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99–676 2005

THE SUPPLEMENTAL SECURITY INCOME PROGRAM 

HEARING 

BEFORE THE

SUBCOMMITTEE ON HUMAN RESOURCES 

OF THE

COMMITTEE ON WAYS AND MEANS 

U.S. HOUSE OF REPRESENTATIVES 

ONE HUNDRED EIGHTH CONGRESS 

SECOND SESSION 

MAY 20, 2004 

SERIAL 108–57 

Printed for the use of the Committee on Ways and Means 

( 

ii 

COMMITTEE ON WAYS AND MEANS 

BILL THOMAS, California, Chairman 

PHILIP M. CRANE, Illinois 

E. CLAY SHAW, JR., Florida 

NANCY L. JOHNSON, Connecticut 

AMO HOUGHTON, New York 

WALLY HERGER, California 

JIM MCCRERY, Louisiana 

DAVE CAMP, Michigan 

JIM RAMSTAD, Minnesota 

JIM NUSSLE, Iowa 

SAM JOHNSON, Texas 

JENNIFER DUNN, Washington 

MAC COLLINS, Georgia 

ROB PORTMAN, Ohio 

PHIL ENGLISH, Pennsylvania 

J.D. HAYWORTH, Arizona 

JERRY WELLER, Illinois 

KENNY C. HULSHOF, Missouri 

SCOTT MCINNIS, Colorado 

RON LEWIS, Kentucky 

MARK FOLEY, Florida 

KEVIN BRADY, Texas 

PAUL RYAN, Wisconsin 

ERIC CANTOR, Virginia 

CHARLES B. RANGEL, New York 

FORTNEY PETE STARK, California 

ROBERT T. MATSUI, California 

SANDER M. LEVIN, Michigan 

BENJAMIN L. CARDIN, Maryland 

JIM MCDERMOTT, Washington 

GERALD D. KLECZKA, Wisconsin 

JOHN LEWIS, Georgia 

RICHARD E. NEAL, Massachusetts 

MICHAEL R. MCNULTY, New York 

WILLIAM J. JEFFERSON, Louisiana 

JOHN S. TANNER, Tennessee 

XAVIER BECERRA, California 

LLOYD DOGGETT, Texas 

EARL POMEROY, North Dakota 

MAX SANDLIN, Texas 

STEPHANIE TUBBS JONES, Ohio 

ALLISON H. GILES, Chief of Staff 

JANICE MAYS, Minority Chief Counsel 

SUBCOMMITTEE ON HUMAN RESOURCES 

WALLY HERGER, California, Chairman 

NANCY L. JOHNSON, Connecticut 

SCOTT MCINNIS, Colorado 

JIM MCCRERY, Louisiana 

DAVE CAMP, Michigan 

PHIL ENGLISH, Pennsylvania 

RON LEWIS, Kentucky 

ERIC CANTOR, Virginia 

BENJAMIN L. CARDIN, Maryland 

FORTNEY PETE STARK, California 

SANDER M. LEVIN, Michigan 

JIM MCDERMOTT, Washington 

CHARLES B. RANGEL, New York 

Pursuant to clause 2(e)(4) of Rule XI of the Rules of the House, public hearing records 

of the Committee on Ways and Means are also, published in electronic form. The printed 

hearing record remains the official version. Because electronic submissions are used to 

prepare both printed and electronic versions of the hearing record, the process of converting 

between various electronic formats may introduce unintentional errors or omissions. Such occurrences are inherent in the current publication process and should diminish as the process 

is further refined. 

iii 

C O N T E N T S 

Page 

Advisory of May 13, 2004, announcing the hearing ............................................. 2 

WITNESSES 

U.S. General Accounting Office, Robert E. Robertson, Director, Education, 

Workforce, and Income Security Issues ............................................................. 8 

Social Security Administration, Patrick P. O’Carroll, Acting Inspector General ........................................................................................................................ 23

Consortium for Citizens with Disabilities, Marty Ford ........................................ 17 

National Association of Disability Examiners, Martha Marshall ........................ 31 

Social Security Advisory Board, David Podoff ....................................................... 38 

(1) 

THE SUPPLEMENTAL SECURITY INCOME 

PROGRAM 

THURSDAY, MAY 20, 2004 

U.S. HOUSE OF REPRESENTATIVES, 

COMMITTEE ON WAYS AND MEANS, 

SUBCOMMITTEE ON HUMAN RESOURCES, 

Washington, DC. 

The Subcommittee met, pursuant to notice, at 10:14 a.m., in 

room B–318, Rayburn House Office Building, Hon. Wally Herger 

(Chairman of the Subcommittee) presiding. 

[The advisory announcing the hearing follows:] 

2 

ADVISORY 

FROM THE COMMITTEE ON WAYS AND MEANS 

SUBCOMMITTEE ON HUMAN RESOURCES 

FOR IMMEDIATE RELEASE CONTACT: (202) 225–1025 

May 13, 2004 

No. HR–10 

Herger Announces Hearing on the Supplemental 

Security Income Program 

Congressman Wally Herger (R–CA), Chairman, Subcommittee on Human Resources of the Committee on Ways and Means, today announced that the Subcommittee will hold a hearing on the Supplemental Security Income program. The 

hearing will take place on Thursday, May 20, 2004, in room B–318 Rayburn 

House Office Building, beginning at 10:00 a.m. 

In view of the limited time available to hear witnesses, oral testimony at this 

hearing will be from invited witnesses only. Witnesses will include representatives 

from the Social Security Advisory Board, the Social Security Administration Office 

of the Inspector General, and the U.S. General Accounting Office. However, any individual or organization not scheduled for an oral appearance may submit a written 

statement for consideration by the Subcommittee and for inclusion in the printed 

record of the hearing. 

BACKGROUND: 

The Social Security Administration’s (SSA) Supplemental Security Income (SSI) 

program is a means-tested Federal assistance program that provides monthly cash 

benefits to the Nation’s needy blind, disabled, or elderly individuals. In fiscal year 

2005, 6.9 million individuals are expected to receive $38.4 billion in SSI payments 

averaging about $425 per month. At an April 29, 2004 Subcommittee hearing on 

SSI, the Commissioner of Social Security discussed challenges in program administration and simplification, possible improvements in the disability determination 

process, and opportunities to better assist disabled SSI recipients in returning to 

work. 

The 1996 Welfare Reform Law (P.L. 104–193), the Foster Care Independence Act 

of 1999 (P.L. 106–169), and the Social Security Protection Act of 2003 (P.L. 108– 

203) included provisions designed to improve the SSI program and address concerns 

about fraud and abuse. These changes included ending disability determinations 

based on drug addiction or alcoholism, barring fugitive felons and parole violators 

from receiving benefits, establishing a bounty system to prevent prisoners from illegally receiving benefits, enhancing the ability of SSA to detect and collect overpayments, strengthening penalties for fraud and abuse, and increasing protections for 

vulnerable SSI recipients. In addition, the Ticket to Work and Work Incentives Improvement Act of 1999 (P.L. 106–170) contained provisions to help disabled individuals receive assistance to help them return to work. 

In spite of these legislative changes and program improvements, challenges remain in the SSI program. For example, even as the U.S. General Accounting Office 

(GAO) removed SSI from its list of programs at high-risk for fraud and abuse in 

January 2003, it added a new high-risk area encompassing a range of Federal disability programs, including SSI. A recent GAO report highlighted residency violations as an area of ongoing program concern. The Social Security Advisory Board 

focused on program stewardship and the disability determination process in a statement included in the May 2003 SSI annual report and conducted a forum on the 

definition of disability in April 2004. In his September 2003 semiannual report to 

3 

Congress, the SSA Inspector General identified improper payments, management of 

the disability program, and service delivery among significant management issues 

that continue to confront SSA. 

In announcing the hearing, Chairman Herger stated, ‘‘While we’ve made dramatic 

progress in reforming SSI over the past few years, SSA Commissioner Barnhart testified recently that there are still many areas of the program that need to be addressed. At this hearing we will hear more about the current operation of the SSI 

program and expert suggestions for improvement from those directly involved in 

overseeing and reviewing the operation of SSI.’’ 

FOCUS OF THE HEARING: 

The hearing will review the operation of the SSI program, including anti-fraud 

provisions in law and policy, and consider further measures to improve program performance and better prevent fraud and abuse. 

DETAILS FOR SUBMISSION OF WRITTEN COMMENTS: 

Please Note: Any person or organization wishing to submit written comments for 

the record must send it electronically to hearingclerks.waysandmeans@ 

mail.house.gov, along with a fax copy to (202) 225–2610, by close of business Thursday, June 3, 2004. In the immediate future, the Committee website will allow for 

electronic submissions to be included in the printed record. Before submitting your 

comments, check to see if this function is available. Finally, due to the change in 

House mail policy, the U.S. Capitol Police will refuse sealed-packaged deliveries to 

all House Office Buildings. 

FORMATTING REQUIREMENTS: 

Each statement presented for printing to the Committee by a witness, any written statement 

or exhibit submitted for the printed record or any written comments in response to a request 

for written comments must conform to the guidelines listed below. Any statement or exhibit not 

in compliance with these guidelines will not be printed, but will be maintained in the Committee 

files for review and use by the Committee. 

1. All statements and any accompanying exhibits for printing must be submitted electronically 

to hearingclerks.waysandmeans@mail.house.gov, along with a fax copy to (202) 225–2610, in 

WordPerfect or MS Word format and MUST NOT exceed a total of 10 pages including attachments. Witnesses are advised that the Committee will rely on electronic submissions for printing the official hearing record. 

2. Copies of whole documents submitted as exhibit material will not be accepted for printing. 

Instead, exhibit material should be referenced and quoted or paraphrased. All exhibit material 

not meeting these specifications will be maintained in the Committee files for review and use 

by the Committee. 

3. All statements must include a list of all clients, persons, or organizations on whose behalf 

the witness appears. A supplemental sheet must accompany each statement listing the name, 

company, address, telephone and fax numbers of each witness. 

Note: All Committee advisories and news releases are available on the World 

Wide Web at http://waysandmeans.house.gov. 

The Committee seeks to make its facilities accessible to persons with disabilities. 

If you are in need of special accommodations, please call 202–225–1721 or 202–226– 

3411 TTD/TTY in advance of the event (four business days notice is requested). 

Questions with regard to special accommodation needs in general (including availability of Committee materials in alternative formats) may be directed to the Committee as noted above. 

f 

4 

Chairman HERGER. Welcome to this morning’s hearing on the 

Supplemental Security Income (SSI) program. I apologize that we 

are running a few minutes late to all our witnesses and everyone 

in the audience. As noted during our hearing last month with Social Security Commissioner Barnhart, SSI provides $3 billion of 

benefits monthly to nearly 7 million individuals. The SSI 

Programfunctions as a safety net for the Nation’s neediest elderly 

and disabled citizens. 

As we have heard, the Commissioner is working on reforms of 

the disability process, program simplification, work incentives and 

administrative challenges in the SSI Program. Her testimony provided us important insights as we review the SSI Program. Today, 

we continue that review and continue to ask some very basic questions. How is SSI working? How can the eligibility process be improved? Can vulnerable beneficiaries be better protected? Can more 

be done to reduce fraud, waste and abuse? How can we encourage 

more SSI beneficiaries to prepare for or go to work? 

Today, we will hear from several key organizations with SSI 

oversight responsibility as well as from a leading representative of 

SSI recipients. The U.S. General Accounting Office (GAO) played 

a critical role in informing SSI reforms included in the 1996 welfare reform law and related legislation. The GAO recently removed 

the SSI Program from its list of programs at high risk of fraud and 

abuse, which is real progress, but the same report suggested that 

disability programs in general remain vulnerable to fraud and 

abuse, so there is more work to be done. 

Today’s testimony highlights that the SSI Program, in recent 

years has paid more than $100 million in benefits to people who 

should not have collected them, because they lived outside the 

United States. That is shocking and something we need to fix. The 

So,cial Security Inspector General (IG) has played an important 

role in preventing and identifying fraud and abuse in the SSI Program, including implementing laws preventing prisoners and fugitive felons from illegally collecting benefits. 

Today, Acting IG Patrick O’Carroll will review these efforts, including the savings that have been achieved and the 19,000 fugitives apprehended so far. The Social Security Advisory Board 

(SSAB) has done important work on disability programs, calling for 

fundamental changes and recently engaging experts in a wideranging discussion of the definition of disability and the implications of possible changes. We also will hear from two groups with 

day-to-day experience with SSI, the National Association of Disability Examiners (NADE) and the Consortium of Citizens with 

Disabilities (CCD). Their representatives will provide us with useful insights and further suggestions for program improvement 

based on their important perspective about how the program really 

works. 

I thank all of our witnesses for joining us today. We appreciate 

their past efforts to help improve the way SSI works and look forward to today’s testimony about how to strengthen, update and improve the SSI Program so that it will better meet the needs of 

beneficiaries and taxpayers. Without objection, each Member will 

have the opportunity to submit written statement and have it inVerDate Aug 04 2004 21:16 Aug 19, 2005 Jkt 099676 PO 00000 Frm 00008 Fmt 6633 Sfmt 6602 E:\HR\OC\A676.XXX A676
5 

cluded in the record at this point. Mr. Cardin, would you like to 

make an opening statement? 

[The opening statement of Chairman Herger follows:] 

Opening Statement of The Honorable Wally Herger, Chairman, and a 

Representative in Congress from the State of California 

Welcome to this morning’s hearing on the Supplemental Security Income (SSI) 

program. 

As noted during our hearing last month with Social Security Commissioner Jo 

Anne Barnhart, SSI provides $3 billion of benefits monthly to nearly seven million 

individuals. SSI functions as a safety net to the nation’s neediest elderly and disabled individuals. 

As we have heard, the Commissioner is working on reforms of the disability process, program simplification, work incentives, and administrative challenges in the 

SSI program. Her testimony provided us important insights as we review the SSI 

program. 

Today we continue that review by asking very basic questions—how is SSI working, how can the eligibility process be improved, can vulnerable beneficiaries be better protected, can more be done to reduce fraud, waste, and abuse, and how can we 

encourage more SSI beneficiaries to prepare for or go to work? 

Today we’ll hear from several key organizations with oversight responsibility over 

SSI, as well as from a leading representative of SSI recipients. 

The General Accounting Office (GAO) played a critical role in informing the SSI 

reforms included in the 1996 welfare reform law and related legislation. GAO recently removed the SSI program from its list of programs at high risk of fraud and 

abuse, which is real progress. But the same report suggested that disability programs in general remain vulnerable to fraud and abuse. So there is more work to 

be done. Today’s testimony highlights that the SSI program in recent years has paid 

more than $100 million in benefits to people who should not have been collecting 

them because they lived outside the U.S. That’s shocking, and something we need 

to fix. 

The Social Security Inspector General has played an important role in preventing 

and identifying fraud and abuse in the SSI program, including implementing laws 

preventing prisoners and fugitive felons from collecting benefits. Today Acting Inspector General O’Carroll will review these efforts, including the savings that have 

been achieved and the 19,000 fugitives apprehended so far. 

The Social Security Advisory Board also has done important work on disability 

programs, calling for fundamental changes and recently engaging experts in a wideranging discussion of the definition of disability and the implications of possible 

changes. 

We also will hear from two groups with day to day experience with SSI—the National Association of Disability Examiners and the Consortium of Citizens with Disabilities. Their representatives will provide us with useful insights and further suggestions for program improvement, based on their important perspectives about how 

the program really works. 

I thank all of our witnesses for joining us today. We appreciate their past efforts 

to help improve the way SSI works, and look forward to today’s testimony about 

how to strengthen, update, and improve the SSI program so that it will better meet 

the needs of beneficiaries and taxpayers. 

f 

Mr. CARDIN. Well, thank you very much, Mr. Chairman. I join 

you in welcoming our panel here today. This is a very important 

subject, and I share your concern about the integrity of any program that is created by Congress and the important role that we 

play and this Subcommittee plays in oversight to make sure that 

the program is working the way Congress intended and that the 

moneys are properly being disbursed. 

Seven million elderly and disabled Americans depend upon the 

SSI benefits, and as Social Security Commissioner Barnhart mentioned just a few weeks ago, the SSI recipients are the poorest of 

6 

the poor. So, I think we have a dual responsibility, Mr. Chairman, 

first to make sure that this program is providing the needed help 

to this very, very vulnerable population and second to make sure 

of the integrity of the program. I hope that we will carry out both 

of those responsibilities. 

We must also recognize that the effort to improve the SSI Program also depends upon SSA having adequate resources, and this 

Subcommittee has been on record historically about the concerns 

on the budget support for the SSA, and once again, I point out that 

we cannot expect them to perform miracles unless we are prepared 

also to support that with the adequate resources. 

Since 1993, Congress has passed no less than bills that included 

provisions designed to curb fraud and abuse and to improve the 

management of the SSI program. When Mrs. Johnson was Chair 

of this Subcommittee, I joined her in 1999 when we passed the Foster Care Independence Act (P.L. 106–169), which generally sought 

to help children aging out of our foster care system, but it also contained changes in the SSI provisions. The law provided new authorities to detect and collect SSI overpayments. It prevented from 

individuals from disposing of resources to gain eligibility, and it included new penalties for deliberate fraud. 

Mr. Chairman, I remain willing to consider other changes to improve the integrity and administration of the SSI Program, but I 

would also urge this Subcommittee to look at whether the program 

is currently providing the necessary help to this most vulnerable 

population. I point out, Mr. Chairman, that SSI has not been increased for 32 years, which means that, in fact, we have seen a 

75—percent reduction in the real value of the SSI payments, and 

that should be of concern to this Subcommittee. One of the income 

exclusions provides for a very small reward for past work by allowing $20 of Social Security benefits to be added to SSI benefit without any penalty. The second exclusion allows the first $65 in 

monthly earnings to be disregarded from SSI eligibility. 

If these income disregards had simply kept pace with inflation 

over the last three decades, the general exclusion would be worth 

$85 a month rather than $20, and the earning exclusion would be 

worth $280 a month rather than $65 a month. Now, that may seem 

like large amounts of money. Maybe it does not seem like large 

amounts of money. Today on the floor of Congress, we will be voting on a bill to increase the income for eligibility of the child credit 

from $110,000 to $250,000. 

Mr. Chairman, if we have time to consider that legislation, do we 

not have time to provide a small increase in the help for the poorest of the poor? Serving on this Subcommittee, we take on a responsibility to advocate on behalf of those who are not very effective in having their voices heard here in Congress, and I would 

hope that we would find time to provide additional relief to this 

very vulnerable population. 

I also urge this Subcommittee to consider extending SSI assistance to elderly and disabled refugees, all of whom have fled political and religious persecution in their home countries. Two months 

ago, I joined a bipartisan group of Members on this Committee in 

introducing legislation to provide a 2-year extension for these refugees, who often have no other source of income. Given that the AdVerDate Aug 04 2004 21:16 Aug 19, 2005 Jkt 099676 PO 00000 Frm 00010 Fmt 6633 Sfmt 6602 E:\HR\OC\A676.XXX A676
7 

ministration also has called for extending the refugee SSI benefits, 

I hope we can address this issue quickly. 

Without congressional action, up to 10,000 refugees could lose assistance by the end of this year and thousands more in the years 

to come. Mr. Chairman, reducing fraud is a very important responsibility. Rewarding work is an important goal of this Subcommittee; helping refugees. I hope that we can move on all three 

of these fronts, and I look forward to hearing the testimony of our 

witnesses and working with the Chairman and the Members of this 

Subcommittee to bring out legislation that can improve the effectiveness of the SSI Program. Thank you, Mr. Chairman. 

[The opening statement of Mr. Cardin follows:] 

Opening Statement of The Honorable Benjamin L. Cardin, a Representative 

in Congress from the State of Maryland 

Mr. Chairman, the SSI program provides benefits to nearly 7 million elderly and 

disabled Americans who have few, if any, other resources. As Social Security Commissioner Barnhart testified a few weeks ago, SSI recipients are the ‘‘poorest of the 

poor.’’ We have an obligation to the taxpayer to ensure that only truly needy individuals are receiving these benefits, but we also have a moral duty to help the least 

fortunate among us. 

As we consider suggestions to ensure the integrity of the SSI program, I hope we 

will always remember both of these responsibilities. 

We must also recognize that efforts to improve the SSI program are unlikely to 

yield much success if the Social Security Administration lacks sufficient resources 

to implement them. 

Since 1993, Congress has passed no less than ten bills that included provisions 

designed to curb fraud and abuse and to improve the management of the SSI program. 

I joined with Mrs. Johnson in one such endeavor in 1999. The Foster Care Independence Act, which generally sought to help children aging out of foster care, also 

included a series of SSI provisions. 

The law provided new authorities to detect and collect SSI overpayments, it prevented individuals from disposing of resources to gain eligibility, and it included 

new penalties for deliberate fraud. 

I remain willing to consider other suggestions for improving the administration 

of SSI, but I believe this Committee cannot afford to ignore other pressing needs 

within the program. 

For example, the income disregards for SSI have not been increased for 32 years 

B meaning they have lost more than 75% of their real value. 

One of these income exclusions provides a very small reward for past work by allowing up to $20 of Social Security benefits to be added to the SSI benefit without 

any penalty. The second exclusion allows the first $65 in monthly earnings to be 

disregarded from SSI eligibility (after that, every $2 of earnings reduces the SSI 

benefit by $1). 

If these income disregards had simply kept pace with inflation over the last three 

decades, the general exclusion would be worth $85 a month, rather than $20; and 

the earnings exclusion would be worth $280 a month, rather than $65. 

In addition, the resource limit for SSI eligibility ($2000) needs to be updated to 

account for inflation since it was last raised 15 years ago. Continued inaction on 

these issues undercuts our stated desire to promote and reward work within the SSI 

program. 

I also urge the Committee to consider extending SSI assistance to elderly and disabled refugees, all of whom have fled political and religious persecution in their 

home countries. Two months ago, I joined a bipartisan group of Members on this 

Committee in introducing legislation to provide a two-year extension for these refugees, who often have no other source of income. 

Given that the Administration also has called for extending refugees’ SSI benefits 

(for one year), I hope we can address this issue quickly. Without Congressional action, up to 10,000 refugees could lose assistance by the end of this year, and thousands more in the years to come. 

8 

Mr. Chairman, reducing fraud is important, but so is rewarding work and helping 

refugees. I hope we can move forward on all three. Thank you. 

f 

Chairman HERGER. Thank you, Mr. Cardin. Before we move on 

to our testimony, I want to remind our witnesses to limit their oral 

statements to 5 minutes. However, without objection, all of the 

written testimony will be made a part of the permanent record. 

Today, we will be hearing from Mr. Robert E. Robertson, Director 

of Education, Workforce and Income Security Issues at the GAO; 

Ms. Martha Ford, testifying as Co-Chair of CCD Social Security 

Task Force; Mr. Patrick O’Carroll, Acting IG of the SSA; Ms. Martha Marshall, President-Elect of NADE; and Dr. David Podoff, a 

member of the SSAB. Mr. Robertson? 

STATEMENT OF ROBERT E. ROBERTSON, DIRECTOR, EDUCATION, WORKFORCE, AND INCOME SECURITY ISSUES, U.S. 

GENERAL ACCOUNTING OFFICE 

Mr. ROBERTSON. Thank you and good morning, Mr. Chairman, 

Mr. Cardin. I have been told that the mikes are live, so I will not 

go through the requisite tap, tap, tapping here before I start. I 

would like to thank you for the opportunity to be here this morning 

to discuss SSA’s oversight of residency requirements for individuals 

who receive SSI. As you know, recipients who fail to establish residency in accordance with SSI Program guidelines or who do not report absences of 30 days or more may be overpaid and are, therefore, subject to monetary penalties and administrative sanctions. 

Our remarks today are based on some work that we issued last 

year, and I am going to touch basically on three areas. First, I will 

discuss the magnitude and the characteristics of the overpayment 

problems relating to residency violations, and I will move on to 

summarizing some of the principal weaknesses in SSA’s administration of the program that inhibit the agency’s ability to identify 

and deter these types of violations, and finally, I will end by highlighting some of the actions that SSA has taken in response to the 

recommendations contained in our report. 

Let me first talk about the size of the problem. Between 1997 

and 2001, SSA detected overpayments of about $118 million for 

residency violations. However, it is important to recognize that this 

figure represents only those violations that were detected, which 

may be only a fraction of the violations that occur each year. In 

fact, prior studies and special projects by SSA and its Office of the 

IG show that residency violations are a pervasive problem, at least 

in some field offices. 

For example, SSA and IG studies estimate that in some regions 

of the country, as much as 26 percent of all recipients are in violation of residency requirements. Additionally, the extent of violations appears to vary by geographic region, with overpayments 

being more prevalent in several large metropolitan areas. In particular, we found that 54 percent of all overpayments detected by 

SSA between 1997 and 2001 occurred in just five states, those 

being California, Florida, Illinois, New Jersey and New York. Finally, we found that recipients born outside the United States acVerDate Aug 04 2004 21:16 Aug 19, 2005 Jkt 099676 PO 00000 Frm 00012 Fmt 6633 Sfmt 6602 E:\HR\OC\A676.XXX A676
9 

counted for at least 87 percent of all detected residency overpayments. 

Let me now move to talking about the weaknesses that impede 

SSA’s ability to detect and deter residency violations. In this regard, we basically found three principal problems: first, the agency 

relies heavily on self-reported information from recipients to verify 

domestic residency. More specifically, SSA field staff often rely on 

recipients’ own assertions and accept minimal documentation from 

them such as rent receipts or letters from neighbors or clergy. Such 

documents, as you know, can easily be manipulated. 

The second broad problem area inhibiting SSA’s ability to deal 

effectively with residency violations concerns the agency’s limited 

use of tools that it has at its disposal to identify and deter possible 

violators. For example, while SSA routinely employs a risk analysis 

system to help identify SSI recipients who are more likely to incur 

overpayments due to excess income or resources, it does not use 

this tool to specifically consider and target potential residency violators. 

A model that we developed and tested to predict residency violations suggests that SSA could, in fact, make better use of its risk 

analysis system to detect and prevent these types of violations. Additionally, while some of the field offices we visited found home visits for verifying residency to be cost-effective under certain circumstances, SSA has not systematically implemented this tool in 

other offices. Other tools that the agency has made only limited use 

of are monetary penalties and administrative sanctions. 

Finally, in addition to the weaknesses stemming from heavy reliance on self-reported information and the limited use of available 

detection and deterrence tools, we reported that SSA had not adequately pursued the use of independent third-party data to help detect residency violations. This data included emerging immigration 

databases and recipient bank account information. 

Mr. Chairman, let me just conclude my remarks by summarizing 

the actions that SSA is planning to take in response to our report’s 

recommendations. These include several agency initiatives such as 

investigating the potential for obtaining access to foreign automated teller machines to track banking transactions, requesting assistance from State Medicaid fraud investigators to help SSA perform more home visits, and investigating the potential of examining arrival/departure records maintained by the Homeland Security office. It is to early to assess how effective these initiatives will 

be, however, these plans do represent positive first steps and a 

willingness to explore additional ways to strengthen the integrity 

of the program, and on that positive note, I will end my prepared 

remarks and answer questions at the appropriate time. 

[The prepared statement of Mr. Robertson follows:] 

Statement of Robert E. Robertson, Director, Education, Workforce, and 

Income Security Issues, U.S. General Accounting Office 

Mr. Chairman and Members of the Subcommittee: 

I am pleased to be here to discuss the Supplemental Security Income (SSI) program. The Social Security Administration (SSA) administers the SSI program, 

which is the nation’s largest cash assistance program for the poor. SSI provides financial assistance to people who are age 65 or older, blind or disabled, and who 

have limited income and resources. In 2003, about 6.9 million recipients were paid 

10 

1This figure includes both federal funds and state supplemental funds. 

2 In 2001, outstanding SSI debt and newly detected overpayments for the year totaled $4.7 

billion. 3See U.S. General Accounting Office, Supplemental Security Income: SSA Could Enhance Its 

Ability to Detect Residency Violations, GAO–03–724 (Washington, D.C.: July 29, 2003). 4More recent data on overpayments due to residency violations were not available at the time 

of this testimony. 

about $36 billion in SSI benefits.1 Benefit eligibility and payment amounts for SSI 

recipients are determined by complex and often difficult to verify factors such as individual living arrangements, including whether a person resides in the United 

States (U.S.). Thus, the SSI program tends to be difficult to administer and susceptible to overpayments.2 In recent years, SSA has identified a general increase in the 

amount of annual overpayments made to recipients who are not present in the U.S. 

as required by SSI program guidelines—a problem we refer to as ‘‘residency violations.’’ 

My testimony today focuses on a report we issued in July 2003 in response to a 

request from this subcommittee.3 You asked us to (1) determine what is known 

about the extent to which SSI benefits are improperly paid to individuals who are 

not present in the U.S. and (2) identify any weaknesses in SSA’s processes and policies that impede the agency’s ability to detect and deter residency violations. In summary, SSA detected overpayments of $118 million for residency violations 

between 1997 and 2001,4 but interviews with the Office of Inspector General (OIG) 

and agency officials suggest that the agency only detected a portion of the violations 

that occur each year, at least in some parts of the country. The extent of violations 

appears to vary by geographic region, with overpayments being more prevalent in 

several large metropolitan areas in five states—California, Florida, Illinois, New 

Jersey, and New York. We also found that recipients born outside the U.S. accounted for at least 87 percent of all residency overpayments. Three kinds of weaknesses have historically impeded SSA’s ability to detect and deter residency violations. First, to verify domestic residency, the agency has often relied on self-reported 

information from recipients and visual inspection of documents that can be easily 

manipulated, such as rent receipts and letters from neighbors or clergy. Second, the 

agency has historically made limited use of tools at its disposal to detect possible 

violators, such as its risk analysis system to screen for high-risk cases more likely 

to result in overpayments. Third, SSA has not adequately pursued the use of independent, third-party data, such as emerging immigration databases or recipient 

bank account information, to help detect residency violations. 

In response to our report recommendations, SSA indicated that it is considering 

implementing several initiatives that may provide a more complete picture of residency violations in the SSI program and improve its ability to detect and prevent 

such violations in a more efficient, timely manner. These include investigating the 

potential for obtaining access to foreign automated teller machines to track banking 

transactions over time, requesting assistance from state Medicaid fraud investigators to help SSA perform more home visits to verify recipients’ residence, and investigating the potential of examining arrival/departure records maintained by the Department of Homeland Security to identify recipients who leave the country for more 

than 30 consecutive days. While it is too early to assess how effective these initiatives may be, we support SSA’s commitment to studying this problem further and 

its willingness to explore new data sources and improvements to existing processes 

as a way of detecting potential violations in a more timely manner. Thus, we view 

these initiatives as positive first steps. However, sustained management attention 

to identifying and preventing residency violations will be needed to further strengthen the integrity of the SSI program. 

Background 

Individuals may apply for SSI benefits at any of about 1,300 SSA field offices. 

During the initial interview, SSA staff solicit information on applicants’ financial 

situation and the disability being claimed. Applicants are required to report any information that may affect their eligibility for benefits, such as income, resources, 

and their living arrangements (including current residence). Similarly, once individuals receive SSI benefits, they are required to report changes in their address or 

residence to SSA in a timely manner. The Social Security Act (Section 1614 

(a)(1)(B)(i)) requires that an individual be a resident of the U.S. to be eligible for 

SSI payments. SSA guidelines define a resident of the U.S. as a person who has 

established a dwelling in the U.S. with the intent to live in the country. Section 

1611(f) of the act also provides that no individual is eligible for SSI payments for 

any month during all of which the individual is outside the U.S. Recipients who fail 

to establish residency in accordance with SSI program guidelines or do not report 

11 

5The rationale for targeting these cases was that financially needy individuals who were aged 

or disabled are likely to use Medicaid services on a regular basis. Thus, SSI recipients who have 

not used Medicaid for long periods of time may have left the U.S. or died. 6These studies considered the effect of only one potential indicator of residency violations— 

Medicaid nonutilization. 

absences of 30 days or more may be overpaid, and subject to monetary penalties and 

administrative sanctions such as suspension of benefits. Similarly, SSI recipients 

who become ineligible for SSI benefits because they violate SSI residency guidelines 

may also be ineligible to receive Medicaid benefits. 

To a significant extent, SSA depends on program applicants and current recipients to accurately report important eligibility information. To verify this information, SSA may use computer matches to compare SSI records against recipient information in records of third parties such as other federal agencies. SSA also periodically conducts ‘‘redetermination’’ reviews to verify important eligibility factors, such 

as income and resources, to determine whether recipients remain eligible for benefits after the initial assessment. 

SSA Detected Overpayments of $118 Million for Residency Violations over 

5 Years, but More May Go Undetected 

SSA detected overpayments of $118 million for residency violations between 1997 

and 2001, but interviews with OIG and SSA officials suggest that the agency detects 

only a portion of the violations that occur each year, at least in some parts of the 

country. Special initiatives of limited duration conducted by SSA and its OIG have 

uncovered additional residency overpayments. According to our own analysis of 

SSA’s data, residency overpayments appear to vary by geographic region, with the 

majority of overpayments having been detected in several large metropolitan areas. 

Finally, we determined that most of the overpayments detected during this period 

were attributable to recipients who were born outside the U.S. 

Residency Violations May be More Prevalent than SSA Has Detected 

SSA detected an average of about 46,000 recipient residency violations annually 

between 1997 and 2001, resulting in $118 million in overpayments. While SSA’s 

data show that less than 1 percent of all SSI recipients violate residency requirements annually, SSA field staff and OIG officials suggest that the problem may be 

more prevalent. For example, over the past few years, SSA and its OIG have initiated a number of studies estimating that residency violations in certain regions of 

the country may represent as much as 26 percent of SSI cases in those areas. These 

local studies were generally limited in duration and were performed within specific 

geographic areas: 

• A 1997 SSA and OIG joint study of SSI residency used home visits in southern 

California to identify potential residency violations. The study concluded that 

about 25 percent of SSI recipients in one field office were living outside of the 

country. The study also determined that 47 percent of SSI recipients from this 

field office could not be located at their reported residence, an indication that 

they may be violating residency requirements. 

• A 1998 OIG eligibility study in El Paso, Texas, found that about 26 percent of 

recipients investigated were violating residency requirements. This project identified about $3 million in residency overpayments. 

• In 1998 and 1999, joint SSA/OIG studies examined 32,641 recipients in New 

York and California who had not used their Medicaid benefits for at least 1 

year.5 Using redetermination reviews, these studies found that 1,281 recipients 

(about 4 percent) were living outside the U.S.6 Many Violations Are Geographically Concentrated 

Many Violations Are Geographically Concentrated 

Our analysis of SSA’s data showed that overpayments due to residency violations 

are more prevalent in a number of large metropolitan areas. For example, overpayments from violations detected in Los Angeles County, California, represented 10.5 

percent of the nation’s SSI residency overpayments between 1997 and 2001. Overall, 

we found that just 15 counties in 5 states—California, Florida, Illinois, New Jersey, 

and New York—accounted for 54 percent of all residency overpayments detected by 

SSA during this period. (See fig. 1.) In addition to Los Angeles County, there were 

other counties with a significant percentage of SSI residency overpayments: Queens 

County, N.Y. (5.2 percent); New York County, N.Y. (5.0 percent); Kings County, 

N.Y. (4.8 percent); San Diego County, Calif. (4.1 percent); and Bronx County, N.Y. 

(3.5 percent). Moreover, of approximately 3,000 U.S. counties, 50 accounted for 77 

12 

7The percentage of total residency overpayments attributed to recipients born outside of the 

U.S. may be higher than 87 percent because SSA could not identify a specific country of birth 

for recipients that represent about $10 million in SSI overpayments. 

percent of all residency overpayments detected by SSA during this time. (See fig. 

1.) 

FIGURE 1: TOP 15 COUNTIES FOR SSI RESIDENCY OVERPAYMENTS, 1997–2001 

Most Overpayments Were Made to Recipients Born Outside the U.S. 

SSA’s data also showed that individuals born outside the U.S. accounted for at 

least 87 percent of all SSI residency overpayments between 1997 and 2001.7 Residency overpayments were most common among recipients who were born in Latin 

America, the Caribbean, and South/Southeast Asia, but included other areas as 

well, such as the Middle East. Recipients from the Philippines accounted for the 

greatest amount of residency violations or $24 million of all SSI residency overpayments during this period. SSA data also showed that recipients from just 14 countries and 1 U.S. territory accounted for about 73 percent of all residency overpayments during this period. These include the Dominican Republic, (12.3 percent), 

Mexico (7.6 percent), Puerto Rico (7.5 percent), India (7.1 percent), and Iran (3.4 

percent). (See fig. 2.) 


Insert offset folio 99676a.001
13 

FIGURE 2: TOP 15 COUNTRIES OF ORIGIN FOR SSI RESIDENCY OVERPAYMENTS, 1997– 

2001 

a Puerto Rico is a United States territory. 


Insert offset folio 99676a.002 Insert offset folio 99676a.003
14 

8This figure represents data from fiscal years 1991 through 1995. 

9See U.S. General Accounting Office, Supplemental Security Income: Action Needed on LongStanding Problems Affecting Program Integrity, GAO/HEHS–98–158 (Washington, D.C.: Sept. 

14, 1998). 10SSI program guidance allows field staff to use home visits in selected circumstances, such 

as in response to a report from a third party that a recipient is outside the U.S. In addition, 

home visits may be employed if a recipient fails to provide information requested by SSA staff, 

or if a recipient does not respond to letters and/or telephone calls from staff asking them to appear at the local office. However, program guidelines give field office managers discretion in determining when to use home visits and allow them to take into consideration factors such as 

the safety of staff who perform such visits. 

Reliance on Self-Reported Information and Other Vulnerabilities Have Impeded SSA’s Ability to Detect and Deter Violations 

SSA’s ability to detect and deter residency violations has been impeded by three 

kinds of weaknesses. First, the agency has relied heavily on self-reported information from recipients to determine domestic residency, often without independently 

verifying such information. Second, SSA has made insufficient use of its existing 

tools for identifying potential violations, such as its risk analysis system to screen 

for high-risk cases. SSA has also not made optimal use of redetermination reviews, 

home visits, monetary penalties, and administrative sanctions to deter future violations. Finally, the agency historically has not made adequate use of independent 

data sources from other federal agencies or private organizations to detect nonresidency of SSI recipients. 

SSA Has Relied Heavily on Self-Reported Information That Can be Manipulated 

SSA has relied on self-reported information, such as documents and statements 

from recipients, to establish proof of U.S. residency. Our prior work has shown that 

about 77 percent 8 of all payment errors in the SSI program were attributable to 

recipients who do not comply with reporting requirements.9 In our recent review, 

about half the SSA field staff we interviewed reported that they relied on recipients 

to self-report important information with respect to travel outside the U.S. SSI program guidelines have generally directed SSA staff to accept recipients’ assertions 

concerning residency unless they have reason to question the accuracy of their statements. If SSA field staff have reason to believe that a recipient has been outside 

the country for more than 30 days, they may request additional documentation such 

as a plane ticket, passport (or similar evidence which establishes date of entry into 

the U.S.), or a signed statement from one or more U.S. residents such as neighbors, 

clergy, or others who may have knowledge of the individual’s whereabouts. However, program guidelines do not require field staff to perform any additional 

verification steps to establish recipients’ residency.10

We also learned that some of the documents accepted by SSA as proof of residence 

are subject to manipulation or forgery. For example, staff in one field office noted 

that documents such as rent receipts can be purchased from a local drugstore and 

easily forged. Other field staff said that statements from neighbors could be falsified 

or manipulated to support assertions that an individual has not traveled outside the 

country. Field staff also reported that recipients may use multiple passports in order 

to conceal extended stays outside the country. For example, staff in two SSA regions 

we visited said that SSI recipients sometimes use a foreign passport to exit and reenter the country while maintaining a separate, ‘‘clean’’ U.S. passport for evidence 

of continuing residency. 

Given the agency’s reliance on self-reported information, SSA field staff often used 

their personal experience, judgment, and ad hoc interviewing procedures to detect 

potential residency violations. In particular, SSA field staff have looked for inconsistencies in recipient statements or a recipient’s inability to answer simple questions about where they live. For example, recipients may be asked about the names 

of people living in their household, or basic facts about their neighborhood such as 

the location of a well-known landmark. Staff may also ask whether a recipient owns 

property outside the U.S. Questionable or inconsistent answers to such questions 

may result in requests to provide additional documentation. However, effectively 

identifying residency violators has often depended on the experience and persistence 

of individual staff. 

Our review also found that the procedures for documenting recipients’ residency 

varied widely among the offices we visited, in particular, the number and types of 

evidentiary documents requested by staff. While staff in several offices reported that 

they often request only the most basic documentation required by SSI program 

guidelines, staff in other offices told us that they routinely ask for additional documentation for recipients, such as a second passport or other travel documents to deVerDate Aug 04 2004 21:16 Aug 19, 2005 Jkt 099676 PO 00000 Frm 00018 Fmt 6633 Sfmt 6621 E:\HR\OC\A676.XXX A676
15 

11SSA’s risk analysis system incorporates about 48 different characteristics—or variables—to 

help the agency determine which recipients will be selected for annual redetermination reviews. 

Recipients identified as being at higher risk for overpayments are designated as High Error Profile cases and may be subject to more frequent reviews that entail personal contact with SSA 

field office staff. Those recipients identified as being less likely to incur an overpayment are designated as Medium or Low Error Profile and may only receive a redetermination conducted by 

mail rather than in person. Some Low Error Profile cases are only examined once every 6 years. 12The variables used in our model are not an exhaustive list of potential variables that SSA 

could use in its risk analysis system. They represent just a few of the characteristics that were 

frequently cited by prior reviews as well as SSA and OIG staff as potentially good predictors 

of residency violations. 13SSI recipients with residency violations were compared against recipients with no violations. 14SSA data show that, in 1998, refining the case selection methodology increased estimated 

overpayment benefits—amounts detected and future amounts prevented—by $99 million over 

the prior year. SSA officials have estimated that conducting substantially more redetermination 

reviews would yield hundreds of millions of dollars in additional overpayment benefits annually. 

See U.S. General Accounting Office, Supplemental Security Income: Progress Made in Detecting 

and Recovering Overpayments, but Management Attention Should Continue, GAO–02–849, 

(Washington, D.C.: Sept. 6, 2002). 

termine whether the individual has been outside the country for more than 30 days. 

While these steps are not required, some field staff reported that they have been 

effective in identifying potential violators and deterring future violations. SSA staff 

reported a number of reasons for different documentation requirements such as 

variance in individual office policies, personal preferences based on experience, time 

pressures to complete cases, and the inability to effectively verify supplied documentation. 

SSA Has Not Fully Exploited Its Tools for Detecting and Deterring Program 

Violations 

SSA has not made optimal use of several tools that could be used to detect residency violations. These include its ‘‘risk analysis system’’ for screening cases more 

likely to result in overpayments, its ‘‘redetermination reviews’’ of recipients’ eligibility, and home visits to verify recipients’ whereabouts. SSA has used statistical 

risk analysis techniques for many years in the SSI program to identify recipients 

who are more likely to be overpaid due to excess income or resources. Since SSA 

lacks adequate staff resources to conduct an annual review of every recipient, it 

uses this technique to identify recipients who are most likely to have a change in 

their eligibility status or benefit amount.11

Despite the proven effectiveness of its risk analysis system to help the agency 

identify cases with the highest potential for overpayments, SSA has not used this 

tool to specifically identify potential residency violations. To determine whether it 

would be possible for SSA to more effectively identify potential residency violators 

by using its existing systems, we developed and tested a statistical model of factors 

possibly associated with residency violations.12 Using this model as a screen, we examined all recipients who were currently in violation of residency requirements as 

of April 2003,13 and found that recipients born outside the U.S.—noncitizens as well 

as naturalized citizens—were more than 40 times as likely to be violating residency 

requirements than were native-born recipients. Similarly, recipients with prior residency violations were about 10 times as likely to be current violators compared with 

recipients who have no prior violations. We also found that recipients who used post 

office boxes were somewhat more likely to be receiving benefits outside the country 

than those without post office boxes. Given the potential usefulness of this limited 

modeling demonstration, it may be possible for SSA to expand and refine its risk 

analysis system to better target potential violators. SSA is studying the potential 

for refining its screening technique to improve its effectiveness for identifying recipients at high risk for residency violations. 

Beyond the targeting problems we identified with SSA’s risk analysis system, we 

found that the agency was not using redeterminations as efficiently as it could despite the fact that SSA’s data and our prior reviews have documented their effectiveness for verifying recipients’ eligibility.14 In particular, home visits were used infrequently during redetermination reviews according to staff in a number of offices 

we visited. 

Those field offices that have used home visits as part of their redetermination procedures have found them effective. About half of the field offices we visited (9 of 17) 

employed home visits at least some of the time to verify whether recipients actually 

live at the address they report to SSA. For example, the SSA regional office in Dallas, Texas contracted with a private investigation firm to conduct residency home 

visits. Using these investigators, field offices within the region performed 4,200 

16 

15Prior GAO reports indicate that monetary penalties and administrative sanctions may be 

underutilized in the SSI program. See GAO–02–849. 16See GAO–02–849. 17 Ibid. 18 Ibid. 19For example, SSA routinely uses information from the Department of Health and Human 

Service’s National Directory of New Hires to verify SSI recipients’ income. 

home visits that uncovered at least $2.1 million in additional overpayments between 

October 1997 and January 2003. According to SSA data, this project achieved a benefit-to-cost ratio of almost 8 to 1. Similarly, the California Department of Health 

Services has worked cooperatively with SSA field offices in the San Diego area by 

conducting residency home visits. Because Medicaid eligibility is often directly tied 

to SSI eligibility, identifying residency violations may save funds from both programs. Between October 2000 and September 2002, state Medicaid investigators 

identified about 1,600 SSI recipients with residency violations. In one instance, state 

investigators discovered an SSI recipient who was using a residence in southern 

California as a mailing address, while actually residing in Tijuana, Mexico, for at 

least 8 years. In another case, state investigators found an SSI recipient using a 

post office box in southern California as a mailing address, although the recipient 

was in fact living in San Felipe, Mexico, since 1982. Because the state provides 

these investigative services to SSA free of charge, it is highly cost-effective. To address this issue, SSA is currently exploring the potential for having states assist in 

performing home visits using their Medicaid fraud investigators. According to SSA, 

27 states and the District of Columbia have expressed an interest in assisting in 

this effort. 

In terms of deterring future violations, we found that existing monetary penalties 

and administrative sanctions are rarely, if ever, used in the offices we visited.15 For 

example, about 72 percent of the field staff we interviewed said that penalties or 

sanctions are not used in their offices, or are only used occasionally. National data 

on SSA’s use of monetary penalties and administrative sanctions also suggest that 

these tools are not routinely utilized for recipients who fail to report important information that can affect their eligibility, including absences from the country. In 

a recent report, we estimated that at most about 3,500 recipients were penalized 

for reporting failures in fiscal year 2001.16 Under the law, SSA may impose monetary penalties on recipients who do not file timely reports about factors or events 

that can affect their benefits. A penalty causes a reduction in 1 month’s benefits. 

Penalty amounts are $25 for a first occurrence, $50 for a second occurrence, and 

$100 for the third and subsequent occurrences. The penalties are meant to encourage recipients to file accurate and timely information. However, a large number of 

staff we interviewed noted that monetary penalties are too low to be an effective 

deterrent against future residency violations. 

The Foster Care Independence Act of 1999 (Pub. L. No. 106–169) gave SSA authority to impose administrative sanctions on persons who misrepresent material 

facts that they know, or should have known, were false or misleading. In these circumstances, SSA may suspend benefits for up to 24 months. Despite having this authority, we found that benefit suspensions are rarely if ever used by field staff for 

residency violators. In fact, administrative sanctions were only imposed in 21 cases 

nationwide as of January 2002.17 A substantial number of staff told us that they 

rarely use sanctions because the process for imposing them is often time-consuming 

and cumbersome. In addition, some staff reported that SSA management does not 

encourage the use of penalties or sanctions to deter residency violations. SSA is currently evaluating its policies for imposing monetary penalties and administrative 

sanctions.18

SSA Had Not Actively Pursued Third-Party Data Sources to Detect Potential Violators 

While SSA uses third-party information to verify certain aspects of recipients’ eligibility such as income, we found that the agency has historically lacked adequate 

outside data sources to verify that recipients are residents of the U.S.19 The agency 

currently receives periodic paper reports from immigration officials on noncitizens 

who have current and planned absences from the U.S. and sends them to the appropriate SSA field offices for follow up. However, these procedures are only effective 

for recipients who voluntarily report their absence to immigration officials. Thus, 

SSA will remain limited in its ability to independently verify the residency of SSI 

recipients who deliberately seek to conceal extended periods outside the country. 

Over half of the SSA managers and field staff we interviewed told us that access 

to automated immigration data would help them to more accurately verify recipients’ residency. We have recommended that SSA consider using a new system called 

17 

20See Access to Information Held by Financial Institutions, 67 Fed. Reg. 22021 (now codified 

at 20 C.F.R. pt. 416). 

the U.S. Visitor and Immigrant Status Indicator Technology system (US VISIT) to 

verify some recipients’ entry and exit from the country. It is currently being used 

by the Department of Homeland Security and will incorporate existing entry-exit 

databases. When fully implemented, this system will provide a mechanism to monitor major ports of entry/exit in the U.S., including land crossings, seaports, and airports. As noted previously, SSA is examining the potential for obtaining access to 

the system to identify SSI recipients who reside outside the U.S. for more than 30 

consecutive days. 

SSA has also not fully utilized its authority to obtain independent data from other 

sources such as financial institutions as a tool for detecting potential residency violations. The Foster Care Independence Act of 1999 (FCIA) granted SSA new authority to verify recipients’ financial accounts. To implement this authority, SSA issued 

proposed regulations on its new processes for accessing financial data in May 

2002.20 In September 2003, the agency issued its final regulations. SSA is testing 

processes to access the records of financial institutions and credit bureaus to detect 

unreported income or resources of SSI applicant and recipients. However, it is not 

clear whether SSA plans to use financial institution data more broadly to detect potential residency violations. In particular, it may be missing potentially helpful 

sources of information such as data on recipients who conduct banking transactions 

outside the U.S. using ATMs. As noted previously, a large proportion of the residency overpayments SSA detected between 1997 and 2001 were tied to recipients 

who originated in various countries in Latin America and South/Southeast Asia. 

However, SSA currently has no way to identify recipients who withdraw SSI benefits from ATMs outside the U.S. Information we obtained from a national financial 

data vendor indicates that it is now possible for authorized users to obtain detailed 

information on individuals’ financial transactions from a large number of national 

and international institutions. SSA may be able to obtain data for recipients whose 

SSI benefits are direct-deposited into a U.S. bank and then withdrawn from automated teller machines outside the country over extended time periods. In response 

to our recommendation, SSA has indicated that it would explore the feasibility of 

obtaining such information to identify recipients who reside outside the U.S. for 

more than 30 consecutive days. 

f 

Mr. Chairman, this concludes my prepared statement. I will be 

happy to respond to any questions you or other Members of the 

Subcommittee may have. 

Chairman HERGER. Thank you, Mr. Robertson. Ms. Ford to testify? 

STATEMENT OF MARTY FORD, CO-CHAIR, SOCIAL SECURITY 

TASK FORCE, CONSORTIUM FOR CITIZENS WITH DISABILITIES 

Ms. FORD. Chairman Herger, Mr. Cardin, thank you for this opportunity to testify. The SSI Program is critically important to 

nearly 6 million people who receive benefits based on disability or 

blindness. The SSI is the only source of income for the majority of 

SSI beneficiaries. The CCD Task Force would like to thank the 

Subcommittee for the improvements to the SSI Program that were 

included in the So,cial Security Protection Act (P.L.108–203). The 

SSI provisions, the ticket to work provisions and the important provisions regarding representative payees will benefit many beneficiaries. 

About 300,000 SSI beneficiaries use the work incentives in SSI 

and engage in work despite their severe disabilities. This suggests 

that with some additional steps to eliminate barriers, it may be 

18 

possible to increase the numbers of SSI beneficiaries with disabilities who are able to reduce or eliminate their need for SSI cash 

assistance. However, the promise of work incentive programs, for 

the promise to be realized, SSA must deal with its inability to 

track wages and adjust benefit levels when working beneficiaries 

report earnings. There is a lot of discussion in the testimony today 

regarding overpayments, but I think it is very important to note 

the fact that for a beneficiary who uses the work incentives in SSI, 

overpayments will be part of the normal course of business. 

Due to retrospective accounting, there will be overpayments 

when an SSI beneficiary works. These overpayments should be adjusted within 3 months of the individual’s work. However, when 

the earnings information is not recorded accurately or in a timely 

manner, large overpayments can result. This is a nightmare to people with extremely low incomes and becomes a major barrier to future work. 

There must be a plan to assure the accurate and timely recording 

of beneficiary earnings reports and the timely adjustment of benefit 

payments to reflect reported income. This is critical for the success 

of any efforts to encourage beneficiaries to work. Since 1996, refugees and other humanitarian immigrants fleeing persecution who 

are elderly or disabled can receive SSI for 7 years, with the expectation that they will become citizens within that time. We now 

know that that is not the case for many now receiving SSI. The 

President’s budget proposed an important 1-year extension of benefits. We urge passage of H.R. 4035, the SSI Extension for Elderly 

and Disabled Refugees Act, which will provide for 2 years’ additional benefits and include the lookback for those who have already 

been hit by the 7-year limit. 

We also urge you to consider H.R. 2187, the SSI Modernization 

Act, which includes an important package of modest SSI improvements. It would double the earned and unearned disregard 

amounts that Mr. Cardin mentioned, which has not changed since 

the inception of the program, and it would increase accountable resource levels for individuals and for married couples. These have 

not been increased or adjusted for inflation since 1989. The resource limit is the highest level of countable savings an SSI beneficiary can have to address a myriad of unexpected costs for emergencies. The bill would also index the dollar levels in future years 

so that the value of these improvements is not lost over time. 

It is critical that SSA improve its process for making disability 

determinations. People with disabilities by definition have limited 

earnings from work, and they are often forced to wait years for a 

final decision. This is damaging not only to the individual and family but also to public perception of the program. We applaud Commissioner Barnhart for establishing as a very high priority her administration’s efforts to improve the disability determination process. We also applaud her work in making the design process an 

open one. 

We strongly support the efforts to reduce unnecessary delays for 

claimants and to make the process more efficient so long as they 

do not affect the fairness of the process. Changes at the front end 

of the process may have a significant beneficial impact on improving the backlogs and the delays later on in the appeals process by 

19 

1 Annual Statistical Supplement, 2003, Table 7.C1, Social Security Administration 2 Id. Table 7.F3 

3 Id. Table 7.D1 

making a correct disability determination at the earliest possible 

point. Our complete written comments to Commissioner Barnhart 

on her proposals are available for the record. 

Finally, we urge that SSA be provided with the resources to fully 

meet its administrative responsibilities. We support the President’s 

budget request for fiscal year 2005 for the limitation on administrative expenses, and in addition, we support removing SSA’s limitation on administrative expenses from any caps on domestic discretionary spending. Again, I thank you for this opportunity to testify, and we look forward to working with the Subcommittee and 

the SSA on these issues. Thank you. 

[The prepared statement of Ms. Ford follows:] 

Statement of Marty Ford, Co-Chair, Social Security Task Force, Consortium 

for Citizens with Disabilities 

Chairman Herger, Representative Cardin, and Members of the Subcommittee, 

thank you for this opportunity to testify regarding the operation of the Supplemental Security Income program. 

I am Director of Legal Advocacy for The Arc and UCP Public Policy Collaboration, 

which is a joint effort of The Arc of the United States and United Cerebral Palsy. 

I am testifying here today in my role as co-chair of the Social Security Task Force 

of the Consortium for Citizens with Disabilities. CCD is a working coalition of national consumer, advocacy, provider, and professional organizations working together with and on behalf of the 54 million children and adults with disabilities and 

their families living in the United States. The CCD Social Security Task Force focuses on disability policy issues in the Title XVI Supplemental Security Income program and the Title II disability programs. 

The SSI program is critically important to many people with disabilities. As Commissioner Barnhart reported when she testified before the Subcommittee recently, 

6.9 million individuals received federally administered monthly SSI benefits in 

March 2004. This group is composed of 1.2 million individuals who receive benefits 

based on being aged 65 or older, 5.7 million people receive benefits based upon disability, and 95,000 people receive SSI based upon blindness. 

The monthly benefit paid to these eligible individuals averages $425. In addition, 

SSI is the only source of income for the majority of SSI recipients. In December 

2002, 51.8 percent of all SSI beneficiaries received the full federal payment, including 54.8 percent of SSI recipients who are disabled and 51.6 percent of SSI recipients who are blind, meaning that they basically have no other source of income.1

We also know that at the end of 2002, there were 17,271 SSI beneficiaries (based 

on disability) participating in the 1619(a) cash assistance work incentive and another 82,177 former SSI beneficiaries (based on disability and blindness) participating in 1619(b)—continuing to receive Medicaid while they are working.2 Overall, 

including those recipients whose earnings did not exceed the Substantial Gainful 

Activity level of $800 per month (and thus they received regular SSI and are not 

counted in the 1619 cash assistance figures), 254,407 individuals receiving SSI 

based on disability and 5,148 individuals receiving SSI based on blindness had some 

earned income in December 2002.3

The numbers of those SSI beneficiaries engaged in work despite their disabilities, 

while modest, are still significant and suggest that, with some additional steps to 

eliminate work disincentives—such as SSA ensuring the timely recording of earnings and updating of benefit payments to eliminate overpayments—it may be possible to increase the numbers of SSI recipients with disabilities who are able to reduce or eliminate their need for SSI cash assistance in the future. 

Social Security Protection Act 

On behalf of people with disabilities, the CCD Social Security Task Force thanks 

the Subcommittee for the improvements to the SSI program that were included in 

the Social Security Protection Act, P.L. 108–203. While many of the SSI provisions 

appear very technical and help to simplify the program for purposes of SSA’s administration of it, these provisions will also be important to those beneficiaries and 

20 

claimants affected by them. In addition, some of the provisions to clarify the Ticket 

to Work and Work Incentives Improvement Act will benefit SSI beneficiaries. Finally, the important provisions regarding representative payees will benefit those 

SSI beneficiaries who need the assistance of representative payees in managing 

their benefit payments. 

Work Incentives and Overpayment Issues 

As you know, the SSI program includes several incentives for beneficiaries to 

work and test their ability to become self-sufficient. Commissioner Barnhart addressed several of these work incentives in her testimony last month. For the success of these work incentive programs, including the Ticket to Work program, to be 

realized, SSA must address its current inability to track wages and adjust benefit 

levels when working beneficiaries report earnings. As the system stands now, the 

chronic problem of overpayments to beneficiaries is a major barrier to efforts to assist beneficiaries in working or returning to work. 

Overpayments, with the resulting letters from SSA stating that the beneficiary 

may owe SSA thousands of dollars in back benefits, are such a nightmare to many 

people that the potential for the existing work incentives in the SSI and Title II 

programs is limited. CCD has recommended that SSA develop and establish a reliable, efficient, beneficiary-friendly method of collecting and recording information 

regarding a beneficiary’s earnings and adjusting benefits appropriately in a timely 

manner. The system must stop punishing the beneficiary for SSA’s inability to properly track and act upon the earnings information. 

Commissioner Barnhart’s April testimony discussed a pilot project designed to 

test beneficiary reporting of income using touch-tone and voice-prompt telephone 

technology. We look forward to the results of this study. More importantly, we look 

forward to implementation of a nationwide program which will ensure the accurate 

and timely recording of beneficiary earnings reports and the timely adjustment of 

benefit payments to reflect the reported income. This is critical for the success of 

any efforts to encourage beneficiaries to work. 

We are also interested in how SSA will respond to concerns raised about the inability of SSI beneficiaries to truly take advantage of the Ticket to Work program 

due to an interpretation that the Ticket program authorizing language requires 

total elimination of cash benefits rather than some reduction in benefits. For SSI 

beneficiaries, the offset of $1.00 of benefits for each $2.00 of earnings—a very important work incentive—sets a much higher threshold for elimination of benefits. As 

a result, it would be better if providers could receive payment when SSI beneficiaries’ earnings reduce the amount of their SSI benefits, rather than completely 

eliminate any SSI payment. Until this issue is resolved, SSI beneficiaries are less 

likely to benefit from the Ticket program than others. 

Refugees and Other Humanitarian Immigrants 

Since 1996, Congress has limited the time that refugees, persons granted asylum, 

Cubans and Haitians with refugee-like status, and other humanitarian immigrants 

who have fled persecution and who are elderly or disabled, can receive SSI. They 

are eligible to receive SSI only for seven years. The thinking was that it was reasonable to assume that these humanitarian immigrants would be able to become citizens within seven years of their arrival in the United States and that then their 

SSI eligibility would continue because they were citizens. We now know that is not 

the case for some people receiving SSI. As of December 2003, about 2,400 refugees 

and other humanitarian immigrants had lost SSI eligibility because of the time 

limit. This year, over 7,500 refugees and humanitarian immigrants will reach the 

seven-year limit and could lose SSI eligibility (some may not, if they are able to establish citizenship fast enough). Between 2004 and 2010, the Social Security Administration estimates that about 48,000 refugees and humanitarian immigrants will 

reach the seven-year limit. 

The President’s budget proposal for fiscal year 2005 acknowledges that the sevenyear limit is flawed and proposes a one-year extension of benefits. If enacted, the 

President’s proposal would offer important short-term relief. CCD supports H.R. 

4035, the SSI Extension for Elderly and Disabled Refugees Act, introduced by Representatives Cardin and Houghton, and co-sponsored by Ways and Means Committee Members Nancy Johnson, English, Levin, Stark, Rangel, and Becerra, as well 

as other Members of the House. This bill will provide two additional years of benefits for refugees and other humanitarian immigrants, and includes a ‘‘look-back’’ for 

those who have already been hurt by the seven-year limit. Given the long waits now 

being experienced at Citizenship and Immigration Services, we worry that even this 

two year extension will be inadequate. However, it would be an important start. Because of the nature of the problems facing these particular immigrants and the cirVerDate Aug 04 2004 21:16 Aug 19, 2005 Jkt 099676 PO 00000 Frm 00024 Fmt 6633 Sfmt 6621 E:\HR\OC\A676.XXX A676
21 

cumstances under which they come to the United States, we believe that ultimately 

Congress should eliminate any limit on receipt of SSI by refugees and other humanitarian immigrants who are elderly or disabled, as it did recently in the Food Stamp 

Program. 

Improvements to the SSI Program 

Representative Cardin has introduced H.R. 2187, the SSI Modernization Act, 

which includes an important package of modest SSI improvements that we urge this 

Subcommittee to consider. The bill would double the unearned income disregard 

from $20 to $40. Making this change would provide modest helpful support to those 

SSI recipients who have another source of income, most commonly a Social Security 

retirement or disability benefit. The bill also would double the earned income disregard from $65 to $130. This would improve an important work incentive by allowing SSI beneficiaries with disabilities who attempt to work to hold on to a little 

more of their earnings. The amounts disregarded for earned and unearned income 

have not changed since the inception of the SSI program. The proposed modest increases will help these individuals to cover their costs of working—while they are 

allowed to deduct impairment-related work expenses when their benefits are calculated, they are not able to deduct other work expenses. By allowing them to retain 

a little more of their earnings, they will be better able to meet the costs of working. 

The Cardin bill also would increase the countable resource level in SSI from 

$2,000 to $3,000 for an individual and from $3,000 to $4,500 for a married couple. 

An increase in the SSI resource limits is long overdue. These limits have not been 

increased or even adjusted for inflation since 1989 and remain far below their inflation-adjusted values in 1974, when the program first paid benefits. When the SSI 

program was first implemented in 1974, the resource levels were $1,500 for an individual and $2,250 for a couple. Had these original amounts been indexed, the SSI 

resource levels in 2004 would be $5,705 for an individual and $8,558 for a couple. 

In inflation-adjusted terms, the resource-eligibility limits have fallen 65 percent. 

In 1984, Congress increased the resource-eligibility levels over a five year period. 

They have remained frozen since 1989 at the current $2,000 and $3,000. If the 1989 

resource-eligibility levels had been adjusted for inflation, the resource-eligibility levels in 2004 would be $3,024 for individuals and $4,536 for married couples. 

The resource limit represents the highest level of countable savings an SSI recipient can have to address any of a myriad of unexpected costs or emergencies, such 

as a needed home or car repair. Just $2,000 in savings does not provide much of 

a cushion for an elderly person or a person with a disability who may need to repair 

his or her roof or fix the transmission on their car which allows them to shop and 

go to medical appointments. The current limit also frustrates the ability of those 

SSI recipients with disabilities who are working and would like the chance to save 

for things like home ownership, or home or vehicle modifications. While increasing 

the limit by $1,000 will not completely address this problem, it would be a move 

in the right direction and lessen the problems created by the current very low limit. 

With regard to all three of these changes, the Cardin bill also would index the 

dollar levels in future years, ensuring that the value of these improvements is not 

lost over time. 

Improvements to Disability Determination Process 

For people with disabilities, it is critical that SSA improve its process for making 

disability determinations. People with severe disabilities who by definition have limited earnings from work often are forced to wait years for a final decision. This is 

damaging not only to the individual with a disability and his or her family, but also 

to public perception and integrity of the program. 

We applaud Commissioner Barnhart for establishing as a high priority her administration’s efforts to improve the disability determination process. We also applaud 

her work in making the design process an open one. She has sought the comments 

of all interested parties, including beneficiaries and consumer advocacy organizations, in response to her initial draft. We believe the resulting discussions will have 

a positive impact on the proposals as they are refined into official proposals for rulemaking. We have submitted a written response to the Commissioner on her initial 

draft proposal and I will highlight our key recommendations here. 

We strongly support efforts to reduce unnecessary delays for claimants and to 

make the process more efficient, so long as they do not affect the fairness of the 

process to determine a claimant’s entitlement to benefits. Changes at the ‘‘front end’’ 

of the process can have a significant beneficial impact on improving the backlogs 

and delays later in the appeals process, by making correct disability determinations 

at the earliest possible point. Emphasis on improving the ‘‘front end’’ of the process 

is appropriate and warranted, since the vast majority of claims are allowed at the 

22 

initial levels. However, any changes to the process must be measured against the 

extent to which they ensure fairness and protect the rights of people with disabilities. 

We strongly support efforts to implement the electronic disability folder, AeDIB, 

since it has great potential for improving the adjudication process and is critical to 

the success of any changes. We believe that it will reduce delay caused by moving 

and handing-off files, allow for immediate access by any component of SSA or a DDS 

working on the claim, and allow adjudicators to organize files to suit their preference. An over-arching concern is to ensure that claimants and their representatives will have appropriate access to the files. Other concerns include a guarantee 

that the electronic file will contain all of the claimant’s evidence in an exact, unalterable electronic copy of the original. In addition, claimants should not be precluded from presenting available evidence in any format. We have urged SSA to ensure protection of original documents, which are valuable and sometimes irreplaceable evidence, by requiring that exact, unalterable electronic copies of all originals 

be permanently maintained in the electronic folder. Otherwise, we could not support 

this move toward a fully electronic record. 

We believe that SSA must maintain the independence and ensure the quality of 

medical experts, consultative examiners, and vocational experts. While electronic access to disability claims folders will make it possible for experts in different parts 

of the country to assist in determining disability for claimants, especially those with 

rare or uncommon impairments, ensuring the independence of the opinions the experts render will be critical to fair decision-making. 

We recommend that there not be a separate appeal from the proposed Reviewing 

Official (RO) level to the Administrative Law Judge level. The RO should issue only 

allowances or one type of decision that is not an allowance—a ‘‘pre-hearing report’’— 

and the report should be sent to the claimant in all cases that are not fully favorable to the claimant. To guarantee the claimant’s right to a de novo hearing at the 

ALJ stage, the Reviewing Official’s decision should not be entitled to more weight 

or a presumption of correctness when considered by the ALJ. 

The official record on the case should not be closed after the ALJ decision. The 

claimant should retain the right to submit new and material evidence after the ALJ 

decision. However, if the Commissioner determines that the record should be closed, 

there should be a good cause exception to submit new and material evidence. We 

strongly support the submission of evidence as early in the process as possible. However, there are many legitimate reasons why evidence is not submitted earlier and 

thus why closing the record is not beneficial to claimants including: (1) the need to 

keep the process informal; (2) changes in the medical condition which forms the 

basis of the claim; and (3) the fact that the ability to submit evidence is not always 

in the claimant’s or representative’s control. For these reasons, the record should 

not be closed to new and material evidence submitted after the hearing decision. 

The claimant’s right to request review by the Appeals Council should be retained. 

Because of the important Appeals Council functions that benefit claimants, we have 

urged the Commissioner to retain the claimant’s right to administrative review of 

an unfavorable ALJ decision. If the Appeals Council is not retained, we have urged 

the Commissioner to ensure that its review functions are carried out by some other 

appropriate entity within SSA. In fact, we believe that any consideration of eliminating the Appeals Council should be postponed because changes at the earlier levels of the process may relieve pressure on the later stages of the administrative 

process. 

Our complete comments to Commissioner Barnhart on her proposed revisions to 

the disability determination process are available for the record should the Members 

of the Subcommittee wish to see them. 

Limitation on Administrative Expenses 

Improving the disability determination process, including reducing the backlog 

and processing times, must remain a high priority. We urge commitment of resources and personnel to resolve the exorbitant waiting times and make the process 

work better for people with disabilities. 

First, SSA must be provided with the resources to fully meet its administrative 

responsibilities. We support the President’s budget request for FY 2005 for $8.878 

billion for the Limitation on Administrative Expenses, a 6.8 percent increase over 

the FY 2004 appropriation. 

In addition, we support removing SSA’s Limitation on Administrative Expenses 

budget authority from any caps on the domestic discretionary spending category. Removal of the LAE from any domestic discretionary spending caps would remove it 

from competition with other health, education, and human needs programs for limited funds. It would allow for growth that is necessary to meet the needs of the comVerDate Aug 04 2004 21:16 Aug 19, 2005 Jkt 099676 PO 00000 Frm 00026 Fmt 6633 Sfmt 6621 E:\HR\OC\A676.XXX A676
23 

ing baby-boomer retirement years (including the retirement of SSA and state DDS 

personnel); continue the efforts to improve the processing time for initial applications and appeals, particularly through technological improvements; continue the efforts to ensure integrity in the program through CDRs and other redeterminations; 

and allow for replacement of staff in a timely manner and to provide for adequate 

training and mentoring. Even if the LAE were removed from any domestic discretionary caps, SSA’s LAE would still be subject to the annual appropriations process 

and Congressional oversight. Currently, SSA’s administrative expenses total less 

than 2% of benefit payments paid annually. Congress would still maintain its role 

in ensuring continued administrative efficiency. 

Again, thank you for this opportunity to testify on these important issues. The 

CCD Social Security Task Force looks forward to working with the Subcommittee 

and the Commissioner on the issues of importance to people with disabilities in the 

Supplemental Security Income program. 

On Behalf of: 

American Association of People with 

Disabilities 

American Association on Mental 

Retardation 

American Foundation for the Blind 

American Council of the Blind 

American Network of Community 

Options and Resources 

Bazelon Center for Mental Health Law 

Brain Injury Association of America 

National Alliance for the Mentally Ill 

National Association of Councils on 

Developmental Disabilities 

National Association of Disability 

Representatives 

National Law Center on Homelessness 

and Poverty 

National Organization of Social Security 

Claimants’ Representatives 

Paralyzed Veterans of America 

Research Institute for Independent 

Living 

The Arc of the United States 

Title II Community AIDS National 

Network (TIICANN) 

United Cerebral Palsy 

United Spinal Association 

f 

Volunteers of America 

Chairman HERGER. Thank you, Ms. Ford. Mr. O’Carroll to testify. 

STATEMENT OF PATRICK P. O’CARROLL, ACTING INSPECTOR 

GENERAL, SOCIAL SECURITY ADMINISTRATION 

Mr. O’CARROLL. Good morning, Chairman Herger and Mr. 

Stark. It is a pleasure to participate in this important hearing on 

the SSI Program. In 1997, the GAO designated SSI a high-risk program. Since then, SSA has taken several significant steps. As a result, GAO removed SSI from its high risk list in January 2003, noting improved financial integrity and management. Today, I will 

discuss SSI from two perspectives: management of the disability 

process and improper payments. I will also discuss the impact of 

the Social Security Protection Act of 2004. 

Managing the disability process remains a major challenge for 

SSA, due to concerns about timeliness and quality of service. In her 

April 29 testimony, the Commissioner said SSA’s accelerated electronic disability system (AeDIB) will reduce delays. We are particularly interested in its electronic signature and system security implications and will continue monitoring this initiative closely. 

Fraud is another challenge to SSA’s disability programs. One great 

success is our collaboration with SSA in the Cooperative Disability 

Investigation (CDI) program. The CDI units are composed of IG 

special agents, SSA personnel and State or local law enforcement; 

24 

CDI obtained evidence to resolve questions of disability fraud. 

Eighteen units have opened since 1998. 

In the first half of fiscal year 2004, CDI saved SSA programs al- most $64 million by identifying fraudulent claims. In fiscal year 

2003, CDI saved almost $100 million. Since its inception, CDI has 

denied or terminated over 5,000 claims. For example, a California 

husband and wife stole $456,000 in SSI benefits and bilked $2 million from elderly victims. The woman was representative payee for 

her husband and children, who both received disability benefits for 

mental impairments, and CDI found each family member had several fictitious identities. The husband and wife received a 10-year 

prison sentence, and they must pay restitution in the amount of 

$1.5 million. 

The second perspective from which we observe advances in the 

SSI Program is improper payments, payments that should not have 

been made or that were made for incorrect amounts. The Committee on Ways and Means has been a key supporter of legislative 

initiatives related to prisoners, fugitives and representative payees; 

SSA has made progress in suspending benefits to prisoners. The 

SSA actuary estimated that $4.9 billion would be saved between 

calendar years 1995 and 2003 with the prisoner program. 

Federal law also bars SSI for fugitive felons and for probation 

and parole violators. Our fugitive felon program assists law enforcement with locating and apprehending criminals, and SSI data 

contributed to arresting 3,300 fugitives in the first half of 2004 and 

over 19,000 arrests since the program’s inception in 1996. For example, 2 fugitive sweeps in Detroit resulted in over 200 felony arrests. We estimate SSA saved SSI $83.4 million between August 

1996 and February of 2003. The agency is currently attempting to 

recover another $207 million in overpayments made to fugitives. 

Another concern is the representative payee program. If beneficiaries cannot manage their own benefits, SSA selects representative payees to do so. Over 5 million representative payees manage 

payments for nearly 7 million beneficiaries. Our audits of this program have identified deficiencies with financial management and 

accounting for benefit receipts and disbursements, vulnerabilities 

in safeguarding payments and poor monitoring and reporting of 

changes in beneficiary circumstances. We have recommended numerous corrective actions. 

We have also opened over 3,800 investigations of representative 

payees, identifying over $32 million in fraud and resulting in 765 

convictions. For example, an organizational representative payee 

called Payees ’R’ Us handled about 200 beneficiaries. Its director 

embezzled over $107,000. After our investigation, she was sentenced to 10 months imprisonment and ordered to pay full restitution. 

I would like to conclude by discussing the impact of the Social 

Security Protection Act. This milestone bill provides new safeguards for Social Security and SSI beneficiaries. It also enhances 

other program protections. For several years, we have assisted this 

Subcommittee in recommending measures embodied in the new 

law. It expands our Fugitive Felon Program by including Old-Age, 

Survivors and Disability Insurance (OASDI) beneficiaries and representative payees, and this could produce a fourfold increase in 

25 

our fugitive felon workload. The new law also strengthens the representative payee program and our ability to deal with dishonest 

representative payees. I look forward to working with Congress and 

the Commissioner to help SSA meet this and other challenges. I 

would be pleased to answer any questions. 

[The prepared statement of Mr. O’Carroll follows:] 

Statement of Patrick O’Carroll, Acting Inspector General, Social Security 

Administration 

Good morning, Chairman Herger, Mr. Cardin, Members of the Subcommittee. As 

the Acting Inspector General of Social Security, it is a pleasure to join you today 

for this important hearing on the status and progress of the Social Security Administration’s (SSA) Supplemental Security Income (SSI) Program. As Commissioner 

Barnhart noted in her testimony of April 29, 2004, SSI has come a long way since 

1997, when the General Accounting Office (GAO) designated it a high-risk program 

because SSA lacked an effective plan to address the level of debt created by overpayments. GAO also said the Agency had difficulty determining initial medical and nonmedical eligibility for the program, as well as continuing eligibility of program participants. 

Since then, SSA has taken a number of significant steps to address these concerns. Most notably, the Agency issued an SSI Corrective Action Plan. This report 

reflected the serious nature of SSA’s commitment to SSI improvement. It focused 

on four areas: commitment to timely processing of continuing disability reviews 

(CDRs), improved prevention of overpayments, increased overpayment detection, 

and increased collection of debt. As a result of the Agency’s efforts, GAO removed 

the SSI program from its high-risk list in January 2003, noting SSA’s progress in 

improving the financial integrity and management of the program. GAO commended 

SSA for its action obtaining legislation both to prevent and to collect overpayments, 

as well as administrative actions to strengthen SSI program integrity. 

Due to SSA’s many accomplishments, as well as the work of this Subcommittee 

and the Subcommittee on Social Security to enact legislation drawn from recommendations made by GAO and by our office—SSA’s Office of the Inspector General (OIG)—the SSI program has improved significantly. 

Today, I will discuss several important actions the Agency has taken to meet the 

challenge of strengthening SSI. I will discuss our office’s evaluation of these improvements to—and status of—the SSI program from two perspectives: management 

of the disability process and improper payments. Finally, I will also comment on the 

impact of the Social Security Protection Act of 2004. 

Management of the Disability Process 

Due to concerns about the timeliness and quality of service, management of the 

disability process remains a major management challenge for SSA. This area includes the Disability Insurance (DI) and SSI programs, which provide payments to 

individuals based on disability. GAO echoed our concerns when it added all Federal 

disability programs across the Federal government to its 2003 high-risk list. 

Several initiatives SSA has tested to address concerns about its disability process, 

have not resulted in significant improvements. However, the Commissioner has introduced a comprehensive long-term approach to improve the Agency’s disability 

process, which SSA expects to shorten its disability processing times. We will continue to evaluate these more recent initiatives to determine their effectiveness and 

report to you on the Agency’s progress once data is available. 

In her April 29 testimony, the Commissioner stated that the linchpin for SSA’s 

strategy is the development and implementation of its electronic disability claims 

system, the Accelerated Electronic Disability System (AEDIB). She described 

AEDIB as ‘‘a major Agency initiative that is moving all components involved in disability claims adjudication and review to an electronic business process through the 

use of an electronic disability folder.’’ When fully implemented, the Agency expects 

each component to be able to work claims by ‘‘electronically accessing and retrieving 

information that is collected, produced and stored as part of the electronic disability 

folder.’’ The Commissioner believes AEDIB will reduce delays that currently result 

from mailing, locating, and organizing paper folders. We are particularly interested 

in the electronic signature and systems security implications of AEDIB, and will 

continue to closely monitor the development of this key initiative. 

Fraud is an inherent risk in SSA’s disability programs. Some unscrupulous people 

view SSA’s disability benefits as money waiting to be taken. A key risk factor in 

26 

the disability program is individuals who feign or exaggerate symptoms to become 

eligible for disability benefits. Another key risk factor is the monitoring of medical 

improvements for disabled individuals to ensure those individuals who are no longer 

disabled are removed from the disability rolls. We will continue to work with the 

Agency to prevent and detect such fraud. 

The Cooperative Disability Investigations Program 

One area that has shown great success is our collaborative effort with SSA in addressing the integrity of the disability programs through the Cooperative Disability 

Investigations (CDI) program. The CDI program’s mission is to obtain evidence that 

can resolve questions of fraud in SSA’s disability programs. 

CDI units are composed of Office of Investigations (OI) special agents and personnel from SSA’s Office of Operations, State Disability Determination Services and 

State or local law enforcement. They use their combined skills and specialized 

knowledge to combat fraud, waste, and abuse in the disability program. Eighteen 

units have been opened in 17 States since fiscal year (FY) 1998 with 2 units open 

in Texas. 

Last year, GAO acknowledged the CDI program’s successes by noting that we 

have increased the level of resources and staff devoted to investigating fraud and 

abuse. Our CDI teams identify fraud and abuse before benefits are approved and 

paid. In the first half of FY 2004, the CDI units saved SSA’s SSI and Old Age, Survivors and Disability Insurance (OASDI) programs almost $64 million by identifying 

fraud and abuse related to initial and continuing claims within the disability program. In FY 2003, the CDI Program saved almost $100 million. Since the inception 

of the program, over 5,000 claims have been denied or terminated. 

Due to the great success of these units, we hope to add additional CDI units on 

a year-to-year basis, depending on available funds. As an alternative, we would also 

consider adding staff to our more successful units. 

Four recent cases highlight the successes of the CDI Program. A California 

woman served as representative payee for her husband and her multiple children. 

They all received disability benefits for mental impairments. The Oakland CDI unit 

investigation found that each family member established several fictitious identities 

and improperly obtained $456,309 in SSI disability benefits, as well as county welfare benefits. The family also bilked some $2 million from several elderly victims. 

The husband and wife were arrested and charged with 28 counts of criminal malfeasance, including grand theft charges for the SSI payments. Each was sentenced to 

a 10-year State prison term, and the couple was ordered to pay joint restitution of 

over $1.5 million to SSA, AlamedaCounty, and their elderly victims. The family’s 

benefits were terminated. 

In another large-scale case, our New York CDI unit recently completed its investigation of a $1.3 million SSI fraud committed by several organized groups in Brooklyn, NY. The Brooklyn DDS contacted the CDI Unit about a pattern of applications 

containing no treatment for alleged mental disabilities. Our investigators observed 

the applicants performing activities they claimed they could not perform, such as 

leaving home, shopping, and driving. We determined that several of these SSI 

frauds had begun in the 1970s and 1980s. This investigation resulted in 35 arrests, 

24 felony convictions, and court-ordered restitutions, forfeitures, and judgments totaling more than half a million dollars. Many of those convicted were also incarcerated. 

In another CDI case, a 23-year-old man filed for disability benefits, alleging brain 

damage and mental retardation caused by exposure to toxic fumes at a chemical 

plant. Our Houston CDI Unit, assisted by local police, arrested him at a girlfriend’s 

house on an outstanding felony warrant for failure to register as a sex offender. 

After the arrest, our investigators found he was able to talk, communicate well and 

follow directions. The man’s claim was denied. 

Finally, our New York CDI investigated a man who received SSI benefits for paralysis, alleging such limitations that he spent his days watching television and 

needed his mother to do chores. Our CDI Unit investigation revealed the subject 

was running a $30 million dollar sports betting operation and was alleged to be a 

captain in the Gambino crime family. His W–2 earnings statements showed annual 

earnings of $75,000 for managing a restaurant. SSA determined his earnings precluded eligibility and he was arrested for grand larceny. The subject was incarcerated on racketeering charges, and his sentencing on the SSI case is pending. 

Improper Payments 

Another perspective from which we observe Agency progress in the SSI program 

is improper payments—payments that should not have been made or that were 

27 

made for incorrect amounts. To combat improper payments, Congress enacted the 

Improper Payments Information Act in November 2002, and the Office of Management and Budget (OMB) issued guidance in May 2003 implementing this new law. 

Under this law, agencies that administer programs with a significant risk of improper payments estimate their annual amount of improper payments, and report 

this information in their Performance and Accountability Reports. SSA has undertaken many projects to identify and improve areas where it could do more to reduce 

improper payments and/or recover amounts overpaid. The Agency has been working 

to improve its ability to prevent overpayments and underpayments by obtaining 

beneficiary information from independent sources sooner and/or using technology 

more effectively. In this regard, SSA has initiated new computer matching agreements, obtained on-line access to wage and income data, and implemented improvements in its debt recovery program. 

In FY 2003, SSA issued over $500 billion to almost 50 million beneficiaries and 

recipients with $33 billion in SSI payments to about 6.8 million individuals. Even 

the slightest error in the overall process can result in millions of dollars in overpayments or underpayments. Working with SSA, we have made great strides in reducing benefit payments to prisoners and SSI payments to fugitive felons, and these 

efforts continue. For example, we recently completed a review of the Agency’s efforts 

which concluded that SSA has made significant efforts over the past several years 

to identify, prevent, and recover SSI overpayments. 

Halting Benefits for Prisoners 

One early sign of SSA’s commitment to SSI program integrity was the halting of 

benefit payments to prisoners. Less than a year after SSA became an independent 

agency, we estimated in an audit report that the annual cost to SSA in erroneous 

payments to prisoners was $48.8 million, and we recommended that SSA seek legislation to facilitate the exchange of information with Federal, state, and local prison 

authorities. Such legislation was enacted in 1999 and payments to more than 69,000 

prisoners were suspended in FY 2000 based on more than 260,000 prisoner alerts 

received in large part because of that legislation. SSA’s actuary estimated in 1998 

that $4.9 billion would be saved between calendar years 1995 and 2003 by stopping 

OASDI and SSI payments to prisoners. In July 2003, we completed a follow-up review and found that SSA has made progress in obtaining, processing, and suspending Social Security benefits to prisoners, as well as collecting overpayments 

from prisoners. 

Currently, SSA receives prisoner data from all 50 States and over 3,000 county 

and local facilities. Since the incentive payment program began in 1997, SSA has 

paid 5,196 penal institutions over $113 million in incentive payments. Suspension 

of benefits to prisoners saves approximately $500 million annually. 

We are currently assessing the accuracy of incentive payments to prisons. The incentive payment provisions in the Social Security Act were established to encourage 

the reporting of inmate data which would allow SSA to suspend SSI and OASDI 

benefits to prisoners in a timely manner. Once our review is complete, we will provide you with our findings and recommendations. 

The Fugitive Felon Program 

Federal legislation bars SSI for fugitive felons and for probation and parole violators, and provides for the exchange of certain SSI information with law enforcement 

agencies under specified conditions. Such fugitives are denied Federal assistance 

and parallel aid is also provided to law enforcement for their apprehension. 

Our highly successful Fugitive Felon Program assists law enforcement with locating and apprehending criminals, making our neighborhoods safer. The program uses 

automated data matches to compare warrant information from the National Crime 

Information Center (NCIC), the Federal Bureau of Investigation, the United States 

Marshals Service, and State agencies with SSI rolls. During FY 2003, we identified 

approximately 38,000 subjects receiving SSI payments—over 3,000 per month—resulting in over 6,500 apprehensions. SSA data contributed to the arrest of 3,329 fugitives in the first half of FY 2004—and over 19,000 arrests since the program’s inception in 1996. 

Let me cite three recent examples. Our Chicago Field Division participated in a 

three-day fugitive sweep in FY 2003 as part of the Violent Crimes/Street Gang Alliance Task Force that combined the resources of Federal, State, county and local law 

enforcement agencies from the Detroit metropolitan area. Our agents contacted approximately 100 fugitives receiving SSI benefits to lure them to our office for arrest. 

Our agents were directly responsible for the arrests of 46 felons, and the sweep resulted in over 100 arrests for a variety of felony offenses including arson, criminal 

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struction of property and animal fighting. The operation followed a similar threeday fugitive felon sweep that resulted in 100 arrests for crimes including assault 

with intent to murder, assault with intent to do great bodily harm, armed robbery, 

criminal sexual conduct, home invasion, weapons violations, auto theft, and various 

probation and parole violations. 

In another fugitive felon case, our Los Angeles Field Division investigated an SSI 

recipient who violated his probation following his conviction for robbing a bank. Our 

investigators determined that he had an extensive criminal history involving numerous violations for both theft and bank robbery. He was taken back into custody 

without incident by our special agents and United States Marshals Service deputies 

near the Social Security office in Pomona. 

In Fall 2003, a Florida man sought for killing a local pastor was featured on 

‘‘America’s Most Wanted.’’ NCIC submitted his arrest warrant to our Fugitive Felon 

Program. We discovered that his SSI record indicated he had recently changed his 

address to a homeless shelter in San Diego, California. A citizen contacted the police 

after recognizing the man from a ‘‘wanted’’ flier our Los Angeles Field Division and 

the San Diego Violent Crimes Task Force distributed. The fugitive was arrested 

near the shelter minutes later. His SSI payments were also terminated. 

In a fugitive felon report issued last year, we estimated that SSA saved the SSI 

program $83.4 million between August 1996 and February 2003. This included 

$74.1 million in SSI payments that might otherwise have been paid to fugitives had 

SSA not taken administrative action to suspend their monthly payments and $9.3 

million in SSI overpayments recovered from fugitives. Also, the Agency is attempting to recover about $207 million in overpayments paid to fugitives. 

Benefits Fraud 

Eligibility for the SSI program is often complex and difficult to verify. Several factors need to be considered, such as an individual’s income, resource levels, and living arrangements. Further, because individual financial circumstances also often 

change, SSA must frequently reassess recipients’ continuing eligibility for benefits. 

As a result, the SSI program tends to be difficult and labor intensive to administer. 

These factors also make the SSI program vulnerable to overpayments. 

Our office is constantly working to prevent and detect fraud that would result in 

the improper payment of SSI. For example, we have taken aggressive action in conjunction with SSA to stop erroneous payments to deceased individuals. This includes 

front-end detection of such payments and controls to prevent them, as well as detailed investigations to locate wrongdoers when the system breaks down. 

In 1997, as a result of the Robinson/Reyf class action lawsuit settlement, SSA implemented procedures that payment checks were issued by SSA be replaced immediately after a non-receipt report is filed. This has resulted in some fraudulent nonreceipt reports. To ensure these payments are issued appropriately, in close coordination with SSA’s regional staff, we have initiated an aggressive investigative 

project into replacement check fraud, in which people ask for a replacement check 

to be issued, falsely claiming they never received the original. 

For example, in a recent investigation, seven representative payees who received 

a combined 20 SSI checks each month engaged in a replacement check fraud 

scheme. Our Atlanta Field Division determined the seven repeatedly called the SSA 

toll-free number to fraudulently report non-receipt of their legitimate monthly 

checks, and then cashed the duplicate checks when they arrived. One was incarcerated, and the remaining six were sentenced to varying terms of probation. The 

seven were ordered to pay restitution totaling $48,655 to SSA. 

In FY 2003, we reviewed SSA’s process for issuing replacement checks and found 

that SSA needs to improve its monitoring of replacement check requests, overpayment recovery actions, and deterrents such as administrative sanctions. In response, 

the Agency revised its procedures and controls over its replacement check policy, as 

well as its recovery of related overpayments. We will continue to monitor the Agency’s progress in this area. 

Representative Payee Fraud 

Another area of concern is the Representative Payee Program. When SSA determines a beneficiary cannot manage his/her benefits, SSA selects a representative 

payee, who must use the payments for the beneficiary’s needs. About 5.3 million 

representative payees manage payments for 6.7 million beneficiaries for all of SSA’s 

programs. Over 2.3 million SSI recipients have representative payees. In managing 

the representative payee process, SSA must provide appropriate safeguards to ensure they meet their responsibilities to the beneficiaries they serve. To assist SSA 

in this effort, we completed a number of initiatives to determine whether representative payees had effective safeguards over the receipt and disbursement of Social 

29 

Security benefits, and to ensure that Social Security benefits are used and accounted for in accordance with SSA polices and procedures. 

Additionally, since FY 2001, our audits have identified deficiencies with the financial management and accounting for benefit receipts and disbursements; 

vulnerabilities in the safeguarding of beneficiary payments; poor monitoring and reporting to SSA of changes in beneficiary circumstances; as well as inappropriate 

handling of beneficiary-conserved funds and the charging of improper fees. As a result of these audits, the Agency has both agreed to and implemented numerous recommendations for corrective actions aimed at strengthening the control and accounting of funds by representative payees. 

Our audit work has shown that closer attention to the initial selection process 

could resolve many potential problems before they arise, so it is critical that SSA 

more thoroughly screen potential representative payees. In October 2002, we issued 

a report that identified 121 individuals serving as representative payees whose own 

SSI benefits were stopped by SSA because they were fugitive felons or parole or probation violators. SSA policy at that time did not prohibit fugitive felons and parole 

or probation violators who have not been convicted of a crime involving a Social Security program to serve as representative payees. In a March 2003 audit we quantified the number of representative payees who were fugitive felons regardless of 

whether they were receiving SSI payments. In this audit, we estimated that fugitives could manage approximately $19 million in Social Security funds each year if 

SSA did not take action to replace them as representative payees. The recent passage of the Social Security Protection Act bars fugitives from serving as representative payees. Therefore, SSA can now take extra precautions to protect its most vulnerable beneficiaries. 

Once representative payees have been selected, it is also incumbent upon SSA to 

adequately monitor them to ensure that benefits are being used as intended to aid 

the beneficiary and that the representative payees continue to be suitable. 

To date, we have opened over 3,800 investigations of representative payees. Those 

investigations have identified over $32 million in fraud, and have resulted in over 

765 convictions. Three recent cases illustrate our successes combating representative payee fraud. 

‘‘Payee-R-Us,’’ an organizational representative payee service in Washington 

State, handled as many as 200 vulnerable beneficiaries including individuals who 

were mentally disabled, for which it received a monthly fee per client. Its executive 

director embezzled over $107,000 in payments. In one egregious example, a homeless beneficiary was unaware of his approximately $15,000 retroactive benefit check 

that the executive director had embezzled for her personal use. After our Seattle 

Field Division’s investigation, she pleaded guilty to representative payee misuse and 

Social Security fraud. She was sentenced to 10 months’ imprisonment and ordered 

to pay $107,292 in restitution directly to 88 victims. 

A Kansas man was representative payee for several recipients and beneficiaries 

of Department of Veterans Affairs (VA) and SSA benefits for several years. He converted their benefits to his personal use, telling agents after his arrest he needed 

the money to pay for his drinking habit, and he admitted selling at least three recipients’ farms for more than $70,000 each. Our office worked with VA’s OIG to 

bring charges, and he was sentenced to 12 months house arrest wearing an electronic monitor, 3 years supervised probation, a special assessment fee of $300, and 

restitution in the amount of $490,625. 

We have the same problem in non-SSI cases as well. For example, our Atlanta 

Field Division investigated a Florida woman who stole an acquaintance’s identity 

to obtain a North Carolina ID card. Then she ‘‘created’’ two children by providing 

SSA false birth certificates to get SSNs for them. After altering marriage and divorce documents and claiming she had married a known deceased man she portrayed as the children’s father, she received SSA survivor’s benefits for the fictitious 

children as their representative payee. We found she had previously collected SSA 

survivor benefits for herself and another fictitious child. Our investigation revealed 

five false identities she used to obtain valid SSNs to open bank accounts and private 

mailboxes for the SSA funds. She was sentenced to 27 months’ incarceration, ordered to pay SSA restitution of $79,627, and required to participate in a Federal 

Bureau of Prisons drug rehabilitation program. 

Partnerships with U.S. Attorneys 

Placing attorneys in several United States’ Attorneys’ Offices (USAO) as Special 

Assistant United States Attorneys (SAUSA) is an important law enforcement tool 

in fighting benefits fraud. This partnership enables us to have cases that are developed by our investigators criminally prosecuted—cases that would normally be declined due to the limited resources of the various USAOs. OIG currently has a fullVerDate Aug 04 2004 21:16 Aug 19, 2005 Jkt 099676 PO 00000 Frm 00033 Fmt 6633 Sfmt 6621 E:\HR\OC\A676.XXX A676
30 

time SAUSA in Los Angeles and part-time SAUSAs in New Haven and Memphis. 

Likewise, SSA’s Office of General Counsel has assigned several attorneys to act as 

SAUSAs in other major metropolitan areas. 

In one such case, an Arizona family received more than $200,000 in SSI payments 

between 1990 and 2003 for the mother and all six of her children, based on various 

alleged mental and learning disabilities. Our Los Angeles Field Division investigation revealed that many of the children not only attended college, but excelled academically. Also, several of the children led community and school-based sports 

teams. As a result of a plea agreement, the mother agreed to make full restitution, 

and could spend more than 4 years in prison after she is sentenced later this year. 

The Civil Monetary Penalty Program 

Another important enforcement tool in the fight against fraud, the Civil Monetary 

Penalty (CMP) program, provides for the imposition of penalties and assessments 

against individuals who make false statements or representations of material fact 

to SSA in connection with the application for or retention of SSI and DI benefits. 

The CMP program is often used when cases investigated by the OIG are declined 

for criminal and civil prosecution by the USAO. The law allows for the imposition 

of up to $5,000 in penalties for each false statement or representation made to SSA. 

In addition, we are authorized to impose an assessment of up to twice the amount 

of any SSI or DI benefits improperly paid as a result of the false statement or representation. Since FY 1998, we have imposed over $2.6 million in penalties and assessments against those who mislead SSA. When neither criminal action nor imposition of a CMP is possible, we refer the details of our investigation to SSA so that 

the Agency can pursue administrative sanctions to protect program integrity. 

In one recent case, a non-governmental claimant representative made numerous 

false statements to SSA in connection with his attempt to obtain or continue SSI 

and DI benefits for his clients. He altered sections, deleted information, and forged 

physician signatures on medical assessment forms to obtain favorable disability 

hearing decisions for his clients. He was disqualified from representing Social Security claimants, and we imposed a $25,000 CMP. 

Impact of the Social Security Protection Act of 2004 

The Social Security Protection Act of 2004, the work of three Congresses, is 

a milestone bill. It provides new safeguards for Social Security and SSI beneficiaries 

who have representative payees, and will enhance other program protections. We 

called for a number of the measures embodied in the new law for several years. 

This new legislation will provide significant new authority to our office to protect 

the Social Security number (SSN), SSA employees, and the Social Security Trust 

Funds. It is a significant expansion of OIG’s responsibility. I congratulate the Ways 

and Means Committee for this comprehensive, diligent effort, and am honored that 

we could contribute our insight and recommendations to improve the integrity of 

SSA programs and operations. 

The new legislation expands our Fugitive Felon Program beyond SSI beneficiaries 

to include OASDI beneficiaries and representative payees. In our audit report issued 

last year on the SSI fugitive program, we estimated that approximately 7,988 individuals were ineligible for SSI payments in February 2003 because of outstanding 

felony warrants, but were eligible for OASDI benefits totaling $4 million for that 

1 month. At the time—prior to enactment of the Social Security Protection Act—we 

noted that if the Social Security Act were amended to preclude payment of OASDI 

benefits to fugitives, SSA could save approximately $48 million over the next year 

by withholding the monthly OASDI benefits to these 7,988 fugitives. 

These savings can now become a reality with the passage of the law, combined 

with SSA’s and OIG’s efforts to implement it with current resources. Additionally, 

I mentioned earlier that SSA data has contributed to the arrest of over 19,000 fugitives since the program’s inception in 1996. With the passage of the Social Security 

Protection Act, we expect our monthly workloads to increase substantially. 

The Social Security Protection Act will also significantly strengthen the Representative Payee Program and our ability to deal with dishonest representative 

payees. It allows for the imposition of CMPs against representative payees who misuse benefits paid on behalf of their clients. The new law also allows SSA to fully 

compensate beneficiaries defrauded by unscrupulous representative payees, and 

bars fugitive felons from serving as representative payees. 

This is an important new safeguard. 

31 

Conclusion 

I am certainly proud of the contributions our office has made toward the detection 

and prevention of fraud and the overall security of the SSI program. While there 

undoubtedly remains more to be done, SSA should be proud of the significant 

changes it has made in the SSI program, and the improvements brought about by 

those changes. 

I look forward to working with Congress and the Commissioner to help SSA meet 

these and other challenges. Thank you, and I would be pleased to answer any of 

your questions. 

f 

Chairman HERGER. Thank you, Mr. O’Carroll. Ms. Marshall to 

testify? 

STATEMENT OF MARTHA MARSHALL, PRESIDENT-ELECT, NATIONAL ASSOCIATION OF DISABILITY EXAMINERS, LANSING, 

MICHIGAN 

Ms. MARSHALL. On behalf of NADE—— 

Chairman HERGER. Ms. Marshall, if you could maybe bring the 

microphone a little closer. 

Ms. MARSHALL. I would like to thank Chairman Herger—— 

Chairman HERGER. Thank you. 

Ms. MARSHALL. Ranking Member Cardin and Members of the 

Subcommittee for the opportunity to be here today. The NADE 

agrees with Commissioner Barnhart that SSI beneficiaries are 

among the most vulnerable Members of our society. For them, SSI 

is truly a program of last resort and is the safety net that protects 

them from complete impoverishment. For that reason, we are concerned with the Commissioner’s proposal and congressional initiatives to require pre-effectuation reviews of 50 percent of State 

agency Disability Determination Service (DDS) allowances of SSI 

adult claims. 

We question the rationale for increasing the Federal quality review for DDSs, a component that allows approximately 40 percent 

of initial claims, while there is no such corresponding review of decisions made at the administrative law judge level, a component 

that allows approximately 65 percent of claims. Clearly, this targeted review of DDS allowances does not support the Commissioner’s stated objective of allowing those claims that should be allowed as early in the process as possible. In fact, by targeting DDS 

allowances, SSA sends a message to the DDSs to deny more claims, 

forcing claimants to pursue their claims to the administrative law 

judge level. This message only serves to increase the appeal rate 

and the overall administrative costs of the program. 

In addition, if the review concludes the DDS allowance to be correct, the review process itself delays payment to disabled citizens 

who by the very nature of their claim are in dire financial need. 

Rather than increase pre-effectuation reviews, NADE believes the 

more effective use of resources to promote stewardship and ensure 

program integrity would be to increase the number of CDI units. 

Anti-fraud efforts such as these offer a visible and effective frontline defense for program integrity and serve as a visible and effective deterrent to fraud. Instead of sending a message to the public 

that encourages appeals and increases administrative costs, the 

32 

message sent to the public should be that it is not worth the risk 

to try to defraud the program. 

The NADE also supports SSA’s plans to increase the number of 

redeterminations to ensure greater payment accuracy. It is also 

critical that continuing disability reviews be conducted in a timely 

manner. These reviews are not only cost-effective, saving approximately $9 for each dollar invested. They play an important role in 

the return to work incentive. An individual who knows that his or 

her claim will be reviewed at the appropriate time is more likely 

to explore vocational options. Unfortunately, with the increase in 

initial claims and the loss of targeted funds specifically designed to 

handle this workload, CDIs are likely to be delayed. 

Adequate resources are also needed to enable SSA and the DDSs 

to process the special Title II disability workload. In September 

2003, Commissioner Barnhart presented her approach to improving 

the disability determination process. This approach was designed 

to shorten decision times, pay benefits to people who are obviously 

disabled much earlier in the process and test new incentives for 

those with disabilities who wish to remain in or return to the workforce. 

Both formally and informally, NADE has provided extensive 

feedback to the Commissioner on her new approach, and NADE 

fully supports all efforts to allow earlier access to health care, 

treatment and rehabilitation needs of disabled individuals, as well 

as efforts to assist those individuals who wish to return to work by 

providing them the needed resources. We agree with Commissioner 

Barnhart that successful implementation of AeDIB is a critical feature of any new approach to SSA disability determinations. We 

support these new technologies. 

However, without sufficient support, adequate resources and 

proper equipment, any attempt at an efficient, paperless process 

will meet with failure. While technology can be expected to reduce 

handoffs, eliminate mail time and provide other efficiencies, technology is merely a tool. It cannot replace the highly skilled and 

trained disability examiner who evaluates the claim and determines an individual’s eligibility for disability. 

Although the Commissioner’s approach envisions that quick decisions for those who are obviously disabled would be adjudicated in 

regional expert review units, NADE believes that the DDSs are 

better equipped in terms of adjudicative experience, medical community outreach and system support to fast track claims and gather evidence to make a decision timely, accurately and cost-effectively. Establishing a regional expert unit to handle this workload 

constitutes an additional handoff of a claim with no value added 

to the process. Likewise, NADE does not support assigning the responsibility for quick decisions to the SSA field office. Even with 

additional training, we do not believe SSA claims representatives 

will have the knowledge and skills necessary on an ongoing basis 

to adjudicate these claims. 

To summarize NADE’s key recommendations, we would suggest—we believe that only those strategies with the most beneficial 

outcome for all entities should be implemented. We would suggest 

expanding CDI units to all States rather than increasing reviews 

of DDS allowances. The quick decisions in the DDS that maintain 

33 

medical consultants on site in the DDS fully integrate the single 

decisionmaker into any new disability process, utilize the current 

infrastructure of disability hearing offices as an interim appeals 

step, provide dedicated funding for redeterminations, CDIs and 

special Title II workloads, implement the AeDIB with adequate infrastructure, support and proper equipment. Thank you. 

[The prepared statement of Ms. Marshall follows:] 

Statement of Martha Marshall, President-elect, National Association of 

Disability Examiners, Lansing, Michigan 

Chairman Herger, Ranking Member Cardin, and members of the Subcommittee, 

thank you for providing this opportunity to present the views of the National Association of Disability Examiners (NADE) on the status of the Supplemental Security 

Income (SSI) program, anti-fraud and abuse initiatives, and suggestions for additional program improvements. 

NADE is a professional association whose mission is to advance the art and 

science of disability evaluation and to promote ongoing professional development for 

our members. The majority of our membership is employed in the state Disability 

Determination Service (DDS) agencies and are directly involved in the adjudication 

of claims for Social Security and Supplemental Security Income (SSI) disability benefits. However, our membership also includes SSA Field Office and Central Office 

personnel, attorneys, physicians, and claimant advocates. It is the diversity of our 

membership, combined with our extensive program knowledge and ‘‘Hands on’’ experience which allows us to view problems in the Social Security and SSI disability 

programs from a broad perspective and to offer solutions which reflect a pragmatic 

realism. 

NADE members, whether in the state DDSs, the SSA Field Office, SSA Headquarters, OHA offices or in the private sector, are deeply concerned about the integrity and efficiency of both the Social Security and the SSI disability programs. We 

believe that those who are entitled to disability benefits under the law should receive them; those who are not, should not. Although, in January 2003, the U.S. General Accounting Office (GAO) removed SSI from its list of programs at high-risk for 

fraud and abuse, it added a new high-risk area encompassing a range of Federal 

disability programs, including SSI. We would concur with this assessment. While we 

strongly believe that the vast majority of applicants are not out to defraud the disability program(s), every disability examiner is aware of at least some level of questionable activity on the part of some applicants and/or their representatives. Efforts 

undertaken by Congress and SSA to combat fraud are cost-effective and provide valuable protection to the victims of those who purposely attempt to defraud the program. 

NADE agrees with Commissioner Barnhart that, ‘‘SSI beneficiaries are among the 

most vulnerable members of our society . . . By any measure, SSI recipients are 

among the poorest of the poor. For them, SSI is truly the program of last resort 

and is the safety net that protects them from complete impoverishment’’. For that 

reason, we are concerned with the Commissioner’s proposal and Congressional initiatives to require pre-effectuation reviews of fifty percent of state agency (DDS) allowances of SSI adult cases, ‘‘in order to correct erroneous SSI disability determinations.’’ We question the rationale for increasing the federal quality review 

rate for the DDSs, a component that allows approximately forty percent of 

initial claims, with an FY 2002 net accuracy rate of 98.5% for allowances, 

while there is no such corresponding review of decisions made at the Administrative Law Judge (ALJ) level, a component that allows approximately 

sixty-five percent of claims, with a decisional accuracy rate in FY 2002 of 

90%. 

NADE does not believe that increased review of DDS allowance decisions represents an appropriate use of scarce resources. We are not aware of any study that 

evaluates the end result of claims appealed to the Administrative Law Judge level 

that were initially allowed by the DDS but later denied after the claim was returned 

by the federal quality review component. Anecdotal evidence suggests that many of 

these claims are eventually allowed during the appeals process. 

The decision regarding an individual’s eligibility for benefits should be objective 

and unbiased. There is no evidence that increased review of DDS allowances 

achieves SSA’s Strategic Goals. Nor does it support the objective of allowing those 

claims that should be allowed as early in the process as possible. In fact, by targeting DDS allowances SSA sends a message to the DDSs to deny more claims, forcVerDate Aug 04 2004 21:16 Aug 19, 2005 Jkt 099676 PO 00000 Frm 00037 Fmt 6633 Sfmt 6621 E:\HR\OC\A676.XXX A676
34 

ing claimants to ‘‘Pursue their claims to the Administrative Law Judge level.’’ This 

‘‘Message’’ only serves to increase the appeal rate and the overall administrative 

costs of the program. In addition, if the review concludes the DDS allowance to be 

correct, the review process itself delays payment to disabled citizens who are frequently in dire financial straits. 

For several reasons the SSI disability program is more labor intensive and difficult to administer than the Title II disability program. Both medical eligibility and 

exact payment amounts are determined by complex, ever-changing rules. Individuals applying for SSI disability benefits are, by definition, very poor. Most have little or no ongoing medical treatment or treating sources able to provide comprehensive records. SSI applicants are strong candidates for manipulation by others for financial gain. They are often the victims of others whose mission is to defraud the 

SSI program. Rather than increased pre-effectuation reviews, NADE believes 

a more effective use of resources to promote stewardship and ensure program integrity would be to increase the number of Cooperative Disability Investigation (CDI) units. 

To combat disability fraud, CDI teams rely on the combined skills and specialized 

knowledge of OIG investigators, state and local law enforcement officials and SSA 

and state DDS personnel. As experts in the disability area, NADE members play 

a key role in the process of detecting fraud and abuse within SSA’s disability process. Our members have a unique opportunity to observe and assist in the process 

of detecting fraud and abuse. Both the Social Security Advisory Board and SSA’s 

Office of Inspector General have stated in previous reports and congressional testimony that the experienced disability examiner is the most effective weapon SSA has 

at its disposal to combat fraud. 

CDI units, which first became operational in 1998, have allowed SSA to avoid im- proper payments of over $159 million. NADE supports the continued expansion of 

the CDI units to combat fraud and abuse in the disability program. Anti-fraud efforts such as these offer a visible and effective front-line defense for program integrity, and serve as a visible and effective deterrent to fraud. Instead of sending a 

message to the public that encourages appeals and increases administrative costs, 

the message sent to the public should be that it is not worth the risk to try to defraud the program. 

In November 2002 SSA issued a Notice of Proposed Rulemaking (NPRM) to conduct pilot projects ‘‘wherein we will request photographic identification from individuals filing for title II and title XVI disability benefits in specified geographic areas 

covered by the pilot projects. In addition, we would require individuals to allow us 

to take their photograph and we would make these photographs a part of the claims 

folder. We would permit an exception to the photograph requirement when an individual has a sincere religious objection. This process would strengthen the integrity 

of the disability claims process by helping to ensure that the individual filing the 

application is the same individual examined by the consultative examination (CE) 

physician.’’ NADE supports such projects and urges Congress to provide appropriate 

resources to continue and increase these and other effective anti-fraud activities. 

NADE also supports SSA’s plans to increase the number of re-determinations to 

ensure greater payment accuracy. This would help ensure that claimants receiving 

SSI benefits are, in fact, eligible to do so. It is also critical that Continuing Disability Reviews (CDRs) be conducted in a timely manner. CDRs are not only cost 

effective, saving approximately $9 for each $1 invested, they play an important role 

in any return to work incentive. An individual who knows his or her claim will be 

reviewed at the appropriate time is more likely to explore vocational options. Unfortunately, with the increase in initial claims and the loss of targeted funds specifically designated to handle this workload, CDRs are likely to be delayed. 

Adequate resources and staffing will be needed to ensure that these initiatives are 

effectively meeting our stewardship responsibilities. Additional adequate resources 

are needed to enable SSA and the DDSs to process the Special Title II Disability 

Workload. These individuals are receiving SSI but have been found to be potentially 

eligible for some type of Social Security disability benefit. 

In her September 25, 2003 testimony before the House Ways and Means Subcommittee on Social Security Commissioner Barnhart presented her approach to improving the disability determination process. This approach was designed to ‘‘shorten decision times, pay benefits to people who are obviously disabled much earlier 

in the process and test new incentives for those with disabilities who wish to remain 

in, or return to, the workforce.’’ Both formally and informally, NADE has provided 

extensive feedback to the Commissioner on the new approach. Our comments are 

summarized below. A flow chart incorporating NADE’s suggestions was included in 

our April 29, 2004 Statement for the Record, and our complete comments and the 

accompanying flowchart are available on our website at www.nade.org. 

35 

NADE fully supports all efforts to allow earlier access to health care, treatment 

and rehabilitation needs of disabled individuals, as well as efforts to assist those individuals who wish to return to work by providing them the needed services to allow 

them to do so. We believe that early intervention efforts will provide improved service to the American public by providing needed treatment and services earlier in 

their disease process. This early intervention has the potential to decrease the lifelong disability payments that some individuals receive once they have been determined eligible for benefits. Although few details are available in the Commissioner’s 

approach regarding potential demonstration projects, it appears that individuals 

chosen for participation in these projects could be screened based upon age, education, work history and claimant allegations. This type of data is currently collected in the initial disability interview; using these types of screening criteria 

would not require system changes or other modifications to the existing process. 

Therefore, NADE believes that a trained ‘‘Technical expert in disability’’ in a SSA 

field office could screen applicants for disability into these demonstration projects. 

Oversight of these projects could be done on a regional basis by regional expert 

units as proposed by the Commissioner. 

NADE agrees with Commissioner Barnhart that successful implementation of 

eDIB is a critical feature of any new approach to SSA disability determinations. 

NADE remains supportive of these new technologies as a means for more efficient 

service to the public. We believe that SSA’s goal of achieving an electronic disability 

claims process represents an important, positive direction toward more efficient delivery of disability payments. In order for an electronic folder to be successful, it is 

an absolute necessity that adequate infrastructure support and proper equipment to 

make the process work effectively and efficiently is in place. Without sufficient support, adequate resources and proper equipment, any attempts at an efficient 

paperless process will meet with failure. While technology can be expected to reduce 

hand-offs, eliminate mail time and provide other efficiencies, technology is merely a 

tool. It cannot replace the highly skilled and trained disability examiner who evaluates the claim and determines an individual’s eligibility for disability benefits in accordance with Social Security federal rules and regulations. 

NADE strongly supports the Commissioner’s emphasis on quality as described in 

the new approach. By including both in-line and end-of-line review, accountability 

can be built into every step. We believe that this will promote national consistency 

that, in turn, will build credibility into the process. 

Although the Commissioner’s approach envisions that ‘‘quick decisions’’ for those 

who are obviously disabled would be adjudicated in Regional Expert Review Units, 

NADE believes that the DDSs are better equipped in terms of adjudicative expertise, medical community outreach, and systems support to fast track claims and 

gather evidence to make a decision timely, accurately, and cost effectively. Previous 

attempts at separating the components of the decision making process demonstrated 

that the perceived improvements are less effective in practice than in theory. DDSs 

already process at least twenty percent of allowance decisions in less than twentyfive days. DDS disability examiners are well versed in the evaluation of disability 

onset issues, unsuccessful work attempts and work despite a severe impairment provisions to quickly and efficiently determine the correct onset for quick decision conditions. 

Establishing a regional expert unit to handle this workload constitutes an additional hand-off of a claim with no value added to the process. We see no need to 

add another layer of bureaucracy to process quick decisions when such cases are already ‘‘triaged’’ and handled expeditiously by the DDS. In order to implement a regional expert unit for quick decisions, SSA would need to change its existing infrastructure to make these decisions and provide for hiring, training and housing staff. 

In addition, business processes would have to be developed to secure and pay for 

medical evidence of record. 

Likewise, NADE does not support assigning the responsibility for Quick Decisions 

to the SSA Field Office. Even with additional training, we do not believe that SSA 

Claims Representatives will have the knowledge and skills necessary on an ongoing 

basis to adjudicate these cases. We are also concerned that assigning this responsibility to the SSA Field Offices will invite jurisdictional disputes between the DDSs 

and the SSA Field Offices as to what types of cases or alleged impairments actually 

constitute potential for ‘‘quick Decisions.’’ In addition, we would point out that some 

Field Offices already struggle with the concept of recognizing presumptive disability 

claims and TERI (terminal illness) cases. Adding additional conditions or expanding 

their responsibilities in this area will require extensive time-consuming and expensive training to an already lengthy claims representative training period. Experience with the Disability Claims Manager pilot demonstrated that there is 

36 

too much complexity in both the claims representative and disability examiner positions to ‘‘merge’’ them into one. 

NADE would not oppose SSA Claims Representatives recommending cases for potential quick decisions but we do suggest that more extensive in-line quality assurance and end-of-line quality control be applied to this new process to ensure that 

those claims that deserve to be identified as having potential for ‘‘quick Decisions’’ 

are so identified and that those that do not, are not so identified. 

NADE is strongly opposed to the Commissioner’s proposal to remove onsite Medical Consultants from the DDS. As an integral part of the DDS adjudicative team, 

DDS medical consultants play a vital role in the disability evaluation process, not 

only in reviewing medical evidence and providing advice on interpretation, but also 

in training and mentoring disability examiners, as well as performing necessary 

public outreach in the community. The DDS medical consultant interacts with disability examiners on a daily basis and offers advice on complex case development 

or decision-making issues. He/she maintains liaison with the local medical community and has knowledge of local care patterns and the availability of diagnostic studies and state regulations to facilitate the adjudication process within the complex 

Social Security system. 

Most disability applicants have multiple impairments involving more than one 

body system and require a comprehensive view of the combined limitations and resultant impact on function. Specialty consultants with limited scope and experience 

cannot fully assess the combined effects of multiple impairments on an applicant’s 

functioning. The SSA programmatically trained DDS medical consultant has the 

education, clinical experience and decision-making skills, along with expertise in 

evaluating medical records and disease conditions and making prognosis predictions 

regarding a claimant’s function and future condition, to more accurately assess the 

case as a whole. 

DDS medical consultants are not only medical specialists—physicians, psychologists or speech/language pathologists— they are also SSA program specialists. There 

is a very real difference between clinical and regulatory medicine and it takes at least 

a year to become proficient in Social Security disability rules and regulations. The 

DDS medical consultant’s unique knowledge of SSA’s complex rules and regulations 

and regional variants of those regulations, their medical expertise in many fields 

and knowledge of local medical sources, and their familiarity with DDS examiner 

staff, quality assurance specialists and supervisors, make the them an invaluable 

asset to the DDS’s and the SSA Disability Program as a whole. It is critical that 

this expertise be on-site in the DDSs and readily available to the disability examiner for case consultation and questions. If, as proposed under the Commissioner’s 

approach, DDS disability examiners are to adjudicate primarily the more complex 

disability claims, then it becomes even more important to maintain DDS medical 

consultants on-site. 

The SSI disability program is unique among disability programs. The disability 

examiners who evaluate claims for SSI disability benefits must possess unique 

knowledge, skills and abilities. Those who adjudicate SSI disability claims are required, as a matter of routine, to deal with the interplay of abstract medical, legal, 

functional and vocational concepts. It takes years before an individual becomes adept 

at this complex task. Disability examiners are required by law to follow a complex 

sequential evaluation process, performing at each step, an analysis of the evidence 

and a determination of eligibility or continuing eligibility for benefits before proceeding to the next step. Adjudication of claims for SSI disability benefits requires 

that disability examiners be conversant (reading, writing and speaking) in the principles of medicine, law and vocational rehabilitation. The disability examiner is not 

a physician, an attorney-or a vocational rehabilitation counselor. Nevertheless, during the course of adjudication he or she must extract and employ major concepts 

that are fundamental to each of these professions. 

The U.S. General Accounting Office declared in one of their reports to Congress 

that: ‘‘The critical task of making disability decisions is complex, requiring strong 

analytical skills and considerable expertise, and it will become even more demanding with the implementation of the Commissioner’s new long-term improvement 

strategy and the projected growth in workload. NADE concurs with this assessment. 

A disability examiner must have knowledge of the total disability program as well 

as proficiency in adult and child physical and mental impairment evaluation, knowledge of vocational and job bank information and the legal issues which impact on 

case development and adjudication. 

NADE has long supported an enhanced role for the disability examiner and increased autonomy in decision-making for experienced disability examiners on certain cases. We were pleased, therefore, that in NADE’s discussions with Commissioner Barnhart, we were told that it was her intent in the new approach to enVerDate Aug 04 2004 21:16 Aug 19, 2005 Jkt 099676 PO 00000 Frm 00040 Fmt 6633 Sfmt 6621 E:\HR\OC\A676.XXX A676
37 

hance the disability examiner’s role in the disability process. In order to achieve 

that, we believe that the Single Decision Maker (SDM) from the highly successful 

Full Process Model project and currently operating in the prototype and ten other 

states, should be fully integrated into the new approach. (Under the SDM model, 

medical sign-off is not required unless mandated by statute.) 

Decisions regarding disability eligibility can be considered to be on a continuum 

from the obvious allowances on one end, through the mid-range of the continuum 

where only careful analysis of the evidence by both adjudicator and physician can 

lead to the right decision, and finally to the other end of the continuum where 

claims are obvious denials. It is at both ends of the continuum where the disability 

adjudicator can effectively function as an independent decision-maker. Using SDM 

to make the disability determination and retaining the availability of medical consultant expertise for consulting on cases without requiring doctor sign off on every 

case promotes effective and economical use of resources. It is prudent to expend our 

medical and other resources where they can most positively impact the quality of 

the disability claim. 

Of all the ‘‘reengineered’’ disability processes proposed or piloted in the past, the 

SDM process has been the most successful. It has had a more positive impact on 

cost-effective, timely and accurate case processing than any other disability claims 

initiative in many years. Statistical results have shown that disability examiners 

operating under the SDM model in the twenty states where this concept was tested 

have the same or better quality than disability examiners operating under the traditional disability adjudication model. Studies of the SDM have demonstrated its 

value as an integral part of the Social Security Administration’s disability claim adjudication process. NADE strongly believes that the SDM model should be integrated fully in any new initial claims process, expanded to Continuing Disability Reviews and adopted as standard procedure in all DDSs. 

The Commissioner, in her approach, has proposed establishment of a federal Reviewing Official (RO) as an interim step between the DDS decision and the Office 

of Hearing and Appeals (OHA). NADE agrees that an interim step is necessary to 

reduce the number of cases going to the OHA as much as possible. An interim step 

laying out the facts and issues of the case and requiring resolution of those issues 

could help improve the quality and consistency of decisions between DDS and OHA 

components. NADE supports an interim step because of the structure it imposes, 

the potential for improving the accuracy of DDS decisions and processing time on 

appeals, and the correction of obvious decisional errors at the initial level before a 

hearing. The establishment of uniform minimum qualifications, uniform training 

and uniform structured decision-writing procedures and formats will enhance the 

consistency and quality of the disability decisions. NADE is not convinced, however, 

that customer service is improved from the current process if this remains a paper 

review at this interim step. 

NADE believes that this interim step should include sufficient personal contact 

to satisfy the need for due process. We do not believe that it needs to be handled 

by an attorney as proposed by the Commissioner. There is little, if any, data that 

supports a conclusion that this interim step needs to be handled by an attorney. In 

fact, a 2003 report, commissioned by the Social Security Advisory Board to study 

this issue, recommended that this position NOT be an attorney. 

Decisions made at all levels of adjudication in the disability process are medicallegal ones. NADE believes that Disability Hearing Officers (DHOs) can handle the 

first step of appeal between the DDS initial decision and the ALJ hearing. DHOs 

are programmatically trained in disability adjudication as well as in conducting evidentiary hearings. Using trained Disability Hearing Officers instead of attorneys 

will be substantially less costly. In addition, there is currently an infrastructure in 

place to support DHOs and using such a structure will prevent creation of a new 

costly and less claimant friendly federal bureaucracy. Since this infrastructure is already in place, national implementation of the DHO alternative can occur very 

quickly. 

NADE supports closing the record after the Administrative Law Judge’s decision 

since this decision will, under the Commissioner’s proposed approach, represent the 

final decision of the Commissioner of Social Security before any subsequent appeal 

to the federal courts. We support providing the assistance of programmatically 

trained medical and vocational experts to the Administrative Law Judges. 

NADE supports elimination of the Appeals Council review step. We have long advocated establishment of a Social Security Court. As long as judicial review of disability appeals continues to occur in multiple district courts across the country, a 

bifurcated disability process will continue to exist as different DDSs operate under 

different court rulings and regulations depending upon what part of the country the 

claimant lives in. Both the Social Security and SSI disability programs provide a 

38 

vital safety net for an extremely vulnerable population. It is essential that these 

programs operate effectively while protecting beneficiaries and taxpayers alike from 

fraudulent payment and wasteful practices. 

In summary, NADE’s key recommendations are to implement only strategies with 

the most beneficial outcome for all entities. These are: 

Expand CDI units to all states instead of increasing reviews of DDS allowance 

decisions 

Provide dedicated funding for redeterminations, CDRs and special Title II workloads. 

Implement eDIB with adequate infrastructure support and proper equipment. 

Keep Quick Decisions in the DDS. 

Maintain Medical Consultants on-site in the DDS. 

Fully integrate the SDM into any new disability process. 

Utilize the current infrastructure of DHOs as an interim appeals step. 

Recognize that technology is only a tool. It does not replace the highly skilled 

trained disability examiner. 

NADE appreciates this opportunity to present our views on the SSI program, 

problems and solutions, and we look forward to working with the Social Security 

Administration and the Congress as the Commissioner continues to refine her approach to improve the disability process. 

f 

Chairman HERGER. Thank you, Ms. Marshall. Dr. Podoff to testify? 

STATEMENT OF DAVID PODOFF, MEMBER, SOCIAL SECURITY 

ADVISORY BOARD 

Dr. PODOFF. Chairman Herger, Congressman Cardin, Members 

of the Subcommittee, on behalf of the SSAB, I want to begin by 

commending you for holding this hearing on the SSI Program. The 

SSAB is chaired by Hal Daub, who during the late eighties, was 

a colleague in the House of many of you on this Subcommittee. 

Chairman Daub was unable to be in Washington today. He asked 

me to give you his best wishes and to tell you that he very much 

would have like to be here with you today. I will focus on four subjects: stewardship, simplification, disability administration and the 

definition of disability. 

Program stewardship is important both to taxpayers and to beneficiaries. Taxpayers have the right to expect that their tax dollars 

will be spent accurately, and beneficiaries have the right to expect 

that their benefits will be accurately determined and administered. 

In its numerous visits to Social Security offices, the board has 

found SSA employees to be hardworking and dedicated. With its 

current level of resources, the agency has been forced to defer important stewardship actions while still seeing unacceptable backlogs in processing claims. Continuing disability reviews, SSI eligibility redetermines and overpayments collection efforts all pay for 

themselves many times over. Failing to fund them is not a cost-effective approach. I would note that legislation originated by the 

Committee on Ways and Means and enacted this year will help the 

agency meet its stewardship responsibilities. 

The Social Security Protection Act of 2004 gave SSA several additional tools. In particular, the board was gratified that one of its 

specific recommendations for helping to collect overpayments was 

included in the bill. The complexity of the SSI Program makes it 

more difficult and time-consuming to administer, more error-prone 

39 

and harder for beneficiaries to understand and comply with. Again, 

H.R. 743 included some commendable simplification provisions, but 

the program remains very complex. At your April 29 hearing, Commissioner Barnhart said that the agency has a working group developing further ways to simplify the program, and we are looking 

forward to learning of the group’s recommendations. 

Simplification is not easy to achieve. There are always costs and 

beneficiary impact ramifications, but it is a goal that the agency 

and the Congress should continue to pursue. The agency is currently working on AeDIB, as you have heard, creating a wholly 

electronic disability determination system. The agency is also considering significant revisions in the adjudication process and developing a new quality management system. 

These seem to hold promise for addressing many of the issues 

the SSAB and others have raised over the past several years. The 

board will closely monitor the development and implementation of 

these measures to see whether they can enable the agency to address the issues of consistency and fairness. The SSA also needs to 

thoroughly review its disability policy rules and regulations to determine where changes can be made to improve the quality and 

consistency of decisionmaking. Again, it is essential that adequate 

resources be made available. Failure to provide needed resources 

creates backlogs, undermines the ability of the agency to provide 

training and quality management and results in foregoing program 

integrity reviews that are highly cost-effective. 

Some of the board’s most recent work has focused on an even 

more fundamental issue underlying the disability program, namely, 

the concept of disability and its relation to work. We believe it is 

necessary to question whether the half-century-old definition of disability that is at the heart of our disability program is today consistent with the basic beliefs of our society about disability and 

work. 

The present definition has a focus on inability to work that 

seems to undermine the motivations that are crucial to supporting 

the objective of enabling impaired individuals to achieve maximum 

self-sufficiency and independence. Moving away from that definition would very clearly involve significant programmatic changes 

that would have to be carefully developed and carefully implemented. 

The board has addressed these issues in a report we issued last 

October and in a forum we sponsored last month. We believe this 

issue deserves serious consideration. Again, I thank you for the opportunity to discuss this important program with you today. I 

would ask that the board’s recent SSI statement be included in the 

record. I would be pleased to answer any questions you may have. 

[The prepared statement of Dr. Podoff follows:] 

Statement of David Podoff, Ph.D., Member, Social Security Advisory Board 

Chairman Herger, Congressman Cardin, Members of the Subcommittee, on behalf 

of the Social Security Advisory Board, I want to begin by commending you for holding this hearing on the Supplemental Security Income, or SSI, program. The Advisory Board is chaired by Hal Daub, who during the late 1980’s was a colleague in 

the House of many of you on this Subcommittee. Chairman Daub asked me to give 

you his best wishes and to tell you that he would very much have liked to be here 

with you today. Unfortunately, he had prior commitments which prevented him 

from coming into Washington for this hearing. However, he has asked me to take 

40 

his place in giving you the views of the Social Security Advisory Board on the SSI 

program. 

When Congress acted in 1994 to make the Social Security Administration an independent agency, it decided at the same time to set up a permanent bi-partisan 

Board to continually examine the important programs that agency administers and 

to make recommendations to the Congress, the President, and the Commissioner of 

Social Security as to how those programs can most effectively, in combination with 

other public and private programs, assure economic security. The Board’s legislative 

charter directs it to make recommendations with respect to program policies and 

regulations as well as the quality of service that the Social Security Administration 

provides. 

The Advisory Board has on a continuing basis carefully reviewed the Social Security programs and we have issued reports dealing with issues such as disability 

process and policy, program integrity, and service to the public. In these reports, 

we have addressed both the overall issues as they affect all Social Security programs and also the particular issues affecting Supplemental Security Income. In addition, since 1998 the Board has been publishing its views on the program in connection with the agency’s annual SSI report to Congress. We have just this week 

completed our annual SSI statement, and I would like to submit a copy of that 

statement for the record. In this year’s SSI statement, the Board focused particularly on program integrity and overpayments and also on the concept of disability 

in the SSI program. 

The SSI program is of vital importance to the income security of many of our most 

vulnerable fellow citizens. As of April, nearly 7 million Americans were receiving 

federally administered payments, 1.2 million on the basis of being 65 or older, and 

5.7 million on the basis of blindness or disability. All of them are required to meet 

stringent income and resource standards in order to qualify for benefits. 

Today I would like both to look back at where we have come over the last several 

years and to look ahead at where I think we need to go. This Subcommittee, the 

Congress, and the Social Security Administration have taken some important steps 

to improve the administration of the SSI program over the last several years. I 

would like both to reflect on these improvements and suggest areas for further improvement. 

I will focus today on four subjects: program stewardship, program simplification, 

the administration of the disability aspect of the program, and the need to re-examine some basic aspects of program design related to work and disability. 

Program Stewardship 

Program stewardship is important both to taxpayers and to beneficiaries. Taxpayers have the right to expect that their tax dollars will be spent accurately. And 

beneficiaries have a right to expect that their benefits will be accurately determined 

and administered. Since its beginnings, SSA has fostered in its employees a commitment to program stewardship. The phrase ‘‘the right check to the right person on 

time’’ has been repeated by generations of employees. But increasing workloads and 

declining resources have undermined this commitment to stewardship. Managers 

and employees throughout the administrative structure are frustrated that they 

lack both the time and the tools to live up to their standards. 

I know that the Ways and Means Committee continues to look for ways to improve the agency’s ability to provide proper stewardship. I would like to commend 

you for this year enacting the bill H.R. 743, the Social Security Protection Act of 

2004. That bill gave SSA additional tools to help it carry out its responsibilities for 

program stewardship, especially with respect to representative payees. Provisions of 

the Act such as higher standards for organizational payees and new sanctions for 

misuse of benefits will be helpful to SSA 

But the agency will still have to do the time-consuming work of carefully selecting 

and monitoring representative payees. If vulnerable beneficiaries are to be protected 

from misuse of benefits, the agency will need to devote considerably more resources 

to screening and monitoring payees. SSA employees have told the Board that pressures to move the work make it difficult or impossible for them to spend the time 

they need to investigate carefully the qualifications of potential payees. SSA has 

taken steps to improve its administration of the representative payee program. A 

regional executive told the Board, however, that SSA is just scratching the surface 

on organizational payee problems. ‘‘The problems are deep, and it will take a tremendous amount of staff time to resolve them.’’ 

Achieving a high level of payment accuracy in the SSI program requires that the 

eligibility determinations be done carefully by well-trained and supervised employees who place a high value on getting the decision right. It also requires that recipiVerDate Aug 04 2004 21:16 Aug 19, 2005 Jkt 099676 PO 00000 Frm 00044 Fmt 6633 Sfmt 6621 E:\HR\OC\A676.XXX A676
41 

ents be adequately instructed on the importance of reporting events that might 

change their eligibility and that their reports of such events be promptly acted on. 

In its reviews of the program, the Board has found several elements that have 

tended to work in the wrong direction. The work measurement system used by the 

agency tends to reward quantity of production rather than quality of product. That 

type of incentive, in combination with staffing shortages and lack of supervision, inevitably leads to a lowering of quality. For example, in our visits to field offices, employees have told the Board that they sometimes do not pursue certain lines of questioning (such as the details of living arrangements) because it takes too long to resolve the issues that may be raised. The Board has also heard from SSA employees 

and members of the public of delays—sometimes extensive—in making payment 

changes required by events reported by recipients. 

Field office managers have consistently expressed to the Board their concerns 

about the quality of non-medical SSI work done in their offices. They say that pressures for a high volume of production prevent their employees from taking the time 

and care needed to ensure quality. They add that because of the reduction in management positions in field offices, they are unable to do quality reviews. A survey 

of field managers conducted last year by the National Council of Social Security 

Management Associations reinforces these concerns. The survey showed that only 

7 percent of managers thought that the quality of work produced in their office had 

improved over the last two years, while 48 percent thought it had worsened. 

SSA’s accuracy rates support what we have been told by its employees. SSA conducts an annual stewardship study of the SSI program. The study examines a 

monthly sample of non-medical reviews of SSI cases in current-pay status. The 

study for FY 2002, the most recent available, shows a decline in non-medical accuracy since 1997, the year that GAO designated SSI a high-risk program. The overpayment accuracy rate for FY 2002 was 93.0 percent, compared to 94.7 percent in 

FY 1997. Applying the FY 2002 rate to the universe of $34 billion in SSI payments 

results in a projection of $2.4 billion in SSI overpayments. (‘‘Overpayment accuracy’’ 

is determined on the basis of a sample study by subtracting overpaid benefits from 

total benefits paid and then dividing the result by total benefits paid.) 

I want to make it clear that these shortcomings are no reflection on SSA’s employees. In our numerous visits to regional and field offices, program service centers, 

teleservice centers, and hearing offices, we have found them to be hard-working and 

dedicated. But with its current level of resources, the agency has experienced serious deficits in the level of service that it is able to provide and has been forced to 

defer important stewardship actions while still seeing unacceptable backlogs in processing claims. 

Two of SSA’s most effective tools in preventing overpayments are redeterminations and continuing disability reviews (CDRs). Redeterminations look at the nonmedical factors affecting payment eligibility and amount, while CDRs look at the 

medical factors. Redeterminations result in seven dollars in savings per dollar of 

cost, and CDRs save ten dollars per dollar of cost. But SSA’s ability to conduct them 

depends on its administrative budget. This year, because the agency’s appropriation 


Insert offset folio 99676a.004
42 

for administrative expenses was lower than the President’s request, SSA will not 

conduct as many redeterminations and CDRs as planned. The agency is, therefore, 

losing programmatic savings well beyond the administrative resources involved. 

When erroneous payments are detected, the agency has an obligation to attempt 

to recover the misspent funds. However, despite the fact that the collection of overpayments is a highly cost-effective activity, resource limitations have limited the 

agency’s results in this area as well. The end-of-year SSI overpayment balance has 

doubled since the program was first put on the high-risk list, from $2 billion in 1997 

to $4 billion in 2003. Although SSI overpayment collections increased in FY 2003 

because of new ‘‘netting’’ software that automatically recovers overpayments when 

an underpayment is discovered, the SSI overpayment balance was $305 million 

higher at the end of 2003 than at the end of 2002. 

The law provides that overpaid beneficiaries may request a waiver of collection 

of the overpayment, which the agency may grant under certain conditions. An SSA 

executive has told the Board that field offices often do not pursue overpayment collection because the staffs are too busy, and it is easier for them to waive collection 

of the debt. We understand that SSA’s Office of the Inspector General plans to issue 

an audit report this year evaluating SSA’s waiver process and expects to issue a report in FY 2005 on undetected overpayments in SSA’s disability programs. The 

Board commends these actions by the IG. 

Before I leave the subject of overpayments, I want to point out that last year the 

Board sent a letter to the leadership of the Ways and Means Committee recommending a specific provision to help reduce outstanding overpayments. That provision allows SSA to collect outstanding SSI overpayments by offsetting the full 

amount owed against lump-sum retroactive Social Security payments. We are gratified that this provision was included in the legislation you enacted last year, the 

Social Security Protection Act of 2004 (H.R. 743). This will allow a substantial recovery—in the range of hundreds of millions of dollars—of existing overpayments 

that can be easily accomplished by offset against retroactive Social Security payments that SSA will be making in the near future. 

The Need for Simplification 

The need to simplify the SSI program is closely related to the problems of accuracy and incorrect payments. Over the last three decades, SSI policy has tended to 

become more complex. This complexity makes the program more difficult and timeconsuming to administer, more error-prone, and harder for beneficiaries to understand and comply with. The degree of complexity is reflected in the fact that although SSI will account for only about 7 percent of SSA’s benefit outlays in fiscal 

year 2004, it will account for 36 percent of the agency’s administrative budget. 

There seems to be a natural tendency for the SSI program to become ever more 

complex. Managing a national program involving income, resource, and living arrangements requires developing rules explaining how a multitude of situations 

should be handled fairly and uniformly. As unforeseen exceptions arise, subsections 

of the operating instructions proliferate. For example, SSA’s operating instructions 


Insert offset folio 99676a.005
43 

for ‘‘Living Arrangements and In-Kind Support and Maintenance,’’ which is just one 

part of the section on income, contains the equivalent of 250 single-spaced pages. 

Field Office employees have to deal with more than 150 current updates to those 

instructions on the topic of general income and resources alone. They include topics 

such as: ownership in fee simple or less than fee simple, validity of prepaid burial 

contracts/trusts in Minnesota, verifying the current market value of foreign property, and determining in-kind support and maintenance for a member of a religious 

order who moves into a private nonprofit residential care institution. 

While this proliferation is understandable, it gives rise to other problems. Program rules are difficult to understand and to apply. Beneficiaries find it difficult to 

comply with program rules. Complexity contributes to errors in payments, which 

can cause hardship and frustration for beneficiaries and further add to the agency’s 

workload. 

SSA worked with this Subcommittee to include some provisions to simplify the 

program in the Social Security Protection Act of 2004. Simplification provisions included exclusion from countable income of small amounts of interest and dividends, 

easing the rules on infrequent unearned income, preventing triple counting of income in some circumstances, and provisions to help military families. 

These changes are commendable, but as Commissioner Barnhart stated in her testimony on April 29, these provisions are a first step in simplifying the program. She 

noted that the agency has a working group developing further ways to simplify the 

program, and we are looking forward to learning of the group’s recommendations. 

We recognize the difficulty of simplifying the program without increasing program 

costs or disadvantaging groups of beneficiaries, and we commend SSA for its efforts 

in this regard and the Congress for its assistance. We encourage SSA and the Congress to take a broader look at simplification, to ask what the program would look 

like if they were to design it anew. For instance, there have been internal discussions within SSA of drastically simplifying the rules for in-kind support and maintenance. In our visits to field locations, we have heard suggestions that the SSI computations be changed from a quarterly to an annual basis. This would remove the 

need to conduct quarterly wage verification, a burden on both employers and SSA 

staff. Rules on living arrangements have also been singled out as an area that 

greatly complicates program administration. 

We recognize that such simplification is a daunting task and will involve tradeoffs 

between program costs and administrative costs, but meaningful simplification will 

require that level of effort. 

Disability Program Administration 

In her testimony last month, Commissioner Barnhart discussed two extremely important disability initiatives, the Electronic Disability System (eDib) and her approach for improving the disability determination process, which addresses many of 

the issues the Board has identified in its reports on the disability program. The 

eDib initiative is now in its early roll-out stage and the agency is working on developing the details of its process reforms. In our report of January 2001, the Board 

said that the Social Security Disability programs were in need of fundamental 

change, and we commend Commissioner Barnhart for aggressively pursuing such 

change. As the eDib implementation proceeds and as the details of the process reforms develop, the Board will be carefully monitoring these changes and will be continue to work with and provide advice to the agency and the Congress. 

In reforming the Social Security disability program, two crucial issues are consistency and fairness in disability decision making and the ability of the administrative 

structure to support future program needs. 

For many years, both Members of Congress and others who have studied SSA’s 

disability programs have expressed concerns about inconsistencies in decision making. For example, in FY 2002, while the average allowance rate for initial SSI disability claims was 38.5 percent, the allowance rate ranged from 27.8 percent in Tennessee to 57.6 percent in New Hampshire. While economic and demographic differences among states explain some of this difference, they do not explain all of it. 

There are other indications that the difference in outcomes reflects differences in 

how claims are adjudicated. For example, the percentage of SSI disability beneficiaries in 2001 with a diagnosis of mental retardation varied from 14 percent in 

Massachusetts to 36 percent in West Virginia. And the percentage with a diagnosis 

of other mental disorders ranged from 22 percent in Louisiana to 49 percent in Massachusetts. There are apparent inconsistencies in denials as well as in allowances. 

In FY 2002, the percentage of claims denied because the disability was not expected 

to last for 12 months ranged from 2 percent in Rhode Island to 17 percent in Nevada. And the percentage of denials because the disability was not considered severe 

ranged from 2 percent in New Hampshire to 37 percent in Mississippi. 

44 

There also seem to be inconsistencies within State agencies. A study done for SSA 

examined the range of initial allowance rates across examiners in four State agencies. It found that the range of allowance rates was 10 to 19 percent greater than 

could be explained by random variations in the claims they examined. A large percentage of claims that are denied at the initial level are appealed to the hearing 

level, where the majority of decisions reverse the lower-level denial of benefits. 

There are also geographic differences at the hearing level. In FY 2002, the national hearing-level allowance rate for SSI claims was 58 percent, with a range from 

42 percent in Louisiana to 78 percent in Maine. There does not seem to be a correlation between high State agency allowance rates and low hearing reversal rates. In 

fact, the hearing-level allowance rate for New Hampshire, which had the highest 

initial-level allowance rate, was 74 percent, the third highest in the country. 

The process changes underway at SSA include improved case management systems and the introduction of an end-to-end quality management system. To a considerable extent, whether those changes are successful will be measured by whether 

they can enable the agency to address these issues of consistency and fairness. The 

agency needs to be able to get the information to determine the degree to which the 

program’s own policies and procedures—including their uneven implementation— 

are causing inconsistent outcomes in different parts of the country and at different 

levels of adjudication. And, having obtained that information, it needs to be able to 

address the problems that information reveals. 

SSA should also thoroughly review its disability policy rules and regulations to 

determine where changes can be made to improve the quality and consistency of decision making. Both medical listings and vocational guidelines should be included 

in this review. Where possible SSA should write these rules and regulations more 

clearly and simply so that adjudicators in different states and different levels of decision making will interpret and use them in the same way. SSA should follow up 

with regular training across all levels of the process. 

The Board is particularly concerned that, in a program where most decisions are 

based on vocational factors, the policy regulations in that area have not been revised 

for many years despite major changes in the nature of the national workplace. The 

Board is also concerned that vocational assessments continue to rely in large measure on an outdated Labor Department publication that is not being updated. The 

recently issued SSA strategic plan indicates a commitment on the part of the agency 

to remedying this situation. The Board believes the agency should place a high priority on fulfilling that commitment. 

The current eDib and process reform initiatives represent an important recognition of the need to update the program’s administrative structure to support future 

program needs. But, electronics and organizational changes will not alone be sufficient to meet the needs of appropriately managing this very complex and massive 

program. 

Recent work by the General Accounting Office has highlighted human capital 

challenges at the State agencies that make disability determinations. There are 

more than 15,000 disability adjudicators throughout the disability system. Their 

qualifications and the rules and procedures they follow differ, sometimes dramatically. For example, adjudicators at the State agency and ALJ levels may receive 

vastly different training and draw upon very different resources. Factors such as 

these raise questions about how well the administrative structure will be able to 

handle the growing workload. 

It is particularly essential that adequate resources be made available. Failure to 

provide needed resources does not save money. It creates backlogs, undermines the 

ability of the agency to provide needed training and carry out quality management, 

and results in foregoing program integrity reviews that are highly cost effective. The 

Board has commended the Commissioner for developing a 5-year service delivery 

budget that is based on the actual workload needs of the agency and that would 

eliminate the inappropriate backlogs by the end of the 5 years. The Board has urged 

and continues to urge Congress to provide those very necessary resources. 

Disability and Work 

Some of the Board’s most recent work has focused on an even more fundamental 

issue underlying the disability program, the concept of disability and its relation to 

work. You may recall that this is an issue that our Chairman, Hal Daub, raised 

when he last appeared before this Subcommittee in July 2002. In October 2003 we 

published a report titled The Social Security Definition of Disability. Last month we 

sponsored a day-long forum on the extent to which the current program is or is not 

consistent with appropriate national disability policy, and what changes might be 

made to the program structure and definition. Both the report and the text of the 

presentations at the forum are available on the Board’s website, www.ssab.gov. 

45 

The definition of disability that is at the heart of the existing disability programs 

was developed some 50 years ago. We believe it is necessary to question whether 

that definition is today consistent with the basic beliefs of our society about disability and work. The present definition asks the applicant and the government to 

make a determination that substantial work is not possible. That, probably inevitably, creates a mindset that is inimical to the motivations that are crucial to supporting the objective of enabling impaired individuals to achieve maximum self-sufficiency and independence. 

Moving away from that definition would very clearly involve significant programmatic changes. Given the importance of the disability programs, any such 

changes would have to be carefully developed and carefully implemented. A first 

step in addressing this issue would be a consideration of the choices policymakers 

would face, including the issue of the extent to which the desired results could be 

achieved by changes within the existing programs. 

In our October 2003 report we discuss in detail a variety of policy issues that 

would need to be addressed. Along with several other questions, we asked: 

• Can the current definition ever by administered fairly and accurately? • What is the realistic potential of the disability population for work? • How does a disability program fit into the overall and greatly changing picture 

of income security? • Does the disability program, as currently defined, fail to meet the legitimate 

needs of a significant portion of the impaired population? • What should be the role of the Social Security Administration if there is a major 

restructuring? 

In considering SSI specifically, there is the additional issue of whether different 

approaches should be used for the DI and SSI programs. These two programs’ beneficiaries differ in their work histories, education levels, and the nature of their disabilities, suggesting that approaches and incentives that work for one program 

might not work for the other. In addition, SSI beneficiaries have increasingly been 

receiving means-tested benefits from other programs as well, making their work incentive situation more complex. The benefit levels of the DI and SSI programs are 

also different. As of February 2004, the average DI worker benefit was $862.60, 

while the average benefit for an SSI beneficiary age 18 to 64 was $443.20. From 

a cost-benefit perspective, it is easier to justify incentives or supports for DI beneficiaries to return to work, since the potential program savings are greater. On the 

other hand, average wages in the economy have tended to rise faster than SSI income support levels. This would argue that failing to encourage and support work 

activity for SSI recipients puts them at an even greater disadvantage compared with 

DI beneficiaries whose benefit levels tend to increase with rising wages. 

Our forum last month showed that there is a wide range of opinions among 

thoughtful observers of the disability programs but a basic agreement that these are 

important issues that deserve further discussion. 

Again, I thank you for the opportunity to discuss this important program with you 

today, and I would be pleased to answer any questions you may have. 

SOCIAL SECURITY ADVISORY BOARD 

STATEMENT ON THE SUPPLEMENTAL SECURITY INCOME PROGRAM 

Public Law 104–193 requires that members of the Social Security Advisory Board 

be given an opportunity, either individually or jointly, to include their views in the 

Social Security Administration’s annual report to the President and the Congress 

on the Supplemental Security Income (SSI) program. 

We appreciate the opportunity to present our views on this important program, 

and we have asked the Social Security Administration to include the following statement of views in this year’s annual report. 

VIEWS OF THE BOARD REGARDING THE SSI PROGRAM 

In its statements in previous annual reports, the Board has discussed a wide 

range of issues, including program integrity, the disability determination process, 

rehabilitation and employment services, research and program evaluation, and service delivery. All of these areas require continuing attention. We note in particular 

that the Social Security Administration is undertaking major revisions in the disability determination process and in the systems supporting that process. This is an 

encouraging development, and the Board expects to monitor those changes as they 

are implemented. 

46 

In presenting our views this year, we would like to comment on two aspects of 

the program. We will first comment briefly on program integrity in general and 

overpayments in particular. Then we will focus on the concept of disability embodied 

in the SSI program and the degree to which it meets the needs of the American 

people today. We have presented our views on the Social Security disability programs more fully in our October 2003 report, The Social Security Definition of Disability, available on our website, www.ssab.gov. 

PROGRAM INTEGRITY AND OVERPAYMENTS 

In 1997 the General Accounting Office designated SSI a high-risk program because of its vulnerability to abuse and mismanagement, increasing overpayments, 

and poor recovery of outstanding overpayments. Last year, GAO removed the program from its high-risk list, noting SSA’s progress in improving the financial integrity and management of the program. GAO noted SSA’s actions in obtaining legislation to prevent and collect overpayments as well as administrative actions to 

strengthen SSI program integrity. 

GAO also noted, however, that the impacts of SSA’s actions were not yet fully realized. A look at some recent data shows that the SSI program continues to need 

attention. Payment accuracy is lower than in 1997, and the balance of identified SSI 

overpayments has climbed every year since 1997. 

Payment Accuracy 

SSA conducts an annual stewardship study of the SSI program. The study examines a monthly sample of non-medical reviews of SSI cases in current-pay status. 

The study for FY 2002, the most recent available, shows a decline in non-medical 

accuracy since 1997, the year that GAO designated SSI a high-risk program. The 

overpayment accuracy rate for FY 2002 was 93.0 percent, compared to 94.7 percent 

in FY 1997. Applying the FY 2002 rate to the universe of $34 billion in SSI payments results in a projection of $2.4 billion in SSI overpayments. (‘‘Overpayment accuracy’’ is determined on the basis of a sample study by subtracting overpaid benefits from total benefits paid and then dividing the result by total benefits paid.) 

Field office managers have consistently expressed to the Board their concerns 

about the quality of non-medical SSI work done in their offices. They say that pressures for a high volume of production prevent their employees from taking the time 

and care needed to ensure quality. They add that because of the reduction in management positions in field offices, they are unable to do quality reviews. A survey 

of field managers conducted last year by the National Council of Social Security 

Management Associations reinforces these concerns. The survey showed that only 

7 percent of managers think that the quality of work produced in their office had 

improved over the last two years, while 48 percent thought it had worsened. 

Overpayment Collection 

Although the collection of overpayments is a highly cost-effective activity, yielding 

about $10 in recovered funds per dollar spent on the activity, resource limitations 

have constrained the agency’s results in this area as well. The end-of-year SSI overVerDate Aug 04 2004 21:16 Aug 19, 2005 Jkt 099676 PO 00000 Frm 00050 Fmt 6633 Sfmt 6621 E:\HR\OC\A676.XXX A676

Insert offset folio 99676a.006
47 

payment balance has doubled since the program was first put on the high-risk list, 

from $2 billion in 1997 to $4 billion in 2003. Although SSI overpayment collections 

increased in FY 2003 because of new ‘‘netting’’ software that automatically recovers 

overpayments when an underpayment is discovered, the SSI overpayment balance 

was $305 million higher at the end of 2003 than at the end of 2002. 

The law provides that overpaid beneficiaries may request a waiver of collection 

of the overpayment, which the agency may grant under certain conditions. As we 

pointed out in previous reports, we believe that waiver policies may be applied too 

loosely. This is not a criticism of SSA’s hard-working field office employees. Rather, 

it is a reflection of the shortage of staff in those offices. As an SSA executive has 

told the Board, field offices often do not pursue overpayment collection because the 

staffs are too busy, and it is easier for them to waive collection of the debt. SSA’s 

Office of the Inspector General should be commended for its plans to issue an audit 

report this year evaluating SSA’s waiver process and to issue a report in FY 2005 

on undetected overpayments in SSA’s disability programs. 

THE CONCEPT OF DISABILITY IN THE SSI PROGRAM 

In discussions of Social Security disability programs, attention tends to center on 

the Disability Insurance program which accounts for annual expenditures of more 

than $70 billion. However, the SSI disability program, although much smaller in 

benefit costs, represents a very large percentage of the disability caseload. Of the 

10.5 million persons receiving benefits on the basis of disability, 3.6 million are 

qualified solely through the SSI program and another 1.3 million receive both SSI 

and title II disability payments. While the number of SSI aged beneficiaries has declined since the program was initiated in 1974, the number of disabled beneficiaries 

has grown substantially and continues to increase. 


Insert offset folio 99676a.007
48 

SSI beneficiaries are, in many respects, different from DI disabled worker beneficiaries. They tend to have less work history and a more tenuous connection to the 

workforce. They are more likely to have mental disorders. In 2002, 22 percent of 

SSI beneficiaries age 18 to 64 had a diagnosis of mental retardation, and 33 percent 

had other mental disorders. Only 9 percent had a musculoskeletal diagnosis. By contrast, only 5 percent of DI disabled workers have a diagnosis of mental retardation, 

28 percent have other mental disorders, and 24 percent have a musculoskeletal diagnosis. One in three adult SSI beneficiaries have a representative payee, compared 

with less than one in eight DI disabled workers. SSI beneficiaries are poor, with 

60 percent of those age 18 to 64 having no income other than their SSI benefits. 

These are very substantial differences. Consideration of any changes in program 

definition or structure should take these differences into account. 

Defining Disability 

When Congress established the Supplemental Security Income program in the Social Security Amendments of 1972, it adopted for that program the same definition 

that had been established for the Disability Insurance program. An applicant will 

be found to be disabled if he or she is ‘‘unable to engage in any substantial gainful 

activity by reason of any medically determinable physical or mental impairment 

which can be expected to result in death or which has lasted or can be expected 

to last for a continuous period of not less than 12 months.’’ Because the inability 

to engage in substantial gainful activity is not a test readily applicable to children, 

the law defines disabilty for those under age 18 in terms of ‘‘marked and severe 

functional limitations.’’ 

As we pointed out in our October 2003 report on the Social Security definition of 

disability, this definition has its roots in an earlier era when there was little expectation that those with servere disabilities could have any realistic expectation of 

participating in employment or aspiring to self-sufficiency. It seemed both feasible 

and reasonable to adopt a definition of disability that would attempt to draw a clear 

line between those who could and those who could not work. 

While the definition of disability has remained unchanged throughout the 30 

years of the SSI program and essentially unchanged since the Social Security disability insurance program was enacted a half-century ago, there have been many 

changes in the economy, in medicine, in rehabilitative technology, and in attitudes 

about disability and the disabled. 

Medical advances and improved rehabilitative knowledge and technology have 

made it harder to draw a clear line between those who can and those who cannot 

work. The nature of work and the workforce has also changed. We have become 

much more of a service economy, in which it is harder to measure the degree to 

which medical impairments limit an individual’s ability to engage in employment. 

Indeed, in the early years of the Social Security disability program, over 90 percent 

of awards were based on the severity of applicants’ medical condition without the 

need for the highly individualized assessment of the combined impact of medical 


Insert offset folio 99676a.008
49 

and vocational factors that now is required in well over half of all allowed disability 

claims. 

Attitudes about disability and work have also changed over the years. Changing 

public attitudes are reflected in the enactment in 1990 of the Americans with Disabilities Act that required employers to make reasonable accommodations as necessary to enable the employment of disabled individuals and that condemned 

stereotypic assumptions about the ability of disabled individuals to participate in, 

and contribute to, society. 

Work as an Objective of the SSI Disability Program 

Although it defines disability as the inability to do any substantial gainful work, 

from its beginning, the SSI program has also included elements aimed at helping 

or encouraging beneficiaries to engage in work activity. The legislation that established it included provision for payment to State Vocational Rehabilitation agencies 

for rehabilitation services to SSI beneficiaries. Other provisions aimed at encouraging work activity were included in (or have been added to) the SSI legislation. 

• Continuation of SSI—Beneficiaries who work may continue to receive SSI payments until their countable income exceeds the SSI limit. (For an individual 

getting only Federal SSI with other income only from earnings, the monthly 

benefit rate would be reduced to zero at a monthly earnings level of $1,213.) • Continuation of Medicaid eligibility—Medicaid eligibility will usually continue 

even if beneficiaries earn too much to receive SSI payments, if they cannot afford similar medical care and depend on Medicaid in order to work. 

• Earned income exclusion—The first $65 ($85 if the beneficiary has no unearned 

income) of any monthly earned income, plus one-half of remaining earnings are 

excluded from countable income. 

• Student earned income exclusion—For students under age 22 who are regularly 

attending school and neither married nor the head of a household, up to $1,370 

of earned income per month, to a maximum of $5,520 per year, is excluded from 

countable income. 

• Work expenses of the blind—Any income earned by a blind individual that is 

used to meet expenses needed to earn that income is excluded from countable 

income. 

• Plan for achieving self-support (PASS)—A PASS allows a disabled or blind individual to set aside income and resources to get a specific type of job or to start 

a business. The income and resources that are set aside are excluded under the 

SSI income and resource tests. 

• Reinstatement of benefits—Beneficiaries who have not been eligible for an SSI 

benefit for 12 months or less do not have to file a new application to reinstate 

SSI cash payments or Medicaid coverage. 

• Impairment-related work expense exclusion—The cost of certain impairment-related services and items that a beneficiary needs in order to work are excluded 

from countable income for SSI purposes and are deducted from earnings when 

determining if work is substantial. 

• Continued payment under a vocational rehabilitation program—Beneficiaries 

who medically recover while particpating in a vocational rehabilitation program 

that is likely to lead to becoming self-supporting may continue to receive benefits until the program ends. 

The Ticket to Work and Work Incentives Improvement Act (TWWIIA) of 1999 

amended the Social Security Act to create the Ticket to Work program. The program 

provides DI and SSI disability beneficiaries with a Ticket that can be used to obtain 

vocational rehabilitation training, employment services, or other support services 

through public and private providers. TWWIIA also expanded the availability of 

health care services to working disability beneficiaries. The law provided several enhancements to Medicaid, including giving States more options in providing Medicaid 

coverage to people ages 16–64 with disabilities who work. 

Participation rates in the program, however, have been low, and most Ticket to 

Work activity continues to involve State Vocational Rehabilitation agencies. Information on participation by SSI beneficiaries has not been published, and SSA’s 

management information system does not make it readily available. This is troubling, especially in view of concerns expressed by the Ticket to Work Advisory Panel 

that program incentives are not adequate to induce providers to serve SSI beneficiaries. 

Data on work, rather than on program participation, show that the response to 

all of these incentives has been limited. Published data for the 18 to 64 age group 

are not available for the entire period since the program began, and figures on the 

number of SSI beneficiaries who work are not available for 1984 through 1986. 

50 

Since 1987, however, the percentage of all disabled SSI beneficiaries who work has 

fluctuated around 6 percent. A very substantial amount of that work activity is by 

beneficiaries with disabilities based on mental retardation. While that diagnosis accounts for 22 percent of the working-age SSI disabled population, it accounts for 42 

percent of those who have work activity. 

As of December 2002, of the 3.9 million SSI beneficiaries between the ages of 18 

and 64 receiving a cash benefit, only about 246,000, or 6.3 percent of the total, reported having earned income. The average monthly earnings for this group was 

$324. Out of this group, 17,000 had earnings above the substantial gainful activity 

(SGA) level ($780 in 2002). Another 79,000 were above the SGA level and were receiving Medicaid but no cash benefit. 

The percentage of beneficiaries of SSI cash benefits age 18 to 64 with earned income has fallen from 7.2 percent in 1998 to 6.3 percent in 2002. 

The amount of work activity seems small in view of the incentives that have been 

provided, and it is particularly of concern that work activity seems to be less rather 

than more common despite the addition of numerous features aimed at encouraging 

work. 

Policy Questions 

We believe it is necessary to look beyond the existing incentives and disincentives 

and to question whether the definition of disability that is at the heart of the existing disability programs is consistent with our society’s basic beliefs about disability 


Insert offset folio 99676a.009 Insert offset folio 99676a.010
51 

and work. The present definition asks the applicant and the government to make 

a determination that substantial work is not possible. That, probably inevitably, creates a mindset that is inimical to the motivations that are crucial to supporting the 

objective of enabling impaired individuals to achieve maximum self-sufficiency and 

independence. Moving away from that definition would very clearly involve significant programmatic changes. Given the importance of the disability programs, any 

such changes would have to be carefully developed and carefully implemented. A 

first step in addressing this issue would be a consideration of the choices policymakers would face, including the issue of the extent to which the desired results 

could be achieved by changes within the existing programs. In our October 2003 report we discuss in detail a variety of policy issues that would need to be addressed 

including: 

• Can the current definition ever be administered fairly and accurately? 

• What improvements are possible within the confines of the existing program 

and definition? 

• Is the existing definition central to program acceptability? 

• What is the realistic potential of the disability population for work? 

• How effective are the current eligibility processes at drawing the line between 

the able and the disabled, and is significant improvement possible? 

• How does a disability program fit into the overall and greatly changing picture 

of income security? How can the impact of disability programs on motivation 

to work be improved? 

• Does the disability program, as currently defined, fail to meet the legitimate 

needs of a significant portion of the impaired population? 

• Should work-oriented services be targeted on beneficiaries or on applicants? 

• What should be the role of the Social Security Administration if there is a major 

restructuring? 

In considering SSI specifically, there is the additional issue of whether different 

approaches should be used for the DI and SSI programs. These two programs’ beneficiaries differ in their work histories and education levels, suggesting that approaches and incentives that work for one program might not be appropriate for the 

other. The fact that the nature of their disabilities is also different, with a much 

higher prevalence of mental retardation and other mental disorders in the SSI beneficiary population, also suggests that different approaches would be needed for 

them. In addition, SSI beneficiaries have increasingly been receiving means-tested 

benefits from other programs as well, making their work incentive situation more 

complex. The benefit levels of the DI and SSI programs are also different. As of February 2004, the average DI worker benefit was $862.60, while the average benefit 

for an SSI beneficiary age 18 to 64 was $443.20. From a cost-benefit perspective, 

it is easier to justify incentives or supports for DI beneficiaries to return to work, 

since the potential program savings are greater. On the other hand, average wages 

in the economy have tended to rise faster than SSI income support levels. This 

would argue that failing to encourage and support work activity for SSI beneficiaries puts them at an even greater disadvantage compared with DI beneficiaries 

whose benefit levels tend to increase with rising wages. 

Issues Related to Alternative Program Designs 

Changing the definition of disability would require a major redesign of all or part 

of the program. It would almost certainly have substantial implications for program 

costs, caseloads, and administrative resources. To the extent it involved changes in 

eligibility or benefit levels, a long transition would be needed to assure that current 

beneficiaries are not adversely affected. 

Ultimately, policymakers would need to decide whether the monetary and social 

gains from such a major shift of direction are worth the monetary and social consequences that might result. There are several basic questions that would need to 

be answered about any alternative program, such as: 

• What would be the appropriate definition (or definitions) of disability? 

• Would it increase or decrease the extent of eligibility and the cost of the program? 

• Would benefit levels differ from the existing program and in what ways? 

• Would it continue to be administered by the Social Security Administration and, 

if not, by what agency or agencies? 

• Would it emphasize services or just provide benefits under a different set of 

rules designed to rely on stronger economic incentives for working? 

52 

If Congress wanted to adopt a different definition of disability, many different 

structures and combinations of structures are possible. Some of the possible elements that might be considered include. 

• Paying benefits based on an essentially medical definition of what constitutes 

a ‘‘severe’’ disability, not necessarily the same as the current adjudicative distinction between severe and non-severe, but not requiring a finding as to the 

impact of the disability on each individual’s ability to work. • Divorcing eligibility for health benefits from eligibility for cash benefit programs, or perhaps, for certain categories of the disabled, providing the health 

care necessary for employment rather than cash benefits. • Dividing the disability program into two programs. A ‘‘permanent’’ program 

roughly equivalent to the existing program would begin only after a longer waiting period (perhaps two or three years) or might be available immediately only 

to those with the most severe disabilities. A new temporary program would be 

available during that waiting period. The temporary program might differ from 

the permanent program by such things as having easier eligibility rules, different benefit levels, and stronger and perhaps more individualized medical and 

other services needed to support workforce participation. A temporary program 

might be administered by a different agency from SSA with SSA retaining responsibility for the ‘‘permanent’’ program. Many variants of this approach are 

possible depending on program objectives and costs. • Changing the current all-or-nothing concept of disability eligibility to a program 

providing percentages of disability based (at least for less than 100 percent levels) on very specific medically determinable criteria.Changing the disqualifying 

event from ‘‘becoming able to work’’ to something roughly along the unemployment compensation lines of failure to seek or accept work. 

Conclusion 

In issuing our October 2003 report on the definition of disability, we argued that 

this is an issue that needs attention. We have found widespread dissatisfaction with 

the existing system. It may be that, in the end, the existing definition will be retained, and ways will be found to administer it in a manner more consistent with 

society’s current approach to disability policy. Or it may be that only a definitional 

change will serve to meet the needs of today’s impaired population in a way that 

society can approve. In any case, the problems and inconsistencies of the existing 

system are significant and demand action. 

To further the discussion of this subject, the Board sponsored a day-long forum 

on April 14, 2004 with presentations and discussion by experts and interested parties on the extent to which the current program is or is not consistent with appropriate national disability policy and what changes might be made to the program 

structure and definition. The text of the presentations is available on the Board’s 

website at www.ssab.gov. 

We encourage the Administration and the Congress to carefully consider how the 

Social Security disability programs can better meet the high goals set by the Americans with Disabilities Act of assuring the disabled ‘‘equality of opportunity, full participation, independent living, and economic self-sufficiency.’’ In some respects this 

issue is particularly important for the SSI program since that has developed into 

a program primarily serving disabled individuals and since that program’s beneficiaries have perhaps even more to gain if they are provided with the incentives 

and support needed for self-sufficiency. 

Hal Daub, Chairman 

Dorcas R. Hardy 

Martha Keys 

David Podoff 

Sylvester J. Schieber 

Gerald M. Shea 

f 

Chairman HERGER. Without objection, that will be included in 

the record. I thank each of you for your testimony, and Mr. Robertson, I want to thank you for your testimony based on last year’s 

report on SSI residency violations. I note that the SSA detected 

$118 million in overpayments from residency violations between 

53 

1997 and 2001 involving about 46,000 recipients each year. Do you 

have any idea how much might have gone undetected by Social Security officials, and what share of the amount of overpayment detected was actually recovered? 

Mr. ROBERTSON. Well, nationally, I do not have figures on the 

amount of overpayments that went undetected due to residency 

violations. I do know that at least in some regions of the country, 

there are significant levels of violations, and in our report, we identified a number of IG and SSA reports in which basically, they got 

some information on specific field offices and regions of this country 

in terms of the levels of violations related to residency violations. 

One of those studies, for example, indicated that—or they concluded that about 25 percent of all of the SSI recipients in a given 

field office were out of the country. In that same study, they 

found—or I probably should say that they did not find—— 

Chairman HERGER. Being out of the country is illegal—— 

Mr. ROBERTSON. Yes. 

Chairman HERGER. To receive them if they are out of the country. 

Mr. ROBERTSON. Right, and in that same study, they found 

that 46 percent of the recipients, SSI recipients, in that same field 

office actually were not residing at the residence that they were reported to be living in. So, that 25 percent could actually be a lower 

limit for that field office. So, again, in short, while we do not have 

national figures on the undetected amounts of residency violations, 

we do know that at least in certain regions of the country, they are 

significant. 

Chairman HERGER. Do you know what percentage of that which 

was detected was recovered? 

Mr. ROBERTSON. No, I do not. 

Chairman HERGER. Okay; thank you very much. Now, I turn to 

Mr. Cardin to inquire. 

Mr. CARDIN. Thank you, Mr. Chairman. I also want to thank 

all of our witnesses here today. I join the Chairman in concern on 

the residency issue. I think that is one area that we should be able 

to figure out a strategy to make sure that we are not paying benefits to those who are not eligible for benefits. Quite frankly, Mr. 

Chairman, I was figuring out a way whether we could not recycle 

that money into some of the provisions in H.R. 2187 so that we 

could put the money back into the program to help the people who 

really need it. 

Ms. Ford, I very much appreciate you mentioning H.R. 2187, because I do think it is somewhat a mischaracterization to suggest 

that someone who is on SSI who one month might be receiving $75 

or $80 in babysitting, which is an overpayment if they get their full 

SSI benefits; as I pointed out in my opening statement, we have 

not adjusted the offsets, the income offsets for 32 years, and to consider that a fraud or an overpayment for someone who gets under 

an income in 1 month of $30 or $40 a month, and all of a sudden, 

because that is not reported, we have an overpayment. 

It seems to me that if we were to adjust these dollar amounts, 

it would encourage people to seek gainful income, gainful employment, without being penalized if we just modernized or brought up 

the date the value of the offsets. Therefore, we would get reports 

54 

showing less overpayment or fraud within the system if we would 

just allow these individuals to be able to have some reward for 

going out and trying to supplement their income. 

Ms. FORD. I agree with you. I think that it is really important 

to make the distinction that overpayments in SSI are the normal 

course of business, because of the way the system is established, 

and there are quite a number of work incentives built into the program. The dollar for $2 offset, when you earn $2 and you lose $1 

of benefits, means that the SSI beneficiary will always be better off 

working than not working. Then, when you look at section 1619(a) 

and (b), that allow the individual to continue to keep their health 

care coverage and also work beyond the substantial gainful activity 

level, there are real incentives in SSI for people to work, and a lot 

of people do try that. 

They should not be perceived as fraudulent in any way, simply 

because they have these regularly occurring overpayments. We 

have raised the issue with the SSA and with the Congress a number of times that there is not a good system right now within SSA 

to handle earnings reports by beneficiaries, and so, the overpayments then become larger, and when someone is hit with a very 

large overpayment and a letter that says you owe us thousands of 

dollars, and you have to pay, the desire to attempt work again is 

gone for many, many people. 

Mr. CARDIN. I want to make it clear, I do not disagree with the $2 earnings, $1 offset. I agree with the amount of money that is 

the floor before that kicks in. 

Ms. FORD. Sure. 

Mr. CARDIN. I agree that it does encourage people to go out and 

earn, although I must tell you that the philosophy in this Congress 

is that a 50 percent tax bracket would be oppressive and confiscatory to everyone except the poorest of our poor. So, I think we 

do exercise sometimes here dual standards as to what incentives of 

work are all about. Dr. Podoff, I appreciate your comments in the 

definition of disability, and I do not disagree with you that we 

should be looking at a definition of disability that encourages work 

in the program itself. My concern is that SSA plays a critical role 

in trying to get people to work and providing financial support and 

services. If we change the definition of disability, I hope that you 

are not implying that the support services to encourage people to 

work would depend upon meeting a definition that may be more 

difficult, as you were explaining it. 

Dr. PODOFF. Not at all, sir. I think we are basically exploring 

the issues. We have not on the board or anywhere else, really come 

to any conclusion how you change this. As we said, we had a conference on this just last month to look at these issues. On the contrary, I think the view would be that you really want to get the 

support services earlier on and that the way to keep people in the 

workforce is to identify the needs of folks early on, and rather than 

talk about getting people back to the workforce, we want to try to 

keep them in the workforce, and one of the ways that you might 

do this is figure out that they need some assistance with health 

care costs or certain special provisions, and so, when we are talking 

about redefining the definition of disability, we are not at all talking about trying to make it harder for people to get on the rolls. 

55 

What we are trying to do is make it easier for people to stay in 

the workforce. 

Mr. CARDIN. Well, I appreciate that clarification, and I am glad 

I asked the question, because I think it was important to clarify 

that point. I think we all want to make it easier for people with 

disabilities to be able to go out and become employed but that we 

know that they need help, and we do not want to have disincentives within the system itself. Once again, Mr. Chairman, I thank 

all of our witnesses for their testimony today. 

Chairman HERGER. Thank you again, Mr. Cardin, and I also 

thank our witnesses. Of course, our goal is to ensure that those 

who are needy are receiving these programs, and there is some $3 

billion a month that we are placing into this program, but it is also 

our responsibility to taxpayers to ensure that those who are not receiving them according to the law are not and how we can make 

this program as efficient as we can and make it work as well as 

we can. So, again, I thank each of you for testifying here. Mr. 

O’Carroll, if you could please review for us how the SSI used to 

provide benefits to fugitive felons and how today, we prevent fugitive felons from illegally getting these payments. 

Mr. O’CARROLL. Mr. Chairman, originally, SSI was provided to 

fugitives and people that were absconders and parole violators, and 

because of legislation passed by this Subcommittee, we no longer 

do provide that. We applaud it, because what we were concerned 

about was having the U.S. Government pay people to flee from justice, and we have stopped that. 

As you know, we have got about—we are looking at a savings of 

about $83 million by identifying fugitives, turning them off of SSI 

benefits, and because it was so successful in the Title XVI or the 

SSI side, H.R. 743 now includes OASDI or retirement benefits for 

it. We feel that that will be probably about a fourfold increase in 

the amount of prisoners identified or fugitives identified, and also, 

it will probably have a significant amount in savings of dollars to 

the SSI Program. The other side of the Fugitive Felon Program 

that we like the most is that we are providing local law enforcement with information that results in the arrest of violent criminals. As we have said in my testimony, about 19,000 criminals, 

mostly violent criminals, have been taken off the streets because of 

this program, which is making America much safer. 

Chairman HERGER. Thank you. Would you say, Mr. O’Carroll, 

that the SSA needs any assistance in collecting the more than $200 

million overpayments paid to fugitives you describe in page 5 of 

your testimony? 

Mr. O’CARROLL. Yes, Mr. Chairman. We are looking at it in 

twofold: one, identifying them, because of the new work load that 

is coming at us, the four times the amount of people that we have 

been dealing with. We do feel it is significant, and we are including 

that in our appropriation request for the future. Also, SSA, from 

their side, is also looking for some remedies and some benefits to 

be able to track down those extra dollars and to be able to recoup 

some of those overpayments that have been made out there. 

Chairman HERGER. Thank you very much. Now, the gentleman 

from California, Mr. Stark, to inquire. 

56 

Mr. STARK. Thank you, Mr. Chairman. Mr. Robertson, let me 

just see. Some of these numbers may not be within the purview of 

your expertise, but you may be able to give me an estimate just for 

the purposes of my question. What I see in some of the testimony 

here is that on the $38 billion annual SSI payments, they are running somewhere around a 5-percent to 7-percent error rate. Am I 

in the ballpark? 

Mr. ROBERTSON. In the last few years, it has been—I am not 

sure what you are talking about the error rate, but in the last few 

years, it has been about $1.8, $1.7 billion overpayment per year. 

Mr. STARK. That is 5 percent; okay, by my numbers, with my 

shoes and socks on. 

Mr. ROBERTSON. Well, it is roughly around that. 

Mr. STARK. Okay. Do you know, for instance, what error rates 

might be in other government programs, U.S. Department of Defense contracting, Internal Revenue Service (IRS)? 

Mr. ROBERTSON. I do not have that information with me today. 

Mr. STARK. Well, what I am really getting at is that I think we 

owe a real debt of gratitude here to Mr. O’Carroll and Dr. Podoff; 

the only program with which I am familiar and have worked a long 

time is Medicare, where our error rate in Medicare in dollars almost equals the entire SSI system. We have 14 percent—and it 

ranges from 12 up and down; and that is not all fraud; it is about 

half fraud and half just mistake; you pay 80 million claims a day 

or a month, and you make mistakes. 

So, you have got 7 million beneficiaries, Mr. O’Carroll. We have 

5 times, 6 times that many Medicare beneficiaries, and we are 

about 12 times worse. So, what I am saying to both of you gentlemen is that you should go back and tell those employees that they 

are doing one heck of a good job. There is, I think, implicit—the 

IRS has about 5 percent. When you are dealing with millions, Mr. 

Chairman, of claims and hardworking employees, there are bound 

to be mistakes. 

Mind you, if we have $28 billion overpayments or error rate in 

Medicare, half of that is fraud; that means we have got $14 billion 

worth of fraud being perpetrated by physicians, hospitals, pharmacists. These are not your normal sheep who are sneaking into 

the country and stealing money to go back to some foreign country. 

These are upstanding American citizens who are fleecing us. Sir? 

Mr. ROBERTSON. I was going to say that one of the—obviously, 

one of the reasons we took this program off of the high risk was 

because we thought that they were doing a much improved job in 

program integrity issues, plus, if I can—— 

Mr. STARK. Go ahead. 

Mr. ROBERTSON. This—the SSI Program is a very difficult program to enforce. The rules are complex, and—— 

Mr. STARK. Are not a large number of—Ms. Ford may answer 

this; you may know—of our beneficiaries under that elderly? Are 

not proficient in the English language; many of them, some of them 

disabled because of mental problems, so that it is conceivable to 

me, because I have a very great staff back in California, as I know 

the Chairman does, that we work on these SSI problems with the 

help, thank you very much, of SSA in both the Oakland—or San 

Jose and San Francisco and Oakland offices. 

57 

It is confusing, it is conceivable to me that some people go back 

home, and they did not know they were not supposed to get their 

check anymore. Also, some may be—but I just wanted to compliment you, and I want to compliment the Chairman for calling 

this hearing to call attention to the excellent job you are doing, and 

I hope you will continue. It is important, and maybe the folks over 

at Centers for Medicare and Medicaid Services and the U.S. Department of Health and Human Services could borrow these people 

for awhile, Mr. Chairman. If we got our error rate down in Medicare to where the error rate is here, we could pay for half of this 

whole system, and so, the taxpayers, we want to thank you all very 

much. Thank you. Mr. Podoff, did you want to make—— 

Dr. PODOFF. Thank you, Congressman. I just wanted to add, 

you know, as I emphasized in my statement that we have found 

on the board that there are nothing but very hardworking, dedicated people in the SSA, and while, obviously, no one likes errors, 

rates, and we would like to get it down, and with more resources, 

you could do more, and point out that in a few weeks, members of 

the board are going, as we often do, to do a field hearing, and we 

will be up in the Oakland, the Bay Area, looking at various offices, 

teleservice centers, DDS offices, and we can expect to learn from 

those people. 

Mr. STARK. When are you going to be there? Do you know? Do 

you know when it is? 

Dr. PODOFF. We are going to be there June 22, 23, 24—June 

23 and June 24. 

Mr. STARK. We will probably be back here, but I would love to 

have you meet some of our staff and some of our—we have three 

or four offices in the area who use the services and—— 

Dr. PODOFF. We will try to arrange something to see someone, 

but we always find very dedicated people when we go out there. 

Mr. STARK. Thank you, Mr. Chairman. 

Chairman HERGER. Thank you, gentleman from California. I 

would like to follow up on that questioning, and it has to do with 

how complicated it is, and perhaps a question to you, Dr. Podoff: 

in your testimony, on page 6, you stated, quote, ‘‘we encourage SSA 

and the Congress to take a broader look at simplification to ask 

what the SSI Program would look like if they were to design it 

anew’’, close quote, and, Dr. Podoff, I can ask you what would your 

answer to that question be? What would be some of the significant 

changes you would consider in designing a program like SSI from 

scratch? 

Dr. PODOFF. All these, of course, are provisional, because they 

all have, you know, complicated interactions, but certainly, one of 

the things one might look at is whether you would have an annual 

determination of income rather than a monthly; as we heard on the 

panel here, the fact that you have monthly determination creates 

all sorts of churning of money going on back and forward, temporary overpayments, so I think trying to simplify that; trying to 

simplify the issues with respect to living arrangements. 

If I recall, there are several hundred pages of regulations which 

just talk about living arrangements, and as Congressman Stark 

said, we are dealing with people who are often—who are disabled; 

perhaps English is not their first language and have trouble underVerDate Aug 04 2004 21:16 Aug 19, 2005 Jkt 099676 PO 00000 Frm 00061 Fmt 6633 Sfmt 6602 E:\HR\OC\A676.XXX A676
58 

standing what those regulations mean. It is those kinds of things— 

you know, there is no magic bullet. I should point out that I first 

came to work for the SSA in 1973, and when I went to talk to one 

of my colleagues in the research office, and I asked them what they 

were working on, they said the disability program. We do not understand it. It is a problem. So, here we are 31 years later asking 

the same question. So, there are no magic bullets. I would also 

point out I think Commissioner Barnhart is on the right track. She 

is talking about the kinds of things she needs to do to simplify the 

process to get the claims folders in a form, an electronic form 

where we can track things better. To stress over and over again, 

none of this comes cheap from administrative resources. The agency needs more resources to help all those good people, and we believe there are payoffs to those administrative resources in terms 

of saving dollars on benefit payments. 

Chairman HERGER. Thank you very much. Now, I turn to the 

gentleman from Washington, Mr. McDermott, to inquire. 

Mr. MCDERMOTT. Thank you. Thank you, Mr. Chairman. We 

have already heard testimony that SSI is the major source of income for most people who are receiving it. Do you agree with that, 

Mr. Robertson? 

Mr. ROBERTSON. The SSI is a source of income for those that 

are at the very bottom of the economic ladder, yes. 

Mr. MCDERMOTT. So, that is their major source. I did some research on the old program when it was set up back in 1972, and 

it says here the building of our present Social Security program 

that would create a new Federal program administered by the SSA 

designed to provide a positive assurance that the Nation’s aged, 

blind and disabled people would no longer have to subsist on below 

poverty-level incomes. 

Now, if I—my math is right, if you take the $564 and multiply 

it by 12, you get—$6,440, and I think that the highest that—excuse 

me, it is $5,768. If you look at what the poverty line is for people, 

for a single person, it is $8,449. About two grand, two and a half 

grand below. Now, if you allow them $65 a month before you start 

taking away, that is another $680, which gets you up to $6,440, 

$2,000. What is the best way to get it to them, to get them up to 

the poverty level? To let them have more income or to raise the 

base amount that we give them? 

Mr. ROBERTSON. I would respectfully suggest that that is beyond my—— 

Mr. MCDERMOTT. Okay; then, I will ask the rest of the panel. 

Mr. ROBERTSON. That is probably a question for you guys. 

Mr. MCDERMOTT. If we are going to follow the plan as we 

thought it was going to be in 1972 to keep people above the poverty 

line, how do we get the extra $2,000 to them? Yes? 

Ms. FORD. I would like to say you probably have to do a combination of both, allowing them to earn more income and increasing 

the base amount, because there are some people who are not going 

to be able to work at all or very little, so you need to address their 

needs. There are others who can work despite a severe disability 

that is lifelong, but they need ongoing support. So, probably a combination. 

59 

Mr. MCDERMOTT. How would you recommend we make the decision about how much to give which? Should we give another thousand? Is that—— 

Ms. FORD. We would love to work with you on that. 

Mr. MCDERMOTT. Make them earn the other thousand. What? 

Ms. FORD. I said we would love to work with you on that. 

[Laughter.] 

Mr. MCDERMOTT. I am looking; if the policy is a good one, that 

you say you do not will the most vulnerable people in the society 

to live in poverty, and this program is designed to get them out of 

it, it is not getting them out of it so—— 

Mr. ROBERTSON. It struck me; one of the things to consider 

now, also, is what David was talking about earlier, and that is another avenue for approaching this is to put the supports in early 

enough so that in essence, you are getting people back to work 

more quickly than you would have ordinarily, so that you are not 

even really fooling with that minimum level. Again, the idea being, 

okay, there are going to be some people that need support, but 

there is going to be another group that if you put the return to 

work supports in earlier in the program rather than at the end of 

the program the way it is now, they will not even bump up against 

that support ceiling. 

Mr. MCDERMOTT. So, you are saying lift—maybe I did not 

catch that part of your testimony—was it your testimony, sir? 

Dr. PODOFF. Yes. 

Mr. MCDERMOTT. That we should raise the level of their disregard. They could earn $300, $400 a month—— 

Dr. PODOFF. I did not, sir, no. 

Mr. ROBERTSON. Let me try again. 

Mr. MCDERMOTT. Okay. 

Mr. ROBERTSON. Right now—— 

Mr. MCDERMOTT. It is complicated, right? 

Mr. ROBERTSON. It is. As everybody said, it is very complicated. 

Mr. MCDERMOTT. We are expecting old people to figure this 

out, right? 

Mr. ROBERTSON. Right now, the disability determination process is basically geared to determining incapacity rather than capacity to work, and I am oversimplifying now when I say that in essence, the current system makes you go through a very lengthy 

process to determine whether or not you are totally disabled to 

work, and at the end of that process, then, they say okay, now, let 

us see what supports we can give you to help you go back to the 

workplace. The SSA recognizes this as a concern, as a problem, and 

it has some demonstration projects now where it is trying to get 

the supports at the beginning of the process, and what I am suggesting with SSI as well as Disability Insurance—— 

Mr. MCDERMOTT. Moving from the pilot project to the whole 

program. 

Mr. ROBERTSON. If you get the support at the beginning, then, 

maybe some of those people who would be dependent on SSI would 

not be as dependent on SSI at all, because they are going to be out 

in the workforce. 

60 

Mr. MCDERMOTT. Is the data in on their pilots, or is this one 

of these things we do pilots—— 

Mr. ROBERTSON. They are just starting the pilots, but you can 

do some lessons learned, so to speak, from the private sector, which 

has long-term disability insurers who basically, their programs are 

geared to getting people back to work, and as part of their programs, they have those services, those return to work services, 

aids, so forth at the beginning of the process, not at the end, so 

there are some lessons from there, I guess, we can talk about. 

Mr. MCDERMOTT. Anybody else agree or disagree? Yes? 

Dr. PODOFF. As we have all said, the board, the SSAB tries to 

take, you know, a broad-brush look at things, although we do go 

back in the field, and, as we said, talk to staff to learn things about 

the program. Aside from the fact, as said here about getting people—keeping people in the workforce, I think you need to also look 

at the interrelationship between SSI, Social Security and all sorts 

of other income support programs we have. Indeed, that is one of 

the broad-brush things the board is looking at, the interrelationship between all of these programs. 

If you begin to change SSI, the basic benefit, then, you may have 

a problem whereby people who are working and are entitled to a 

Social Security benefit may not get any more as a result of working. While I certainly do not want to touch something about Social 

Security solvency in this hearing, because I know it may present 

lots of problems, I think in some of the proposals that people have 

brought up about changing Social Security, one of the things they 

are talking about is making sure that people who are in the workforce for 30 or more years will get a Social Security benefit which 

keeps them above poverty, which is not the case even with respect 

to Social Security, let alone SSI. So, when you begin to talk about 

trying to boost the income support for low-income people, I think 

you cannot just do it by isolating SSI. I think you also have to look 

at the interrelationship with Social Security and other income support programs, and that is a big bite of the apple to take right now. 

Mr. MCDERMOTT. Mr. Chairman, if you would give me just one 

more second, the issue of health care, you get the benefits of Medicaid when you kick into SSI. Now, if you work your way up, you 

suddenly disqualify yourself for the Medicaid benefit, right? Is 

there any discounting that or waiver or whatever? 

Ms. FORD. Well, if you use section 1619(b), you can work beyond 

all cash benefits and still maintain Medicaid if you need that in 

order to continue to work, if you cannot replace that kind of health 

coverage with your own income, so that is available under 1619(b). 

Mr. MCDERMOTT. Tell me, explain to me what working beyond 

the cash benefits means. 

Ms. FORD. Well, there is—— 

Mr. MCDERMOTT. I am getting $564 now. If I work and make 

more than $564—— 

Ms. FORD. No, you would actually have to make almost double 

that, because there is a cash offset for earnings. If you earn $2, you 

lose $1 of SSI benefits. So, it would be—at the break-even point, 

when your SSI benefit reduces to zero, you would move into section 

1619(b), which means you are still technically a part of the proVerDate Aug 04 2004 21:16 Aug 19, 2005 Jkt 099676 PO 00000 Frm 00064 Fmt 6633 Sfmt 6602 E:\HR\OC\A676.XXX A676
61 

gram, but you are not receiving cash anymore, but you can continue to receive your Medicaid. 

Mr. MCDERMOTT. Is that true in all 50 States? 

Ms. FORD. I am not sure, but we could find out, 1619(b) is supposed to be available in all 50 States, but there are some ramifications for the 209(b) States, and I am not entirely clear on that. We 

could find out. 

[The information follows:] 

Social Security Task Force 

Washington, DC 20005 

June 7, 2004 

Hon. Jim McDermott 

U.S. House of Representatives 

Washington, DC 20515 

Dear Representative McDermott: 

This is in response to your question during the Human Resources Subcommittee 

hearing on May 20, 2004 regarding the Supplemental Security Income program. 

I had discussed the ability of an SSI beneficiary to receive continued Medicaid 

benefits even after SSI cash benefits have ended. You asked me if that was true 

in all 50 states. I indicated that I knew that there were some ramifications for people in section 209(b) states and that I would check. 

In fact, there are problems with accessing Medicaid for some section 1619 users 

in 209(b) states. The individual must have been receiving Medicaid in the month 

before Sec. 1619(a) or (b) is triggered in order to be able to keep Medicaid benefits. 

The 2004 Green Book, WMCP 108–6, p. 3–48, states: 

Under section 1619(b), blind and disabled individuals can continue to be eligible 

for Medicaid even if their earnings take them past the SSI income disregard ‘‘breakeven point.’’ In some 209(b) States, workers may lose Medicaid eligibility before attaining 1619(a) or (b) status if they did not have Medicaid coverage the month before section 1619 status began, thus making this provision inoperable for those 

workers. 

I hope this responds to your question. Thank you for this opportunity to provide 

additional information. Please let me know if I can provide any other additional information. 

Sincerely, 

Marty Ford 

f 

Co-Chair 

Mr. MCDERMOTT. Okay; I would appreciate finding out the 

complexity. I have been watching this issue from watching senior 

citizens, where they have to spend down to a certain point to get 

into Medicaid, and it is a very tricky kind of game they have to 

play, and that seems to me the health care benefit would be one 

of the stickers for these people. 

Ms. FORD. Well, you have a similar but slightly different problem for young people with disabilities who have to—where Medicaid, for instance, is the source of their long-term supports, their 

long-term care. In order to continue to receive the Medicaid that 

they need, they cannot have resources over the limit, and so forth, 

so some of the things you might do to help their situation would 

be, for instance, to increase the resource limits that individuals and 

couples can keep to have on hand in case of any kind of emergency, 

family or otherwise. 

Chairman HERGER. The gentleman’s time has expired, and 

again, I want to thank each of our witnesses for your outstanding 

testimony before our Subcommittee this morning. Your comments 

62 

will help us as we continue our oversight of the SSI program and 

look for new ways to strengthen and improve that program. The 

hearing stands adjourned. 

[Whereupon, at 11:20 a.m., the hearing was adjourned.] 

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