOHNSON. And what is the process for staggering those work-
ers’ forms? Do they do it A, B, C, D; A in January, B in February,
and so forth? What is the process? What is the technical procedure
that they use? Do you know? You do not know.

Ms. FaGNonl. I am sorry.

Mr. JOHNSON. OK, let me ask you another question, then. Why
is the lead time so long on their contractual arrangements? Why
do we have to go out 2 years ahead to produce something? Because
we here in our office are elected for 2 years, and when we make
mailings to 40,000 people in our districts, we can do it in 1 week.
Now, tell me why they cannot do that.

Ms. EISENSTAT. SSA has been letting contracts in the spring of
a year. For example, for a mailing | that is going to go out in the
year 2000, in the spring of 1999, th ey would have had to have let
a contract.

Mr. JOHNSON. Well, get off of 2000, and tell me about next year.

Ms. EISENSTAT. They have already jet the contract for—and have
statements in hand that they will be using for the 1997 and 1998


16

Mr. Jacoss. I am sorry, Mr. Chair. Just let me make one last

int.
pojoes everybody know that? Should you circularize the various of-
fices? Should there be a bulletin from the Commissioner saying
that if you do have information that this is the procedure to follow?

Mr. WILLIAMS. That might be a problem, and that is a great idea.

Mr. Jacoss. OK.

Mr. WILLIAMS. We are also doing our best to get to the 65,000
people to tell them that, and other things about our office.

Mr. Jacoss. Forgive me. I happen to be a former police officer
in the same community. So, I am acutely aware of the problem.

Chairman BUNNING. Why is it a problem? Why might it be a
problem to do that? Circularwise, then, that they should contact
the Office of Inspector General if these set of circumstances comes
up, why would that be a problem?

Mr. Jacoss. He is saying it is not a problem.

Chairman BUNNING. It is not a problem. OK.

Mr. WILLIAMS. No. I am confident that the Commissioner would
be very pleased to do that, and it is a great idea and in line with
other initiatives in this direction.

Chairman BUNNING. Mr. Laughlin.

Mr. LAUGHLIN. Thank you, Mr. Chairman.

Mr. Williams, I understand that your office recently broke up one
of the largest credit card fraud rings ever. Can you tell us about
this and how the SSA employees and its data bank were involved
in this fraud ring and what you did to break it up?

Mr. WILLIAMS. Thanks, Congressman Laughlin.

My Assistant for Investigations is here and is in touch with that
case daily. That is a big one, and we feel very good about it. If I
may, I would like to—

Mr. LAUGHLIN. Yes, please.

Mr. WILLIAMS [continuing]. Give you the most accurate and up-
to-date information.

Mr. Huse. Yes, sir. That investigation is still ongoing. So, some
of my comments will be confidential. The investigation——

Mr. LAUGHLIN. Well, if they are going to be confidential, you
cannot say them.

Mr. Huse. Meaning I——

Mr. LAUGHLIN. I used to be in the Intelligence Committee, and
we used to say if we tell you what we know, we will have to kill
you and I do not want to kn you, but tell us what you can in the
general frame without getting into the confidential part of the
investigation because——

Mr. Huse. You said it far better than I did.

Mr. LAUGHLIN [continuing]. We do not want to blow——

Mr. Huse. I would be glad to.

Mr. LAUGHLIN [continuing]. Your investigation.

Mr. Huse. No. This investigation involves a West African fraud
conspiracy, and I know you are probably all familiar with West
African fraud because the Congress has recognized that in the past.

It is a national conspiracy, and it began with West African con-
spirators suborning the services of some of our Social Security em-
p oyees. They provided our employees with Social Security
numbers.


99

component. Borderline cases, or cases in which substantial judgment is required,
are much less likely to overcome this second hurdle than to overcome only one.
It is apt to observe that even though the DDS decision maker had limited contact
with the claimant, most likely telephone contact, the Federal reviewer has had no
contact at all. Accordingly, subjective elements that may have been a part of the
DDS decision are structured out during the Federal review. While only half of
favorable decisions are actually reviewed in this manner, the chilling effect of the
frequent return of DDS allowances on subsequent decisions should not be
underestimated.

By contrast, ALJ decisions that are reviewed (by OHA) are overturned only if it
is determined that there is not substantial evidence to support that decision. Stated
conversely, the decision is upheld if there is more than a mere scintilla of evidence,
ie, such relevant evidence as a reasonable mind might accept as adequate to
support the conclusion. It seems manifestly apparent that the standard employed
in reviewing ALJ decisions serves to reinforce the discretion and latitude inherent
in the hearings process while the standard employed in reviewing DDS decisions
reinforces the adherence to strict rules characteristic of the process required of
them. This type of review tends to discourage individual consideration of factors
not clearly covered by rules. On the other hand, the standard used in reviewing
ALJ decisions supports and reinforces consideration, including very subjective
consideration, of such factors.

We will identify and discuss additional factors below; however, these can arguably be
viewed as specific manifestations of the two general, and fundamental, factors described
above and, as such, tend to elaborate on them.

Different emphasis on the medical and legal components of disability
determinations. Some observers have commented that DDS’s makes medical
decisions while the ALJ's make legal decisions. It is more accurate, we believe,
to conclude that both components recognize the medical /legal nature of disability
decisions but tend to emphasize these two aspects differently. In fact, their
different processes require it. DDS applies a set of complex, largely inflexible
rules to a set of objective medical findings and related evidence and determines
whether the requirements for finding disability are met. The Federal review
component reinforces this approach when it reviews DDS decisions "to ensure
that:

a. The evidentiary record supports the decision, and

b. The evidence and the decision conform to SSA operating policies and
procedures."


21

preters who come into the Social Security offices and act as crimi-
nal brokers, enabling some of these fake recipients to obtain these
benefits, but using the language barrier as a way to accomplish
that. We are focused on those, also; and then, finally, doctors and
attorneys who participate in an illegal way in the disability bene-
fits Supplemental Security Income process.

Mr. CouLins. Have you actually pinpointed and been able to
prosecute any of this so far, even with service providers?

Mr. Huss. There have been some successful cases that we have
had with this. Certainly, we would like to do a lot more.

Mr. WILLIAMS. We were sort of latecomers to this area, just hav-
ing been created, and we were able to join with other law enforce-
ment agencies focused on this, particularly in the Northwest where
we have had some good success.

Mr. CoL.ins. I would think the quicker we could do that and get
the word out, maybe we could deter some of it within itself.

My time has expired. Thank you very much.

Mr. WILLiaMs. Thank you, sir.

Chairman BUNNING. Mr. Neal.

Mr. NEAL. Thank you, Mr. Chairman.

Just a fairly general question for Mr. Williams. You have talked
about the fraudulent activity that your office obviously has made
some gains in attempting to overt. What kind of trends are you
finding? What kind of fraudulent activity? What would be a notable
example?

Mr. WILLIAMS. The disability area is one that greatly concerns
us, and we are finding—as Mr. Hughes began discussing—we are
finding trends there with regard to street-level kinds of cottage in-
dustries in which people are instructed on how to fake symptoms
on certain kinds of disabilities.

We are very concerned about that, but it also allows us to strike
effectively at a single head. We think, in some ways, that is what
made organized crime vulnerable to the attack that occurred
against it. We are almost encouraged by the fact that there is some
organization there rather than it is entirely dissembled.

Certainly, the SSI area is one that concerns us. I was a Secret
Service agent in the seventies, and I am familiar with all the vari-
eties of Federal entitlement fraud. I worked undercover for 1 year
in Chicago. I am very familiar with SSI frauds, and those are going
to be with us always. We are not going to be able to wipe those
out, but we can be very, vigilant in attacking them. I think, as we
get better, we will be able to follow the trends and attack fraud
schemes with great effectiveness.

We have a special unit that we have created to study emerging
kinds of crime when we first begin to see them, develop rec-
ommendations for the agency to prevent them, and to develop tech-
niques for our agents to most efficiently and effectively attack
them.

Mr. NEAL. Mr. Huse, would you like to add anything?

Mr. Huse. Just to follow on that point about our—we call this
unit our Strategic Enforcement Unit, or team, and as we learn
through our audit activities, or from the Social Security Adminis-
tration Program people who learn about new and emerging crime
issues that come from the total universe of their knowledge, our


50

pandemic fraud are defeated by the reluctance of the courts to deal with crimes that have
become so common that arrests and prosecutions are rare. As a result, these prosecutions
actually appear to be the acts of selective prejudice by the government and are thus rejected
by the courts.

There never will be a time where we possess enough resources to completely suppress fraud.
Instead, our responsibility is to maximize the impact of our OIG operations by developing
projects and procedures that count. What these strategies might be, and how we effectively
fulfill them, is our abiding charge.

My past experience has also informed me about the consequences of failure to act effectively
on these areas. I have witnessed valuable and important government programs collapse from
the weight of abuse. The International Brotherhood of Teamsters’ Central States Pension
Fund was barred from making loans as investments because so many of their loans were to
support mafia enterprises. I have also witnessed the costs of government programs become
so prohibitively expensive that they are abandoned because no one could effectively separate
deserving applicants from those who would defraud.

In sum, I understand the corrosive effects of failing to act decisively against program areas
that are susceptible to fraud, waste and abuse. As I have indicated in these responses to the
Subcommittee, we are well underway in the effort to effectively provide an effective
enforcement program to the SSA.


95

1996, it has not fully completed or implemented any of the 38
initiatives and is behind schedule in meeting its testing
milestones.

Moreover, SSA also has encountered significant challenges in
implementing some of the more complex initiatives. For example,
SSA considers technology vital to fully realizing the redesign's
benefits and has undertaken a technology initiative to more fully
automate the processing of disability claims from the first contact
with the claimant to the final decision. SSA is purchasing over
50,000 computers, installing a local area network in more than
1,350 office locations, and developing software. Today, completing
this key initiative is falling behind schedule because
implementation of this software has been delayed by more than 2
years. The delay is due to software development problems and the
heed for additional testing to assess redesign changes.

Another complex undertaking that will require completion of
several supporting initiatives is implementing the disability claim
manager (DCM) position. SSA currently plans to place about 11,000
employees in this position. DCMs will be expected to gather and
store claim information, develop both medical and nonmedical
evidence, share facts about a claim with medical consultants and
specialists in nonmedical or technical issues, and prepare well-
thought-out decisions. DCMs will be responsible for making the
final decision on both medical and nonmedical aspects of a
disability claim. Before fully implementing the DCM position, SSA
must first provide several critical support features, including
technology enhancements and a simpler methodology for making
disability decisions--features that SSA does not expect to be
available for several years.

Several of SSA's initiatives are beginning to expand in scope
and length. For example, the scope of SSA's initiative to achieve
consistent adjudication results throughout all stages of the
disability process has expanded considerably. Initially, the plan
called for developing a single policy manual for use by all SSA and
state employees involved in the process. As the agency worked on
the initiative, it realized that considerably more effort was
required. As a result, SSA expanded this initiative to include (1)
conducting the same training for 14,000 decision-makers, including
claim representatives, disability examiners, AlJs, doctors. and
reviewers; (2) developing a consistent quality review process that
balances review of allowances and denials and applies the same
standards at all stages of the process; and (3) using medical and
vocational expert input. With these expanded tasks, full
implementation has been extended from September 1996 to January
1998 or later.

Although SSA may take many years to fully implement this
complex undertaking, experts suggest that individual project
initiatives should be completed quickly--generally taking no more
than 12 months to implement--to give managers better control over
them and allow for a faster response to problems that arise.
Achieving measurable results quickly also enables organizations to
build stakeholder support for its initiatives and overall redesign
project.

Moreover, the cornerstone of any redesign effort is the
commitment and long-term availability of its top leaders. Redesign
initiatives that take many years to complete face an increased
risk--the longer the project takes, the greater the chance that the
leadership will change. Turnover typically causes project delays
and possible changes in scope and direction. Although SSA
recognizes the importance of management stability and continuity co
the redesign process, it has already experienced turnover of key
executive-level personnel since implementation began


33

$250 million and network staffing required over 5,000 work years. In addition to TSC
employees, SSA enlists the assistance of PSC employees to answer the 800 number. This
assistance is needed on peak calling days, usually at the beginning of each week, each month
when checks are received, and any time a change is made to the majority of benefit accounts
(such as a cost of living increase).

Retirement and Survivors Insurance issue team; staff = 11 FTEs, located in Richmond,
California, The Old-Age, Survivors, and Disability Insurance (OASDI) program provides
monthly benefits to retired workers and their dependents and to survivors of deceased insured
workers. Benefits are paid as a matter of earned right to workers who gain insured status
and to their eligible spouses and children. In this area, we will focus on the RSI program,
specifically, representative payee issues, processing applications, systems controls, and fraud
and abuse.

‘Operations issue team; staff = 6 FTEs, located in Atlanta, Georgia. The SSA currently has
1,300 field offices to serve its 50 million clients through its four entitlement programs. The
offices are located in cities and rural communities across the Nation and are the Agency's
physical points of contact with the public. They are established and managed through a
regional office structure under the direction and guidance of the Office of Operations in
Baltimore.

‘Systems issue team; staff = 9 FTEs, located in SSA headquarters. Automated processing
systems are a critical element in SSA's efforts to provide services to its clients. In today’s
environment, SSA's quality of service directly relates to the quality of its automated
processing systems. The SSA is faced with huge increases in operational workloads over the
next several years due to the demographic changes in our Nation's population, To meet the
future demands, SSA is relying on technological changes. The SSA challenge is to give the
public the service they expect during a period of increasing demands for service without a
corresponding increase in staff. ‘To meet this challenge, SSA must increase reliance on
automated systems.

‘The sensitivity of the data maintained and the magnitude of funds expended make controls in
automated systems critical to the integrity of SSA programs. We will focus on evaluating the
cost-effectiveness of SSA's automated systems, general and application controls, and the
safeguards developed for reducing fraud and preventing costly errors. Also, the Government
‘Management Reform Act generates the need for systems controls audits due to the critical
role the-automated processing systems have in producing financial statement information.
‘We will also evaluate SSA’s preparedness for the year 2000 to ensure that systems can accept
and process transactions with new century dates.

‘Technical Services issue team; staff = 7 FTEs, located in SSA headquarters. This team
provides a variety of services to support all the other issue teams, such as developing and


7

Mr. LAUGHLIN. Just 1 minute, Mr. Huse. I am an old trial law-
yer, and I want to translate that. When you said suborn some of
the Social Security employees, you mean some of the Social
Security employees got involved in the conspiracy?

Mr. Huse. Yes, sir.

Mr. LAUGHLIN. Got involved in the criminal misconduct?

Mr. HusE. Yes, sir.

Mr. LAUGHLIN. OK.

Mr. Huse. To continue, they engaged them to provide their crimi-
nal enterprise with some of the proprietary information inside
Social Security data bases, particularly the NumIdent information.
They supplied our employees——

Mr. LAUGHLIN. What?

Mr. Huss. I will explain that in English.

Mr. LAUGHLIN. OK.

Mr. Huse. They provided the Social Security numbers of credit
cardholders. Our employees provided them with the mother’s maid-
en name information that is contained inside Social Security data
bases which allowed the West Africans, then, to take a legitimate
credit card that was being sent back to somebody to be reactivated.

We all have our credit cards expire, and then they are reissued
to us. We have to call in and open the account up again providing
some kind of a security identification. Many of these companies use
the mother’s maiden name as the key to open up the account.

Well, they got this mother’s maiden name information, as far as
we know, in about 24,000 different instances. It is a very large
credit card case.

We, with the first leads aggressively last spring, have worked
this case continuously. We think we have the scope of it in front
of us now. We have identified approximately 15 of our employees
as being involved, working with the Justice Department. of
those have already been charged. Another four people that were
Nigerians have been arrested. And as these cases are developed, of
course, more of these 15 employees will be charged in the U.S.
courts with these offenses.

The conservative estimate of the loss to the financial community
involved in this particular case is about $5 million.

Mr. LAUGHLIN. What is the potential loss as you evaluate?

Mr. Huse. That would depend on the actual credit limit of each
one of those cards, and I do not think the industry has been able
to give us that figure yet. That is something we are working on so
we can charge the rest of these employees.

Mr. LAUGHLIN. Is it safe to say so much larger than the $5
million minimum?

Mr. Huse. Yes, sir. Yes, sir.

Mr. LAUGHLIN. Now, as I understand, this is financial institution
money, not tax——

Mr. Huse. Not trust fund money. That is right.

Mr. LAUGHLIN. Not trust fund money. But U.S. Federal Govern-
ment, Social Security Administration, employees are working hand
and hand with the criminals?

Mr. Huse. That is correct.
an LAUGHLIN. And if we prove it, then they are the criminals,

Iso.


61

APPENDIX I APPENDIX I

——— — —- —
Your Personal Earnings and Benefit Estimate Statement
from the SOCIAL SECURITY ADMINISTRATION

¥
e

February 21.1996

é

JANE Q PUBLIC
12) MAIN STREET
WASHINGTON. DC 20225-0000

‘A Message from the Commieslone of Sacal Security

i pels ol geo older whe was rot aang Sx Seay tela he rupee nang ohh to
parade wit wan nals ren

Sree ois ce cement yan fre Ti yon ee

Seige ere pore eee tan emer a
het Renee on beeen Forepr  e oun pl-enplyed fave repented Socal

‘Stcunty over tu yen your cords dat ager, ow hate cna your

‘ate bamd on ourself Your ngs ne omer Tash parent

ep tn rand Socal tot inter! meet ll your france need. For eurpl, when you rie.

youll probably nes ther nome, ich a sings ot 8

Tis ao impor remem hat Sol Sey fers ave than retreat benein Most workers eve
areagt to prom fam fern oof rece ry bore severe Gable Into

Promina ow heal yo Soa Seuss gts ou el

"fo ap you bees undentand te ba at tout Socal Score ave requ sake quer

on beck oft sauemene If ou hove other ‘ded to rower hem

Fo over 0 yea Socl Secu ts werk! for ll of wr wc or Ou fallen The Socal Scary Boar of sees
wilcarurue have adept scarcs pay beatin flo owen 30 yar, This ears

Sar er Conga na rs te i i

ake changes resded 1 5 Branca hare
‘bore wal rll in the frsinaton of a American pubic widenpread ropport for Socal Scan

wham
Riky 5 tate

5S. Chater
SiteyS Ouse
"Your Thi, about your own Social record only. It does
found ‘ot talk about Social Security benefis you are now getung ot magi get in te future oo
anyone else's record. We used the following information Lo prepare your statement
"Vout New. June Q Pubic
‘Your Sonal Security Niner 30009061000
‘Your Date of Bir ‘Apel 26,1937
Estimated Future Earnings (995 Ox.
‘Other Social Securry Numbers Also Asmpand Yo You ‘Nowe


114

Questions for the Record

PERSONAL EARNINGS AND BENEFIT ESTIMATE STATEMENT (PEBES):

1

Does the current PEBES statement convey what Congress intended, that is, an
understanding of Social Security that results in increased public confidence,
especially for younger workers?

Overall, the public believes the information provided in the PEBES can be helpful
as a financial planning tool. However, we found that the statement fails to clearly
communicate the complex information people need to understand SSA's programs
and benefits. It provides too much information, and presents this information in a
way that undermines its useluiness. As a result, the statement can frustrate or
confuse readers and could undermine rather than boost public confidence in Social
Security. Younger workers in a 1994 focus group asked for a simplified one-page
statement with the explanatory information placed in a separate pamphlet.

You said that the estimated cost of sending out the PEBES to 123 million workers
in the year 2000 is $80 million. Has GAO estimated the administrative burden the
current design of the statement may place on SSA if millions of workers continue
to receive a PEBES statement they cannot read or understand? Could this result
in an overwhelming workload for the local Social Security offices and the
‘employees who answer SSA's 800 number? Would this confusion further erode
public confidence in Social Security?

In our ongoing work for this Subcommittee, we are cuzrently examining the impact
of PEBES on SSA's workload and operations. We plan to report on this work in
June 1997. Certainly, a confusing statement can generate unnecessary public
inquiries. These unnecessary inquiries place an added burden on SSA's front-line
workers, especially those workers who answer SSA's toll free telephone numbers.
If SSA is unable to handle the number of incoming calls, this could frustrate callers
and further erode public confidence. As SSA considers new formats and changes
to the PEBES, it will be important to examine the effects of these changes on the
level of public inquiries.

Why is it important for SSA to make your recommended changes to the PEBES
‘statement now, rather than say, next year?

SSA can begin by making limited wording and organizational changes to the
current PEBES. However, SSA needs to make more extensive revisions to the
PEBES to ensure that the statement communicates effectively. Since there is no
clear consensus on how best to present the PEBES information, revising the


116

In general, the experts agreed that the PEBES was too long and too complex. It
presents too much information, which may overwhelm the reader. However, a
standard benefit statement model does not exist, and there is no clear consensus
on how best to present benefit information. The design expert and other benefit
experts we consulted suggested that the PEBES layout and design should be
improved. Specifically, SSA could (1) provide a more concise and inviting
explanation of the purpose of the statement, (2) make better use of bulleting and
highlighting to improve the layout and design, (3) reorganize the statement to
provide information where it is needed, and (4) simplify its program and benefit
explanations.

What was the schedule SSA used to send out PEBES statements in 1995 for all
workers who had reached age 607 By this | mean, were the statements sent out
alphabetically, chronologically or by Social Security number and divided by
months?

In 1995, SSA was required to send a PEBES to all eligible individuals aged 60 and
‘over. This group included individuals who had a Social Security number, had
wages or net eamings from self-employment on record at SSA, were not currently
receiving Social Security benefits, and had a current address obtainable by SSA.
SSA decided not to send statements to individuals who had requested and
received a PEBES in approximately the past year.

To meet the PEBES requirements, SSA staggered the required mailings on a
weekly basis throughout the year. To stagger the mailings, SSA separated a list of
eligible individuals aged 60 and over into four groups by date of birth,
corresponding to quarters of the year. Next, SSA further divided these lists into
‘smaller segments for weekly processing, based on the last two digits of each
individual's Social Security Number. This further division ensured that batch
mailings would be spread throughout the country geographically. The data for
each batch was electronically transmitted to the commercial contractor weekly for
Printing and mailing of the statement. In 1995, SSA sent an average of 200,000
fecords to the contractor each week.


4

Chairman BUNNING. The Subcommittee will come to order.

Today’s hearing is to follow up on the recommendations to im-
prove the performance of the Social Security Administration as an
independent agency made by the Comptroller General at the
Subcommittee hearing on July 25.

We will hear testimony from the new Social Security Inspector
General, David Williams, about how well equipped his office is to
combat and prevent waste, fraud, and abuse of the Social Security
Trust Funds.

The General Accounting Office will testify on the results of its re-
search into the effectiveness of the personal earnings and benefit
estimate statements which SSA will be sending to almost every
American worker, 123 million, by the year 2000.

GAO will also update the Subcommittee on the progress of SSA’s
disability program redesign initiatives.

In addition, we will hear from the representatives of the State
DDS, Disability Determination Services, about their views on the
redesign of the disability program. :

I think this is particularly important that we hear from the State
DDSs because these are the people who work the frontlines and
know the process best. They make the initial determinations re-
garding whether a person is disabled or not. I hope that they will
share with us their observations and recommendations to make the
process more effective and efficient.

This is the last hearing the Subcommittee will hold in this
Congress. I will not get another opportunity to thank the Members
of the Subcommittee for their hard work and dedication over the
past 20 months or so. I could not have asked for better Members,
and it has been an honor and pleasure to serve as their Chairman,
but none of us has dedicated more time or energy to the Social
Security system and its needs than our Ranking Member, Andy
Jacobs. Mr. Jacobs has tirelessly worked for the betterment of this
program for over 20 years, always putting that concern above par-
tisan politics. He is truly a man of honor. This will be Mr. Jacobs’
last official meeting with the Social Security Subcommittee, and I
will miss his counsel and advice, but most of all, his friendship. ,

In the interest of time, it is our practice to dispense with opening
statements except from the Ranking Democratic Member. All Mem-
bers are welcome to submit statements for the record. I yield to Mr.
Jacobs for any statement. This is your last chance, so make it good.

Mr. Jacoss. Well, Mr. Chairman, I am speaking for the record
here, and that lasts for quite a while, when I say that it is pretty
heavy stuff to be praised by a member of Baseball’s Hall of Fame.
There aren’t very many Americans who have achieved that, and
your friendship—I used to say the congressional terms are for 2
years, friendships are forever, and I am sure that we regard ours
as that.

T return the kind words about devotion to duty. You have always
been here promptly. Your hearings start exactly on time. You have
been concise, and you have been right in your views about Social
Security in every instance except one, which is to say we have
agreed on every instance except one. I have seen these things hap-
pen over and over again and always thought they were a little bit
phony when I would see the Democrat and Republican for Speaker


93

activity due to a severe physical or mental impairment, Both
programs use the same criteria and procedures for determining
whether the severity of an impairment qualifies an applicanc for
disability benefits

Despite efforts to manage its increasing workload with
shrinking resources, SSA has not been able to keep pace with
program growth. Initial claim levels remain high, appealed case
backlogs are growing, and decisions are not being made in a timely
manner. In fiscal year 1995, about 2.5 million initial disability
claims were forwarded to state offices for disability
determinations, an increase of 43 percent over fiscal year 1990
levels. During the same period, the number of applicants
requesting an administrative law judge (ALJ) to reconsider a
decision denied at the initial claims level escalated from about
311,000 to about 589,000, an increase of 89 percent. Because of
the increased workload, in many cases claimants now wait more than
a year for a final disability decision.

ih _sCurrent Eligibility Determination
and Appeals Process

SSA's procedures under the current eligibility determination
process have not changed significantly since the DI program's
inception. The process is slow, labor intensive, and paper
reliant. In addition to delays in making disability decisions, SSA
spends more than half of its administrative budget on this
program--and very little of the process is automated. DI and SSI
disability claims pass through from one to five levels of review to
receive a decision, depending on the number of appeals a claimant
files

SSA field office personnel assist with completing
applications; obtain medical, financial, and work history
information; and determine whether applicants meet the nonmedical
criteria for eligibility. Field offices forward applicant
information along with supporting medical history to 1 of the S4
state disability determination services (DDS), where medical
evidence is developed and a final decision made on whether the
impairment meets SSA's definition of disability. SSA funds the
DDSs, provides them with guidance for making disability decisions,
and reviews the accuracy and consistency of their decisions
Claimants who are dissatisfied with an initial determination may
request reconsideration by the DDS. Although a reconsideration is
conducted by different DDS personnel, the criteria and process for
determining disability are the same.

Claimants who disagree with a reconsideration denial have the
right to a hearing before 1 of SSA's 1,035 ALJs in the Office of
Hearings and Appeals. At these hearings, applicants, usually
represented by attorneys, and medical or vocational experts may
submit additional evidence. If the ALJ denies the claim, the
claimant may then request a review by SSA‘s Appeals Council. The
Appeals Council may affirm, modify, or reverse the ALJ's decision,
or it may remand the case to the ALJ for further consideration or
development. Finally, either the applicant or SSA may appeal the
Appeals Council's decision to a federal district court

SSA's Vision for the Redesigned Process

In November 1994, SSA released an extensive and complex plan
to help turn its vision of a new disability determination process
into reality. SSA's redesign plan for improving the process
includes 83 initiatives to be implemented during a 6-year period
(fiscal year 1995 through 2000).* Thirty-eight of those

‘see i . $8A (Washington,
D.C.: Sept. 1994).


38

E. Overview of the Work in the Office of Investigations’ Field Offices

The Commissioner has made an increased investigative response to fraud a major priority
within SSA. The Office of Investigations closed FY 1996 with an inventory of 1,551
pending investigations. In the same fiscal year, our investigative efforts led to the
convictions of 568 individuals for crimes involving SSA benefit programs or operations.
Additionally, we reported either to SSA or the United States Treasury $22,768,372 in fines,
court-ordered restitution, or judgments, as the result of investigative activities. ‘These results
outline the scope of the Office of Investigations’ mission across the United States. The
intensity of our investigative operations matches those locations where SSA's benefits
disbursements are similarly most intense: in the major urban centers, and especially in
Southern California and Florida. In order to maximize the potential of our investigative
operations, I have established the following priorities for our Special Agents in Charge to
determine the application of our resources:

Our first priority 1s the investigation of all internal fraud activity within SSA's operations. In
other words, the aggressive investigation of any fraud by SSA employees.

The second priority is the investigation of all frauds involving SSA benefits programs.

‘The third priority is the investigation of crimes involving the fraud or misuse of SSNs or
Social Security cards.

Question 7. What can you tell us about your office’s "hotline" since you became Inspector
General? We understand that it is different from the one operated earlier, when SSA was
part of HHS. Please include general information on the number of calls you are averaging
per month and the categories they fall into (employee fraud, beneficiary fraud, etc.), as well
as sources of calls by type (SSA employees, the public, etc.). Has the volume of these calls
increased? Is your office able to keep up with them? If not, what additional resources do
you estimate you might need?

Answer:

‘At the time of my confirmation as the SSA Inspector General, the Hotline was staffed by one
full-time operator with limited supervision. Immediate steps were taken to assess the duties
and responsibilities of the SSA OIG Hotline and to refocus its mission and objectives to
complement major proactive fraud awareness and investigative initiatives developed by my
office and that of the Office of the Commissioner. In addition, the role and function of the
Hotline was substantially expanded to include the management and operation of the new OIG
Allegation Management System (AMS). This system captures data concerning all allegations


125

STATEMENT OF LARRY JACKS, DIVISION LEADER
OFFICE OF DISABILITY DETERMINATIONS
PUBLIC EMPLOYEES FEDERATION

‘We want to thank the Subcommittee for its continuing National focus on the
Disability Program, We too have major concerns regarding the Social Security
Administration's ( SSA's) Disability Process Redesign( DPR) and its impact on this
vital safety net for our truly disabled citizens. DPR fails to adequately address
fraud and abuse in the Disability Program.

SSA deserves praise for helping to raise a National discussion of the Disability
Progsam with its Disability Process Redesign plan. Unfortunately the DPR is
inadequate in many areas including its failure to include safeguards against fraud
and abuse. We welcome the new SSA Inspector General's role in addressing this
deficiency. Since Redesign's inception in April'94, we have repeatedly criticized
SSA's Disability Process Redesign Team's ( DRPT's) failure to include safeguards
against fraud and abuse. Many of the Redesign’s major components radically
increase the potential for fraud:

© The proposal relies on a “certification” system that eliminates the strict
medical documentation requirements now in place.

© The single decisionmaker, a.k.a. Disability Claims Manager (DCM ),
advocated by the DPRT places too much authority in one person and reduces
the medical consultant to a peripheral role. Checks and balances are vital to
preserve the Trust Fund's integrity.

© Without adequate safeguards, DPR proposes to increase the role of third
party, advocacy groups and for-profit businesses (ie. attorneys) in the
Disability process. It places unrealistic emphasis on trust, receptivity to
‘education and voluntary compliance which does not guarantee Program
integrity. Issues of secondary gain on the part of claimants and their
representatives should not be ignored since they can lead to,fraud, conflict of
interest and lack of uniformity. SSA must not relinquish its authority and
responsibility for claims development.

SSA had pledged not to implement Redesign initiatives until safeguards to prevent
fraud and abuse were in place. We are concerned that this commitment has not been
met. Our experience suggests that current referrals for potential fraud are not
adequately investigated. Front line staff have little confidence that SSA is genuinely
interested in identifying and pursuing these issues. Left unchecked, Redesign will
‘exacerbate these problems and create new ones. We welcome greater involvement
by the Inspector General, not only to investigate individual cases, but to provide
leadership to the DPRT regarding the dangers inherent in the Redesign plan.

‘The State Disability Determination Services with modest additional resources have
made progress in reducing claim backlogs and processing time despite a barrage of
policy and technological changes that lack a consistent direction, The Disabllity
Program needs sensible change... it is not broken! The DPR has not
been able to provide effective short terin solutions to these problems and has been
the greatest obstacle to constructive change. It has siphoned off valuable staff and
resources. By emphasizing the legalistic rather than the medical aspects of the
Program, we are now even farther away from a real solution. Congress must
continue its leadership role in redirecting SSA's efforts so that both the truly
disabled and the taxpayers are protected. We recommend the following:


100

The quoted text is from the Program Operations Manual System (POMS) GN
04440.001B, Federal Quality Review of State Disability Determinations, Policy. DDS
decisions are made by an examiner/physician (or psychologist) review team.
Medical assessment of facts in the case is often intensive and frequently requires
a specialist. Credibility of the claimant's allegations and the validity of the
opinion of treating medical sources regarding disability are weighed against
objective medical findings.

ALJ’s, however, rely extensively on the opinions of expert witnesses and the
statements of claimants and their representatives to augment the written record.
Often, there is little or no input from a physician or psychologist. The ALJ, with
significantly less medical training than DDS examiners, must determine the
credibility of the claimant's statements about pain, fatigue, and loss of function
comparing these statements to medical evidence which, relative to the DDS
physician /examiner team, he is inadequately prepared to interpret. He runs into
a similar problem in assessing the appropriate weight to be given to the opinions
of the claimant's treating sources. These circumstances help to explain, we
believe, why DDS physicians often find individuals capable of extensive work-
related functional ability (such as lifting substantial weight and standing for
extended periods throughout the day) when the same individuals are
subsequently found to be capable of only sedentary work, or less, by an ALJ.
Studies by SSA demonstrate that this difference in assessment of residual
functional capacity accounts for the largest portion of the discrepancy between
DDS and ALJ decisions.

The subjectivity inherent in a process involving face-to-face contact with the
claimant. We need to make it clear, first of all, that we recognize the value in
affording claimants an opportunity to personally plead their case to a decision
maker and that the face-to-face contact can sometimes lead to recognition of facts
that were not apparent in a paper review. Accordingly, such contact often
permits a correction of deficiencies inherent in the paper review and underscores
the importance and value of an appeals process. At other times, however,
personal contact leads to inappropriate subjectivity in decision making. A loss of
objectivity due to sympathy for the individual or, as sometimes occurs, a negative
reaction to the individual, is not appropriate. While this difficulty is a structural
component of personal contact, factors such as clear policy, meaningful reviews,
and extensive training can effectively discipline against inappropriate subjectivity.

One of our members has described an incident in which he, and others, watched
a reconsideration interview of a claimant by an experienced adjudicator. The
observers concluded that, based on the medical facts and program guidelines, the
claimant was “clearly a denial.” When questioned, the reconsideration examiner


41

for funds put to better use totaling $968 million; however, we did not include recommended
funds put to better use in our estimate of base year audit savings.

Based upon these savings, we project our annual benefits to cost ratio would be nearly 3:1.

Question 9. Would you tell us a little more about these SSA computer operations, the
number and expertise of the staff you are currently devoting to investigations in this area,
and what you would need to establish adequate internal controls and protections? Is this the
kind of expertise that you could obtain by hiring current SSA staff, particularly OPIR staff?
Answer:

The size and complexity of SSA’s data processing operations are enormous. During FY
1996, SSA processed the following workloads:

© 40 million persons received $380.6 billion in Title II and Title XVI benefits,
© almost 240 million earnings record accretions were processed,

© about 15.9 million requests for new SSNs or replacement cards were
processed, and

© approximately 6.6 million Title II and Title XVI claims were processed.
Nearly all of this activity is directly dependent upon SSA’s data processing operations.
In addition, as part of SSA's FY 1998 budget request, the Agency is requesting funding for

‘numerous systems initiatives that it feels are critical to its mission. The following projects
are included in its FY 1998 submission:

° $350 million to fund the installation of Intelligent Workstations/Local Area
Networks throughout SSA,

° $30 million to fund increased automation of work processes,
© $31 million to fund improved telephone service, and

° $16 million to fund electronic service delivery initiatives.