U.S. GOVERNMENT PRINTING OFFICE

WASHINGTON : 

51–401 CC 1998

SOCIAL SECURITY ADMINISTRATION’S

CONTINUING DISABILITY REVIEW PROCESS

HEARING

BEFORE THE

SUBCOMMITTEE ON SOCIAL SECURITY

OF THE

COMMITTEE ON WAYS AND MEANS

HOUSE OF REPRESENTATIVES

ONE HUNDRED FIFTH CONGRESS

FIRST SESSION

SEPTEMBER 25, 1997

Serial 105–44

Printed for the use of the Committee on Ways and Means

(
ii

COMMITTEE ON WAYS AND MEANS

BILL ARCHER, Texas, Chairman

PHILIP M. CRANE, Illinois

BILL THOMAS, California

E. CLAY SHAW, JR., Florida

NANCY L. JOHNSON, Connecticut

JIM BUNNING, Kentucky

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

PHILIP S. ENGLISH, Pennsylvania

JOHN ENSIGN, Nevada

JON CHRISTENSEN, Nebraska

WES WATKINS, Oklahoma

J.D. HAYWORTH, Arizona

JERRY WELLER, Illinois

KENNY HULSHOF, Missouri

CHARLES B. RANGEL, New York

FORTNEY PETE STARK, California

ROBERT T. MATSUI, California

BARBARA B. KENNELLY, Connecticut

WILLIAM J. COYNE, Pennsylvania

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

KAREN L. THURMAN, Florida

A.L. SINGLETON, Chief of Staff

JANICE MAYS, Minority Chief Counsel

SUBCOMMITTEE ON SOCIAL SECURITY

JIM BUNNING, Kentucky, Chairman

SAM JOHNSON, Texas

MAC COLLINS, Georgia

ROB PORTMAN, Ohio

JON CHRISTENSEN, Nebraska

J.D. HAYWORTH, Arizona

JERRY WELLER, Illinois

KENNY HULSHOF, Missouri

BARBARA B. KENNELLY, Connecticut

RICHARD E. NEAL, Massachusetts

SANDER M. LEVIN, Michigan

JOHN S. TANNER, Tennessee

XAVIER BECERRA, California

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 September 17, 1997, announcing the hearing ................................... 2

WITNESSES

Social Security Administration, Susan M. Daniels, Ph.D., Associate Commissioner, Office of Disability; accompanied by Joseph Markovic, Director, Division of Disability Process Policy .......................................................................... 6

U.S. General Accounting Office, Jane L. Ross, Director, Income Security

Issues, Health, Education, and Human Services Division; accompanied by

Cynthia Bascetta, Assistant Director, Income Security Issues, Health, Education, and Human Services Division ................................................................. 10
(1)

SOCIAL SECURITY ADMINISTRATION’S

CONTINUING DISABILITY REVIEW PROCESS

THURSDAY, SEPTEMBER 25, 1997

HOUSE OF REPRESENTATIVES,

COMMITTEE ON WAYS AND MEANS,

SUBCOMMITTEE ON SOCIAL SECURITY,

Washington, DC.

The Subcommittee met, pursuant to notice, at 2:05 p.m., in room

1100, Longworth House Office Building, Hon. Jim Bunning (Chairman of the Subcommittee) presiding.

[The advisory announcing the hearing follows:]
2

ADVISORY

FROM THE COMMITTEE ON WAYS AND MEANS

SUBCOMMITTEE ON SOCIAL SECURITY

FOR IMMEDIATE RELEASE CONTACT: (202) 225–9263

September 17, 1997

No. SS–11

Bunning Announces Oversight Hearing on

Social Security Administration’s

Continuing Disability Review Process

Congressman Jim Bunning (R–KY), Chairman, Subcommittee on Social Security

of the Committee on Ways and Means, today announced that the Subcommittee will

hold an oversight hearing on the Social Security Administration’s (SSA’s) progress

in conducting continuing disability reviews (CDRs). The hearing will take place on

Thursday, September 25, 1997, in the main Committee hearing room, 1100 Longworth Office Building, beginning at 1:00 p.m.

In view of the limited time available to hear witnesses, oral testimony will be

from invited witnesses only. However, any individual or organization may submit

a written statement for consideration by the Committee and for inclusion in the

printed record of the hearing.

BACKGROUND:

SSA is required to review the continuing eligibility of individuals with non-permanent disabilities at least once every three years. Congress enacted this statutory requirement to ensure that individuals remain on the disability rolls only if they continue to be disabled. SSA’s difficulties in conducting the required number of CDRs

in recent years have resulted in extraordinary backlogs. According to the U.S. General Accounting Office (GAO), 4.3 million recipients were due or overdue for a CDR

in fiscal year 1996.

The extraordinary growth in the Social Security disability rolls over the last decade and the increased length of time disabled recipients remain on the rolls, demonstrates the importance of conducting CDRs. Last year, Congress authorized an additional $3 billion for fiscal years 1996 through 2002 to help SSA eliminate the CDR

backlog.

In announcing the hearing, Chairman Bunning stated: ‘‘Individuals who work and

pay into Social Security must be able to count on disability benefits to support their

families if severe disability strikes. However, the public should also be able to count

on SSA managing the program well, and that means stopping payments to people

who have recovered and are no longer disabled.’’

FOCUS OF THE HEARING:

During the hearing, the Subcommittee will: (1) review the current status of the

CDR workload, (2) examine SSA’s use of the additional funds made available last

year to SSA for CDRs, and (3) consider the findings of the GAO regarding SSA’s

management of the CDR process.
3

DETAILS FOR SUBMISSION OF WRITTEN COMMENTS:

Any person or organization wishing to submit a written statement for the printed record of the hearing should submit at least six (6) single-space legal-size copies of

their statement, along with an IBM compatible 3.5-inch diskette in ASCII DOS Text

or WordPerfect 5.1 format only, with their name, address, and hearing date noted

on a label, by the close of business, Thursday, October 9, 1997, to A.L. Singleton,

Chief of Staff, Committee on Ways and Means, U.S. House of Representatives, 1102

Longworth House Office Building, Washington, D.C. 20515. If those filing written

statements wish to have their statements distributed to the press and interested

public at the hearing, they may deliver 200 additional copies for this purpose to the

Subcommittee on Social Security office, room B–316 Rayburn House Office Building,

at least one hour before the hearing begins.

FORMATTING REQUIREMENTS:

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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 typed in single space on legal-size paper and may not exceed a total of 10 pages including attachments. At the same

time written statements are submitted to the Committee, witnesses are now requested to submit

their statements on an IBM compatible 3.5-inch diskette in ASCII DOS Text or WordPerfect

5.1 format. 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

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3. A witness appearing at a public hearing, or submitting a statement for the record of a pub- lic hearing, or submitting written comments in response to a published request for comments

by the Committee, must include on his statement or submission a list of all clients, persons,

or organizations on whose behalf the witness appears.

4. A supplemental sheet must accompany each statement listing the name, full address, a telephone number where the witness or the designated representative may be reached and a

topical outline or summary of the comments and recommendations in the full statement. This

supplemental sheet will not be included in the printed record.

The above restrictions and limitations apply only to material being submitted for printing.

Statements and exhibits or supplementary material submitted solely for distribution to the

Members, the press and the public during the course of a public hearing may be submitted in

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

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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.

tee will examine the Social Security Administration’s progress in

Chairman BUNNING [presiding]. This afternoon the Subcommitf

conducting what we call continuing disability reviews, or CDRs.

Congress enacted a statutory CDR requirement to ensure that

only those individuals who continue to be disabled remain on the

disability rolls. However, SSA has consistently failed to conduct the
4

required number of CDRs, resulting in a tremendous backlog. In

1996, 4.3 million recipients were due or overdue for a CDR.

Over the years, SSA has requested additional funding to help them address the CDR backlogs. Last year Congress took extraordinary steps to adjust the discretionary spending limits to provide

SSA with over $4 billion—that’s right, $4 billion—for fiscal years

1996 through 2002, in order to conduct CDRs and other redeterminations.

Today’s hearing will give us a chance to see what the Social Se- curity Administration has been doing with that money. While the

public should be able to count on disability benefits to support their

families if disability strikes, the public should also be assured that

SSA is managing the program so that only those who are truly disabled remain on the rolls.

Today we will focus on the current status of the CDR workload and SSA’s use of additional funds made available last year. I am

pleased to hear that SSA is making strides in reducing the backlogs and look forward to hearing more details. We will also hear

about GAO’s findings regarding SSA’s management of the CDR

process.

[The opening statement follows:]

Statement of Hon. Jim Bunning, a Representative in Congress from the State of Kentucky

This afternoon the Subcommittee will examine the Social Security Administra- tion’s progress in conducting continuing disability reviews (CDRs). Congress enacted a statutory CDR requirement to ensure that only those individ- uals who continue to be disabled remain on the disability rolls. However, SSA has

consistently failed to conduct the required number of CDRs, resulting in tremendous

backlogs. In 1996, 4.3 million recipients were due or overdue for a CDR. Over the years, SSA has requested additional funding to help them address the CDR backlogs. Last year, Congress took extraordinary steps to adjust the discretionary spending limits to provide SSA with over $4 billion for fiscal years 1996 through 2002 in order to conduct CDRs and other redeterminations. Today’s hearing will give us a chance to see what the Social Security Administra- tion has been doing with that money. While the public should be able to count on disability benefits to support their families if disability strikes, the public should also be assured that SSA is managing

the program so that only those who are truly disabled remain on the rolls. Today, we will focus on the current status of the CDR workload and SSA’s use of additional funds made available last year. I am pleased to hear that SSA is making strides in reducing the backlogs and look forward to hearing more details. We will also hear about GAO’s findings regarding SSA’s management of the CDR

process.

dispense with opening statements except from the Ranking DemoChairman BUNNING. In the interest of time, it is our practice to

f

crat Member. All Members are welcome to submit statements for

the record.

I yield to Congresswoman Kennelly for any statement that she may wish to make.

Ms. KENNELLY. Thank you, Mr. Chairman. Today we take up the subject of continuing disability reviews.

For some time this Subcommittee, under both Republicans and

Democrats, has been interested in assuring that the Social Security

Administration has adequate resources to conduct continuing dis5

ability reviews. Last year we adopted a measure similar to the one

coauthored by Chairman Bunning and the previous Democratic

Chairmen of the Subcommittee, and supported by me, which authorized additional CDR administrative funds outside the discretionary spending caps. This measure recognized that CDRs are a

cost-effective means of reducing the disability rolls and assuring

that only those who continue to be disabled will receive Social Security benefits.

We are here today to ask several questions about the implementation of these reviews. How effectively have the additional funds

been used? How many disability cases has SSA reviewed with

these increased funds? Are we on the road to eliminating the backlog of CDRs which accumulated during the late eighties and the

early nineties?

I am pleased with the results of the General Accounting Office

review of the status of CDRs. The Social Security Administration

seems to have met its own targets for conducting CDRs, even in

the face of additional SSI childhood disability workloads imposed

on the agency in last year’s welfare bill.

Further, the SSA seems to be making progress reducing its backlog of CDR cases. The agency projects that with sufficient funding

it will have eliminated the backlog of cases by the year 2002.

It would appear that the additional CDR funding was money well

spent. The Social Security Administration has completed the target

number of cases with less funds than anticipated and may be able

to schedule additional reviews for next year. Above all, those cases

have already been targeted for review.

Moreover, if authorized funding is appropriated, the Social Security Administration may be able to eliminate its current backlog in

the next 5 years. More importantly, SSA is projecting that it will

save the taxpayers considerable money through reduced disability

payments.

Let me also point out that routine CDRs are not the only answer

for reducing Social Security disability costs. Some individuals have

permanent disabilities, but might still return to work if they had

a little additional assistance. I have introduced legislation, as Mr.

Bunning has, to help individuals with disabilities return to work

by providing continual health care coverage and other incentives to

these individuals. I look forward to moving similar legislation

through the Subcommittee in the near future.

With respect to CDRs, I want to thank the General Accounting

Office for completing in a timely fashion much of the work that I

requested of them. And I look forward to hearing from the Social

Security Administration about the agency’s plans for the future

and thank the agency for the work that it’s done already. Thank

you.

Thank you, Mr. Chairman.

Chairman BUNNING. Thank you, Ms. Kennelly.

First, we will hear from the Social Security Administration, Dr.

Susan Daniels, Associate Commissioner of the Office of Disability;

accompanied by Joseph Markovic, Director of the Division of Disability Process Policy.

Testifying from the GAO is Jane Ross, Director of Income Security Issues for the Health, Education, and Human Services Divi6

sion; accompanied by Cynthia Bascetta, Assistant Director of Income Security Issues.

Dr. Daniels, if you would please begin.

STATEMENT OF SUSAN M. DANIELS, PH.D., ASSOCIATE

COMMISSIONER, OFFICE OF DISABILITY, SOCIAL SECURITY

ADMINISTRATION; ACCOMPANIED BY JOSEPH MARKOVIC,

DIRECTOR, DIVISION OF DISABILITY PROCESS POLICY

Ms. DANIELS. Thank you, Mr. Chairman and Members of the

Subcommittee, for inviting me here to report on SSA’s success in

protecting the integrity of the Social Security Disability Program.

Effective stewardship at the Social Security Administration is

one of our highest priorities. Toward that end, we processed roughly half a million CDRs in 1996 with an estimated lifetime savings,

including Medicare and Medicaid, of nearly $2.5 billion.

I also appreciate this opportunity to thank each of you personally

for the additional funding for processing CDRs that made this

progress possible. Achieving additional funding resulted from the

work of both the appropriating and authorizing committees and

has the full support of this Administration.

The Social Security Act requires SSA to review continuing disability eligibility for individuals with nonpermanent disabilities

every 3 years. These reviews are called periodic CDRs. We also conduct CDRs for individuals who have returned to work, some of

which require a full medical review; others do not.

Beginning in 1990, SSA faced unprecedented increases in initial

claims, resulting, not surprisingly, in growing backlogs of overdue

CDRs. In 1996, Congress authorized additional funding for SSA to

process CDRs through fiscal year 2002.

Beginning in 1993, we implemented a series of innovations, the

most notable of which is the mailer questionnaire and profiling system, which is now in its sixth year. It is an efficient and costeffective way to accurately differentiate beneficiaries who do and do

not need full medical reviews in the State Disability Determination

Services.

CDRs have always generated program savings well above administrative costs. Under our improved processes, including the mailer

and questionnaire, the program savings are far in excess of the administrative costs. We expect similar results well into the next decade.

Now let’s look at our recent accomplishments. In fiscal year 1996,

we nearly doubled the number of CDRs conducted during the previous fiscal year, resulting in the second largest annual volume of

periodic CDRs in the history of the agency. We processed over half

a million, 565,000, and this chart shows you that some were done

with mailers; some were full medical; some were work activity; and

some were periodic. Our Office of the Actuary estimates that there

will be savings of about $2.5 billion resulting from final benefit terminations for 26,500 individuals. In fiscal year 1997, through August, we have processed over 700,000 CDRs, again using the full

medical and mailer processes.

[The following was subsequently received:]
7

First, almost doubling the number of CDRs at far less than double

Ms. DANIELS. Our future goals include two important features.

f

the cost. We project processing over 1.1 million periodic CDRs in

fiscal year 1998. In addition, we plan to fold in the welfare reform

legislation, including CDRs for children under age 18 who do not

have permanent impairments and for low-birth-weight babies.

The mailer profiling system provides a high level of confidence in

both our ability to achieve the estimated workload targets and in

the accuracy and reliability of the decisions resulting from these

processes. Our achievements in processing CDRs over the last 2

years demonstrate Congress’ and the Administration’s commitment

to addressing this crucial workload.

Discretionary cap adjustments for additional funds have been authorized to enable SSA to eliminate the backlog of CDRs by fiscal

year 2002 while staying current on our annual review requirements. However, further congressional action is necessary each

year to make additional CDR funding available. If Congress appropriates additional funds as requested each year, we can meet our

legislatively mandated CDR workload goals.

In that regard, the House version of the fiscal year 1998 SSA appropriation, expected to be considered by the conference committee

next week, provided $45 million less than the President’s request

for processing CDRs and related SSI welfare reform legislation.

The Senate version of this bill includes the full amount of the

President’s request. Failure to provide the additional funds would

mean some 15 percent fewer individuals would receive CDRs in
8

1998. We strongly urge the conference committee to provide the additional $45 million, consistent with the Senate action.

Mr. Chairman, we are proud of our recent accomplishments. We

are confident in our CDR strategy. We are grateful for your support, and we thank you for your attention. And I would be happy,

as would Mr. Markovic, to take any questions. [The prepared statement follows:]

Statement of Susan M. Daniels, Ph.D., Associate Commissioner, Office of

Disability, Social Security Administration

Mr. Chairman and Members of the Subcommittee:

Thank you for inviting me here today to testify about the success of SSA’s efforts to protect the integrity of the Social Security disability program. As you know, continuing disability reviews (CDRs) are how we ensure that only people who are still

disabled continue to receive monthly benefits. Effective stewardship of the Social Security trust funds is one of SSA’s highest priorities. Toward that end, we processed

roughly half a million CDRs in FY 1996, with estimated lifetime savings (including

Medicare and Medicaid) of nearly $2.5 billion. I also appreciate this opportunity to thank each of you personally for authorizing last year the additional funding for processing CDRs that has allowed us to achieve

such significant progress. Achieving this additional funding was the work of both

the authorizing and appropriating committees, and had the full support of the Administration. At the same time, SSA was required to submit an annual report to

Congress at the end of each fiscal year through FY 2002 on the amount spent on

CDRs, the number of reviews conducted, their results, and the estimated savings.

We submitted the report for FY 1996 to Congress two weeks ago.

BACKGROUND

The Social Security Act generally requires SSA to review the continuing eligibility of individuals with non-permanent disabilities entitled to Social Security Disability

Insurance (DI) benefits at least once every 3 years. It also requires SSA to review

the continuing eligibility of such individuals with permanent disabilities at such

times as the Commissioner determines to be appropriate. Together, these reviews

are known as periodic CDRs. We also conduct CDRs when there has been an indication that the individual has returned to work, some of which require a full medical

review, some of which do not.

Beginning in 1990, SSA faced unprecedented increases in initial disability claims workloads, resulting, not surprisingly, in a substantial number of overdue CDRs.

Even though the number of periodic CDRs processed each year increased from

48,000 in FY 1993 to 217,200 in FY 1995, SSA recognized that it could not conduct

the required CDRs without additional resources. In 1996, Congress authorized administrative funding to enable SSA to process additional CDRs through FY 2002

and provided that the discretionary spending caps could be adjusted for appropriations above a base funding level of $200 million a year. Congress appropriated $260

million for FY 1996 for SSA to process CDRs, including a $60 million discretionary

cap adjustment. For FY 1997, Congress appropriated $510 million for CDRs, including a $310 million adjustment to the discretionary cap to process CDRs, including

SSI CDRs and redeterminations related to the welfare reform legislation. These

funds are apportioned separately by the Office of Management and Budget and

tracked separately by SSA’s accounting systems.

SSA INNOVATIONS

Beginning in 1993, SSA implemented a series of innovations to increase the num- ber of CDRs processed. The primary innovation in this area was the CDR mailer

questionnaire and profiling system, now beginning its sixth year of operation. It is

an efficient and cost-effective means for accurately identifying beneficiaries who do

not require full medical reviews in the Disability Determination Services (DDSs), as

well as identifying those cases that are productive referrals for full medical reviews.

During FY 1996, we implemented further enhancements to the mailer/profiling

system. Specifically, we automated the process further by using optically scannable

mailers and computer-based decision logic, an important step as SSA prepares to

begin annually processing more than three-quarters of a million mailers. Additionally, through experience, we continue to improve our ability to profile cases. We expect that these improved processes will increase our efficiency, program savings,

and our ability to accurately process even larger volumes of CDRs.
9

CDRs have always generated program savings well above administrative cost.

Under our improved process in FY 1996, program savings were far in excess of administrative costs. We expect to receive similar returns over the lifetime of the authorized additional funding by continuing to work toward our goal of processing

CDRs in the most cost-effective manner consistent with program requirements.

FY 1996 ACCOMPLISHMENTS

During FY 1996, SSA processed a total of 566,000 CDRs, of which 162,900 were

for Supplemental Security Income (SSI) recipients. Out of the 566,000 total, 498,400

were periodic CDRs and 67,600 were work issue CDRs. The FY 1996 total was nearly double the number of CDRs conducted during the previous fiscal year, and the

second largest annual volume of periodic CDRs that SSA has ever processed. During

FY 1996, SSA made initial determinations that benefits should be ceased due to

medical improvement and the ability to work in 60,300 cases. Of these, 41,910 were

cessations resulting from periodic CDRs, 18,622 were DI only cases, 6,253 were concurrent DI/SSI cases, and 17,035 were SSI only. Out of these, we estimate that

26,500 beneficiaries will have their benefits terminated after all appeals: 10,500 DI

only, 4,000 concurrent, and 12,000 SSI only. This represents life-time savings of

nearly $2.5 billion—over $1.7 billion in the DI and Medicare programs and over

$700 million in Federal savings for the SSI and Medicaid programs.

SSI CDRS

The Social Security Act was amended in 1994 to require SSA to perform CDRs

for a minimum of 100,000 SSI recipients during each of fiscal years 1996, 1997, and

1998.

Additionally, last year’s welfare reform legislation requires SSA to make redeterminations of disabled childhood SSI recipients who attain age 18, using the adult

disability eligibility criteria, and to conduct CDRs once every 3 years for SSI recipients under age 18 with impairments that are likely to improve, and by age 1 for

children whose low birth weight is a contributing factor material to the determination of disability. This year’s Balanced Budget Act permits us to schedule a CDR

for a low birth weight child at a later date if the child’s impairment is not expected

to improve by age 1.

During FY 1996, we confirmed the effectiveness of the profile/mailer system for

SSI cases and conducted 162,900 SSI CDRs. These reviews included 5,700 initial determinations made for low birth weight children, of which 3,200 were cessations.

FUTURE GOALS

SSA’s budget projected spending of about $288 million in FY 1997 to process

603,000 periodic review CDRs, including about 151,000 SSI cases. Through August

1997, we have processed nearly 636,000 periodic review CDRs. By the end of the

fiscal year, we expect to have processed at least 650,000, at a cost of about $315

million, plus another 74,000 work issue CDRs.

For FY 1998, SSA’s budget projects that we will spend about $366 million to process over 1.1 million periodic CDRs—almost double the number of CDRs in FY 1997

at far less than double the cost. Our improved mailer/profiling system provides a

high level of confidence in both our ability to achieve our estimated workload targets

and in the accuracy and reliability of the decision resulting from our case reviews.

Also, in FY 1998, we will begin processing CDRs for SSI recipients under age 18

whose impairments are likely to improve. These cases will allow us to develop a

database to profile children’s cases for CDR mailers.

CONCLUSION

Our achievements in processing CDRs over the last two years demonstrate Congress’ and the Administration’s commitment to addressing this crucial workload.

Discretionary cap adjustments for additional funds have been authorized to enable

SSA to eliminate the backlog of CDRs by FY 2002, while staying current with annual review requirements.

However, further congressional action is necessary each year to make additional

CDR funding available. If Congress appropriates additional funds, as requested each

year, we expect to become current with our legislatively mandated CDR workloads.

In that regard, the House version of the FY 1998 SSA appropriation, expected to

be considered by a Conference Committee next week, provided $45 million dollars

less than the President requested to process CDRs and SSI administrative work related to the welfare reform legislation. The Senate version of this bill includes the
10

full amount of the President’s request. Failure to provide the additional funds would

mean that some 15 percent fewer individuals would have their status reviewed in

FY 1998. We would strongly urge the Conference to provide the additional $45 million consistent with Senate action.

Mr. Chairman, we are proud of our recent accomplishments and are confident

that our CDR strategy will lead to reliable and cost-effective monitoring of the disability rolls. I thank you for your attention and would be happy to answer any questions.

Chairman BUNNING. Ms. Ross.

f

STATEMENT OF JANE L. ROSS, DIRECTOR, INCOME SECURITY

ISSUES, HEALTH, EDUCATION, AND HUMAN SERVICES

DIVISION, U.S. GENERAL ACCOUNTING OFFICE;

ACCOMPANIED BY CYNTHIA BASCETTA, ASSISTANT

DIRECTOR, INCOME SECURITY ISSUES, HEALTH,

EDUCATION, AND HUMAN SERVICES DIVISION

Ms. ROSS. Mr. Chairman and Members of the Subcommittee, I’m

pleased to talk with you today about SSA’s recent experience in

conducting continuing disability reviews. I want to make two

points.

First of all, SSA is meeting its 1997 goal because they have been

able to hire additional staff and because other competing workloads

have declined. Also, in future years we encourage SSA to set more

ambitious targets in its CDR goals, so that program costs can be

reduced and program integrity can be enhanced.

Let me go back and set the stage for the current emphasis on

CDRs, directing your attention to the chart showing CDR history.

In the late eighties——

Chairman BUNNING. It’s awfully small. You’re going to have to

do a lot of explaining for us to understand it.

Ms. ROSS. I think you’ll be able to see which are the big red bars

and which are the small red bars.

In the late eighties, because of budget constraints, SSA reduced

the number of staff who were available to do CDRs, and as a consequence, reduced its CDR goal. I’m sure the gentleman can point

out on the chart where the late eighties are. And then in the early

nineties, the number of DI and SSI applications increased dramatically, and as a part of its effort to keep up with this tremendous

applications workload, SSA again significantly reduced its CDRs.

So by 1993, both Members of Congress and the GAO were concerned that SSA’s very limited number of CDRs, no matter how legitimate the reasons for those numbers, had resulted in unjustified

program expenditures and a breakdown of public confidence in the

programs. Over the next few years, as you know, people struggled

to find mechanisms to increase funding, and last year’s legislation

represented a real breakthrough on the CDR issue.

Now that SSA has funding authorization for CDRs and 1 year’s

experience under its belt, you asked GAO to give you an assessment on SSA’s progress in achieving its goal. Getting to the bottom

line, SSA data indicate, and Dr. Daniels just confirmed, that SSA

will exceed its target of 603,000 CDRs for 1997, while it was also

processing the required SSI childhood redeterminations.
11

As I said, one reason that SSA was able to achieve its goals was that the State Disability Determination Services were able to hire

up and increase their capacity. They did so despite some problems

about hiring freezes and shortages of qualified applicants in certain

places, but they were able to do it, and they expect to meet their

1998 hiring goals as well. Another important reason that SSA was able to meet its 1997

goal was that the number of applications for disability benefits declined between 1996 and 1997 by several hundred thousand. The

people who evaluate these initial applications for disability are the

same people who conduct the CDRs. So when you have fewer initial

applications, you have more resources available to do CDRs. In other words, the problems that we saw in the late eighties and the early nineties—reductions of staff and increased initial workloads—have now turned around for the agency. They’re increasing

their capacity in terms of staff to do CDRs and the initial workload

is down.

So let me summarize. SSA plans to conduct over 8 million CDRs

by 2002, more than double the number they’ve ever conducted in

the preceding 21-year period. Our preliminary findings indicate

that SSA is meeting its capacity-building goals in the DDSs, and

that if the funds are appropriated as planned, they should have

adequate funding to carry out their plans. Their current plan also assumes making some technical improve- ments. We assume that these will go as projected. The more quickly SSA can remove persons who are no longer eligible from the

rolls, the more it can save in program benefits. Finally, we note that many beneficiaries who will not medically improve could, nevertheless, have or regain work capacity. In light

of this, we continue to encourage SSA to consider ways to integrate

return-to-work efforts into its overall management of the CDR

process for beneficiaries.

Mr. Chairman, this concludes my statement. I’d be glad to answer your questions.

[The prepared statement follows:]

Statement of Jane L. Ross, Director, Income Security Issues, Health,

Education, and Human Services Division, U.S. General Accounting Office

Mr. Chairman and Members of the Subcommittee:

Thank you for inviting me to testify on the Social Security Administration’s (SSA)

plan to eliminate the backlog of continuing disability reviews (CDR) in the Disability Insurance (DI) and Supplemental Security Income (SSI) programs. These programs together pay about $60 billion annually to 9 million disabled beneficiaries.

CDRs, required by law for all DI and some SSI beneficiaries, help ensure that only

those eligible continue receiving benefits. During the last 20 years, however, SSA

has conducted from as few as 36,000 to as many as 544,000 reviews in various

years. We have reported on several occasions that because SSA has not consistently

done the required CDRs, hundreds of millions of dollars in unnecessary costs have

been incurred each year, and program integrity has been undermined. (See the list

of related GAO products at the end of this statement.)

For almost a decade, budget and staff reductions and large increases in initial

claims hampered SSA’s efforts to conduct these reviews. Consequently, more than

4 million beneficiaries were due or overdue for CDRs by 1996. Both SSA and the

Congress focused attention on CDRs in that year. As a result, SSA developed a plan

to conduct 8.2 million CDRs between 1996 and 2002, and the Congress authorized

funding of about $4.1 billion over 7 years for this purpose. Soon after SSA developed

its plan, the Congress established a new requirement for CDRs and for disability

redeterminations for certain SSI children, for whom eligibility criteria were made

more restrictive as part of welfare reform. SSA expects to complete an update of its
12

1See GAO numbered correspondence HRD–78–97.

2See the Social Security Disability Amendments of 1980 (P.L. 96–265) Sec. 311.

3See the Social Security Disability Benefit Reform Act of 1984 (P.L. 98–460).

plan in November 1997 to incorporate these SSI CDRs as well as its progress conducting CDRs. My testimony today presents our observations on SSA’s ability to achieve its cur- rent 7-year plan cost effectively and on schedule. I will discuss SSA’s progress so

far, its spending rate, and the status of selection formulas needed to meet future

goals. My testimony is based on our previous reports and our ongoing work for you

and Representative Kennelly. In summary, we have found that SSA’s experience in conducting CDRs during fis- cal year 1997 is encouraging. For 1997, SSA expects to meet or exceed its goal to

conduct 603,000 CDRs. And, for 1998, it is planning to increase its goal because it

was able to meet its 1997 goal, while also processing at least 235,000 SSI childhood

eligibility redeterminations. Reviewing more cases sooner than planned, to the extent possible, is clearly desirable because of the high costs—in taxpayer dollars and

program integrity—of continuing benefits to those who are no longer eligible. In addition, SSA’s spending to date and estimates of future processing costs suggest that

it will be able to complete its current 7-year plan with the funds the Congress has

authorized, although its revised plan will not be available until November 1997. Key

issues, however, such as deciding which beneficiaries should undergo a full medical

review—a lengthy and costly process—are still unresolved but will determine how

quickly and at what cost SSA can become current on its CDR workload.

PRIORITY OF CDRS HAS VARIED

SSA’s disability programs provide cash benefits to people with long-term disabil- ities. The DI program provides monthly cash benefits and Medicare eligibility to severely disabled workers; SSI is an income assistance program for blind and disabled

people. The law defines disability for adults for both programs as the inability to

engage in substantial gainful activity because of a severe physical or mental impairment that is expected to last at least 1 year or result in death. For children seeking

SSI disability benefits, the impairment must meet the duration requirement and result in marked and severe functional limitations.

Both the DI and SSI programs are administered by SSA and state disability determination services (DDS). DDSs receive 100 percent of their funding from SSA

and make disability decisions in accordance with SSA’s policies and procedures.

They process initial disability applications, assess beneficiaries’ potential for medical

improvement, set due dates for CDRs, and conduct full medical reviews.

In early 1978, we had reported on serious program administration weaknesses

that allowed thousands of medically ineligible recipients to go undetected.1 Because

of its concerns about the effectiveness of the CDR process and the growing number

of disability beneficiaries, the Congress enacted a provision in a 1980 law requiring

periodic CDRs for all DI beneficiaries.2 This provision requires SSA to review—at

least once every 3 years—the status of DI beneficiaries whose disabilities are not

permanent to determine their continuing eligibility for benefits. The law also requires CDRs for DI beneficiaries with permanent impairments but gives SSA latitude in determining the frequency of these reviews. The 1980 provision does not require SSA to review cases involving SSI recipients. Before the 1980 legislation, SSA

scheduled beneficiaries for medical reviews only if medical improvement was expected.

As a result of the 1980 law, SSA began increasing the number of CDRs in fiscal

year 1981, using age, benefit amount, and medical characteristics as selection criteria. This resulted in the selection of a disproportionate number of young people

with mental impairments for CDRs, as shown in table 1. Many of these cases were

terminated because they did not meet new strict mental disability criteria that had

been implemented after they had been put on the rolls.

In response to this situation, the Congress enacted a law in 1984 establishing the

Medical Improvement Review Standard, which prohibits benefit termination unless

SSA can show that the beneficiary’s medical condition has improved since the last

medical decision and that this improvement relates to the individual’s ability to

work.3 As a result, SSA declared a moratorium on conducting CDRs until the new

medical improvement standard was implemented by regulation in late 1985. Since

enactment of the new standard, the cessation rate for CDRs has declined greatly.

SSA’s regulations require CDRs every 6 to 18 months for DI beneficiaries expected to improve medically and at least once every 3 years if medical improvement

is considered possible. For DI beneficiaries whose impairments are judged to be per13

4To develop the mailer CDR process, SSA used the outcomes of previous DI CDRs to statistically estimate the likelihood that a CDR would result in benefit termination. The estimate is

based on characteristics such as age, impairment, length of time on the disability rolls, and previous CDR activity. If the estimated likelihood of benefit termination is high, SSA routes the

case to a DDS for a full medical review. If the estimated likelihood of benefit termination is

low, SSA sends a mailer to the beneficiary, permitting SSA to do more CDRs than if all cases

were forwarded to DDSs for full medical reviews.

manent, the regulation requires CDRs once every 5 to 7 years. Until 1993, all CDRs

were labor-intensive full medical reviews. In full medical reviews, one of SSA’s 1,300

field offices first contacts the beneficiary to determine whether he or she is engaged

in any gainful activity that would make the beneficiary ineligible for benefits. If not,

the field office forwards the case to a DDS, which determines whether the beneficiary still meets the medical eligibility requirements. SSA currently estimates that

a full medical review costs about $800.

Table 1: CDR Historical Data, Fiscal Years 1975–96

Fiscal year Number of

CDRs 1

Initial cessation rate

(in percent)

Selected significant events in CDR history

1975 ............. 147,200 21

1976 ............. 170,000 24

1977 ............. 150,300 38

1978 ............. 118,800 46 GAO reported its concern that thousands of medically ineligible recipients were going undetected.

1979 ............. 134,500 46

1980 ............. 159,600 46 The Congress established requirement for periodic reviews of DI beneficiaries.

1981 ............. 257,100 47 SSA increased CDRs and began targeting CDRs on the

basis of age, benefit amount, and medical factors that

disproportionately affected younger people and the

mentally impaired.

1982 ............. 496,800 45

1983 ............. 544,200 41

1984 ............. 156,600 24 The Congress enacted medical improvement review

standard, and SSA declared moratorium on CDRs.

1985 ............. 35,900 11

1986 ............. 47,700 6 SSA lifted the CDR moratorium after publishing regulations for the medical improvement review standard.

SSA also published criteria for scheduling CDRs.

1987 ............. 206,000 13

1988 ............. 353,800 12

1989 ............. 366,800 9

1990 ............. 195,100 11 SSA began diverting CDR resources to initial disability

claims, which were growing rapidly.

1991 ............. 73,500 10

1992 ............. 73,100 13

1993 ............. 64,800 2 11 SSA implemented mailer CDR process for certain DI

beneficiaries under age 59.

1994 ............. 118,400 2 14 Congress enacted requirement for 100,000 SSI CDRs annually during fiscal years 1996–98.

1995 ............. 217,000 2 17

1996 ............. 498,400 2 11 The Congress authorized $4.1 billion for CDRs during fiscal years 1996–2002 and required additional SSI childhood disability reviews and redeterminations for which

it authorized an additional $250 million.

1 CDR data for 1975 through 1994 include ‘‘work’’ CDRs for which DDSs conduct full medical reviews. Work

CDRs are unscheduled reviews that SSA’s field offices initiate when, for example, they receive reports indicating a beneficiary is working or has income. SSA estimates that DDSs annually conduct about 20,000 full medical reviews as a result of work CDRs. 2For 1993–96, the number of mailers, respectively, were about 34,600, 31,000, 76,500, and 248,000.

Source: SSA.

To conduct CDRs more cost effectively, SSA developed an alternative to full medical reviews.4 Under this alternative, SSA mails a questionnaire (referred to as a

‘‘mailer’’) to beneficiaries who have a low likelihood of benefit termination for them

to report information on their medical conditions, treatments received, and work ac14

5See the Social Security Independence and Program Improvements Act of 1994.

6See Social Security Disability: Alternatives Would Boost Cost-Effectiveness of Continuing

Disability Reviews (GAO/HEHS–97–2, Oct. 16, 1996) and Social Security Disability: Improvements Needed to Continuing Disability Review Process (GAO/HEHS–97–1, Oct. 16, 1996). Also

see Supplemental Security Income: SSA Is Taking Steps to Review Recipients’ Disability Status

(GAO/HEHS–97–17, Oct. 30, 1996). 7The Contract With America Advancement Act of 1996 (P.L. 104–121) authorizes funding for

7 years for CDRs from the Federal Old-Age and Survivors Insurance Trust Fund and the Federal Disability Insurance Trust Fund. 8See the Personal Responsibility and Work Opportunity Reconciliation Act of 1996. This act

repealed the provision for CDRs for 18-year-olds in the 1994 legislation. SSA determined that

newly required CDRs on low birth weight babies and children under age 18 whose impairments

are likely to improve, and redeterminations for 18-year-olds may count toward the 100,000

CDRs required under the Social Security Independence and Program Improvement Act of 1994.

The Balanced Budget Act of 1997 permits SSA to schedule a CDR for a low birth weight child

after the child’s first birthday if it is determined that the child’s impairment is not expected

to improve within 12 months after birth.

tivities. About 2 percent of these beneficiaries eventually undergo a full medical review because their responses to the mailer and statistical information used to indicate the likelihood of cessation indicate that a more comprehensive review is warranted. SSA currently estimates that a mailer CDR costs about $50 to process.

Due to budget and staff reductions after 1986 and large increases in initial disability claims beginning in 1990, SSA diverted resources from CDRs and could not

conduct all required DI CDRs; nor could the agency conduct many SSI CDRs. In

1994, the Congress established the first statutory requirement for SSI CDRs, mandating that SSA review one-third of the SSI beneficiaries who reach age 18 and at

least 100,000 additional SSI beneficiaries annually in fiscal years 1996 to 1998.5

We reported in October 1996 that about 2.4 million DI beneficiaries were due or

overdue for CDRs, all required by law, and about 1.9 million SSI beneficiaries due

or over due for CDRs, of which 118,000 were required by law.6 SSA calculated a

smaller number of due or overdue CDRs—1.4 million for DI beneficiaries and 1.6

million for SSI beneficiaries. SSA excluded from its calculation DI worker beneficiaries aged 59 and older, disabled adult children and disabled widows and widowers of DI worker beneficiaries, and SSI beneficiaries aged 59 and older. SSA officials

have acknowledged that CDRs were required for all DI beneficiaries excluded from

its calculation but stated that because of the CDR backlog it was focusing on the

portions of the CDR population that the agency estimated as the most cost effective

to review.

In early 1996, SSA developed an ambitious 7-year plan to conduct 8.2 million

CDRs during fiscal years 1996 to 2002, and, in March 1996, the Congress authorized a total of about $4.1 billion to fund SSA’s plan.7 The current 7-year plan includes (1) CDRs for DI worker beneficiaries under age 59, (2) SSI CDRs required

under the Social Security Independence and Program Improvements Act of 1994,

and (3) about 2 million additional SSI CDRs.

In November 1997, SSA plans to complete its updated plan to include additional

beneficiary groups mandated in recent legislation. SSA estimates adding about

600,000 cases to its plan during fiscal years 1998 to 2000 to comply with requirements to conduct (1) CDRs at least every 3 years for SSI children under age 18 who

are likely to improve; (2) CDRs for infants in their first year of life who receive SSI

benefits due to low birth weight; and (3) redeterminations for all SSI children beginning on their 18th birthdays, using adult disability criteria.8 The August 1996 legislation also required that SSA conduct SSI eligibility redeterminations for all children who previously qualified for disability on the basis of an individualized functional assessment (IFA), which the law eliminated, or on maladaptive behavior criteria, which the law revised to eliminate double counting of impairments. SSA estimated that about 300,000 had been approved on the basis of the IFA or maladaptive

behavior criteria. These cases, which are not counted in the CDR workload, must

be completed by February 1998.

SSA MET 1997 TARGET, FURTHER PROGRESS EXPECTED

SSA data indicate that it will meet its CDR target for 1997, while also processing

the newly required SSI childhood redeterminations. This result is due in part to

SSA’s working with the DDSs to increase case processing capacity to handle the unprecedented workloads in SSA’s CDR plan. We find this progress encouraging and

will continue to review SSA’s progress in our ongoing work.
15

Table 2: SSA’s CDR and SSI Childhood Redetermination Workload Targets and Cases Completed, Fiscal Years 1996–2002

In thousands

1996 1997 1998 1999 2000 2001 2002

Current workload targetsCDRs processed (mailers and full medical reviews) ......................... 500 603 1,117 1,397 1,595 1,527 1,443SSI childhood initial redeterminations 1 ............................................ Not

applicable

288 Not

provided 2

Not

applicable

Not

applicable

Not

applicable

Not

applicable

Actual cases completedCDRs 3 (mailers and full medical reviews) ........................................ 498 603 Unavailable Unavailable Unavailable Unavailable UnavailableSSI childhood initial redeterminations 1 ............................................ Not

applicable

235 4 Unavailable Not

applicable

Not

applicable

Not

applicable

Not

applicable

1 Years other than 1997 and 1998 are not applicable for childhood redetermination targets or cases completed because the Aug. 1996 legislation required that all childhood redeterminations be completed by Aug. 22, 1997, and in 1997 the Congress extended this deadline to Feb. 1998 in P.L. 105–33. Actual cases completed for 1998 are unavailable until the end of 1998.2SSA did not provide the current target workload for childhood redeterminations in 1998.3 CDRs completed for 1996 represents CDRs for DI and SSI beneficiaries. CDRs completed for 1997 includes periodic CDRs, CDRs for SSI low birth weight babies, and redeterminations

for SSI children after they reach age 18. The 603,000 cases for 1997 is an estimate based on actual cases completed through the end of Aug. 1997. Cases completed for fiscal years beyond1997 are unavailable until the end of each fiscal year.

4 As of the end of Aug. 1997, about 235,000 of the original 288,000 SSI childhood redeterminations had been processed. Of the 235,000 cases processed, SSA determined on the basis of a

review of existing medical evidence that about 28,000 cases could be continued without referring them to DDSs for medical redeterminations. DDSs conducted medical redeterminations forthe remaining 207,000 cases. SSA did not provide an estimate of the initial redeterminations it will complete by the end of Sept. 1997.

Source: SSA.
16

9The Contract With America Advancement Act of 1996 (P.L. 104–121) authorized about $4.1

billion for DI and SSI CDRs during fiscal years 1996 to 2002. The Personal Responsibility and

Work Opportunity Reconciliation Act of 1996 (P.L. 104–193) added a total of $250 million to

the authorized amounts for fiscal years 1997 and 1998.

In fiscal year 1997, SSA faced a new SSI childhood redetermination workload that

competed for the same resources that conduct CDRs. Even so, the DDSs were on

track to meet or exceed the 1997 target of 603,000 CDRs (see table 2). Both SSA

and DDS officials told us that they attributed part of their success to the decline

in initial applications—from about 2.4 million in fiscal year 1996 to about 1.9 million through the first 11 months of fiscal year 1997. SSA is reassessing its CDR

workload target for 1998 to determine the extent to which it can increase the CDR

target beyond the 1.1 million the plan currently calls for.

To prepare for this ambitious CDR workload, SSA has negotiated with the DDSs

to increase CDR workloads and increase the DDSs’ efforts to hire, train, and supervise additional staff. After several months of training, the new staff would be expected to handle initial disability determinations, freeing more senior examiners to

handle CDRs. Training and supervising new disability examiners, however, can require a great deal of the senior disability examiners’ time. Our preliminary work

indicates that the DDSs substantially succeeded in meeting their 1997 hiring goals,

despite problems such as hiring freezes, shortages of qualified applicants, or limited

office space, which sometimes caused DDS to reach their hiring goals later in the

year than planned. From 1996 to 1997, the number of full-time disability examiners

in the DDSs increased from 5,459 to 5,724, not including 435 trainees. SSA also expects DDSs to be able to meet their 1998 hiring goals.

BUDGET AUTHORITY APPEARS SUFFICIENT TO CONDUCT REQUIRED CDRS

On the basis of SSA’s current cost estimates, the congressionally authorized funding levels for fiscal years 1998 through 2002 will exceed the estimated costs of the

CDR workloads in SSA’s current plan. The Congress has authorized a total of about

$4.3 billion for DI and SSI CDRs and SSI redeterminations during fiscal years 1996

through 2002 (see table 3).9

Table 3: Amounts Authorized, Requested, Appropriated, and Obligated for CDRs and SSI Redeterminations,

Fiscal Years 1996–2002

Dollars in millions

Funding for DI and SSI CDRs and SSI redeterminations 1996 1997 1998 1999–2002

Amount authorized ................................................... $260 $510 $670 $720 1

SSA’s budget request ................................................ 260 510 490 2 Not applicable

Amount appropriated ................................................ 260 510 2 490 3 Not applicable

Amount obligated by SSA

CDRs .......................................................................... 207 288 366 Not applicable

SSI redeterminations ................................................ 0 235 164 Not applicable

Total obligations ........................................................ $207 $523 4 $530 5 Not applicable

Amount not spent and carried forward

CDRs .......................................................................... 53 40 0 Not applicable

SSI redeterminations ................................................ 0 0 0 Not applicable

Total ........................................................................... $53 $40 $0 Not applicable

1The annual authorization from 1999–2002 is $720 million.

2The $510 million appropriated in 1997 and the $490 million requested for 1998 include $200 million annually from SSA’s administrative expenses to be used for CDRs. The remaining funds—$310 million in 1997 and

$290 million in 1998—are from an additional budget authority that can be used to process either CDRs or SSI

redeterminations. 3The Senate approved SSA’s $490 million request on Sept. 11, 1997. Final approval by the Congress is

pending. 4 In 1997, SSA obligated more than the amount appropriated because $53 million of unobligated 1996 funds

had been carried forward to 1997. 5SSA estimates it will have $530 million in obligations available in 1998—its $490 million request plus the

unobligated $40 million carried over from 1997.

Source: SSA.

For fiscal year 1996, SSA requested and received $260 million for CDRs, of which

the Congress designated $60 million as 2-year funding for use in 1996 or 1997. SSA

spent a total of $207 million in 1996 to conduct 498,000 CDRs—only 2,000 short

of its goal of 500,000. In 1996, SSA found that full medical reviews cost less than

previously estimated—about $800 each rather than $1,000 each. As a result, SSA

carried forward $53 million from 1996 into 1997.
17

For fiscal year 1997, SSA requested and received $510 million—$200 million for

CDRs and $310 million of 2-year funding that could be used for either CDRs or SSI

redeterminations. Including the $53 million that SSA carried forward from 1996,

SSA had a total of $563 million available for 1997. Of this $563 million, SSA estimates it will spend $288 million to meet its goal of conducting 603,000 CDRs and

$235 million on SSI redeterminations—or a total of $523 million. This means SSA

will spend $13 million more than the $510 million appropriated; however, it still

will be able to carry forward $40 million into 1998 because of the $53 million carried

forward from 1996 into 1997.

SSA officials told us that in fiscal years 1996 and 1997 the agency could not have

effectively spent the unused funds ($53 million and $40 million, respectively) to

greatly increase the number of full medical reviews conducted during those years

because the DDSs were gearing up to handle the increased CDR workloads. As mentioned previously, some DDS officials told us they could not have expanded any faster.

In 1996, the Congress authorized $670 million for CDRs and SSI redeterminations

in fiscal year 1998. This $670 million consisted of $570 million authorized by Public

Law 104–121 for CDRs and an additional $100 million authorized by Public Law

104–193, which enacted the SSI redetermination requirements. SSA officials told us

that the $570 million authorization assumed that the DDSs would conduct 533,000

full medical reviews costing $1,000 each. In formulating its budget request for 1998,

however, SSA reduced the full medical review workload from 533,000 to 428,000

(costing $800 each). SSA reduced the workload because of the size of other DDS

workloads. As a result, SSA submitted a budget request of $490 million or $180 million less than the total amount authorized for CDRs and SSI redeterminations.

On the basis of SSA’s current 7-year plan and the current estimated average cost

of processing CDRs, it appears that the $720 million authorized for each year from

1999 to 2002 will exceed the cost of conducting CDRs (see table 4). For example,

the current plan calls for the largest number of CDRs to be conducted in 2000. At

an average estimated cost of $800 per full medical review and $50 per mailer, the

estimated total cost for CDRs in 2000 is about $668 million, compared with the authorized amount of $720 million.

Table 4: Estimated Costs of Conducting CDRs During Fiscal Years 1999–2002 Under SSA’s Current CDR

Workload Plan

1999 2000 2001 2002

Workload targets specified in current plan (CDRs in thousands)

Full medical reviews ....................................................................... 593 780 778 678

Mailer CDRs .................................................................................... 880 890 820 840

Estimated average cost per CDR in FY 1998

Full medical reviews ....................................................................... $800 $800 $800 $800

Mailer CDRs .................................................................................... 50 50 50 50

Estimated total cost (dollars in millions)

Full medical reviews ....................................................................... 474 624 622 542

Mailer CDRs .................................................................................... 44 44 41 42

Total cost ......................................................................................... $518 $668 $663 $584

Amount authorized (dollars in millions) ....................................... 720 720 720 720

Authorized amount less estimated cost (dollars in millions) ...... 202 52 57 136

Source: GAO computations based on SSA data.

TIMELY COMPLETION OF SELECTION FORMULAS NEEDED TO MEET FUTURE GOALS

To make the CDR process more cost effective, SSA has been developing selection

formulas to identify which beneficiaries should receive lower cost mailers and which

should be designated for higher cost full medical reviews. In October 1996, we reported that SSA had sufficiently developed the selection formulas to apply them to

about one-half of the beneficiaries due for CDRs. SSA is still developing selection

formulas for many of the other beneficiaries due for CDRs, however, and the extent

of SSA’s success could affect its ability to complete its 7-year plan cost effectively

and on schedule.

We reported that although SSA had developed selection formulas for beneficiaries

under age 59 who have potential for medical improvement, the formulas could not

identify for most beneficiaries in this group who should receive a mailer or be referred for a full medical review. Recently, however, SSA began full medical reviews

for the 10 percent of these beneficiaries with the highest probability of benefit ces18

sation. Successful completion of selection formulas for the remainder of the beneficiaries is important because if SSA has to do full medical reviews for all of them,

it could jeopardize meeting the 2002 goal.

SSA is also developing selection formulas to apply to more than 600,000 SSI childhood cases that will be coming due for a CDR by fiscal year 2000. Completing these

CDRs on schedule may depend on SSA’s ability to develop and implement a reliable

mailer process for children.

SSA has finished developing selection formulas for beneficiaries aged 59 and older

and for beneficiaries not expected to improve medically. Of this latter group, SSA

sent mailers to 44,000 beneficiaries in early 1997. For beneficiaries aged 59 and

older, SSA plans to send mailers to 60,000 beneficiaries in October 1997.

SSA officials also said that the agency is nearing the completion of selection formulas for disabled adult children and disabled widows and widowers of DI worker

beneficiaries, and mailers for this group could start going out sometime in fiscal

year 1998.

CONCLUDING OBSERVATIONS

SSA plans to conduct over 8 million CDRs by 2002, more than double the number

of CDRs conducted during the entire preceding 21-year period. Our preliminary

findings indicate that SSA is meeting its capacity-building goals in the DDSs and

should have adequate funding to carry out its current plan. In fact, SSA may be

able to conduct these CDRs in a shorter time period. The more quickly SSA can remove those who are no longer eligible from the rolls, the more it can save in program benefits. Therefore, in light of the lower levels of initial applications, SSA

should increase its yearly CDR goals. Finally, we note that many beneficiaries who

will not medically improve could nevertheless have or regain work capacity. In light

of this, we continue to encourage SSA to consider ways to integrate return-to-work

efforts into its overall management of the CDR process for all beneficiaries.

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

happy to answer any questions you or the other Subcommittee members may have.

RELATED GAO PRODUCTS

Social Security Disability: SSA Must Hold Itself Accountable for Continued Improvement in

Decision-Making (GAO/HEHS–97–102, Aug. 12, 1997).

Social Security: Disability Programs Lag in Promoting Return to Work (GAO/HEHS–97–46,

Mar. 17, 1997).

Supplemental Security Income: SSA Is Taking Steps to Review Recipients’ Disability Status (GAO/HEHS–97–17, Oct. 30, 1996).

Social Security Disability: Alternatives Would Boost Cost-Effectiveness of Continuing Disability

Reviews (GAO/HEHS–97–2, Oct. 16, 1996).

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

Social Security: New Continuing Disability Review Process Could Be Enhanced (GAO/HEHS–

94–118, June 27, 1994).

Social Security: Continuing Disability Review Process Improved, But More Targeted Reviews

Needed (GAO/T–HEHS–94–121, Mar. 10, 1994).

Social Security Disability: SSA Needs to Improve Continuing Disability Review Program (GAO/HRD–93–109, July 8, 1993).

Social Security: Effects of Budget Constraints on Disability Program (GAO/HRD–88–2, Oct. 28,

1987).

Social Security Disability: Implementation of the Medical Improvement Review Standard (GAO/HRD–87–3BR, Dec. 16, 1986).

More Diligent Followup Needed to Weed Out Ineligible Disability Beneficiaries (HRD–81–48,

Mar. 3, 1981).

Chairman B

Let me start out with Dr. Daniels. According to GAO, in fiscal

UNNING. Thank you, Ms. Ross.

f

year 1996 you spent all but $53 million of the $260 million authorized and appropriated to process almost 500,000 CDRs. The total

number of reviews you did complete, almost 500,000, was more

than double the total number of CDRs you completed the previous

year. In fiscal year 1997, you project that you will spend all but

$40 million of the $563 million authorized and appropriated to

process 650,000 CDRs, plus 235,000 SSI childhood redetermina19

tions. The number of total reviews, 885,000, represents a 68-

percent increase over the total number of reviews you conducted in

fiscal year 1996. I commend DDS and SSA staff for your exemplary

efforts in processing these complex workloads.

However, in fiscal year 1998, Congress authorized $670 million

for CDRs and SSI redeterminations. This $670 million includes

$570 million authorized through this Subcommittee and an additional $100 million requested by SSA and included in the welfare

reform legislation. Yet, SSA’s fiscal year 1998 budget request includes only $490 million. That’s $180 million short of what was

originally authorized. Please explain why SSA didn’t request all

the money we’ve provided for you.

Ms. DANIELS. The most important part of the medical CDR process occurs in the DDS. And as we looked across the workloads for

the next few years, increasing the capacity of the State DDS agencies to do CDRs was one of the chief factors in determining how

fast we could grow the CDR Program. Staffing up, finding eligible

and available disability examiners, or, in some cases, training large

numbers of examiners is very labor-intensive and difficult for the

State DDSs. So we have tried to span the increase over the last

year and this year the numbers in the DDSs. We’re expanding as

rapidly as we think all the DDSs can handle and manage, and at

the same time, continue to work their current workloads. So that’s

one feature that determines how many CDRs we think we can do.

In addition, we thought it was time to step back and see if there

were other improvements—other populations or subgroups—that

we could make with the profiling and mailer systems. We plan to

do this in the next year, looking at testing profiles for children, and

so forth. We thought that the most judicious use of the funds would

be to spend some time trying to perfect the most cost-effective way

to do these CDRs.

So we’re ramping up as fast as our capacity allows to do CDRs

in both SSA and in the DDSs, and we’re still working on increasing

our efficiency by perfecting our processes.

Chairman BUNNING. In October of last year, GAO indicated the

CDR backlog was 4.3 million cases. What is the backlog today?

Ms. DANIELS. If we consider in the backlog everybody who has

a diary that has come due, we think it might be somewhere around

3.5 million.

Chairman BUNNING. And, on average, how many CDR diaries

come due each month?

Ms. DANIELS. Each month? Well, it’s about 1 million a year.

Chairman BUNNING. About 1 million a year come due?

Ms. DANIELS. Yes.

Chairman BUNNING. What are the lifetime average savings to

the trust funds for each individual who medically recovers and is

removed from the rolls?

Ms. DANIELS. I would like to provide that answer for the record,

since I’m not an actuary.

Chairman BUNNING. In other words, you don’t have the answer

with you? You would like to submit it in writing?

Ms. DANIELS. I would. I would very much like to submit that.

[The following was subsequently received:]
20

The average present day value of the lifetime savings to the trust funds for each

beneficiary estimated to be ultimately removed from the rolls as a result of the initial CDR cessations in FY 1996 is $75,000 to the Old-Age and Survivors (OASI)

Trust Fund and Disability Insurance (DI) Trust Fund (virtually all of which is for

the DI Trust Fund), plus $45,000 to the Medicare trust funds.

full medical review has dropped from about $1,000 per case to

Chairman BUNNING. GAO reports that the cost of completing a

f

about $800 per case. Is that accurate, and what do you attribute

the cost savings to?

Ms. DANIELS. Yes, that is accurate. As we began to ramp up the

capacity of the DDSs, the initial cost of providing the infrastructure

for those individuals, those new examiners, additional training, additional workspace, computer systems, and so forth, contributed to

that cost. Once that infrastructure is in place, we estimate the ongoing cost to be $800 per case.

Chairman BUNNING. Barbara, go ahead.

Ms. KENNELLY. Thank you, Mr. Chairman.

Dr. Daniels, some people have suggested that disability benefits

should be limited to 3 years, and thereafter the person disabled

will have to prove again that they are in need of these benefits. Do

you agree with this? And I would add to that, doesn’t an effective

CDR process like the one SSA is conducting right now produce the

same results as limiting it to 3 years and then starting the process

again?

Ms. DANIELS. I completely agree with you, Ms. Kennelly. The

CDR process we have put into place and our plans and targets for

the next few years will assure the integrity of the program, especially when we’re doing a full complement of CDRs, like we plan

for this coming year. Still, only a small number of people, though

it’s very cost effective, leave the rolls as a result of CDRs. If we put

a time limit, we would be readjudicating every case, not just those

who leave the rolls. It could be very, very costly and time consuming. I think the way that we’re doing it now with a combined efficient system of mailers and full medicals is probably the way to go.

Ms. KENNELLY. Thank you, Doctor. Doctor, much of the workload

for CDRs has fallen on the State Disability Determination Services,

and these DDSs are facing other possible increases in their workloads. For example, DDSs are being required to write more comprehensive explanations when they deny the application for the

benefit. Has SSA taken these additional burdens on the DDSs into

account when determining the resources that will be necessary to

complete the CDRs? If anybody could hear us with these initials——

[Laughter.]

Ms. DANIELS. The DDSs are a remarkable arm of the agency.

They’re very hard working, very dedicated, and they’re very dedicated to this workload of CDRs. They know how important it is to

ensure the integrity of the program. And even this year, when we

had the additional welfare reform legislation, they still exceeded

the goal that we set for them. I think that, with a strong signal

and good management and careful planning with them, we could

do all of the workloads that we have planned.
21

Ms. KENNELLY. Doctor, you mentioned that one of the things

you’re doing is using the mailer, and I’m just wondering if this lowcost mailer process that began in 1993 is effective. What I wonder,

if after a certain amount of time that the person won’t be able to

kind of realize how you should answer that mailer. It’s effective

now, but will they begin to use it in maybe a less effective way in

the future, or have you thought about that?

Ms. DANIELS. We certainly have thought about this. And I’m

going to ask Mr. Markovic to tell you about a research project we’re

planning for this coming year.

But before he does, I’d like to tell you that the mailer is not an

attempt to elicit from the individual any trick. We’re simply asking

these individuals to tell us what their condition is and how they’re

doing. We have already determined by the profile that it is not cost

effective to do full CDRs on these individuals. So by the profiling

system, we have determined that these are not likely to be disability cessations. We, of course, do check this assumption through integrity samples and ongoing empirical analysis of our own data.

But, in addition, we have planned a research project that I’d like

Mr. Markovic to tell you about.

Ms. KENNELLY. Thank you, Doctor.

Mr. MARKOVIC. Well, it’s very simple. We are looking for expert

advice on how we could better word the questions on the mailer to

get the information that we’re looking for that would allow us to

better distinguish the responses, and how we can structure it to

safeguard against any deliberate falsification of the answers.

Ms. KENNELLY. Thank you. Thank you, Mr. Chairman.

Chairman BUNNING. Mr. Portman.

Mr. PORTMAN. Thank you, Mr. Chairman.

First, I want to commend the Subcommittee and you for holding

the oversight hearing, and to say that I’m very encouraged by what

we’ve heard today about the potential savings to the taxpayer as

a result of these stepped up efforts to address the backlog. The

numbers are incredible, and I think they really justify the kind of

time and effort you put into this, Mr. Bunning, and I, again, think

these hearings are helpful just to keep everybody informed and

keep the process moving.

I have a couple of questions. One is: How accurate are these

CDRs? I mean, Dr. Daniels, we have now seen a lot of progress.

You talked about the potential savings over the lifetime, and what

I want to know is, are these CDRs accurate? Specifically, do you

have any statistics on the number of people whose benefits might

have been terminated in the last 12 months, as we’ve stepped this

up, who have successfully appealed those decisions, and therefore

been reinstated?

Ms. DANIELS. I think I’d like to go back to the 1996 data, and

maybe that would help me explain. Let’s put up the chart on the

estimated savings, Jim.

[The following was subsequently received:]
22

our estimate is very conservative. For the number of initial CDR

Ms. DANIELS. The estimated savings are in the lower box because

f

cessations, we have 60,000 from the CDRs that we did in 1996. Of

the work CDRs, there were 7,300 initial cessations. Then we had

another 11,000 from, what we call, periodic voluntary CDRs. And

the last one, the category we tracked closely for you was the periodic SSA-initiated CDRs; that was 41,900. Now that’s empirical

data; that’s actually what happened.

Mr. PORTMAN. Yes.

Ms. DANIELS. From that 41,900, our actuary estimates that there

will be over 26,000 ultimate cessations; that is, after all hearings,

all appeals, all the way through the system, that eventually over

26,000 people will have benefits terminated.

Now let’s go back. We started with half a million CDRs and we’re

going to end up with 26,000 terminations, yielding savings of $2.5

billion over the lifetime of the benefits.

Does that answer your question?

Mr. PORTMAN. Well, that’s very helpful information as to how the

process works and how, in the end, we get tremendous savings,

even from a relatively small number from our base. But do you

think the CDRs, based on those numbers—maybe I should ask

GAO this also—are accurate? Do you think that they’re doing—

whether it’s the mailer or whether it’s the full medical—whether

the CDRs are meeting the kind of accuracy standards that you’d

like to see?

Ms. DANIELS. Well, we certainly don’t count on my feeling about

whether or not they’re accurate. We do samples of the mailer group

when we send the mailers out. Then, later, we come back and we

do integrity samples. We do full medical reviews on some of these

to see if our prediction is correct. And we improve our profile as

we go along, in order to increase our accuracy. We don’t rely just
23

on a gut feeling that the mailers are accurate. We actually do integrity samples.

Mr. PORTMAN. GAO, are you satisfied with the accuracies of the

CDRs, particularly on the mailers side?

Ms. Ross?

Ms. ROSS. Well, we’ve looked at the processes that Susan Daniels

is talking about, and as long as they continue to do a quality assurance study of all of the CDRs, and as long as they look particularly

at doing full medical reviews of some of the people receiving mailers, we think they have some of the pieces in place to assure that,

if there are quality problems, they’ll be able to discover them.

Mr. PORTMAN. On the mailers, Ms. Ross—and my time’s almost

up—I guess my concern would be, as I understand it—and I’ve

learned more today—as Ms. Kennelly said, it’s almost like selfreporting, and I guess there’s a group of people that you choose to

send the mailers to who you figure are less likely to come off the

rolls, based on certain criteria you have, and those folks would get

a short questionnaire, seven questions, I think, based on your testimony. And this questionnaire, this short questionnaire, really is

the CDR. Are you satisfied, from the GAO perspective, that there

are adequate safeguards in place to be sure that people are selfreporting accurately?

Ms. ROSS. Let me start back a little bit to answer the question.

The requirement in the law is that SSA review everybody, so everybody receiving DI and SSI benefits is supposed to get a CDR at

some point. If you’re going to do that on everybody and there are

9 million people on the rolls, then you need a cost-effective way of

doing it. You know that some people are never going to recover.

You’re trying to figure out how to select those people who might recover and do the expense of the $800 medical review on those and

something less on other people. They have been working on this

mailer—and it’s not just a mailer; it’s statistical profile—they’ve

been working on that since 1993. So they’re getting pretty proficient at figuring out which group of people are less likely to recover. So they’re using the more cost-effective way of dealing with

them, the process that costs $50 rather than $800.

And as I said, as long as they continue to do some full medical

reviews on people who are in this mailer group, just to be sure that

they would know if they were starting to have problems, then I

think we can be comfortable, because they are doing it on people

who are very unlikely to recover.

Chairman BUNNING. Mr. Johnson.

Mr. JOHNSON. Thank you, Mr. Chairman.

I’m interested in following up on a couple of these questions.

First, according to your chart, you’re attaining about a 50-percent

rate out of the total that are actually taken off; is that true?

Ms. DANIELS. Yes.

Mr. JOHNSON. OK. Well, then you say you’ve reduced the backlog

from 4.3 million to about 3 million; is that true?

Ms. DANIELS. Yes.

Mr. JOHNSON. OK. Of that 3 million, how much of that 1 million

increase is added in each year? You say you get about 1 million a

year new.

Ms. DANIELS. You’re asking if——
24

Mr. JOHNSON. Can we say that the system is going to eliminate

1 million in a year and take it down to zero?

Ms. DANIELS. We’ll never get down to zero because every year individuals become——

Mr. JOHNSON. Getting 1 million more, OK.

Ms. DANIELS. Every year, yes, there are individuals who become

due. So you never have a zero number. But what you want is to

have done some type of CDR on people whose time has come due.

We believe that we can eliminate that backlog and stay current by

the year 2002 using the processes we have.

Mr. JOHNSON. OK. And be down to approximately 1 million reviews a year then?

Ms. DANIELS. Correct.

Mr. JOHNSON. Of that number, how many of them are actually

given medical reviews?

Ms. DANIELS. Less than half of 1.1 million will get a full medical

review.

Mr. JOHNSON. Less than half?

Ms. DANIELS. Yes.

Mr. JOHNSON. And of that 1 million, how many of them fall into

the category of appealing and are kept on the rolls?

Ms. DANIELS. Well, we have hit——

Mr. JOHNSON. Is it going to be 50 percent still?

Ms. DANIELS. Oh, certainly, yes. The initial cessation rate for

CDRs has varied from year to year. The 11-percent initial cessation

rate for 1996 was considered relatively high, and we expect an initial cessation rate of around 9 percent of the CDRs——

Mr. JOHNSON. I thought I saw a number 4 or 5 percent somewhere.

Ms. DANIELS. That’s correct. It’s still very cost effective.

Mr. JOHNSON. Well, but how can you say 9 percent if it’s 4 or

5? If it’s 10 or 11 in 1996 and you say it’s going to go down to 9,

I thought somewhere I saw the number 4 or 5 percent. Did that

come out of your studies, Ms. Ross?

Ms. ROSS. Well, the initial cessation rate is at about 11 percent.

That’s the number that first came off the rolls.

Mr. JOHNSON. Off the 1996 numbers?

Ms. ROSS. Right. And then the estimate is that, after all the appeals take place, about half of those will actually leave the rolls.

So I think that’s how you get from 11 percent to 5 percent.

Mr. JOHNSON. OK, I’ve got you. Some of your questions on your

CDR mailer ask them whether they’re interested in receiving rehabilitation or other services that enable them to work. How many

of those were in the affirmative?

Ms. DANIELS. In 1991, there were 76,000 affirmatives. We referred a great number of those to State VR agencies. The feedback

we got from the State vocational rehabilitation agencies is that

these were not productive referrals. They did not result in a great

number of people entering into formal rehabilitation plans and

leaving the rolls. And so we have cut back on the number of referrals that we make through the CDR process.

Mr. JOHNSON. So you don’t—how many do you refer then to the

State rehabilitation programs?
25

Ms. DANIELS. It varies by State, Mr. Johnson. The number of

people who are referred in each State is worked out between the

State Disability Determination Services and the State VR agency

themselves, because the States have varying capacity to receive referrals, and they accept the ones that they are most likely to be

able to work with.

Mr. JOHNSON. So what percentage of that million go back to

work?

Ms. DANIELS. Very few.

Mr. JOHNSON. Less than 1 percent?

Ms. DANIELS. Yes.

Mr. JOHNSON. Thank you very much. Thank you, Mr. Chairman.

Chairman BUNNING. Ms. Ross in her testimony referred to the

fact that SSA is revisiting its 7-year plan to eliminate the CDR

backlog. Yet, in your testimony you don’t even mention a plan. Is

there such a plan and is it being revisited? What will it do?

Ms. ROSS. Mr. Chairman, are you asking me or——

Chairman BUNNING. I’m referring to Dr. Daniels.

Ms. DANIELS. OK. Yes, there is such a plan and we are revisiting

the plan right now. The welfare reform legislation made new requirements on the agency that we need to fold into our plan, as

well as intended improvements we hope to make in the mailer

profiling system. We are looking at staging out those workloads

and we’re looking at the number of CDRs we can do in the future,

including the numbers that were required by the welfare reform

legislation. For these reasons we are reworking that plan to stage

out the number of CDRs over the next 7 years.

Chairman BUNNING. And that’s what it says? Will you share that

plan with this Subcommittee?

Ms. DANIELS. We’ll be delighted to.

[The following was subsequently received:]

Revised 7 Year Plan for Conducting Continuing Disability Reviews in

Fiscal Years 1996 Through 2002

INTRODUCTION

SSA is now in its third year of a plan to become current in processing continuing

disability reviews (CDRs). SSA has been processing CDRs under a 7 year plan,

issued August 16, 1996, in response to the applicable provisions of Public Law (P.L.)

104–121, The Contract With America Advancement Act of 1996. The legislation provided for an increase in discretionary spending caps for fiscal years (FYs) 1996

through 2002 to fund the cost of processing additional CDRs. SSA made good

progress during the first two years, exceeding processing targets by more than

90,000 cases.

Subsequently, five primary forces drove SSA to revisit and revise the plan. The

original plan needed to be revised:

• to address title II disabled workers over age 58, disabled surviving spouses and

disabled adult children.

• to address the subsequent enactment of P.L. 104–193, the ‘‘welfare reform’’ legislation which, as amended by P.L. 105–33, required CDRs for certain title XVI disabled children.

• in light of actual CDR productivity in FYs 1996 and 1997, and more definitive

data regarding the remaining backlog(s) and whether they were appropriate for

processing as a mailer and/or a full medical review.

• in light of the assessment of processing capacity based on our recent experience

with the CDR workload, and in consideration of revised budget assumptions.

• because it was put together without definitions of the ‘‘backlog’’ and what it

means to be ‘‘current,’’ or a consensus about whether all cases with a matured medical diary warrant review.
26

The revised plan holds to the original goal of becoming current with title II by

the end of FY 2000 and adds a new goal; to bring SSA current with title XVI by

the end of FY 2002. Of course, the revised plan assumes that Congress continues

to appropriate adequate funds to process the projected workloads.

DEFINITIONS

The ‘‘backlog’’ is defined as those beneficiaries who have been found to be disabled

and have a matured medical reexamination diary (or for a title XVI disabled child

case a review is required), are considered ‘‘workable’’ (e.g., a trial work diary is not

present). A case remains in the backlog while a review is in process until a mailer

deferral decision, or an initial level CDR or redetermination decision, is made.

Being ‘‘current’’ is defined as when the backlog is reduced to roughly one year’s

processing for full medical reviews and 6 months processing for mailer reviews. The

overall process from identifying cases for selection to completing processing takes

about 12 months for full medical reviews and 6 months for mailers.

Finally, it was also recognized that some cases, for reasons of age, nature of permanent impairment, basis for entitlement, and/or need for further consideration, are

not good candidates for CDRs. Accordingly, CDR ‘‘backlogs’’ and ‘‘deferred cases’’

have been defined.

The backlogs represent those groups of cases the available data indicate as being

productive, and good stewardship demands that continuing disability status be reviewed. As of October 1, 1997, the backlogs were:

Beneficiary Category Backlog (in

thousands)

OASDI (including concurrent SSI beneficiaries)

Disabled Workers under age 62 .................................................................. 1,643

Disabled Surviving Spouses under age 60 ................................................. 16

Disabled Adult Children under age 65 ....................................................... 504

Subtotal, OASDI ............................................................................ 2,163

SSI (excluding concurrent OASDI beneficiaries)

Disabled and Blind Adults under age 65 ................................................... 1,266

Disabled Children ......................................................................................... 371

Subtotal, SSI .................................................................................. 1,637

Total OASDI and SSI .................................................................... 3,800

Deferred cases represent those groups of cases that are known to be much less

productive or unproductive under the existing CDR processes (full medical review

or CDR mailer), or are under study to determine how they should be reviewed in

order to be productive. Deferred cases include those in which a finding of disability

cessation would result in entitlement to another benefit administered by the Agency,

often with minimal or no reduction in benefit amount, and those in which the beneficiaries are of advanced age, markedly decreasing the likelihood of medical improvement.

As of October 1, 1997, the deferred cases were:

Beneficiary Category

Medical Diary

Has Matured (in

thousands)

All Cases (in

thousands)

OASDI (including concurrent SSI beneficiaries)

Disabled Workers age 62 to 65 ........................................ 394 585

Disabled Surviving Spouses age 60 to 65 ....................... 36 83

Disabled Adult Children age 65 and older ..................... 60 60

Medicare for Qualified Gov’t Employees ........................ — —

Subtotal, OASDI ................................................. 490 728

SSI (excluding concurrent OASDI beneficiaries)

Disabled and Blind Adults age 65 and older ................. 678 678

Grandfathered-In Disabled Adults under age 65 .......... 79 79

Permanently Impaired Disabled Children ..................... 8 70

Subtotal, SSI ...................................................... 765 827

Total OASDI and SSI ........................................ 1,255 1,555

Title II Deferred Cases: If disability ceases, disabled workers age 62 to age 65 can

elect to receive payment of reduced retirement insurance benefits (RIB). At age 60
27

or later, disability cessation causes a disabled surviving spouse to convert to regular

surviving spouse benefits (WIB).

Disabled adult children are individuals whose disability began before they became

22 years old. Although disability is always a factor of entitlement regardless of age,

a productive CDR is unlikely considering both advanced age and duration of impairment (more than 4 decades as of age 65); to be determined is whether an alternative

process is appropriate.

Medicare for Qualified Government Employment beneficiaries are a small group

of former government employees under age 65 entitled only to Medicare benefits

based on disability, and who are not insured for title II disability insurance benefits.

Productive reviews are unlikely. An exact number of cases is not yet available.

Title XVI Deferred Cases: Approximately 16.2% of all disabled or blind adults are

age 65 or older. They would convert to SSI Aged payment eligibility if cessation

were found.

The ‘‘grandfathered-in’’ disabled adults under age 65 were converted from the old

State rolls. Medical eligibility is based on State determinations in which the bases

were less strict State Plans that bear no relation to the Agency’s adjudicatory standards. There is usually no medical evidence in their files. For these reasons, in part,

they have not been the subject of subsequent CDRs. Productive CDR referrals are

unlikely.

Permanently impaired children are under study to determine if an alternative review procedure is appropriate, inasmuch as a productive CDR referral done under

existing policies and procedures is considered unlikely.

COMPARISONS OF THE ORIGINAL AND REVISED 7 YEAR CDR PLANS

Under the original plan, we expected to process approximately 8.2 million cases

during the 7 year period. Under the revised plan, in order to work off the priority

backlogs and stay current, it is projected that SSA will have to process 9.3 million

reviews, an increase of 1.1 million. This includes the backlogs described above and

newly maturing cases. For example, approximately 436,000 title II and 271,000 title

XVI medical diaries will come due in FY 1998.

Much of the 1.1 million increase is necessary to accommodate title XVI welfare

reform cases and to attain current status with respect to the title XVI disabled and

blind adults by the close of FY 2002.

Five million cases, including 200,000 title XVI child cases, are projected to be

processed under the CDR mailer process, with an overall increase of 312,000 cases

in the revised plan as compared to the original plan.

The attached chart provides more detailed summaries and is included in the

President’s 1999 budget decisions.

CONCLUSION

Periodic review and revision of this plan is necessary to ensure that the plan reflects what we have learned (our experiences and the latest data), addresses current

legislative mandates, and is, to the extent possible, a realistic assessment of resources and goals. At a minimum, a review every other year is necessary; a yearly

review may be more appropriate, depending on the factors and issues that arise during the preceding year that demonstrate the need for review.

With adequate funding, the Agency can and will continue to improve the profiling,

mailer and direct release processes necessary to realize the projections in the revised plan.

Attachments:

Tab A: Continuing Disability Review Budget Plan Revised for 1999 President’s Budget Decisions—Workloads

Tab B: SSA Office of the Chief Actuary Memo and Actuarial Tables and Charts
28
29
30
31
32

you through your new Commissioner, that this Subcommittee exChairman BUNNING. OK, let me be perfectly clear. I want to tell

f

pects you to request and to spend every dime authorized until your

CDR backlog is down to zero. By that, I mean until the new cases

that you get are the only ones that you have to process.

During the 104th Congress, both the House and the Senate took

extraordinary steps to authorize the funds you said you needed and

wanted to conduct continuing disability reviews and other redetermination workloads. Frankly, I’m stunned that you would not take

full advantage of the funds we authorized for you. From what you

just told me, you certainly have the capacity to do more, and we

expect you to take full advantage of your maximum capacity to reduce this workload as quickly as possible. The American public deserves nothing less.

So if you can tell the new Commissioner, that this money is authorized and ought to be used for what it is authorized for, I expect

you to do that. I expect the GAO to continue monitoring, at my request, what is going on with CDRs, and with redeterminations that

you are responsible for.

Mr. Weller.

Mr. WELLER. Thank you, Mr. Chairman. I do have a couple of

questions I would like to ask, if I could direct them to Dr. Daniels.

In your annual CDR report, you indicated that you take steps to

ensure the integrity of the CDR process and the accuracy of decisions that are based partly on a self-reported beneficiary information, and that you perform full medical reviews of some cases that
33

the mailer process would otherwise identify as not requiring such

a review.

Of the 498,400 CDRs you completed in fiscal year 1996, 248,000,

or about 50 percent, were mailer cases. Of the CDR mailer cases

not requiring a full medical review, how many did you review to

ensure the integrity of the mailer process?

Ms. DANIELS. The mailer process integrity samples were not

taken in the 1996 pool, though we did have some smaller number

of mailer responses that indicated to us that a full medical review

would be appropriate. We did not do an integrity sample on the

1996 mailer itself. The mailer was previously validated in the 1995

integrity sample.

Mr. WELLER. Now, in 1996, have you done an integrity sample?

Ms. DANIELS. In 1996?

Mr. WELLER. Excuse me, 1997.

Ms. DANIELS. No, we did not.

Mr. WELLER. OK. In your annual CDR report, you indicated that

you reviewed 10,736 CDRs processed by State agencies, which is

about 4 percent according to the statistics we have. How many appealed CDRs decided by administrative law judges did you review,

and why wasn’t this information included in your report?

Ms. DANIELS. Mr. Weller, could you give me the year again? I’m

sorry, I missed it in the beginning.

Mr. WELLER. In looking at your annual CDR report, you indicated that you reviewed 10,736 CDRs processed by the State agencies, which is about 4 percent. How many appealed CDRs decided

by administrative law judges did you review, and why wasn’t this

information included in the report?

Ms. DANIELS. I’m not exactly sure I understand your question.

I’m going to try to answer it. We did, in 1996, we did almost half

a million CDRs, of which—I don’t have my chart up there, but

there are well over 200,000 in the DDSs. So are you asking me how

many of those cessations from 1996 were appealed?

Mr. WELLER. How many of the appealed CDRs that were reviewed by administrative law judges did you review, and why was

there no information regarding this review in the report?

Ms. DANIELS. OK.

Mr. WELLER. It’s a quality review.

Ms. DANIELS. I’m going to have to look that up for you and submit it for the record in writing.

Mr. WELLER. OK. All right.

[The following was subsequently received:]

Although there was no statutory requirement to do so, we included quality assurance data in the FY 1996 Annual Report of Continuing Disability Reviews (CDRs).

As mentioned in the report, SSA ensures the integrity of the CDR process and the

accuracy of CDR decisions through integrity samples (performing full medical reviews on some cases that the mailer process would otherwise identify as not requiring such reviews) and ongoing quality assurance reviews.

In FY 1996, we selected approximately 400 title II low profile mailers for an integrity sample of the CDR mailer process. Preliminary results show that there were

4 cessations out of 92 reviews completed to date, yielding a 4.3% initial cessation

rate. The ultimate cessation rate, after all appeals, will be lower. Data from these

integrity samples conducted in 1994 and 1995 demonstrate that the cessation rate

for these cases, after all appeals, is so low that it is not cost effective to conduct

full medical reviews. That is, the amount of benefit savings is lower than the administrative costs required to do the reviews.
34

As also mentioned in the report, SSA performed quality assurance reviews in FY 1996 on 10,736 CDRs processed by the State Disability Determination Services, resulting in an overall performance accuracy rate of 95.9 percent. The Appeals Council

reviews approximately one percent of all favorable decisions rendered by Administrative Law Judges (ALJs). This review is ongoing and random; CDRs are included

in the sample. Although data on the quality of CDRs picked up in this sample is

not compiled nationally, feedback is provided to the ALJ and the Office of Hearings

and Appeals.

Social Security Administration implemented legislation that we

Mr. WELLER. Let me ask one more question here. Last year the

f

passed in 1995 which eliminated patients—excuse me—benefits to

individuals disabled by drug addiction or alcoholism. During the

implementation process, SSA indicated that many recipients’ files

contained inaccurate diagnosis coding. Are you confident that the

CDR diary coding used by the State agencies and the administrative law judges is accurate?

Ms. DANIELS. I’m confident that we have a very good grip on the number of people who are in our CDR backlog, and I’m very confident that any mistakes that were made in coding can be corrected

through the process.

Mr. WELLER. Can you specifically describe for me the quality review process that you have in place to ensure that the CDR diary

coding is accurate?

Ms. DANIELS. We have a quality review system to look at CDRs

that’s parallel to the initial claims process; that is, a random sample of cases are drawn from the cases that are reviewed by the

DDS, and those are reviewed by Federal reviewers for two kinds

of errors: Documentation errors, errors in the way it’s documented,

and decisional errors. We report the figures on the quality sample

of CDRs as part of our ongoing quality assurance system. The 1996

quality assurance data indicated that the DDSs met a quality

standard of 95 percent or better with no errors in the number of

CDRs that they did.

Mr. WELLER. Thank you, Mr. Daniels. Mr. Chairman, I see my

time has expired.

Chairman BUNNING. Ms. Ross, you know that I’m particularly interested in SSA spending, specifically when funds aren’t being

spent for what they were intended to be spent for. We had a problem, as you know, when we authorized $200 million for a specific

program and it was spent for other programs. Can you assure me

that SSA has spent the funds authorized by the Committee on

Ways and Means only on those CDRs and redetermination workloads specified in the law?

Ms. ROSS. Well, Mr. Chairman, let me tell you what I can assure

you of at this point. GAO has done a lot of work on the accounting

systems at the Social Security Administration. We’ve done over the

years a lot of work on what their internal controls are, and we

have reasonable assurance that their systems provide accurate information, so that now when SSA reports that in fact they have expended a certain amount of money to do a certain function, GAO

is comfortable, given what their financial systems are like, that

that’s accurate. Were somebody to tell us that they thought there

might be a particular problem, you might go do indepth work there,
35

but basically we feel confident because of the general good condition of their financial systems.

Chairman BUNNING. In other words, you are taking their word

for what they say they spend their money on?

Ms. ROSS. No, sir, we have been doing financial audits at the Social Security Administration for many years.

Chairman BUNNING. Well, I understand that.

Ms. ROSS. And we have audited and now we feel comfortable

enough about their procedures that the Inspector General of SSA

audits every year. Given that and each year looking at what goes

into their accounting, at least saying for this year, even though the

financial audit isn’t finished, we feel confident that they have spent

their money appropriately, I think that’s——

Chairman BUNNING. In other words, their Inspector General does

the auditing, and you should be auditing the Inspector General?

Ms. ROSS. And we do.

Chairman BUNNING. Well, I just want to make sure that you are

accurately doing that and are making sure that the money we allocated for CDRs and other reviews are being spent for those specific

purposes.

Ms. ROSS. We are.

Chairman BUNNING. You are?

Ms. ROSS. Yes.

Chairman BUNNING. The whole business of CDR mailers is a little confusing. SSA has this CDR backlog of about 4 million cases.

You say—this is for Ms. Ross—you say that SSA somehow tried to

figure out who is in this backlog and likely to come off the rolls and

who isn’t, based on certain criteria: Age, impairment, length of

time on rolls, and so forth.

SSA then sends those cases likely to come off the rolls to the

State agency for a full medical review, new medical reports, all

kinds of updated information, the whole ball of wax. For those SSA

cases that are not likely to come off the rolls SSA sends them a

short questionnaire with seven questions. You are telling me that

this little questionnaire counts as a continuing review; is that correct?

Ms. ROSS. They do count, and let me explain why I think that

under certain conditions that’s appropriate. SSA is required to review everybody on the rolls. A medical review costs $800. If you review everybody who’s on the rolls, it’s not cost effective. So——

Chairman BUNNING. You mean medically review them?

Ms. ROSS. Medically review them.

Chairman BUNNING. It’s not cost effective?

Ms. ROSS. Right. And so what SSA did, I think using the word

‘‘mailer’’ is—they probably ought to try a different term.

Chairman BUNNING. But we have it in our——

Ms. ROSS. Yes.

Chairman BUNNING. What is sent is this short questionnaire in

our folder here. So it isn’t very comprehensive.

[The following was subsequently received:]
36
37

amount of profiling of who’s likely to recover and who’s not. Those

Ms. ROSS. No, it isn’t, but it comes—it’s sent to people after some

f

formulas about who’s likely to recover and who is very unlikely to

recover have been formulas they have been refining now for about

4 years.

Chairman BUNNING. Ms. Ross, how many people can read that

get this? How many people actually fill out their own review? Do

you have any idea? In other words, if this is sent into some areas

in my State, some people couldn’t read it. So how many people fill
38

it out on their own or how many people have somebody else fill it

out? Can you answer that question?

Ms. ROSS. No, sir, we have not looked into that particular piece.

Perhaps the people at Social Security have.

Chairman BUNNING. Dr. Daniels.

Ms. DANIELS. No.

Chairman BUNNING. You have no idea?

Ms. DANIELS. No. I do know that there are some number of people on disability who have representative payees because they are

not able to handle their own affairs, and I would imagine that

some portion of these were filled out by representative payees.

Chairman BUNNING. But you don’t have any idea how many they

are? In other words, 5, 10, 15, 25, 30 percent? What?

Ms. DANIELS. I could certainly find out how many people who

have responded to mailers have representative payees and report

that back for the record.

Chairman BUNNING. No, no, no. No, I know about the representative payees. I’m asking you how many people fill out their own

questionnaire when it’s sent to them. Because you’ve made a determination on the information sent back to you that this is a continuing disability review and it’s accurate.

Ms. DANIELS. We send the mailer only to those people who we

believe that it is not cost effective to do full medical reviews on.

Chairman BUNNING. Yes, ma’am, I understand that.

Ms. DANIELS. The pool of people who get the mailers are people

whose disabilities we do not expect to cease, if they had a medical

review. So it is our judgment that it is more cost effective not to

do one on people whose disabilities are not likely to cease.

Chairman BUNNING. As you already have testified, you didn’t do

a quality review in the last 2 years on this?

Ms. DANIELS. We did not do an integrity sample on the 1996

cases.

Chairman BUNNING. OK. So you’re not sure about the accuracy

of the questionnaire. I understand those people that are permanently disabled, and you know that they’re not going to get better,

can accurately fill something like this out. If there are some people

that are on the edge, somehow you’ve got to get them in for a medical exam, so that you can really determine if they continue to be

disabled. It’s a no-brainer when somebody is totally and permanently disabled for life, but it isn’t if it’s a temporary total disability. Those are the individuals that we want to capture in those statistics that you have up there, so that you can accurately review

those people.

Ms. DANIELS. That’s right. I agree with you. I think we need to

have both systems. We have to have full medical reviews because

there are some number of people for whom we can’t predict.

Chairman BUNNING. All I’m telling you is that there are an awful

lot of people who aren’t permanently disabled for life that you are

sending this to.

How many of the total amount of people on SSDI do you think

are permanently disabled for life?

Ms. DANIELS. This is not something I would be willing to conjecture to, Mr. Chairman. I think that we have——
39

Chairman BUNNING. Oh, but it’s very important. It’s very important for us to have an accurate picture of whether you can conduct

continuing disability reviews as required by law or whether you

can’t over the next 4 or 5 years.

Ms. DANIELS. What we can do is look at the data that predict

whether or not a person will cease benefits and use those formulas

to create profiles. We certainly can do many more medical reviews,

but the question is, will they be cost effective? And we’re trying to

balance those two things, the cost effectiveness with the capacity

of the State DDSs as well.

Chairman BUNNING. Well, as the bottom line on that chart indicates, the cost effectiveness of someone coming off the rolls because

they’re no longer permanently disabled is pretty breathtaking.

Let me ask Ms. Ross, whether SSA has ever told her how many

recipients in the backlog have never had a full medical review?

Ms. ROSS. No, we have not gotten that information from them.

Chairman BUNNING. Dr. Daniels, could you possibly enlighten

me on that question?

Ms. DANIELS. I can’t at this moment, but I would be willing to

see if our data can indicate that, and if so, provide it for the record.

[The following was subsequently received:]

Of the approximately 2.2 million disabled OASDI beneficiaries with a past-due

diary for a CDR—including about 588,000 concurrently entitled to Supplemental Security Income (SSI)—about 1.75 million (or about 80 percent) have not had a full

medical CDR.

Of the approximately 1.64 million SSI recipients (excluding concurrent OASDI

beneficiaries and including about 370,000 childhood cases) with a past-due diary for

a CDR, about 1.59 million (or about 97 percent) have not had a full medical CDR.

Altogether, about 3.3 million disabled individuals with a past-due diary for a CDR

(or about 87 percent of the total CDR backlog of approximately 3.8 million) have

not had a full medical CDR.

The 3.8 million amount is higher than the 3.5 million figure we previously reported to the Subcommittee because it now includes cases where a full medical review is currently in progress, as well as cases where the diary due date on the system is blank or invalid. The 3.8 million figure does not include certain cases whose

reviews have been deferred: Individuals who would be eligible for a non-disability

benefit if disability ceased (widows age 60 and workers age 62) or individuals for

whom the likelihood of a productive CDR is remote (individuals over age or SSI recipients who were grandfathered-in from State welfare in 1974 at the beginning of

the SSI program).

Chairman B

Mr. JOHNSON

UNNING

. I wonder if I could ask you, on this form, Dr. Dan-

. Sam, do you have any more questions?

f

iels, it says there’s a signature block. It says, ‘‘Sign here.’’ Is the

person signing or the person that fills it out signing?

Ms. DANIELS. It’s the intention that the person who’s filling out

the form should sign it.

Mr. JOHNSON. But it doesn’t say that. Do you—have you checked

that in your studies?

Ms. DANIELS. Are you asking, Have we conducted a study——

Mr. JOHNSON. Well, the Chairman asked a question, How many

of them are filled out by the actual person receiving the benefit as

compared to those who are filling them out for them—a parent, a

guardian, or whatever, and/or somebody who can’t read getting

somebody else to fill it out for them. So how do we know the accu40

racy if we don’t know who’s signing them? And do you get any back

with an ‘‘X’’ on them?

Ms. DANIELS. I can’t tell you off the top of my head—I certainly don’t have the data in front of me now—how many come back with

an ‘‘X’’ on them, but I will ask the data center if we have that kind

of information.

Mr. JOHNSON. Well, I think it would be interesting to know how many are actually filled out by the recipient and how many are actually filled out by a second person, and whether or not that signature—I think you need to change that block. If that’s who you intend to have the signature of, it should be the person who fills it

out, if it’s somebody else other than the recipient. I would ask the Chairman if we could have that statistic next

time we get—— Chairman BUNNING. Well, we could request the SSA to add a

block: If the person who is filling it out is the actual recipient or

if somebody is filling it out for them. I don’t know how many you

have printed in advance. I would imagine you have quite a few, but

when you run out, reprinting them would not require an awful lot

of additional information.

Mr. JOHNSON. Yes, and I would say——

Ms. DANIELS. In our instruction form that goes along with the questionnaire, we ask the individual claimant to sign it or their

legal guardian, but I can’t tell you how many come back with a signature of a legal guardian. But I will check and see if we have that

data available.

Mr. JOHNSON. But even if the claimant’s signing it, that doesn’t mean he filled it out. And, you know, there’s room for fraud there—

there really is—if someone else is filling the form out. Chairman BUNNING. What would help, though, is finding out how many people actually have had medical reviews and how many

didn’t. That information would really assist us also. I’d like to remind you both that I may be submitting questions

in writing for you to answer for the record.

[The questions and answers follow:]

GAO Responses to Questions

Question 1. What effect has the medical improvement review standard had on the

continuing disability review process, and in your view, is the medical improvement

standard working?

GAO response: While GAO’s work has not addressed these issues directly, the MI

standard’s history provides perspective on these issues. The impetus for the medical

improvement standard can be traced back to SSA’s implementation of a provision

in the Social Security Disability Amendments of 1980 that required SSA to do CDRs

at least once every 3 years for all DI beneficiaries not considered to be permanently

disabled and at least once every 7 years for all other DI beneficiaries. In its implementation of this requirement in 1981, SSA did CDRs for more beneficiaries than

required by the 1980 amendments. As a result, the number of benefit terminations

increased greatly, which attracted substantial Congressional attention.

According to House of Representatives Report 98–618, dated March 14, 1984, the

increase in terminations occurred primarily because many beneficiaries undergoing

CDRs had been put on the disability rolls before 1979, and at that time, medical

disability criteria were more lenient than when these beneficiaries later underwent

CDRs. This occurred because SSA had implemented stricter medical disability

standards in 1979. Many beneficiaries who qualified for disability benefits under the

more lenient pre-1979 standards were being terminated when they were reassessed

under the stricter post-1979 standards. As a result, according to the House report,

the Congress enacted the medical improvement standard in the Social Security Disability Benefits Reform Act of 1984 (P. L. 98–460) to prevent the termination of ben41

efits for beneficiaries whose medical conditions had not improved substantially since

they first were allowed benefits, even if they do not meet current disability standards.

Since enactment of the medical improvement standard in 1984, there has been a significant decline in the CDR initial termination rate (the rate before any reconsideration or appeals). According to data provided by SSA, the yearly initial termination rate exceeded 40 percent during 1980–1983. However, after 1984, the yearly

initial termination rate has ranged from 6 percent to 14 percent. While the MI

standard certainly played a role in this decline, other factors, such as doing more

CDRs for beneficiaries whose impairments are considered permanent, also may have

contributed to the decline in the termination rate.

Question 2. There are concerns in the State Disability Determination Services (DDS) that the medical improvement standard requires DDS examiners to terminate the benefits of severely disabled beneficiaries whose conditions have slightly

improved. However, there are beneficiaries on the rolls who would not be found disabled based on the current medical listings. The medical improvement standard prohibits DDS examiners from terminating the benefits of these beneficiaries since

medical improvement cannot be found for those who are not truly disabled. Do you

have any ideas on how to remedy this situation? GAO Response: While GAO has not done any work that would enable us to com- ment on remedies, we believe there are at least two scenarios in which the medical

improvement standard potentially could prohibit DDSs from terminating benefits for

persons who are not disabled under current SSA criteria. First, a person could have

been found disabled under medical listings that later were revised and made more

stringent. When such an individual undergoes a CDR, he or she might be considered

able to work based on the current listings, even though his or her medical condition

has not changed since the time of the original award. The medical improvement

standard, however, prohibits terminating such an individual’s benefits merely because disability criteria have changed. Benefits can be terminated only if it can be

shown that the individual’s medical condition has improved since the prior determination. According to SSA officials, medical listings have not undergone sufficient

changes in recent years for this first scenario to be a significant problem today. In a second scenario, the medical improvement standard could make it difficult

to terminate the benefits of individuals who were awarded benefits erroneously by

the original adjudicators. In such cases, one would not expect to be able to find significant medical improvement at the time of a CDR for a beneficiary who was not

actually disabled at the time of the original decision. However, when adjudicators

believe the original award was made in error, the medical improvement standard

provides an exception under which benefits may be terminated, even if medical improvement cannot be shown. Under this exception, benefits may be terminated if (1)

substantial evidence on the record at the time of the prior determination shows on

its face that the decision in question was in error, (2) required and material evidence of the severity of the individual’s impairment was missing at the time of the

prior evaluation, or (3) new evidence related to the prior favorable decision refutes

the conclusions that were based on the prior evidence. A substitution of current

judgment for that used in the prior favorable decision cannot be the basis for applying this exception. GAO has no data on how often or how successfully adjudicators

use these exception criteria when they believe the original decision was made in

error.

In addition, the medical improvement standard provides an exception for fraudulent prior decisions. If SSA finds that any prior favorable decision was obtained by

fraud, SSA may find that the beneficiary is not disabled. In determining whether

a prior favorable decision was obtained fraudulently, SSA takes into account any

physical, mental, educational, or linguistic limitations that the beneficiary may have

had at the time.

Question 3. In fiscal year 1996, SSA conducted 11,542 CDRs on DI cases designated as medical improvement expected (MIE). Of that number, the benefits of

only 2,466 DI beneficiaries have been terminated to date. Do you view the MIE coding as an accurate measure of which beneficiaries are likely to improve? If so, why

isn’t the ultimate cessation higher?

GAO Response: While we have not assessed these issues specifically, we are

aware that SSA does not rely on the DDSs’ assessments of the likelihood of medical

improvement to determine which beneficiaries should undergo full medical CDRs.

Instead, SSA has developed statistical formulas and profiles that are used to estimate the likelihood that a beneficiary’s benefits will be terminated due to medical

improvement if a full medical CDR is conducted. For those with a high likelihood

of termination, SSA refers these cases to DDSs for full medical reviews. For those

with a low likelihood of termination, SSA sends them a brief questionnaire to gather
42

limited information about their disability, medical treatments, and work activity, if

any. For those receiving the mailer questionnaire, about 98 percent have their benefits continued without any further review. We do not know the percentage of MIEs

who undergo full medical reviews versus those who receive mailer questionnaires.

fore the Subcommittee and updating us on this critical issue of

Chairman BUNNING. I want to thank you again for appearing bef

SSA’s handling of the CDR backlog. The Subcommittee will continue to closely oversee SSA’s management of the CDR process.

The Subcommittee stands adjourned.

[Whereupon, at 3:07 p.m., the hearing was adjourned subject to

the call of the Chair.]

Æ