```

[House Hearing, 106 Congress]
[From the U.S. Government Publishing Office]

 
                     MANAGEMENT OF DISABILITY CASES

=======================================================================

                                HEARING

                               before the

                    SUBCOMMITTEE ON SOCIAL SECURITY

                                and the

                    SUBCOMMITTEE AND HUMAN RESOURCES

                                 of the

                      COMMITTEE ON WAYS AND MEANS
                        HOUSE OF REPRESENTATIVES

                       ONE HUNDRED SIXTH CONGRESS

                             FIRST SESSION

                               __________

                            OCTOBER 21, 1999

                               __________

                             Serial 106-59

                               __________

         Printed for the use of the Committee on Ways and Means

                     U.S. GOVERNMENT PRINTING OFFICE
66-024CC                     WASHINGTON : 2000

_______________________________________________________________________
            For sale by the U.S. Government Printing Office
Superintendent of Documents, Congressional Sales Office, Washington, DC 
                                 20402

                      COMMITTEE ON WAYS AND MEANS

                      BILL ARCHER, Texas, Chairman

PHILIP M. CRANE, Illinois            CHARLES B. RANGEL, New York
BILL THOMAS, California              FORTNEY PETE STARK, California
E. CLAY SHAW, Jr., Florida           ROBERT T. MATSUI, California
NANCY L. JOHNSON, Connecticut        WILLIAM J. COYNE, Pennsylvania
AMO HOUGHTON, New York               SANDER M. LEVIN, Michigan
WALLY HERGER, California             BENJAMIN L. CARDIN, Maryland
JIM McCRERY, Louisiana               JIM McDERMOTT, Washington
DAVE CAMP, Michigan                  GERALD D. KLECZKA, Wisconsin
JIM RAMSTAD, Minnesota               JOHN LEWIS, Georgia
JIM NUSSLE, Iowa                     RICHARD E. NEAL, Massachusetts
SAM JOHNSON, Texas                   MICHAEL R. McNULTY, New York
JENNIFER DUNN, Washington            WILLIAM J. JEFFERSON, Louisiana
MAC COLLINS, Georgia                 JOHN S. TANNER, Tennessee
ROB PORTMAN, Ohio                    XAVIER BECERRA, California
PHILIP S. ENGLISH, Pennsylvania      KAREN L. THURMAN, Florida
WES WATKINS, Oklahoma                LLOYD DOGGETT, Texas
J.D. HAYWORTH, Arizona
JERRY WELLER, Illinois
KENNY HULSHOF, Missouri
SCOTT McINNIS, Colorado
RON LEWIS, Kentucky
MARK FOLEY, Florida
                     A.L. Singleton, Chief of Staff

                  Janice Mays, Minority Chief Counsel
                                 ------                                

                    Subcommittee on Social Security

                  E. CLAY SHAW, Jr., Florida, Chairman
SAM JOHNSON, Texas                   ROBERT T. MATSUI, California
MAC COLLINS, Georgia                 SANDER M. LEVIN, Michigan
ROB PORTMAN, Ohio                    JOHN S. TANNER, Tennessee
J.D. HAYWORTH, Arizona               LLOYD DOGGETT, Texas
JERRY WELLER, Illinois               BENJAMIN L. CARDIN, Maryland
KENNY HULSHOF, Missouri
JIM McCRERY, Louisiana
                                 ------                                

                    Subcommittee on Human Resources

                NANCY L. JOHNSON, Connecticut, Chairman
PHILIP S. ENGLISH, Pennsylvania      BENJAMIN L. CARDIN, Maryland
WES WATKINS, Oklahoma                FORTNEY PETE STARK, California
RON LEWIS, Kentucky                  ROBERT T. MATSUI, California
MARK FOLEY, Florida                  WILLIAM J. COYNE, Pennsylvania
SCOTT McINNIS, Colorado              WILLIAM J. JEFFERSON, Louisiana
JIM McCRERY, Louisiana
DAVE CAMP, Michigan

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.

                            C O N T E N T S

                              ----------                              

                                                                   Page

Advisory of October 14, 1999, announcing the hearing.............     2

                               WITNESSES

U.S. General Accounting Office, Cynthia M. Fagnoni, Director, 
  Education, Workforce, and Income Security Issues, Health, 
  Education and Human Services Division; accompanied by Kay 
  Brown, Assistant Director, Education, Workforce, and Income 
  Security Issues, Health, Education and Human Services Division.    40
Social Security Administration, Hon. Kenneth S. Apfel, 
  Commissioner; accompanied by Susan Daniels, Deputy Commissioner 
  for Disability and Income Security Programs....................    10
                                 ------                                
Association of Administrative Law Judges, Inc., Hon. Ronald G. 
  Bernoski.......................................................    79
Federal Bar Association, Hon. Kathleen McGraw....................    87
National Council of Disability Determination Directors, Michael 
  W. Brennan.....................................................    75
National Council of Field Operation Locals, Council 220, and 
  National Partnership Council, Social Security Administration, 
  American Federation of Government Employees, AFL-CIO, Witold 
  Skwierczynski..................................................    69
National Council of Social Security Management Associations, 
  Inc., Ron Niesing..............................................    64
National Organization of Social Security Claimants' 
  Representatives, Nancy G. Shor.................................    95

                       SUBMISSIONS FOR THE RECORD

American Bar Association, Robert D. Evans, letter................   117
American Federation of State, County and Municipal Employees, 
  Communication Workers of America, and Service Employees 
  International Union, joint statement...........................   118
Hall, Lisa Russell, Office of Hearings and Appeals, Social 
  Security Administration, Paducah, KY, statement................   119
International Union, United Automobile, Aerospace and 
  Agricultural Implement Workers of America, statement and 
  attachments....................................................   120
National Association of Disability Examiners, Terri Spurgeon, 
  Lansing, MI, statement.........................................   121
National Association of Senior Social Security Attorneys, Fort 
  Smith, AR, Harold D. Davis, statement..........................   124

                     MANAGEMENT OF DISABILITY CASES

                              ----------                              

                       THURSDAY, OCTOBER 21, 1999

                  House of Representatives,
                       Committee on Ways and Means,
                        Subcommittee on Social Security and
                           Subcommittee on Human Resources,
                                                    Washington, DC.
    The Subcommittees met, pursuant to notice, at 10:10 a.m., 
in room 1100, Longworth House Office Building, Hon. Nancy L. 
Johnson (Chairman of the Subcommittee on Human Resources) and 
Hon. E. Clay Shaw, Jr. (Chairman of the Subcommittee on Social 
Security) presiding.
    [The advisory announcing the hearing follows:]

ADVISORY

FROM THE COMMITTEE ON WAYS AND MEANS

                    SUBCOMMITTEE ON SOCIAL SECURITY

                    SUBCOMMITTEE ON HUMAN RESOURCES

                                                CONTACT: (202) 225-9263
FOR IMMEDIATE RELEASE

October 14, 1999

No. SS-8

               Shaw and Johnson Announce Joint Hearing on

                     Management of Disability Cases

    Congressman E. Clay Shaw, Jr., (R-FL), Chairman, Subcommittee on 
Social Security and Congresswoman Nancy Johnson (R-CT), Chairman, 
Subcommittee on Human Resources, Committee on Ways and Means, today 
announced that the Subcommittees will hold a joint hearing on the 
Social Security Administration's management of its disability caseload. 
The hearing will take place on Thursday, October 21, 1999, in the main 
Committee hearing room, 1100 Longworth House Office Building, beginning 
at 10 a.m.
      
    In view of the limited time available to hear witnesses, oral 
testimony at this hearing will be from invited witnesses only. 
Witnesses will include the Commissioner of the Social Security 
Administration (SSA), representatives from the U.S. General Accounting 
Office (GAO), organizations representing disability examiners, Social 
Security caseworkers and applicants, and disability benefit recipients. 
However, any individual or organization not scheduled for an oral 
appearance may submit a written statement for consideration by the 
Committee and for inclusion in the printed record of the hearing.
      

BACKGROUND:

      
    Social Security's disability programs help protect workers and 
their families against financial hardship due to disabling conditions 
that prevent them from working. The number of Social Security 
disability beneficiaries rose from 4.1 million in 1989 to 6.4 million 
today, an increase of 56 percent; disabled Supplemental Security Income 
(SSI) recipients grew from 3.1 million in 1989 to 5.3 million today, or 
71 percent. Accompanying this rise has been an equally noteworthy surge 
in waiting periods for accessing benefits. Two-thirds of claimants 
filing an appeal eventually received a favorable decision, indicating 
potential problems with either initial or appellate decisions and 
raising questions about the fairness and efficiency of the process.
      
    In response to such concerns, in 1994 SSA announced a fundamental 
overhaul of the process it uses to determine if claimants are eligible 
for disability benefits. Thus, SSA has undertaken several key 
initiatives involving initial workload processing, Office of Hearings 
and Appeals workloads, and including a new Hearing Process Initiative, 
and Appeals Council workloads. Following release of its initial plan, 
SSA issued a scaled-back plan in 1997. According to a March 1999 GAO 
report, ``while SSA has made some progress . . . even with its scaled-
back plan, SSA has been unable to keep its redesign activities on 
schedule and to demonstrate that its proposed changes will 
significantly improve the claims process.''
      
    At the same time, the number of continuing disability reviews 
conducted by SSA has grown rapidly. SSA processed nearly 1.4 million 
periodic reviews in 1998, the largest number ever and more than twice 
the number performed in 1997. While these reviews will result in 
significant savings over time, the sheer volume of reviews, their 
accuracy, and how they mesh with SSA's other disability program 
responsibilities are matters of interest to the Subcommittees.
      
    In announcing the hearing, Chairman Shaw stated: ``Ensuring that 
American workers who experience a disability have all the protection 
they paid for is a core function of the SSA. While caseloads have 
grown, so have waits to get on the rolls. This hearing will help us 
determine whether SSA is taking steps to ensure that disabled workers 
get the benefits they deserve in a fair and timely fashion.''
      
    Chairman Johnson stated: ``The SSI program, which is so important 
to many disabled recipients, needs an administrative system that 
strikes a balance between timely processing of beneficiary claims and 
ensuring adequate safeguards against fraud and abuse. Testimony from 
this hearing will provide useful information about SSA's plans to 
improve disability services.''
      

FOCUS OF THE HEARING:

      
    The hearing will focus on SSA management of the Social Security 
Disability Insurance and SSI program caseloads, including the ability 
of SSA's disability redesign plan and hearing process initiative to 
address concerns regarding initial, appeals, and continuing disability 
determinations.
      

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 six (6) single-
spaced copies of their statement, along with an IBM compatible 3.5-inch 
diskette in WordPerfect 5.1 format, with their name, address, and 
hearing date noted on a label, by the close of business, Thursday, 
November 4, 1999, 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, by close of business the day before the 
hearing.
      

FORMATTING REQUIREMENTS:

      
    Each statement presented for printing to the Committee by a 
witness, any written statement or exhibit submitted for the printed 
record or any written comments in response to a request for written 
comments must conform to the guidelines listed below. Any statement or 
exhibit not in compliance with these guidelines will not be printed, 
but will be maintained in the Committee files for review and use by the 
Committee.
      
    1. All statements and any accompanying exhibits for printing must 
be submitted on an IBM compatible 3.5-inch diskette in WordPerfect 5.1 
format, typed in single space and may not exceed a total of 10 pages 
including attachments. Witnesses are advised that the Committee will 
rely on electronic submissions for printing the official hearing 
record.
      
    2. Copies of whole documents submitted as exhibit material will not 
be accepted for printing. Instead, exhibit material should be 
referenced and quoted or paraphrased. All exhibit material not meeting 
these specifications will be maintained in the Committee files for 
review and use by the Committee.
      
    3. A witness appearing at a public hearing, or submitting a 
statement for the record of a public 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, company, address, telephone and fax numbers where the witness or 
the designated representative may be reached. 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 other forms.
      

    Note: All Committee advisories and news releases are available on 
the World Wide Web at `HTTP://WWW.HOUSE.GOV/WAYS__MEANS/'.
      

    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.

                                

    Chairman Johnson. Good morning. We are here today to 
discuss the important issue of how the Social Security 
Administration is managing the disability caseload. This 
caseload has grown tremendously in the past 10 years and, in 
addition, SSA has been responsible for an increased number of 
continuing disability reviews. Caseworkers in my New Britain 
office, work daily with constituents who have questions and 
concerns about their Social Security disability claims and the 
process that they have to go through to receive their benefits. 
Even with excellent assistance from the local Social Security 
office personnel, these constituents often wait up to a year 
for their claims to move through all the steps in the 
disability determination process. Needless to say this causes 
tremendous hardship on the part of the people who are already 
in a difficult situation.
    I have to say that the personnel in my local Social 
Security office are not only hard-working but very kindly 
toward my constituents and it is an excellent office. But it is 
not tolerable to face people who are already in terribly 
difficult circumstances with quite the weight and the 
complexity of the process that we have been using.
    While SSA needs an improved administrative system that 
provides fair and timely processing of beneficiary claims, it 
also has a responsibility to ensure the safeguards that are 
necessary to prevent fraud and abuse. I look forward to hearing 
your testimony this morning and learning more about SSA's plan 
to improve disability services and I would like to yield to my 
co-chairman, Congressman Shaw.
    Chairman Shaw. Thank you very much.
    I would like to welcome all of you and all of our witnesses 
to today's hearing. This hearing will focus on whether we are 
doing everything we can to ensure workers and families get 
disability benefits in a timely and efficient manner. This is 
no small issue. Social Security's two disability programs, the 
Social Security Disability Insurance and Supplemental Security 
Income serve about 11 million disabled Americans and their 
families providing $77 billion in annual cash benefits, usually 
accompanied by health care coverage.
    The Social Security Administration processes literally 
millions of applications for disability benefits each year and 
reviews millions of other cases to ensure recipients remain 
entitled to the benefits. All told, Social Security spends 
about $4 billion administering these programs. That is about 
two-thirds of the Social Security's total administrative 
budget; up from about half in 1980, even though the disability 
benefits represent about 21 percent of the total beneficiary 
population.
    Despite this enormous and increasing financial commitment, 
the bipartisan Social Security Advisory Board in August 1998 
expressed: ``serious concerns about the lack of consistency in 
decisionmaking, unexplained changes in application and 
allowance rates, the complexity, slowness and the cost of the 
application and appeals process, the lack of confidence in the 
system and the fact that few beneficiaries are successfully 
rehabilitated.'' Hopefully we will improve the last problem 
with the Ticket-To-Work bill. The other concerns are the topic 
of our hearing today.
    Everyone agrees that disability decisions must be fair, 
swift and they must be correct. Yet, in the past decade, we 
have seen major backlogs develop as applications and caseloads 
have grown. To their credit, the Social Security Administration 
is testing several new initiatives to improve its management of 
disability cases. We are fortunate today to have a number of 
frontline employees who will give us their assessment of how 
these initiatives are working.
    The future promises ever increasing numbers of disability 
beneficiaries. Under the worst case scenario, according to the 
Social Security actuaries, the number of Social Security 
disability beneficiaries will rise 75 percent over the next 10 
years. Under the best of circumstances, it will increase by 40 
percent.
    As several of our witnesses will testify it is unacceptable 
to require some applicants to wait literally years before they 
are found to be disabled. That is the current dilemma. What 
will be the future? What will the future be like if we fail to 
improve this situation while millions more apply for benefits?
    I look forward to the hearing and suggestions of how to fix 
the problem and provide better services for the American 
families. They certainly deserve no less.
    I have here a chart which shows the time that goes between 
the application and the resolution of the problem. As you can 
see that it is taking now about 900 days. That is absolutely 
incredible. Many of the applicants die before their case is 
ever fully considered and properly adjudicated. I know we can 
do a lot better than this and I look forward to the witnesses' 
testimony and to explaining exactly the direction that we need 
to go.
    I hope that each of the witnesses will direct their 
attention to this terrible problem that we are facing and this 
injustice that we are doing to the American families and, I 
might say, they deserve no less than our full attention and 
cooperation. At this time, I will yield to Mr. Cardin, the 
Ranking Member on Human Resources.
    Mr. Cardin. Thank you, Chairman Shaw.
    On behalf of both Bob Matsui, who is the Ranking Member on 
the Social Security Committee, and myself we want to thank you 
and Chairman Johnson for holding these hearings. We think these 
hearings are extremely important. As Chairman Shaw pointed out, 
2 days ago this Congress passed the Ticket-To-Work bill which 
deals with people who exit the disability system. Today we are 
talking about people who need disability insurance help 
entering the system. And we have to make it easier for people 
to get the benefits that they are entitled to. The current 
delays are unacceptable, particularly on the appeals 
determinations.
    So, I think these hearings are extremely important. I want 
to complement Ken Apfel, the Commissioner, for the streamlining 
process that he has already started to implement at SSA. I 
think we are already starting to see some of the positive 
effects of the changes that are currently underway. I also want 
to applaud your effort to follow the General Accounting 
Office's recommendations to focus on the most important reforms 
and test the concepts before full implementation. I think that 
is extremely important, also.
    But, Mr. Chairman, I just really want to point out that I 
think we, in Congress, have a good deal of responsibility here 
for our past actions, I think, have contributed to the problems 
that our constituents are confronting in delays in disability 
determinations. And that is, since 1982, we have reduced the 
work force at the Social Security Administration by 26 percent. 
At the same time, the number of applications under review by 
the agency has increased dramatically.
    I have had the opportunity to visit first-hand the men and 
women who work at Social Security Administration from my 
community. And these are hard-working men and women, who are 
trying to do their jobs, in some cases, very frustrated by the 
lack of support that we give here to their budget.
    So, as we ask Social Security Administration to do more, we 
should also be willing to make the investments in the budget 
that they need to provide the type of support to our 
constituents; we can't continue to ask them to do more with 
less when we know that we are not providing adequate resources.
    So, I think these hearings are extremely important. We have 
6 million Americans who are receiving disability insurance 
under Social Security; 5 million Americans receiving disability 
benefits under SSI. For these 11 million and for those that are 
awaiting determination, it's important that we have the most 
efficient system possible for original determination and for 
appeals and I hope the hearings today will help us work 
together to improve the system.
    Thank you.
    Chairman Shaw. Without objection, each member, including 
Mr. Matsui, will be given an opportunity to insert their 
opening statement into the record.
    [The prepared statements follow:]

Statement of Hon. Nancy L. Johnson, a Representative in Congress from 
the State of Connecticut

    We are here to discuss the important issue of how the 
Social Security Administration is managing its disability 
caseload. This caseload has grown tremendously in the past 10 
years. In addition, SSA has been responsible for an increased 
number of continuing disability reviews.
    Caseworkers in my New Britain, Connecticut district office 
work daily with constituents who have questions or concerns 
about their Social Security disability claims process. Even 
with excellent assistance from local Social Security office 
personnel, these constituents often wait up to a year for their 
claims to move through all the steps in the disability 
determination process. Needless to say, this causes additional 
hardship to people in an already difficult situation.
    While SSA needs an improved administrative system that 
provides fair, timely processing of beneficiary claims, it also 
has a responsibility to ensure adequate safeguards against 
fraud and abuse. I look forward to hearing your testimony and 
learning more about SSA's plans to improve its disability 
services.

                                

Statement of Hon. E. Clay Shaw, Jr., a Representative in Congress from 
the State of Florida

    Today's hearing focuses on whether we are doing everything we can 
to ensure workers and families get disability benefits in a timely and 
efficient manner.
    This is no small issue. Social Security's two disability programs--
Social Security Disability Insurance and Supplemental Security Income--
serve about 11 million disabled Americans and their families, providing 
$77 billion in annual cash benefits, usually accompanied by health care 
coverage. The Social Security Administration processes literally 
millions of applications for disability benefits each year, and reviews 
millions of other cases to ensure recipients remain entitled to 
benefits. All told Social Security spends about $4 billion 
administering these programs. That's almost two-thirds of Social 
Security's total administrative budget, up from about half in 1980--
even though disability beneficiaries represent about 21 percent of the 
total beneficiary population.
    Despite this enormous and increasing financial commitment, the 
bipartisan Social Security Advisory Board in August 1998 expressed:

          ``serious concerns about the lack of consistency in decision 
        making; unexplained changes in application and allowance rates; 
        the complexity, slowness and cost of the application and 
        appeals process; the lack of confidence in the system; and the 
        fact that few beneficiaries are successfully rehabilitated.''

    Hopefully we will improve the last problem with the Ticket to Work 
bill; the other concerns are the topic of our hearing today.
    Everyone agrees that disability decisions must be fair, swift and 
correct. Yet in the past decade we have seen major backlogs develop as 
applications and caseloads have grown. To their credit, Social Security 
is testing several new initiatives to improve its management of 
disability cases. We are fortunate today to have a number of front line 
employees who will give us their assessment of how these initiatives 
are working.
    The future promises ever increasing numbers of disability 
beneficiaries. Under the worst case scenario, according to the Social 
Security actuaries the number of Social Security disability 
beneficiaries will rise 75 percent over the next 10 years. Under the 
best of circumstances, it will increase by 40 percent. As several of 
our witnesses will testify, it's unacceptable to require some 
applicants to wait literally years before they are found to be 
disabled. That's the current dilemma. What will the future be like if 
we fail to improve this situation while millions more apply for 
benefits?
    I look forward to hearing suggestions on how we can fix such 
problems and provide better service for working American families. They 
deserve no less.
[GRAPHIC] [TIFF OMITTED] T6024.001

Statement of Hon. Benjamin L. Cardin, a Representative in Congress from 
the State of Maryland

    Mr. Chairman, let me start by thanking the Chair of the Human 
Resources Subcommittee, Mrs. Johnson, for her commitment to forging a 
bipartisan consensus on how to help low-income fathers support their 
children. While the legislation before us may not do everything either 
myself or Mrs. Johnson would like to achieve, it does represent a very 
positive first step in reconnecting absent fathers with their families.
    It goes without saying that raising children is the responsibility 
of both parents. When one parent intentionally evades this obligation, 
our child support enforcement system should be unyielding in its 
determination to make that individual live up to his or her parental 
responsibility. The 1996 welfare law made some strides in that 
direction by providing new tools to the States to help them track down 
delinquent parents and force them to pay child support.
    However, there is a difference between a parent who is unwilling to 
support his children and one who is unable to meet this commitment. 
Unfortunately, the current system seldom recognizes this distinction 
between deadbeat and dead-broke fathers.
    The Fathers Count Act would begin to reverse this oversight by 
making a direct commitment to help non-custodial parents who want to 
support their families. Under the legislation, competitive grants would 
be made available for communities to directly encourage fathers to 
become a consistent and productive presence in the lives of their 
children--whether through marriage, or through increased visitation and 
the payment of child support. These new grant funds could be used for a 
wide array of specific services, including counseling, vocational 
education, job search and retention services, and even subsidized 
employment.
    In addition, the grant program would encourage States and 
communities to implement innovative policies to assist and encourage 
non-custodial parents to pay child support. For example, preference 
would be given to grant applications which contain an agreement from 
the State to pass-through more child support payments to low-income 
families rather than recoup the money for prior welfare costs. 
Additionally, a preference would be provided to any grant request that 
included a commitment to forgive child support arrears owed to the 
State by a non-custodial parent who was actively attempting to pay 
current support to their family. Such initiatives will hopefully make 
the child support system seem less like a hostile enemy and more like a 
collaborative partner for non-custodial fathers who want to provide for 
their families.
    The legislation before us would make one other very important 
change to help both custodial and non-custodial parents support their 
children--it would expand eligibility for the current Welfare to Work 
program. This initiative was originally passed as part of the Balanced 
Budget Act of 1997, and it has proven to be a useful tool to help long-
term welfare recipients and non-custodial parents of children on public 
assistance gain employment.
    However, the current eligibility criteria under the program is far 
too strict for both mothers and fathers. Therefore, the Fathers Count 
Act would broaden eligibility and local flexibility under the Welfare 
to Work program--an improvement requested by the National Governors 
Association, the US Conference of Mayors, and the Department of Labor. 
I hope the Committee will build on this effort in the near future by 
passing a broader reauthorization of the Welfare to Work program.
    Mr. Chairman, I urge Members to support this bipartisan effort to 
help reconnect fathers with their families. Such an initiative would 
help these men meet their parental responsibilities and thereby improve 
their self-esteem; it would help mothers attempting to raise their 
family single-handedly; and most of all, it would improve the lives of 
children, both materially and emotionally. Thank you.

                                

    Commissioner, it is my privilege to welcome you back to 
this Committee. In holding up the chart that I did, I do see to 
your credit that the hearing process has shrunk somewhat but 
the appellate process seems to be totally out of control and 
900 days under any measurement is an incredible, unconscionable 
time to have many needy people to wait for their benefits, 
particularly, the disabled community. And I hope you will, in 
your statement, address that issue.
    We have a copy of your statement which is going to be made 
a part of the record. We have a copy of all the witnesses' 
statements which will be made a part of the record and we would 
invite you to proceed and/or summarize as you see fit.

  STATEMENT OF HON. KENNETH S. APFEL, COMMISSIONER OF SOCIAL 
SECURITY; ACCOMPANIED BY SUSAN DANIELS, DEPUTY COMMISSIONER FOR 
            DISABILITY AND INCOME SECURITY PROGRAMS

    Mr. Apfel. Thank you, Mr. Chairman.
    Chairmen Shaw and Johnson, Mr. Cardin and Members of the 
Subcommittees, thank you for this opportunity to update you on 
Social Security's progress in improving administration of its 
disability programs. Joining me today is Dr. Susan Daniels, our 
Deputy Commissioner for Disability and Income Security 
Programs.
    While much of the public debate about Social Security 
focuses on retirement, about one-third of Social Security 
beneficiaries are severely disabled workers and their children 
or surviving family members of deceased workers. In 1990, 5.7 
million individuals with disabilities were receiving either 
Social Security or SSI disability benefits. Today, more than 9 
million receive these benefits; a workload increase that 
represents just one of the many challenges in managing such a 
complex program.
    However, despite the program growth of the early nineties, 
Social Security's disability rolls are not high compared to 
those of other Western countries; only about 3.5 percent of 
insured American workers receive Social Security disability 
payments. This is much lower than the Netherlands, Sweden or 
Norway and slightly lower than rates in Germany, the United 
Kingdom and Austria. All these countries have aging 
populations, including the United States. Actuarial forecasts 
indicate that as the baby boom generation ages, the number of 
people on SSA's disability rolls will continue to grow with 
disability incidence increasing from about 3.5 percent to 
almost 5 percent over the next decade.
    As Social Security's dedicated employees work to maintain 
their high level of customer service while handling increasing 
workloads, the result is organizational stress. By identifying 
eligible individuals earlier in the process and streamlining 
the process, we plan to decrease stress and increase service.
    To accomplish these goals, we've developed a comprehensive 
strategy which is outlined in our March 1999 report, ``Social 
Security and Supplemental Security Income Disability Programs: 
Managing for Today, Planning for Tomorrow.'' Basically we're 
looking for ways to improve the disability adjudication process 
at all levels, to safeguard the integrity of the program and to 
enhance beneficiaries' opportunities to work. Our three guiding 
principles are quality, timeliness and efficiency.
    The process improvements are based on our strong belief 
that through investments in the quality of our decisionmaking 
at the initial level of the administrative process, we can 
provide better service by identifying eligible individuals with 
disabilities as early in the process as possible. Denied 
claimants who appeal will experience a more efficient appeals 
process that will take much less time to produce decisions.
    I recognize that many of the benefits expected from these 
improvements will not materialize immediately. We have seen 
results but it's going to take time for us to see full results.
    While SSA expects some short-term decreases in productivity 
during the implementation, the long-term improvements in the 
system will outweigh these costs. We are also committed to 
enhancing the quality of decisions by ensuring that SSA's 
policies are applied in a consistent manner by all adjudicators 
and by improving the development and explanations of disability 
determinations.
    On October 1, we implemented prototypes in 10 States to 
improve the initial claims process. These prototypes consist of 
the following: Enhanced documentation and explanation of 
decisions at the initial claims level; revised roles of the 
disability examiner and the medical consultant in State DDS 
determinations; an opportunity for a conference between the 
claimant and the State DDS decisionmaker; and elimination of 
the reconsideration step of the administrative appeals process.
    In the past we have increased resources to address hearing 
office problems and this has led to significant results with 
hearings processing times reduced from 386 days in 1997 to an 
estimated 316 days in 1999. Building on these successes, our 
new hearings process improvement plan relies on process 
changes. Our goal is to reduce processing time to 257 days this 
year and to less than 200 days in FY 2002.
    If I could take an extra minute, Mr. Chairman, I'm going to 
specifically address the issue of the Appeals Council process. 
Having reached decisions on making improvements to the initial 
hearing levels, we are now carefully looking at what can be 
done to eliminate the long wait before receiving a decision 
from the SSA Appeals Council. Later this year, we will release 
a plan to improve service in this area. Elements of this plan 
will include using attorneys from SSA's Office of the General 
Counsel to assist with case reviews; permitting claimants with 
cases pending at the Appeals Council to pursue new claims for 
periods of time subsequent to the ALJ decisions; and promoting 
stability and excellence in the Appeals Council by continuing 
SSA's efforts to obtain legislation that would provide pay 
parity for SSA's Appeals Council Administrative Appeals Judges 
with the nonsupervisory ALJs.
    Quite simply, forcing individuals to wait more than a year 
for an Appeals Council decision is simply unacceptable, and I 
agree with you, Mr. Chairman.
    During recent travels, Dr. Daniels and I saw firsthand how 
hard employees are working to implement both the prototypes in 
the 10 States and the hearings office changes, which combine 
redesign features and other initiatives. I also want to assure 
you that SSA is committed to guaranteeing that only those who 
are truly disabled will continue to receive benefits.
    And I want to thank this Committee for the additional 
funding to conduct more continuing disability reviews than 
ever. In FY 1998, we processed more than twice the CDRs we did 
in 1996. We estimate that from the 1998 activities, over 70,000 
beneficiaries who were no longer eligible will have their 
benefits terminated after all appeals, resulting in savings of 
upwards of $4.4 billion.
    And while the numbers for FY 1999 are still preliminary, 
our initial data indicates that we will exceed the number of 
CDRs that we processed in 1998 by at least 10 percent. This is 
progress and heads us in the right direction for the new 
millennium.
    As we approach this millennium, I want to reiterate the 
administration's longstanding commitment to encouraging 
individuals with disabilities to return to work. I want to 
congratulate this Committee on its tireless efforts in bringing 
the Ticket to Work and Work Incentives Act of 1999 to the floor 
so it could pass with such a large majority.
    Thank you again for inviting me here to address this 
important issue of the Social Security Disability programs. I 
promise you we are totally committed to make them more 
responsive to claimants and beneficiaries and more accountable 
to this great Nation's taxpayers.
    I would be happy to answer any questions that you have.
    [The prepared statement follows:]

Statement of Hon. Kenneth S. Apfel, Commissioner of Social Security

    Chairman Shaw, Chairman Johnson, Mr. Matsui, Mr. Cardin and 
Members of the Subcommittees: I am pleased to be here today to 
discuss the progress that SSA is making to improve its 
administration of the disability programs. This opportunity to 
report on SSA's disability programs is especially relevant 
since October has been designated by the Congress and the 
President as ``National Disability Employment Awareness 
Month.''
    Overall, I am happy to report that SSA has made substantial 
progress towards improving the service it provides to 
individuals with disabilities. SSA is pleased with its progress 
in this direction, but recognizes that more needs to be done to 
ensure that these vitally important programs offer the 
protection that they were intended to provide to the American 
people.
    While much of the public debate about Social Security 
focuses on retirement, this is also a particularly appropriate 
time to emphasize that about one third of Social Security 
beneficiaries are severely disabled workers, their children, or 
the surviving family members of workers who have died. Because 
about 25 to 30 percent of today's 20-year-olds are estimated to 
become disabled before retirement, the protection provided by 
the Social Security Disability Insurance (SSDI) program is 
extremely important, especially for young families. For a 
young, married, average income worker with two children, Social 
Security is the equivalent of a $233,000 disability income 
insurance policy. In the event of severe disability, the SSDI 
program stands between these families and poverty. 
Additionally, the Supplemental Security Income Program (SSI) 
serves the most economically vulnerable population with 
disabilities, most of whom are living in poverty.
    In December 1990, 5.7 million individuals with disabilities 
were receiving either Social Security or SSI disability 
benefits. As of December 1998, 9.0 million were receiving 
Social Security or SSI disability benefits. As you are no doubt 
aware, managing such an enormous complex program presents many 
challenges. One way to put our disability programs in 
perspective is to compare them with the recent experience in 
other developed countries.
    Comparisons aren't always simple. SSA's programs have 
always awarded benefits on the basis of a single strict 
standard of disability defined by statute. Other nations have 
sometimes used broader standards to make it easier for persons 
nearing retirement or experiencing long-term unemployment to 
collect disability benefits. In addition, benefits are often 
provided to working-age adults without any disability 
requirement. In tandem with these broader standards, several 
countries have made quite strenuous efforts to encourage hiring 
the disabled and enabling them to go to work.
    In spite of the considerable program growth of the early 
1990's, SSA's disability rolls are not high in most comparisons 
to other western countries. For example, in the United States, 
at the end of 1998, 3.5% of the population insured under Social 
Security were receiving disability benefits from the SSDI 
program. This is slightly lower than rates in Germany, the 
United Kingdom, and Austria, and much lower than in the 
Netherlands, Sweden, or Norway.
    Actuarial forecasts indicate that the number of people on 
SSA's disability rolls will continue to grow. The rate of 
disability prevalence is projected to increase from 3.5% to 
almost 5% over the next 10 years. Although still a very small 
percent of the population, this represents an increase of 
almost 40 percent. This increase will occur largely due to the 
aging of the population and within the context of our very 
strict definition of disability.
    The current growth in the disability programs has resulted 
in organizational stress as SSA's dedicated and capable 
employees have worked to maintain their traditional high level 
of customer service. Additionally, the resultant workload has 
made it even more critical that we seek ways to ensure that 
eligible individuals are identified as early in the process as 
possible.
    In 1994, SSA announced an ambitious plan to streamline the 
disability process by eliminating unnecessary handoffs and most 
importantly to ensure that eligible individuals are identified 
as early in the process as possible. In the years following, 
SSA carefully tested many aspects of this plan. This testing 
was critical in order to make certain that our most vulnerable 
customers were not adversely affected by any changes.
    In August 1998, the Social Security Advisory Board issued 
its report, ``How SSA's Disability Programs Can Be Improved.'' 
In this report, the Advisory Board made a number of 
recommendations relating to SSA's disability programs. These 
recommendations included making the disability determination 
process more consistent and equitable, strengthening the 
public's trust in the integrity of the programs, and helping 
disabled individuals continue or return to work. As a result of 
SSA's prior initiative to strengthen the disability programs, 
SSA was already well on the way to addressing these concerns.

Disability Management Plan

    SSA is now working on several initiatives designed to 
improve the disability adjudication process at all levels of 
adjudication, safeguard the integrity of the program, and 
enhance beneficiaries' opportunities to work.
    Many of these initiatives are based on SSA's Disability 
Redesign Plan. After a lengthy study of the issues involved, I 
determined that no single initiative would be the answer. SSA 
needed to take concerted action in several areas. SSA needed to 
address longstanding issues to improve administrative 
efficiency and achieve greater consistency in our 
decisionmaking process.
    In March of this year, SSA published the report, Social 
Security and Supplemental Security Income Disability Programs: 
Managing for Today, Planning for Tomorrow, and in August of 
this year, SSA published the report, The Hearings Process 
Improvement Initiative: Delivering Better Service for the 21st 
Century. These reports set out our comprehensive strategy and 
firm commitment to administer the disability programs fairly, 
effectively, and efficiently, so that SSA can continue to 
protect the millions of individuals who depend on it. To 
achieve this, SSA is making improvements to both the initial 
disability determination process and the hearing process. The 
improvements are premised on SSA's strong belief that, through 
investments in the quality of our decisionmaking at the initial 
level of the administrative process, such as making the claim 
development process more comprehensive, SSA can expect to 
provide better service by ensuring that eligible individuals 
with disabilities are identified as early in the process as 
possible. Denied claimants who appeal will experience a more 
efficient appeals process that will take less time to produce 
decisions.
    SSA recognizes that many of the benefits expected from 
these improvements will not materialize immediately. While SSA 
expects some short term decreases in productivity during 
implementation, the long term improvements to the system will 
outweigh these costs.

                               Background

    Before I get into specifics, a brief overview of the 
current disability process might help put this statement in 
context. The Social Security Act broadly defines disability as 
the inability to engage in any substantial gainful activity due 
to a physical or mental impairment expected to last at least 
one year or result in death. The Act requires the Commissioner 
of Social Security to prescribe rules for obtaining and 
evaluating evidence and making disability decisions. The law 
further requires that initial disability determinations be made 
by State Disability Determination Services (DDSs) following 
Federal rules and guidelines and financed by Federal funds.
State DDS Process

    In the State DDS, a team composed of a disability examiner 
and a physician (or sometimes a psychologist) makes the 
disability determination based on an evidentiary record. The 
State DDS requests medical evidence from the treating 
physician(s) and other sources identified by the claimant. If 
that evidence is incomplete or conflicting, the disability 
examiner may request a consultative examination from the 
claimant's treating physician or a physician under contract to 
the DDS to perform these examinations. If necessary, the 
examiner will also obtain evidence from the claimant's family, 
friends, or other third parties that will help explain how the 
individual's impairment(s) affects his or her ability to work. 
The team then considers all medical and other evidence to make 
the disability determination.

Appeals Process

    A person who is dissatisfied with an initial determination, 
may pursue an appeal through three administrative levels and 
the Federal courts. The Act requires the Commissioner to 
provide a claimant the opportunity for a hearing, and allows 
for filing of a civil action in Federal court after the 
Commissioner's final decision. SSA's regulations also provide a 
reconsideration review prior to the hearing before the 
Administrative Law Judge (ALJ) and an opportunity for final 
review by SSA's Appeals Council.
    Reconsideration is the first administrative review for 
claimants and involves a de novo, or fresh, review of the claim 
(including any new evidence) by individuals who did not 
participate in the original determination. The reviewers 
consider all of the evidence and issue a reconsideration 
determination.
    The second level of administrative appeal is a de novo 
hearing before an ALJ who can call on medical or vocational 
experts, if needed, to help evaluate the evidence. Usually the 
claimant obtains legal representation at this point. 
Frequently, new evidence is introduced by the claimant and his 
or her representative, often at the hearing itself. Claimants 
are allowed to appear before the ALJ and to call witnesses.
    The final administrative appeal level is the Appeals 
Council which may grant, deny, or dismiss a request for review 
of the ALJ decision. It will grant review if the ALJ decision 
contains an error of law, is not supported by substantial 
evidence, involves a broad policy issue, or if there appears to 
be an abuse of discretion by the ALJ. After an Appeals Council 
action, if the claimant is still dissatisfied, the next step is 
filing a civil action in Federal court.

Improving the Disability Adjudication Process

    Results from redesign testing showed that certain process 
changes resulted in:
     A higher percentage of individuals being allowed 
at the initial level;
     Enhanced quality of initial decisions;
     Earlier access to the hearing process for those 
who appeal their initial decision; and
     High claimant satisfaction.
    In addition to the information already gathered, SSA 
remains committed to testing the Disability Claims Manager 
concept as an alternative approach to claims taking. The 
results of this testing will allow SSA to determine if the 
process can provide a more user-friendly, efficient and faster 
way to serve claimants filing for disability benefits.
    On October 1 SSA implemented prototypes in 10 states, which 
combine these features of redesign with other initiatives to 
improve the adjudicative process at all levels. These 
prototypes consist of the following:
     Enhanced documentation and explanations of 
decisions at the initial claims level;
     Revised roles of the disability examiner and 
medical consultant in State DDS determinations;
     An opportunity for a conference between the 
claimant and the State DDS decisionmaker; and
     Elimination of the reconsideration step of the 
administrative appeals process.
    In our recent travels, Dr. Daniels and I saw first hand the 
commitment that SSA and DDS employees have to making the new 
process work. One SSA Office of Hearings and Appeals (OHA) 
employee succinctly pointed out that better documented and 
rationalized DDS determinations would make OHA's job harder 
because the planned initiatives ensure that only the most 
complex cases will get to OHA. Additionally, the new mantra for 
the New York DDS units participating in the prototype testing 
is ``No easy cases to OHA.''

Claims at the Initial Level

    SSA is committed to enhancing the quality of decisions by 
ensuring that SSA policies are applied in a consistent manner 
by all adjudicators and by improving the development and 
explanations of disability determinations.
    SSA's redesign experience showed that by focusing more 
attention at the initial determination level, SSA could expect 
to improve quality and identify eligible individuals earlier in 
the process.

Revising the Roles of the Disability Examiner and Medical 
Consultant

    The process being tested in the prototype states enhances 
the existing roles of the disability examiner/medical 
consultant team and is derived from previous redesign tests. It 
permits the DDS disability examiner to make the initial 
determination of disability without requiring the certification 
of a medical consultant on the disability forms. The medical 
consultants will act as true consultants and generally will 
only be asked to review the more complex cases in which expert 
medical guidance is needed. Medical consultant review will, as 
required by law, continue to be required for all SSI childhood 
claims and in denials in which the evidence indicates the 
existence of a mental impairment.

Providing a Claimant Conference

    The purpose of the claimant conference is to provide the 
claimant with an increased opportunity to interact with the 
disability decisionmaker earlier in the process and to submit 
further information when evidence in the initial claim is 
insufficient to make a fully favorable determination. Before 
issuing a less than fully favorable determination at the 
initial level, the DDS decisionmaker will contact the claimant 
to discuss the case. This ensures that claimants can fully 
present their case and allows them to have a better 
understanding of how their cases were decided. This initiative 
serves SSA's goals of improving customer service by making the 
process more personal and allowing appropriate claims earlier 
in the process.
    Thorough case development and explanation practices at the 
initial claims level are crucial to achieving accurate 
decisionmaking. SSA recognizes that assuring more complete 
development and improved explanations of how the determination 
was made will require more time to be initially spent on each 
individual case. However, enhanced claims documentation is 
essential to furthering the overarching goals of improving the 
quality of decisions and making the correct decision early in 
the process. This will ultimately save time for many 
beneficiaries who will, as a result of these enhancements, be 
awarded benefits earlier in the process.

Eliminating Reconsideration

    Eliminating the reconsideration step from the current four-
level adjudicative process addresses SSA's goal for a 
streamlined, more efficient process. The improvements to the 
initial determination process will afford the same benefits 
without an additional administrative step.

Improving the ALJ Hearing Process

    During the past few years, SSA undertook a number of 
initiatives to address large hearing workloads that have 
produced real results. Initiatives such as the establishment of 
case screening units and specialized decision writing units, 
helped decrease average processing time at the hearing level 
from 386 days in 1997 to, under a preliminary analysis, 316 
days at the close of FY 1999. Despite these improvements, SSA 
knew that it had to do better.
    Therefore, SSA convened a high-level interdisciplinary team 
under the direction and guidance of the Regional Chief 
Administrative Law Judges. The team also worked with an outside 
contractor (Booz-Allen & Hamilton, Inc.). The team was charged 
with making recommendations that would build on the recent 
improvements in OHA quality and timeliness and further reduce 
processing times, increase productivity, and enhance the 
quality of service to the claimant. In August of this year, SSA 
published the team's recommendations in The Hearings Process 
Improvement Initiative: Delivering Better Service for the 21st 
Century. As stated in the report, it is our intent that, when 
fully implemented, the Hearings Process Improvement initiative 
(HPI) will reduce processing times. Average processing times 
for all hearing cases are projected to fall from an estimated 
316 days in FY 1999 to 257 days by the end of FY 2000, and 193 
days in FY 2002.
    The improvements envisioned by HPI differ from the more 
traditional response of committing additional resources to the 
existing hearing process that SSA has taken over the last few 
years. Instead, the plan relies on process changes, including 
new administrative processes for local hearing offices to 
achieve dramatic improvements. On this point, I want to make 
clear that there are no plans to alter the organizational 
structure of the Office of the Chief ALJ.
    Specific HPI initiatives include implementation of a 
``National Workflow Model'' that combines pre-hearing 
activities, a standardized pre-hearing conference, and 
processing-time benchmarks for various tasks. These activities 
will increase the ``front-end'' efficiency of our hearing 
process and get the cases to our Administrative Law Judges 
sooner for decisionmaking.
    With the plan set out in the report, the Social Security 
Administration continues its commitment to a customer-focused 
hearings process that is more timely and efficient while 
maintaining the claimant's right to a fair and impartial 
hearing. We will begin implementing this plan in January 2000 
and expect to have the project fully implemented by March 2001.

Improving the Appeals Council Process

    Having reached decisions on making improvements to the 
initial and hearing levels, SSA is now carefully looking into 
what can be done to eliminate the long wait before receiving a 
decision from SSA's Appeals Council. Later this year, SSA will 
release its plan to improve service in this area. Elements of 
this plan will include using attorneys from SSA's Office of the 
General Counsel to assist with case reviews, permitting 
claimants with cases pending at the Appeals Council to pursue 
new claims for periods of time subsequent to the ALJ decisions, 
and promoting stability and excellence on the Appeals Council 
by continuing SSA's efforts to obtain legislation that would 
provide pay parity for SSA's Appeals Council Administrative 
Appeals Judges with non-supervisory ALJs. Quite simply, forcing 
individuals to wait more than a year for an Appeals Council 
decision is unacceptable.

Safeguarding the Integrity of the Program

    As I stated at the outset SSA is committed to ensuring that 
only those who are truly disabled continue to receive benefits. 
Thanks to additional funding from Congress, and particularly 
this committee, SSA is doing more continuing disability reviews 
(CDRs) than ever. In fiscal year 1998, SSA processed almost 1.4 
million periodic CDRs, more than twice the number of CDRs 
processed in 1996. Based on the CDRs done in FY 1998, SSA 
estimates that 70,300 beneficiaries will have their benefits 
terminated after all appeals, resulting in savings of 
approximately $4.4 billion when you consider the savings to the 
OASDI, SSI, Medicare, and Medicaid programs for the ten-year 
period running from 1998 to 2007. And while the numbers for FY 
1999 are still preliminary, our initial data indicates that we 
will exceed the number of CDRs that we processed in FY 1998 by 
at least 10 percent.
    Importantly, SSA is meeting the goals set in our 7-plan 
that SSA has shared with you. As you may recall, this plan 
calls for approximately 9.3 million CDRs to be conducted during 
the 7-year period, FY 1996 through FY 2002. SSA is on schedule 
to meet our goal of being up-to-date on all Title II CDRs by 
2000, and all Title XVI CDRs by 2002. With your continued 
support, SSA will stay on top of this important workload.

Enhancing Beneficiaries Opportunities To Work

    Before I close, I applaud this committee's work on the 
return to work legislation and want to reiterate the 
Administration's longstanding commitment to encouraging 
individuals with disabilities to return to work. This year, SSA 
promulgated regulations to increase the level of earnings at 
which SSA presumes that a non-blind individual is performing 
substantial gainful activity from $500 to $700. This is just 
one in a number of initiatives that will be taken to help 
individuals with disabilities enter the workforce.
    SSA's emphasis on returning individuals with disabilities 
to work is starting to pay off. Since FY 1996, the number of 
beneficiaries for which SSA reimbursed state vocational 
rehabilitation agencies for successfully returning 
beneficiaries to work has almost doubled from 6,024 in 1996 to 
11,124 in FY 1999. Also, our latest data show that there were 
approximately 16,650 working SSDI beneficiaries at the start of 
FY 1998 and 23,300 working SSI recipients as of June 1999. SSA 
will continue to do all that it can to help individuals with 
disabilities return to work.
    In addition to the initiatives that SSA can undertake using 
its current statutory authority, the Administration looks 
forward to working with Congress to enact the Work Incentives 
Improvement Act. I understand that there are financing and 
health-and education-related policy issues that remain to be 
addressed.
    This important legislation improves access to health care 
for the disabled, establishes a program that allows consumers 
their choice of private or public employment service providers, 
creates work incentive outreach programs, and reauthorizes 
SSA's demonstration authority to test new and innovative ways 
to return people to work.

                               Conclusion

    Thank you for the opportunity to be here today. SSA is committed to 
making the Social Security disability programs both more responsive to 
its claimants and beneficiaries and more accountable to the nation's 
taxpayers. We will tirelessly continue in our efforts to make Social 
Security's disability programs the best that they can be. I would be 
happy to answer any questions.
    [The attachments are being retained in the Committee files, and may 
also be obtained from the Social Security Administration. They are 
entitled, ``The Hearings Process Improvement Initiative, Delivering 
Better Service for the 21st Century,'' August 1999, ``Social Security 
and Supplemental Income Disability Programs: Managing for Today 
Planning for Tomorrow,'' March 11, 1999; and ``How the Social Security 
Administration Can Improve its Service to the Public,'' by the Social 
Security Advisory Board, September 1999.]

                                

    Chairman Johnson. Thank you for your testimony, Ken, and 
for your leadership of the Social Security Administration. And 
I did want to thank my colleague, Congressman Shaw, for this 
hearing because it is rare in this body that we ever do 
anything jointly and it is really counterproductive that we 
don't.
    So, we are here today as both Committees and appreciate 
your leading off with the efforts that you are making to 
improve the process.
    I think one of the most discouraging aspects of this whole 
situation for representatives, at least for me, has been the 
rate of overturn at the appeals level. It just is so unfair for 
people to go through a very long process, receive a denial and 
then two-thirds get overturned.
    Would you describe in somewhat greater detail the changes 
in the initial process so that the first decision will be more 
thoroughly thought out?
    Mr. Apfel. If we look at the overturn rates at the ALJ 
level, clearly, a number of cases have been overturned and 
that's after a very long period of time. Our goal is establish 
a better front-end process, a stronger process at the initial 
stage. What I would expect you would see is continued increases 
in the allowance rates at that level. And comparably I would 
expect to see lower allowance rates at the hearing level as 
more of those cases are decided earlier in the process with the 
steps that we're taking.
    I should point out that back in 1995 at the Office of 
Hearings and Appeals, almost two-thirds of cases were decided 
favorably. In 1998, that was down to 53 percent and our 
expectation is--and I say expectation because I do not believe 
that the Commissioner of Social Security should be establishing 
targets for allowance rates--there needs to be independence of 
the ALJ in making that decision--but I believe that the process 
that we're putting in place will lead to even lower allowance 
rates if we focus on the front-end of the process--which we're 
doing.
    Also, I want to point out that by the time a case gets to 
the hearings level, it is in many respects a different case--
given the length of time an individual has waited, many times a 
disability condition worsens; also there is more evidence that 
the legal community has provided to make the decision. In 
addition, there is a need for process unification, for all of 
our adjudicators to have the same understanding about what our 
policy is.
    So, I believe that over time the steps that we're taking 
will lead to a continued increase in allowance rates at the 
initial stage and an expectation of a lower allowance rate at 
the hearings level. Also, with more cases decided up front, you 
will see shorter processing times throughout the process.
    Chairman Johnson. And the evaluation of disability, to what 
extent are you beginning to employ the tools that some of the 
States have employed to help disabled workers find careers in 
which their disability is not a disadvantage.
    In other words, does your disability review go to that 
level of consideration and does it also track people into any 
services that would be appropriate?
    Mr. Apfel. I am going to ask Dr. Daniels to handle that 
question.
    Ms. Daniels. Over the last 5 years, we've seen a steady 
increase in the number of our beneficiaries who have been 
referred for and successfully completed vocational 
rehabilitation. In fact, this year we estimate that this will 
be the largest number ever to have been referred and actually 
received services.
    We're also working with private providers, additional 
vocational rehabilitation service providers and have enrolled 
almost 600 of them to be our partners in helping beneficiaries 
return to work.
    So, we're making good strides and the legislation that is 
now on the horizon gives us even more tools to work on this 
issue. Progress is being made and these tools and the 
additional tools in the future will help us make even more.
    Chairman Johnson. I thank you. It is one of the reasons why 
passage of the reform legislation that this Committee worked so 
hard on and that Chairman Shaw provided such excellent for to 
get over some of the humps that were ignored in the other body, 
is so important. Because you are doing so much more now to help 
disabled people get into the work force and have a whole range 
of opportunities in the past that they haven't had.
    Thank you.
    Mr. Apfel. Madam Chairman, if I could also add that the 
reality is we are still just touching the tip of the iceberg 
here.
    Chairman Johnson. I know you are.
    Mr. Apfel. There is a lot more--if we look years and years 
into the future, particularly over the next 10 years, with the 
aging of the population, we will see an increase in cases that 
are coming to us because of the simple natural aging of the 
population in the baby boom generation. As technology changes 
and as opportunities change, the focus on work is a key one and 
I believe that the legislation that I hope will be enacted 
very, very soon, is still only the first step in finding ways 
to improve incentives to return disabled individuals to work. 
Particularly as the population ages we need to have greater 
incentives in this area.
    Chairman Johnson. I agree with you but I think that also 
improving the initial disability review so that it goes far 
more in-depth into the person's medical circumstances and 
connects that knowledge to our knowledge of the work force is 
equally important. So, I think without a more thorough initial 
review process, you aren't going to be able to maximize the 
number that are going to be able to take advantage of the 
services that you're now developing a lot more knowledge of, 
familiarity with, and capability in. So, I do think they go 
hand-in-hand. And I am pleased to see you focusing on that 
initial contact and discussion of the person's problems, 
because that's where we have the best opportunity.
    As you say, it's a year earlier in the process than the 
overturn decision and we are at a point where in support 
programs like Medicare, we're also looking at how do we manage 
chronic illness? And if we can manage chronic illness better 
and connect it up with disability and work then I think we'll 
have a system that far better serves our constituents.
    Thank you.
    Chairman Shaw. Commissioner, maybe it will be very helpful 
at this point in time if you walked us through the process. 
Having practiced law, myself, for over 20 years it is beyond me 
to see why the initial claim filing takes 100 days? Why 
couldn't that be shrunk to 30 days, certainly no more than 60 
days? Why the hearing process people have to wait, even today, 
even though it has slightly improved, over 400 days, that's 
over a year, just to get to the hearing process. And then 900 
days, that's several years, for the appellate process.
    Mechanically, what in the world is going on? Who is not 
doing their job? What is the problem with why this system has 
not been streamlined? And the background of this, I would 
remind you, that in 1996, we tripled the budget--1996, we 
tripled the budget and the time periods from 1996 to 1997 to 
1998 continued to grow. That is what we were after is to try to 
get these periods online very quickly, get the hearings, have 
due process, be sure they are fair hearings or accurate 
hearings. And that they----
    Mr. Cardin. Would the Chairman yield just to explain the 
tripling of which budget, are we referring to? We are somewhat 
amazed that we are not aware of tripling the budget.
    Chairman Shaw. Oh, this is the--the Congress tripled the 
budget for continuing disability reviews in 1996.
    Mr. Cardin. For continuing disability reviews?
    Chairman Shaw. Yes.
    Mr. Cardin. That's not the process, I think, the Chairman 
is currently describing. So, I just don't want to give the 
wrong impression out there that the budget was tripled in 
regards to initial determination or appeals process.
    Chairman Shaw. Well, I think the Commissioner is well aware 
of the direction that I am going.
    Mr. Cardin. I understand but a continuing review is not the 
real issue that we're here today on. I don't think it is.
    Mr. Apfel. Well, I think it is on both and I could address 
them both, Sir, if you will----
    Chairman Shaw. All of this, all of this impacts the system 
and it is the total budget that you are working with and when 
we increase the budget or triple the budget for the continuing 
disability reviews as we did in 1996, this certainly has an 
impact. Now----
    Mr. Cardin. Would the Chairman yield?
    Chairman Shaw. Well, let's let the Commissioner walk 
through this and then I will recognize you for any questions 
that you might have.
    Commissioner.
    Mr. Apfel. On the issue of funding, this Committee with my 
full support, established a separate pot of funds for 
continuing disability reviews to assure that individuals who 
are already on the disability rolls were having their cases 
reviewed on a regular basis to determine if their medical 
conditions had changed, and if there was a greater capacity to 
be able to engage in substantial gainful employment.
    I think it was one of the most important things to happen 
to the Social Security Administration in several years and I 
fully supported that endeavor. The effect of that is a doubling 
of the number of disability cases that are being continually 
reviewed, and those increases continue.
    I would also point out that this separate pot of money was 
over and above the Federal budget caps that were established 
which gave the Congress the flexibility to be able to give us 
that money to do those continuing disability reviews.
    So, we are very, very thrilled about that pot of resources 
and I think we've been using it to take the right steps to 
continue to do continuing disability reviews of those 
individuals that are already on the rolls.
    Now, our second activity though are the people that are 
coming onto the rolls, and you pointed out correctly, that the 
period of time has increased significantly for handling those 
cases. You asked about both the length of time it takes at the 
initial stage and at the hearing stage and the appeals stage. I 
believe that it is unrealistic and probably an incorrect 
assumption to assume that the initial stage could be done much 
faster than it is being done now. To assemble the----
    Chairman Shaw. If I could interrupt you. That is what I 
want you to do. I want you to walk us through the process so we 
can understand the problems and if we are being unrealistic by 
wanting to shorten that process, I would hope that you would 
point that out to us.
    Mr. Apfel. I will, Sir.
    There are four steps to the process currently. At the 
initial step, the individual comes into one of our field 
offices and files a claim. The claim is processed by the States 
after the person has come into our field office.
    If it's an application for SSI, the income eligibility is 
handled by our field office. The disability determination is 
handled at the State level.
    Chairman Shaw. Right. Are we still within the first 100 
days?
    Mr. Apfel. We are still within the first 100 days. And my 
own belief is that what we need to strengthen is going to lead 
to some short-term increases and maybe intermediate-term 
increases in order to do a better job of developing that case. 
That means the number of days to process a case at the initial 
level may rise. It has actually risen, from about 97 days to 
about 105 days over the last couple of years.
    I don't think that is inappropriate. I think spending a 
longer amount of time at that front-end of the process is a 
good investment.
    If a claim is denied at the initial level, a person can 
apply for a reconsideration, which is the first appeals step 
and is a de novo review at the State disability level. That 
takes a period of time as well.
    If the case is again denied--and very few of the cases are 
overturned at that second step--the process moves on to the 
Office of Hearings and Appeals for a de novo review by our 
Administrative Law Judges, and the length of time that that has 
taken as recently as 1997 was 386 days. That's primarily due to 
the fact that there was a very significant increase in the 
number of cases that were coming to that level in the early 
nineties.
    We've reduced that from 386 to 316 in FY 1999 and our next 
projection is about 250 days in FY 2000. But we are going to 
need extra investments of resources. We have shifted resources 
throughout our organization into the hearings process to 
strengthen that process, to ensure that we could get those 
backlogs down.
    If a decision is made that is not favorable at that level 
it can then be appealed to the Appeals Council. And there has 
been a significant increase in the number of cases appealed to 
the Appeals Council due to the fact that the overall volume of 
cases has increased and, as the number of allowances have gone 
down at that third step, more cases are being appealed on to 
that fourth step.
    Ultimately, at that fourth step, there are only about \2/
10\ths of 1 percent of the cases that get decided--if you had 
100 cases that were going to be decided favorably, only about 
\2/10\ths of 1 percent would be decided at that last step--so, 
there are very few cases that are actually being decided 
favorably at the Appeals Council but it also has a very large 
backlog.
    The proposal that we've been working through, that we've 
articulated in our disability management plan, will strengthen 
the front-end of the process and that's probably going to mean 
a few extra days at that level to do a better job of 
documenting the case through claimant conferences and the 
development of a rationale.
    Chairman Shaw. We are back in the first----
    Mr. Apfel. We are back at the first step and now the 
actions. At the front-end process we need to do a better job of 
documenting that decision, to do a stronger case development, 
obtain better medical information, a rationale developed as to 
why a denial would be made, and the elimination of the second 
step. Because the second step, we do not believe, adds a lot of 
value to the decisions. We would eliminate that step entirely 
in the appeals process and use those savings from the 
elimination of that step to help strengthen both the initial 
step as well as to strengthen what our field offices do at the 
front-end of the process.
    We would like to see the continual decline in the number of 
days at the hearings process. The hearings process approval 
plan provides for a more documented case to give to the ALJ so 
that that ALJ can make a decision independently with better 
information, earlier in the process. And then, at the Appeals 
Council, these are the very, very rare cases that go that far 
through the process--we've got to be able to do some shifting 
of resources there to get those processing times down. They 
are, frankly, unacceptable.
    Chairman Shaw. What percentage is that, because Ms. Johnson 
pointed out that 56 percent of them are, in fact, reversed but 
that percentage may not be fair. What percentage of the people 
go ahead and take the judgment that was made in the regular 
process?
    Mr. Apfel. Well, at the initial stages, in 1995, about 30 
percent of the cases were allowed. That is now up to 35 percent 
as more cases are allowed at that step. In the hearings process 
about 64 percent were allowed as recently as 1995. That's now 
down to about 53 percent.
    So, the goal of process unification, the goal of this 
process is to have a more aligned process that will lead to 
better decisionmaking. It is likely that those decisions will 
lead to more allowances at the front end and fewer allowances 
at the hearings levels. So, there has been a decline and a 
significant decline in the number of cases decided----
    Chairman Shaw. Now, most of the cases never get to any of 
these levels and are decided administratively. So, we are not 
talking about every case takes 900 days to be heard or even 100 
days.
    What percentage of the cases get to the hearing level?
    I want to be sure we are completely fair as to the 
percentages that we are looking at and talking about.
    Mr. Apfel. Right.
    Ms. Daniels. I would say 20 percent of the cases--if you 
think of 100 people coming into the agency for a claim, 20 of 
those will go to the hearings level. So, 80 percent of our 
customers will be served in the blue range over there on the 
average processing time.
    And then 20 percent will go on into the yellow range.
    Chairman Shaw. These are the people who get into the 
hearing process.
    Ms. Daniels. Hmm-hmm.
    Chairman Shaw. I may be misunderstanding this. Someone 
comes in the door, they have a disability, they do all their 
paperwork and apply for disability. Now, are they included in 
that first 100 days or the first days are the people that have 
been denied coverage?
    Mr. Apfel. No. The first 100 days are for the allowances 
and the denials.
    Chairman Shaw. That is for everybody.
    Mr. Apfel. Let me try it this way.
    Chairman Shaw. So, anyone who comes in the office if they 
are looking for disability benefits, is included in that first 
100 days.
    Mr. Apfel. That is correct. The allowance of that, average, 
allowances as well as----
    Chairman Shaw. Now, going to the hearing level. Obviously 
most of those people, I would assume, in that first 100 days 
that their cases are disposed of, that not many of them get 
into the hearing process because many of them have been handled 
administratively, is that correct?
    Mr. Apfel. Well, again of the 100, if there were 100 that 
were coming in the door, some are decided favorably, some are 
denied. Those that are denied, some decide not to appeal that 
decision and some subset----
    Chairman Shaw. That is the percentage I want. What 
percentage of the applicants will go through the hearing 
process?
    Mr. Apfel. Go through the hearings process? About 20 
percent.
    Chairman Shaw. Twenty percent. What percentage are denied 
and don't go through the hearing process, do you have that 
figure?
    Ms. Daniels. That is 43 percent.
    Mr. Apfel. That is 43 percent.
    Chairman Shaw. And, so, taking it through the hearing 
process that was 20 percent?
    Ms. Daniels. Yes, 20 percent.
    Chairman Shaw. Then they are the ones that are taken up to 
the 400-day level? They will be caught in this thing for about 
400 days. Are some of them dropping out more quickly or are 
disposed of quickly through this process? Or do they all seem 
to go to the 400 days?
    Mr. Apfel. No. That is an average and, therefore, half are 
above that amount of time and half are below that amount of 
time.
    Chairman Shaw. Some people actually take more than 400 
days?
    Mr. Apfel. Because that is the average. But, again, that 
400 days was 400 days in 1997 and in the year 2000 we are 
expecting to reduce it to approximately 250 days. So, we have 
seen significant improvements. In 1999 we were a little over 
300 days.
    So, clearly, the steps that we have taken to date have led 
to sizable improvements. Enough? Absolutely not. Which is why 
we need the further steps that we are taking.
    Chairman Shaw. Now, of the 20 percent, what percentage of 
those go on to the appellate process?
    Mr. Apfel. A very small number. About 3 percent.
    Chairman Shaw. So, this is a small, small number that get 
into the actual appellate level. I guess the question that 
needs to be asked at this point, what can the Congress do to 
help you be able to shrink this number down and perhaps even 
cut it in half?
    I mean we have got to have some objectives here. We want to 
be sure we have fair hearings, complete hearings, both fair to 
the taxpayer and fair to the beneficiary. What can we do, in 
the Congress? And as a sidebar to that, I would ask, did the 
funding that we made that Mr. Cardin pointed out, that was 
going to the continuing disability review, the tripling of that 
budget, did that have any impact on this at all?
    Mr. Apfel. The funding for the continuing disability 
reviews had only a very, very small implication here. About 2 
percent of the cases handled at the hearings level are appeals 
of decisions on continuing disability reviews. So, there is 
only a tiny amount of impact from the continuing disability 
reviews on the hearings process workloads.
    Our goal is to cut processing time in half between 1997 and 
2002 and we are on track to move in that direction. I think 
that what I would urge from the Congress is adequate funding to 
be able to continue to move forward on our activities and 
continued oversight. I think this is one that will continually 
need time, hearings, focus and attention as we move forward on 
these activities.
    I applaud the need for hearings. I would also urge the need 
for resources because if the resources are not there, it will 
be hard to do the things that we want to be able to do.
    So, there is not a change in law that is necessary in this 
process except for one, and it's a small one but it's an 
important one, Mr. Chairman. That is our Administrative Appeals 
Judges, by law, are paid less than our Administrative Law 
Judges. It might sound like a small thing, but--because that is 
actually later in the process--you kind of expect that their 
pay would be the same or better.
    We have a sizable turnover at that appellate level and 
actually half of the judges at the Appeals Council have only 2 
years of work experience. What we have proposed is legislation 
to assure that that group of appellate judges be paid at the 
same level as our Administrative Law Judges. I think that will 
lead to greater retention in that area, as well. I think it 
would be an important legislative step to help move the process 
forward and to strengthen the appeals process.
    Chairman Shaw. Better pay gives us better judges, is that 
what you are saying?
    Mr. Apfel. Well, better pay gets us potentially less 
turnover.
    Chairman Shaw. OK.
    Mr. Apfel. And better pay gets us greater stability of a 
work force, which I think would help us.
    Chairman Shaw. There is a vote on the floor at this time. 
So, we are going to have to recess for a moment. Chairman 
Johnson will be back and she will be recognizing Mr. Cardin as 
the next questioner.
    We will be at recess for just a few moments.
    [Recess.]
    Chairman Johnson. While my colleagues haven't returned, in 
the interests of time, I'm going to go ahead with some 
questions that we had discussed among ourselves and believe 
need to be on the record, and if you would, please, respond?
    The Social Security Advisory Board has raised the issue 
that the teamwork in the Social Security system is inadequate 
among the various components with the responsibilities for 
determinations and management of the cases.
    To quote from them, they say,

    Disability is the area in which the need for better teamwork is 
most manifest. The administrative arrangements for determining 
disability have always been fragmented.

    In addition, under SSA's current structure, nearly every 
staff component of the agency has a role in administering the 
disability programs. The multiplicity of offices involved in 
the administration of the disability programs makes it 
inherently difficult for them to work together in a coordinated 
and cohesive way. Their interests and mission vary and there is 
no management mechanism to bring them together.
    Now, my question to you is, do you believe this is a fair 
assessment of SSA's management of the disability programs and 
how would you correct it? Now, the urgency behind my question 
though derives from my long experience over the last 15 years 
from the changes that have gone on in manufacturing, the 
changes that are going on in medicine, if you look at every 
sector of our economy, the dramatic difference between today 
and yesteryear is teamwork. Quality, productivity have all 
emerged to be attainable at levels never before anticipated as 
a consequence of teamwork.
    So, as an agency that is structured on the old assumptions, 
how do you anticipate improving teamwork and what do you think 
of the Advisory Board's comment?
    Mr. Apfel. I think there is some truth to the comment. I 
believe that better communication and better teamwork is going 
to be a key to us to resolve the disability issues. The Social 
Security Administration--and this is something that many people 
do not realize--is increasingly a disability agency. Increasing 
proportions of our work force are involved in the disability 
front.
    That will continue, I believe, for the foreseeable future. 
Since I became Commissioner, I have strongly voiced the need 
for one Agency as opposed to separate stovepipes within the 
organization. The importance of trying to break down ``the them 
versus us'' in this organization is critical. It is in every 
organization, I believe, critical to try to break down 
stovepipes to get less ``them versus us'' and more ``us,'' as a 
team, getting the work done.
    I think we've made significant progress in this area in the 
implementation of the disability management plan. Moving 
forward to bring people together from the hearings process, the 
field process, and the State process, together, to resolve how 
to move forward as an organization, I think we have seen 
significant improvements here. More to do? Absolutely.
    But I think we are on the right path toward greater 
teamwork and fewer stovepipes through the organization.
    Chairman Johnson. Of course, good teamwork is, in part, a 
matter of communication and interest in teamwork.
    It is also almost geographic. Again, I have been absolutely 
stunned by the extent to which this can work--I was in a 
factory recently that was on the rocks the last time I was 
there and now is booming along. And, you know, one of the young 
women employees, said, ``This has just been terrific.'' She 
said, ``I just decided what I wanted to do and talked it over 
with my friends and we've rearranged ourselves physically. So, 
all we have to do is lean over and communicate with each other.
    I don't know that you can really attain the goals of 
improved teamwork without a geographic reorganization of desks 
and people. But one of the things that has been disappointing 
to me and some things that have been going on in OSHA is that 
when I ask the local people, were you a part of this reform, 
the answer is, no. So, again, it's really hard for a 
bureaucracy as big as the United States government's 
bureaucracies to try to change from the bottom up. But I would 
say that in the end teamwork only matters in the office, that's 
where it's most powerful.
    So, I don't know what you are thinking of or what the 
challenges are that you face, in terms of integrating the 
functions at the local level. But I can't imagine that you can 
make the level of change that is necessary without both 
structural changes as well as leadership changes. And I do 
commend you on the focus on this issue from the leadership 
level.
    Mr. Apfel. Well, at the geographic level, I believe that 
where our field offices have greater connections with the State 
Disability Determination offices, there is a greater alignment 
of mission. I don't think it makes sense to consolidate those 
offices, of the State facilities as well as the Federal 
facilities. I think, that to the extent that it could be done, 
in some areas it could be helpful but there is a specific State 
role as well as a specific Federal role that I think needs to 
be continued.
    I think that we should be funding States for the initial 
process and that should continue and at the Federal level 
having our hearings office handle the hearings process.
    I don't think it makes sense to combine one funding stream 
or to have one office do the whole process. But what that does 
is create significant strains and it creates a tremendous need 
for better communications since some activities are funded at 
the State level, some through our field office structure and 
some through hearings offices. So, it is a major challenge that 
you have identified and I agree with you. I think communication 
and teamwork is going to be key to that.
    Chairman Johnson. There were 16 recommendations made by the 
Advisory Commission with priority given to five of these. They 
are development and implementation of an ongoing joint training 
program for all adjudicators, development of a single 
presentation of disability policy binding on all 
decisionmakers, development and implementation of a quality 
assurance system that will unify the application of policy 
throughout the system, improvement in the quality of medical 
evidence that is used in determining disability claims and 
development and implementation of a computer system that will 
provide adequate support to all elements of the claims process.
    Do you agree with these recommendations and have you 
implemented any of them?
    Mr. Apfel. Our disability management plan that was released 
in March addresses every one of those areas and more as needs 
for improvement. The quality assurance, automation, every one 
of the areas that were listed by the Advisory Board, are areas 
that I believe are very important activities for us to work on.
    Our plan addresses every one of those areas. We are moving 
ahead on every one of those areas and as I said, even more.
    Chairman Johnson. One last question and then I will turn to 
my colleague, Mr. Cardin to proceed.
    Administrative expenses are currently subject to the budget 
caps. What is the administration's and your agency's view of 
removing the Social Security administrative expenses from the 
discretionary caps?
    Mr. Apfel. Well, first, I would point out that through the 
actions of this Committee working with the Administration, 
working with me, we established about $400 million of our 
administrative dollars to be outside of those caps and that is 
the continuing disability review fund. And I was very 
supportive of that activity.
    I must say that the Administration and the Congress have 
not yet taken a position on whether the Social Security 
administrative costs should be outside of the cap. But as the 
Commissioner of Social Security I personally would prefer to 
see our administrative costs, in total, being outside of the 
caps. I think it does create very tough pressures on us and as 
we see workloads emerge in the future, I would prefer to see us 
outside of those caps.
    Chairman Johnson. Could you give me an example of how that 
flexibility would help you?
    Mr. Apfel. Well, if we look to the future we see sizable 
workload pressures--the aging of the America, the increase in 
disability cases because of the aging of the American people, 
is going to create some real strains on our system and it would 
seem to me that automation will be clearly part of our long-
term solution for that. Understanding what those resources are 
going to be, I would prefer to see us outside of the caps.
    Chairman Johnson. So, with the greater number of aged and 
the greater chronic debilitation that we are going to face, you 
believe that you could respond more efficiently and more 
effectively if you had control over your administrative costs?
    Mr. Apfel. Well, I also believe that it does not 
necessarily have to reduce the role of the Congress in 
overseeing the size of the budget. That could be determined 
through the ongoing process with the President's budget request 
as well as with the Congress.
    Chairman Johnson. In other words, they could still be 
appropriated?
    Mr. Apfel. I would prefer it, personally, I would as 
Commissioner.
    Chairman Johnson. Thank you.
    Mr. Cardin.
    Mr. Cardin. Thank you, Madam Chairman.
    Let me just follow-up on that because I agree with you. It 
seems somewhat hypocritical that Congress is taking the Social 
Security trust fund's or Social Security off-budget and yet the 
administrative costs are still subject to the budget caps. And 
then this year, there seems to be a new-found belief that we 
shouldn't even borrow from the Social Security trust fund for 
the purposes other than Social Security.
    So, it would seem to me it's inconsistent for us to make 
your administrative budget subject to the caps. And as you 
point out, Mr. Apfel, that does not mean you can spend what you 
want to spend, you only can spend what is appropriated. You 
still have to go through the discipline of a budget process, 
but it would not be subject to the arbitrary caps that really 
should not apply to your agency under the other fiscal policies 
of our country.
    So, I agree with you on that and I hope that we can make 
some bipartisan progress on that issue.
    The Chairman, Chairman Shaw mentioned the tripling of the 
budget for the continuing disability reviews. And I notice in 
your statement that we have been successful in that regard in 
that you have processed almost, in fiscal year 1998, you 
processed almost 1.4 million periodics, CDRs, more than twice 
the number of 1996. And, as a result of that, we saved $4 
billion by people who shouldn't be on disability being removed 
from the rolls.
    So, I applaud that effort and I think it just goes to show 
that if you get the resources you need it can be in our 
financial interest as well as treating our citizens properly.
    And I guess the point that I raised in my opening statement 
and I want to make sure that it is clear on this, is that you 
have not--as far as your administrative support for processing 
people to come onto the disability rolls, not for people to 
come off of the disability rolls and for people to come onto 
the disability rolls, there certainly hasn't been any increase 
in your tripling of your administrative budget in that regard. 
Am I correct on that?
    Mr. Apfel. You are correct. There have been increases and I 
think they have been invested wisely in those activities. But I 
would point out, Mr. Cardin, that this issue is a very relevant 
issue because it deals with what our appropriation will be for 
this coming year. And over the next 12 months carrying forward 
on many of the endeavors that we are talking about here today, 
adequate resources would be helpful to be able to move forward 
on many of the activities that are before the Social Security 
Administration.
    Mr. Cardin. Thank you.
    Let me point to one area where I think resources does make 
a difference. And that is, as you have pointed out, we have a 
serious problem at the appeals council level. This is the level 
on appeals between the administrative determinations and moving 
onto the Administrative Law Judges. And, currently at that 
level, someone who may be entitled to benefits has to wait over 
a year for that process to be completed. You pointed out, in 
both your written and in your statements here, the disparity on 
the salary levels between appeals council judges and 
Administrative Law Judges and that we have lost nearly half of 
our 28 judges on the appeals council.
    It seems to me that has to be an issue that is affecting 
the number of days and I would just appreciate your comments as 
to whether that is one action that we could take that could 
help in regards to that delay?
    Mr. Apfel. That is very much one action that would help. I 
believe greater stability of that organization in terms of its 
appeals judge work force would be helpful. That legislation 
would be one step that would be needed.
    I think there are other steps that we can take and I have 
outlined those in my testimony. I think we are going to need 
even more than that. We are developing a plan that we want to 
have developed and published by the end of this year that goes 
beyond the steps that I have outlined in my testimony. It is 
not yet ready to be made public because it has not been 
finalized. But I think several steps are going to be necessary 
at this stage.
    I would point out that very few cases get to that final 
step. As the Chairman pointed out, we are dealing with a very, 
very small percent of cases. About 80 percent of the cases are 
decided at the initial level, they don't go on to the hearings 
process.
    So, because it's a very small activity, I think, we can see 
some significant change in that last step of the process 
because the numbers are not that large. There aren't that many 
cases that are moving to that part of the process.
    Mr. Cardin. So, sure, to summarize, as you pointed out, the 
initial determination, you think you are pretty close to the 
reasonable time necessary to make sure that you get all the 
information you need and to make the correct decisions 
considering the volume that you expect will be applying for 
disability. We are not too far off, the number of days that you 
would consider to be reasonable.
    But at some parts of the process you are in the process of 
making structural changes in order to streamline the process 
and resources will also play a role, is that a fair summary.
    Mr. Apfel. It is, Sir. I think we are about halfway along 
on where we need to be in the appeals process and we have a 
long way to go on that final appellate step.
    Mr. Cardin. Good.
    One other question I would like to ask and that deals with 
the decision of the U.S. Postal Service that they may no longer 
rent post office boxes to persons without Federal 
identification. I raise this issue because there have been some 
private groups that have raised a concern of our seniors, 
particularly in high-crime areas, that use safety deposit boxes 
to receive their disability checks, could be at jeopardy during 
the transition to this new policy.
    And I guess my question to you or at least my comment to 
you is that I would hope that you would review this situation 
and perhaps work with the Postal Service to make sure that 
seniors are not going to be disadvantaged during this period of 
time and that we can have a smooth transition or a way to make 
sure that they receive their checks timely.
    Mr. Apfel. I first heard about this issue today, Mr. 
Cardin, and it does strike me as an area that could create some 
significant problems potentially for some of our beneficiaries, 
particularly our SSI beneficiaries. I think there are about a 
million SSI beneficiaries who do have Post Office boxes, and I 
don't know how many have photo IDs.
    So, we will be reaching out to the Postal Service today to 
express our reservations and see what can be done to assure 
continued and fair access to services for our Nation's seniors 
and disabled Americans.
    Mr. Cardin. Thank you, Mr. Apfel.
    Thank you, Mr. Chairman.
    Chairman Shaw. Mr. McCrery.
    Mr. McCrery. Thank you, Mr. Chairman.
    And, thank Commissioner Apfel and Dr. Daniels for your 
testimony and continuing to work with us to try to improve on 
our disability programs. Mr. Chairman, I don't have any 
questions but I do want to submit for the written record of the 
Committee two reports done by the bipartisan Social Security 
Advisory Board. No. 1, in August 1998, entitled, ``How SSA's 
Disability Programs Can be Improved'' and another in September 
1999, ``How the Social Security Administration Can Improve Its 
Service to the Public.''
    These are both excellent reports and I think they ought to 
be in the record of the proceedings of this Committee.
    Thank you.
    Mr. Apfel. Mr. Chairman.
    Chairman Shaw. Without objection.
    Mr. Apfel. Actually I don't think I have asked this yet, 
but I ask that my written testimony be submitted in the record 
and also the two reports that we did on the hearings process 
improvements and disability process improvements also be 
included in the record.
    Chairman Shaw. Without objection, all of the reports just 
mentioned by Mr. McCrery and by the Commissioner will be made a 
part of the record.
    [The reports mentioned by Commissioner Apfel are being 
retained in the Committee files.]
    Mr. Apfel. Thank you, Mr. Chairman.
    Chairman Shaw. Mr. Doggett.
    Mr. Doggett. I have no questions, Mr. Chairman.
    Chairman Shaw. Mr. Portman.
    Mr. Portman. Thank you, Mr. Chairman.
    Thanks for having this joint hearing of the Subcommittee. 
Commissioner, thank you for being here and for the work that 
you are doing to try to reform and improve the disability 
system.
    I guess I just have a general question and it is one that I 
have had ever since being on the Social Security Subcommittee. 
When you look at the program from a big picture perspective, 
you find that about two-thirds of the appeals are being 
granted.
    And I guess that is still true according to SSA. Those are 
your numbers. They are going down a little. What is your number 
now? How many of these appeals are being granted?
    Mr. Apfel. As recently as 1995, 64 percent were being 
overturned and decided favorably at the hearing level and in 
1998 it was 53 percent. During that same period of time, we 
have seen an increase in the allowances at the initial level 
from 30 percent to 35 percent. I think we will, over time, see 
a continued alignment in that general direction.
    Mr. Portman. I like the trend. I would still say that 53 
percent is unacceptable. And, you know, there is an old saying 
which is, we never seem to have time to do it right but we 
always have time to do it over.
    The problem with that is that it costs time and money and 
it's taxpayer money and I guess my sense would be, again, some 
of these appeals are probably rightly decided. But it suggests 
strongly to me that at the initial intake stage we need to do a 
much better job of having accurate information presented about 
the claimant's situation, look at it more clearly, treat these 
people more fairly, unless your appeals process is not treating 
them properly and be sure that we aren't wasting taxpayer 
dollars in having all these appeals and having more than half 
of them even still being granted.
    I think that is the one part of the system where, again, 
when you look at the big picture here, it seems to me we have 
the most opportunity for improvement.
    Mr. Apfel. Mr. Portman, I agree with almost everything that 
you said. I think that doing a better job at the front-end is 
going to be the cornerstone to having a better process, a much 
better process. I don't think that the 53 percent allowance 
rate is wrong. I don't think that the decisions by the judges 
are incorrect.
    Mr. Portman. Well, then you must think that at the intake 
side there are major problems since more than half of the 
decisions are being overturned.
    Mr. Apfel. Well, there are two things. No. 1, an improved 
front-end process, better information, and more solid case 
development will help. No. 2, as that process moves forward, if 
we can provide a better process at that front-end, I think we 
will see fewer allowances ultimately at the back-end of the 
process, fewer cases will be moving forward to that stage.
    Again, I am not at all setting targets for allowance rates. 
That is up to the independent Administrative Law Judges.
    Mr. Portman. Each case has to be decided on its merits but 
clearly there is a systemic problem.
    Let me ask you another question quickly if I might while we 
still have some time. This has to do with a question that is 
going to come up in a future panel and you will, unfortunately, 
be unable to respond. But in your testimony you say there are 
no plans to change the organizational structure of the office 
of the chief Administrative Law Judge, and I think you have 
confirmed that in correspondence with the Subcommittee. Yet, 
some of the witnesses we will hear from later today, and you 
can see it in their testimony, continue to be concerned about 
that.
    They are frankly not convinced that that is the case. Can 
you today tell us in more detail and on the record how you have 
reached your decision and what your plans are with regard to 
reorganization at headquarters?
    Mr. Apfel. Well, let me start off and I would like Dr. 
Daniels to follow-up. We need to strengthen the hearings 
process and to strengthen the management structure in the 
hearings process. All of our attention now is being focused on 
improving that at the hearings office level and through our 
regional offices. There is no plan to change the role or 
responsibility of the Chief Administrative Law Judge. So, there 
is no plan to do that and there has never been.
    But I would like Dr. Daniels to answer.
    Ms. Daniels. Yes. Like every rumor there is a nugget of 
truth here and the nugget is that the Commissioner continually 
asks his deputies to look for better and more efficient ways to 
do business. So, we're always having conversations about how 
can we improve and some folks, when asked that question, have 
some answers and others have different ones. But the 
Commissioner never received from the Office of Hearings and 
Appeals a recommendation to change the Office of the Chief 
Judge.
    But it is true that we're always thinking and talking about 
how to be more efficient in what we do. But his direction to us 
has been that we focus our energies on the hearings process 
improvement in order to make that process work and that is what 
we are doing.
    Mr. Apfel. So, there is no change being contemplated, 
period.
    Mr. Portman. Thank you.
    Thank you, Mr. Chairman.
    Chairman Shaw. I would suggest that your conferences be 
behind closed doors because it set off a firestorm of concern.
    Mr. Apfel. Welcome, to the life of the Commissioner of 
Social Security! [Laughter.]
    Chairman Shaw. Mr. McCrery.
    Mr. McCrery. Mr. Chairman, I wasn't going to ask any 
questions but Mr. Portman brought up something that I think 
needs further statements. And with respect to the issue of why 
there are so many claims, initial decisions that are 
overturned, the gist of the conversation I heard between Mr. 
Portman and Commissioner Apfel was problems at the lower level 
of the initial claims, and I am not sure that is the case 
necessarily, and two of the recommendations of the Advisory 
Board I think get to this point.
    No. 1, develop and implement an ongoing joint training 
program for all adjudicators and, No. 2, development of a 
single presentation of disability policy binding on all 
decisionmakers, both the initial claims at the disability 
determinations level and at the hearings and appeals level 
because I have heard from some of the disability examiners that 
they think some of the regs are being misinterpreted by the 
Administrative Law Judges and the ones above them.
    So, I am not sure where the problem is but I think part of 
the fix is to get them all in a room, you know, metaphorically 
speaking, and say this is the policy, you will abide by this 
policy.
    Mr. Apfel. If I could clarify. This is not at all a 
criticism of the job being done by the State DDSs. The State 
DDSs--and you will hear testimony today--do a very superb job 
given the resources that they have, given the complex laws that 
they have to administer.
    What is needed is a greater process unification so that 
everyone is singing from the same song page. Mrs. Johnson 
raised the issue of teamwork. It is centrally important, a 
feature to move forward with and I have gone all around the 
country discussing this issue. We have got to do joint training 
with the ALJs and our State DDSs so that there is an 
understanding and a confluence of agreement on policy.
    I would like Dr. Daniels to speak specifically about the 
steps that we are taking in this area. It is a very important 
recommendation that we believe in fully. It is going to be part 
of our solution for the long-term. I don't want to point 
fingers either way.
    Mr. McCrery. Nor do I. I just want to make it clear that 
there is a solution, I think, and I think the recommendations 
of the Advisory Board are good in that respect and I appreciate 
the Social Security Administration being willing to follow-up 
on those recommendations.
    Thank you, Mr. Chairman.
    Dr. Daniels, did you want to speak to that issue?
    Ms. Daniels. Well, Mr. McCrery, I just want to let you all 
know that we made a significant downpayment on that training 
effort over the last few years. We conducted training 
nationally for every single adjudicator in the disability 
program area on the five areas where we thought it would be 
most likely that there would be differences of understanding of 
the policy.
    So, the first downpayment has been made. That doesn't mean 
that additional training doesn't need to be developed and 
continued. And if you ask people about that training you will 
hear that they were very pleased with the outcome of the 
training, State DDS people together with the ALJs so that they 
were learning and discussing the cases together.
    Mr. McCrery. And are you continuing to pursue that? Because 
I am told that there was an initial splash but since then there 
has not been much done.
    Ms. Daniels. Well, that initial downpayment was quite 
extensive, but we are training all of the adjudicators when we 
issue new policy. So, we are doing--we are continuing to 
broaden that but, of course, the continuing efforts are not as 
big as that first downpayment.
    Mr. McCrery. OK. Thank you.
    Chairman Shaw. Commissioner, I would like to follow-up just 
1 second on the question of the training. As you know, and I 
advised you that this question was coming regarding Congressman 
Callahan recently--he has brought to my attention--the matter 
of the training program, the ALJ training, which occurred 
during a 3-day period in late September in Orlando, Florida. 
And due to the short lead time there were 1,206 hearings that 
had to be rescheduled. And while 11 percent of those were 
rescheduled to an earlier date, the remainder were rescheduled 
to a later date. So, over 1,200 individuals, who believed that 
they were unable to work and who were likely experiencing 
personal financial difficulty, were asked to wait an even 
longer time and this was perhaps even 3 months longer to have 
their claim heard, so, that the Atlanta judges could attend 
training.
    It seem to me that the training programs that are necessary 
should be scheduled in advance so that the scheduling of the 
hearings could be made around that program. I understand this 
was called on very short notice. Perhaps you might want to 
comment on that because I think that does impact directly on 
the amount of service and the quality of service that we are 
getting to the beneficiaries.
    Mr. Apfel. Thank you, Mr. Chairman.
    Well, we always do training and that is important and that 
will mean that when we do training there can't be a hearing 
scheduled. But I think in this situation it was called very 
late in the process. There is a need for us to do a much better 
job of providing adequate lead time when training is----
    Chairman Shaw. Who called the training?
    Ms. Daniels. Yes. The regional Chief Judge was able to 
finalize the arrangements for that training and it was a very 
excellent training. Actually, I attended one of the days and it 
was a very well received and highly motivating and informative.
    Chairman Shaw. I'm not commenting on the quality of 
training or the need for training but it seems that the policy 
is bad if the Chief Judge can all of a sudden decide that he 
wants to go down to Orlando and call a training program and 
really uproot a lot of the appeals that are already in process.
    Mr. Apfel. We need to make sure that the training is 
scheduled far enough in advance to assure that hearings are 
scheduled appropriately.
    Chairman Shaw. Mr. Hulshof.
    Mr. Hulshof. Thank you, Mr. Chairman.
    Mr. Commissioner, welcome, Dr. Daniels thank you for both 
being here. As the Chairman mentioned in his opening remarks 
and as the gentleman from Maryland also echoed in his statement 
regarding ``Ticket To Work'', what a great celebration we have 
this week to come together in an overwhelming vote, bipartisan 
vote to really try to remove some of the barriers and obstacles 
that are in the place of those with disabilities who want to 
return to work.
    And, Commissioner, I remember in the last session of 
Congress you were in front of us when the former chairman, Mr. 
Bunning, now in the Senate, and I think because of your 
willingness to show support for that ``Ticket To Work'' 
provision that we were able to forge a good, strong bill which 
I think we improved in this year's version that passed 412-to-
9, I think it was a better bill than we had last year.
    But you mentioned, I think, in your testimony that this is 
a good first step and what I guess I want to follow-up on is 
what are steps two, three and four? I mean where do we go from 
here or maybe you could clarify a little further what you meant 
by just a good first step?
    Mr. Apfel. Mr. Hulshof, what I said was I'm not sure what 
the next steps are but I know it's only a good first step. And 
the reason why I say that, Sir, is that I'm looking forward, as 
soon as possible, to a Rose Garden signing. I think it is very 
important to see that legislation be enacted into law for the 
sake of America's persons with disabilities.
    When 2 years from now, this Committee is looking and 
saying, how many people are returning to work, there will be 
more, but it won't be enough. And what we have got to find ways 
to do in the disability programs is to create greater 
incentives for people to return to work. We are also going to 
need to find ways to help employers bring individuals into 
their labor force. It is going to be both individual incentives 
as well as employer incentives, I believe. I don't have the 
answers yet. My focus has been on the Ticket and on the health 
care expansions, which I think are so critical.
    But I believe that this will be a focus of this Committee's 
activity for years and years to come. Particularly as we see 
the aging of America, and the new technology that is coming out 
to assist persons with disabilities to be able to lead a more 
self-sustaining life. We are going to be focused on this 
activity year-in-and-year-out. I believe this Committee will be 
focused more and more on this issue in the future. I don't have 
the answers yet. I have been focused very singularly on the 
enactment of that legislation but this will be an issue for all 
of us to find ways to help both employees and individuals.
    Mr. Hulshof. Well, as in the course of the months ahead if 
you wake up in the middle of the night and that light-bulb 
comes in, please, make sure that you jot down those thoughts 
because I do hope that we can continue to look for ways to 
provide some incentives. I know that the health issue which has 
been one of the greatest hurdles or obstacles where those with 
disabilities are afraid of losing health insurance, the whole 
idea of the income cliff, which we now have the demonstration 
project, assuming that this present version is signed into law, 
and I think even just maybe the lack of consistency, as one of 
my constituents who sat where you are earlier this year and 
said, you know, I go to the State vocational rehabilitation 
office and they ask me, can I work? And I have to tell them, 
``yes, I can,'' in order to qualify for their services. And, 
yet, then I go to the Social Security office and in order to 
qualify for SSI or SSDI they ask me can I work? And I have to 
say, ``no''. And, so, you're giving inconsistent answers just 
to try to get those services. So, I think that consistency is 
important.
    Let me ask you this question because, again, we have a 
unique world we work in and often that is, where do we find the 
revenue offsets to pay for certain things. And I know there is 
a witness coming behind you, Judge McGraw testifying on behalf 
of the Federal Bar Association, about this 6.3 percent fee that 
we are now going to be charging. The testimony of Judge McGraw 
is that that administrative fee might discourage involvement by 
members of the Disability Bar in Social Security disability 
cases which concerns me a great deal. What response do you give 
to those who make that claim?
    Mr. Apfel. First, I would say that I believe that user fees 
are appropriate in many cases and this is one. The handling of 
payment of attorney's fees cost the Social Security 
Administration about 400-work years. It seems to me to be a 
legitimate activity for a user fee and I applaud the action of 
the Committee in this area.
    I would say specifically that the legislation also ensures 
that those costs are not passed on to beneficiaries by law, 
which I think is key. I also do not believe that it will create 
a significant disincentive for the legal community to handle 
these cases. It is, after all, a 6.3 percent, roughly a 6.3 
percent fee. So, I don't think that the size of it is adequate 
enough to create a disincentive. The legislation addresses 
whether it will be passed on to the beneficiary; it will not be 
by law. And given our needs for resources, as an agency, 
creating a user fee in this area will help us pay for that 400-
work years that we spend on this activity.
    Chairman Shaw. Just to follow-up on that and I am about 
ready to let you go. I have heard complaints from the legal 
community as to the length of time it takes for them to be 
paid. At the end of the adjudication, how long do the lawyers 
have to wait for their fee, for which they will be paying us a 
fee for administrative costs, in seeing that they are paid?
    Mr. Apfel. We have no direct measurement of attorney fee 
processing times, but generally, attorney fees are paid within 
90 days of the date of the award notice of the claim. Cases 
that do not require additional development can be completed in 
less time.
    I will provide the specific number for the record, Mr. 
Chairman, but I can tell you this, it's too long. It is too 
long. And one of the things that I believe that needs to be 
done with the enactment of a fee is a commitment that we will 
assure that those payments take place faster than they do now. 
Given resource constraints it is----
    Chairman Shaw. I am not going to ask you to answer this 
question now, but perhaps you would answer it within the next 
few days, because it might be critical. Would it be reasonable 
or possible to say that if the fee is not paid within 45 days 
that the administrative costs would be waived or at least 
decreased?
    Mr. Apfel. I cannot answer that at this point in time.
    [The following response was subsequently received.]

    The President's FY 2000 budget requested that the funds 
from the 6.3 percent attorney fee assessment be deposited to 
SSA's Limitation on Administrative Expenses (LAE) account. The 
intent is to use the funds raised by the fee to improve the 
administration of the payment process. I hope that the Congress 
will support it.
    Assuming that the Social Security Administration receives 
the fiscal resources to implement this proposal, it would be my 
objective to reduce the attorney fee processing time as much as 
possible consistent with maintaining the program's integrity.

    Chairman Shaw. I am not asking you to answer it now because 
I don't want you to get out on a limb with that one.
    Mr. Apfel. You have told me something very important that I 
will address very, very carefully as you move toward 
conference.
    Chairman Shaw. I think it is reasonable that we are 
charging the fee and I have no problem with charging the fee. 
However, I think it is also reasonable that if we are charging 
the fee that we provide good service and I think that is 
tremendously important.
    Commissioner, I appreciate your testimony. You do a good 
job. Our job on our oversight is to look for the warts, point 
the warts out and try to make some corrections. I certainly 
hope that you will do all you can to shorten the process.
    By the way, you mentioned the pay level of appellate 
judges. What do the judges, the lower judges and the appellate 
judges receive in compensation?
    Mr. Apfel. The maximum salary for the Administrative Law 
Judge is $125,900. The maximum salary for the Administrative 
Appeals Judge is $104,800.
    Chairman Shaw. They both have life tenure subject to 
removal, don't they?
    Mr. Apfel. Well, ALJs can only be removed through a process 
through the Administrative Procedures Act and the Merit Systems 
Protection Board and about maybe 10 or so have been removed 
over the last decade.
    Chairman Shaw. But I mean they don't have to worry about 
being thrown off every time we change administrations?
    Mr. Apfel. No, Sir.
    Chairman Shaw. So, they do have some pretty good security 
and I assume there is also a good pension program that is in 
place for them.
    Mr. Apfel. There is.
    Chairman Shaw. So, do you know the reason why the appellate 
judges are paid less? They are all lawyers are they not?
    Mr. Apfel. Well, it goes back to the law when the ALJs' 
salaries went up and this was an issue that was missed nearly a 
decade ago. When the ALJs' salaries were increased the Appeals 
Council Judges were not, so, we are trying to clean up that and 
create a new incentive for the Administrative Appeals Judges.
    [The following response was subsequently received.]

    We estimate the cost of the Administrative Appeals Judge 
salary parity legislation, if enacted, will be negligible or 
less than $1 million.

    Chairman Shaw. Well, perhaps we can also be supplied with 
the revenue impact of giving them the salary increase.
    Thank you very much for being with us.
    [Questions submitted by Chairman Shaw, and Commissioner 
Apfel's responses, follow:]

Responses from Kenneth S. Apfel to Questions from Chairman Shaw

    Question 1. Disability Claim Manager: One witness alleged that, 
despite the ``screaming success'' of new disability claims manager 
positions, SSA is less than fully committed to proceeding with the 
position. What is your response? Please provide a full report on the 
status of the DCM initiative.
    Response. SSA is fully committed to testing the effectiveness of 
the DCM position. The DCM Test, by design, is being conducted in two 
phases over a three-year period. Phase I began in November 1997 and 
ended in June 1999. Phase II testing started November 1, 1999. We used 
an independent contractor, The Lewin Group, to help us assess the first 
phase of testing and provide recommendations for the configuration of 
the second phase of testing, the formal evaluation period. Their final 
report concluded that the DCM is a ``viable'' approach to processing 
claims, in the limited sense that certain key outcomes were within the 
ballpark of outcomes under the current process.
    During Phase I, DCMs were operating in a controlled environment, 
which focused on training, both formal and on-the-job (OJT) for state 
and federal DCMs. Phase I was not intended to provide a statistical 
basis for a formal evaluation, as DCMs were still trainees working with 
coaches. While the Phase I findings showed some positive indicators, it 
is premature to draw any conclusions.
    The information obtained during the first phase of testing serves 
as the basis for conducting Phase II of the DCM Test. Phase II testing 
is designed to assess the DCM process in a more realistic work 
environment within a formal evaluation construct. We are currently 
finalizing the evaluation plan. Phase II is scheduled to run at least 
through September 2000 and includes 36 DCM units, comprised of almost 
200 DCMs, operating in 15 states.
    In this second phase, we are collecting data to evaluate quality, 
processing time, employee and customer satisfaction, and cost 
effectiveness. Results will be presented in a report in late 2000. 
After the DCM Test concludes, we expect to have the valid test results 
needed to determine our next steps to improve the initial disability 
claims process.

    Question 2.  Hearings Process Improvement: Several witnesses 
expressed concerns that key stakeholders were not involved in designing 
the Hearings Process Improvement initiative. Please respond, especially 
in light of your stated commitment to teamwork in making such changes.
    Response. In September 1998, Susan Daniels, Deputy Commissioner for 
Disability and Income Security Programs, commissioned an HPI workgroup 
to survey current hearing office procedures, looking closely at 
processing delays and queue times. The workgroup was comprised of 
individuals representing the broadest possible range of high-level 
internal stakeholders. The involved unions (AFGE and NTEU) and the 
Association of Administrative Law Judges (AALJs) received extensive 
briefings in October 1998. The workgroup drew on the expertise and 
experience of numerous other individuals within SSA and OHA in crafting 
the HPI vision, which was conveyed to all stakeholders (including all 
OHA employees) in January 1999.
    An HPI ``Process Action Team'' (PAT) was formed in the spring of 
1999 to carry out the HPI vision, under the guidance of OHA's 10 
Regional Chief ALJs (RCALJs). During the successive months, there were 
many briefings, meetings and other communications with stakeholders. 
These included presentations to the AALJ's Board of Directors in April 
1999 and at the AALJ's conference in July 1999, and extensive feedback 
from Regional Management Conferences. The Commissioner's HPI report was 
released in August 1999 to all stakeholders, including unions, the 
AALJs, SSA and OHA management and management associations, all OHA 
employees, and the National Organization of Social Security Claimants 
Representatives (NOSSCR), soliciting their comments and reactions.
    More than 3,000 comments, suggestions and questions were 
subsequently received by the HPI team, and considered in developing the 
HPI process plan, process guides, position descriptions, and training 
plan. Agreements were reached with AFGE and NTEU in late summer 1999; 
these unions were invited to participate in the development of the HPI 
``process guides'' and in the process orientation conducted during the 
fall of 1999.
    Ongoing two-way communication between the HPI team and stakeholders 
has been strongly and actively encouraged during the past year. 
Questions and information about the development of the HPI initiative 
have been continuously received from and provided to OHA employees and 
other stakeholders by E-Mail, newsletters, flyers, ``question and 
answer'' issuances, interactive video training (IVT), and the OHA 
Website. In addition, members of the HPI team spoke at Regional 
Judicial Conferences in August and September 1999; briefed the 
Executive Director of NOSSCR in August 1999, the OHA Managers 
Association in September 1999, and the newly-formed ALJ's Union in 
November 1999. They also addressed the NOSSCR membership at a 
conference in November 1999, and visited numerous Hearing Offices to 
discuss HPI with the employees and managers.

    Question 3. Attorney Fees: How long does it take to process 
claimant benefits when payment of attorney fees is involved? 
Specifically, what share take longer than 1 month to process? 3 months? 
6 months? 12 months? Do claimant benefits and the attorney fee check go 
out at the same time? How long does it take on average for SSA to 
process attorney fees at present? Specifically, what share take longer 
than 1 month to process? 3 months? 6 months? 12 months?
    Response. The majority of cases involving payment of attorney fees 
are decided at the hearing level. The average processing time for these 
cases from date of decision to payment effectuation/award notice to the 
claimant is about 30 days. Data are not available that break out the 
share of attorney-involved cases according to the time frames above. 
Until recently, SSA was required to provide a 15-day administrative 
review period after the receipt of the award notice, whereby the 
claimant, representative or the Administrative Law Judge or other 
adjudicator are allowed to review the case and either request a 
decrease or increase in the maximum fee that had been approved. This 
requirement delayed the processing of attorney fees by at least 30 days 
after the date the claimant received past-due benefits. In addition, 
SSA cannot calculate the past-due benefits due to the claimant and pay 
the attorney until all development is complete. In some cases, current 
benefits only are paid to the beneficiary, pending completion of 
development.
    We have no direct measurement of attorney fee processing times, but 
generally, attorney fees are paid within 90 days of the date of the 
award notice of the claim. SSA estimates that we will save 
approximately 30 days on most cases--the 15 day waiting period and an 
additional 15 days of mail and routing time.

    Question 4. Adjudication Officer: Why was this project terminated? 
How much was spent on it? What lessons, if any, were learned?
    Response. The Adjudication Officer's (AO) role was intended to be 
the focal point for all prehearing activities. The AO was responsible 
for: explaining the hearing process to claimants and their 
representatives; working with claimants and representatives to ensure 
the case was ready for hearing; fully developing the issues; preparing 
a summary of evidence for the representative and Administrative Law 
Judge (ALJ); and making fully favorable decisions where warranted by 
the evidence. In theory, this should have substantially reduced the 
time for the claimant to navigate through a long hearings process. For 
those cases in which the AO rendered allowance decisions (15 percent), 
processing time was substantially reduced for the claimant. AOs 
forwarded the remaining 85 percent to the ALJ for hearing. It was at 
the ALJ level where the Agency hoped to have substantial savings in 
service to the public (case better prepared to go to hearing) and to 
recoup the AO resources invested. Substantial savings were never 
realized at the ALJ level, thus failing to make the AO process 
efficient.
    Costs for the AO test were primarily related to long-term travel 
for participating staff and averaged between $2-3 million per fiscal 
year of the test (11/95-9/99).
    Although results from the AO test did not support the levels of 
efficiency needed for national implementation, lessons and experience 
from the AO test were used in the development of SSA's Hearings Process 
Improvement Plan. Additionally, AOs continued to provide processing 
support to hearings workloads during the duration of the test. Specific 
lessons learned from the AO process included:
     Allowing ALJs to focus on holding hearings and deciding 
cases. The AO being the focal point for all prehearing activity 
provided ALJs with additional time to focus on holding hearings and 
deciding cases. In addition, AOs reduced the number of hand-offs in the 
hearing office and increased the level of accountability since they 
were the prehearing focal point. However, the AO did add another step 
in the hearing office workflow.
     The paramount importance of a timely held hearing. The 
AO's primary function was to fully develop the record so that the case 
would be ready to be heard by an ALJ. If cases are not heard in a 
timely manner, the development becomes dated, resources are wasted, and 
redevelopment is generally required (double effort). No matter who 
develops the record for the ALJ, if hearings are not held in a timely 
manner, the Agency runs the risk of wasting valuable resources.
     Onsite Feedback Process (OFP), designed by the Appeals 
Team as a cross-component process in which individuals with 
decisionwriting experience provided AOs with immediate feedback on 
their decisions prior to release. The process made a significant 
contribution to the increase in the quality of AO decisions. The OFP is 
being used as a model to bolster the quality of other processes at the 
hearing level.
     Document Generation System (DGS) was developed by the 
Appeals Team and Office of Information Management (OIM) to convert the 
antiquated WordPerfect macros into a Microsoft Word process. DGS 
incorporates templates that propagate information into hearing level 
decisions and can substantially reduce the time it takes to write a 
favorable decision. This system has been adopted for hearing office 
use.
     Intercomponent Communication and Cooperation continues as 
a key to the success of any Redesign initiative. AO sites which had 
established a close working relationship with their hearing office(s), 
Disability Determination Services, Field Offices, and Regional Offices 
were the most successful in terms of providing a product that was of 
benefit to the ALJs, as well as having direct bearing on AO quality and 
productivity.
     Process Unification was successful at AO sites. The field 
offices, hearing offices, and DDSs, which were jointly involved in the 
AO project, gained a valuable perspective of each other's respective 
roles in the disability process. The location and assigned mission of 
the DCM position within the disability process provided the AO with a 
unique opportunity to bridge the gap that has long existed between the 
various components that administer the disability process, and 
demonstrated significant success in doing so. Process unification 
efforts continue to be a priority for the agency.

    Question 5. Appeals Council: Please provide background about the 
Appeals Council, including why certain positions were set up the way 
they are. What is the justification for the pay raise? Is it true that 
judges at the Appeals Council level have less training and experience 
than those at the Administrative Law Judge level below them? Why? 
Should this be changed? If so, how?
    Response. The Administrative Law Judges (ALJs) are appointed 
through an OPM register under the Administrative Procedure Act (APA) 
and they have APA protection. The Administrative Appeals Judges (AAJs), 
on the other hand, are appointed by competitive application, and while 
they exercise independent judgment, they are an instrumentality of the 
Commissioner of Social Security, acting on direct delegation from the 
Commissioner, and they are not subject to the same protection. Prior to 
the passage of the Federal Employees Pay Comparability Act (FEPCA) in 
1990 (PL 101-509), the members of the Appeals Council AAJs and the ALJs 
were all compensated at the same level (GS-15). FEPCA created the ALJ 
pay scale, and drew all Federal APA Administrative Law Judges into its 
aegis. The Appeals Council AAJs were not included in FEPCA, and they 
remain compensated at the GS-15 pay level. The Appeals Council AAJs are 
the only appellate tribunal in the Federal government who are paid less 
than the hearing-level judges whose decisions they review. Recently, 
efforts to rectify the disparity legislatively have been supported by 
SSA and OPM.
    The training and professional experience required for appointment 
of AAJs and ALJs are substantially the same. Although the appointments 
to the Appeals Council are made by the Commissioner of Social Security 
through a competitive process and appointments of ALJs are made from a 
competitive register maintained by OPM, the qualifications for the AAJ 
position track exactly those of the ALJ position in terms of their 
legal training, number of years of legal experience, etc.

    Question 6. Removing SSA Administrative Expenses from the Budget 
Caps: What are the advantages and disadvantages of moving SSA's 
administrative expenses out from under the discretionary caps? If 
legislation were to be introduced, would the Administration support its 
passage?
    Response. Advantages:
     Protecting Social Security: Given the concern expressed 
over the past two years about ``Saving Social Security,'' removing all 
Social Security resources from the budget process could be perceived as 
support for this goal and will reassure the public that its investment 
is being protected.
     Agency Performance: The Agency's highly-regarded service 
increasingly is at risk as the discretionary spending caps require the 
administrative expenses for the Agency to compete with defense, health 
and education priorities for limited resources. The September 1999 
Social Security Advisory Board report: ``How the Social Security 
Administration Can Improve Its Service To The Public'' recognized this 
when it recommended that the Agency's administrative budget be excluded 
explicitly from the spending caps, consistent with the treatment of 
other outlays from the Social Security trust funds.
     Ensuring Accountability: The Agency's customers, who 
represent an increasing workload, especially considering the impending 
retirement of the baby boom generation, expect responsive and world 
class services for the contributions and investments they make in 
Social Security programs. Taking SSA's administrative expenses off 
budget would permit the review of administrative expenses based on 
program requirements and workloads rather than a share of the spending 
caps.
    Disadvantages:
     Discretionary Spending: If discretionary spending were 
reduced for the balance of the Labor-HHS Appropriations bill in the 
process of moving the limitation on administrative expenses account 
outside of the caps, the Appropriations Committees might view this as a 
lose of control over spending. Also, the continuing pressure on other 
programs within the Labor, HHS, and Education Subcommittee, many of 
which will also be impacted by the aging population, might lead to a 
shifting of responsibilities to SSA.
     Mandatory Spending: If administrative expenses were 
removed from the discretionary cap, a separate decision would have to 
be made on how such funds would be classified in the budget and whether 
offsets would be required.
     Proliferation of Special Treatment Budget Accounts: Given 
the pressures created by the spending caps, other Federal agencies 
could propose arrangements that would remove their accounts from the 
spending caps. Maintaining fiscal discipline could be made more 
difficult.
    If legislation were to be introduced, would the Administration 
support its passage?
    The Administration has not yet taken a position on whether the 
Social Security administrative costs should be outside of the caps. In 
the future, the Agency will realize increasing workload pressures and 
significant growth in disability cases because of the aging of 
Americans, both of which will create a real strain on our system. In 
light of these pressures, as Commissioner of Social Security, I 
personally would prefer to see our administrative costs, in total, 
outside of the caps.

                                

    We have from the General Accounting Office, Cynthia 
Fagnoni, the Director of the Income Security Issues, Health, 
Education and Human Services Division and she is accompanied by 
Kay Brown who is Assistant Director of Income Security Issues, 
Health, Education and Human Services Division.
    If you would take your seats and we have your full 
statement which will be made a part of the record and we would 
ask you to proceed and/or summarize as you see fit.
    And if you would, first of all, start out by correcting me 
on the pronunciation of your name.
    Ms. Fagnoni. It is Fagnoni.
    Chairman Shaw. Fagnoni.
    Ms. Fagnoni. Yes.

     STATEMENT OF CYNTHIA M. FAGNONI, DIRECTOR, EDUCATION, 
 WORKFORCE, AND INCOME SECURITY ISSUES, HEALTH, EDUCATION AND 
   HUMAN SERVICES DIVISION, U.S. GENERAL ACCOUNTING OFFICE; 
   ACCOMPANIED BY KAY BROWN, ASSISTANT DIRECTOR, EDUCATION, 
 WORKFORCE, AND INCOME SECURITY ISSUES, HEALTH, EDUCATION AND 
    HUMAN SERVICES DIVISION, U.S. GENERAL ACCOUNTING OFFICE

    Ms. Fagnoni. Thank you.
    Good morning, Mr. Chairman, and Members of the 
Subcommittee. Thank you for inviting me here today to discuss 
the Social Security Administration's management of its 
disability caseload. My testimony today focuses on the status 
of SSA's efforts to improve its disability claims process and 
some lessons learned from the agency's efforts to date that can 
be applied to its current and future claims processing 
improvement plans. I will also talk about SSA's efforts to 
review the continuing eligibility of its disabled 
beneficiaries. The information I am providing today is based 
primarily on our published reports.
    Regarding the status of SSA's redesign efforts, the agency 
is just beginning to make some headway. In 1994, SSA embarked 
on an ambitious plan to fundamentally redesign the process. 
However, we reported in 1996 that SSA had not made significant 
progress and had not completed any of the 38 initiatives that 
it had hoped to accomplish during the first 2 years. 
Recognizing this slow progress, SSA reassessed its approach and 
issued a revised, scaled-back plan in 1997. The new plan 
focused on eight key initiatives, each one intended to make a 
major change to the system.
    Last spring, we reported that SSA had not met most of the 
milestones for testing or implementing its near-term 
initiatives, and had not yet demonstrated that its proposed 
changes would significantly improve the process.
    SSA has made slow progress in part because even its scaled-
back plan was so large and unwieldy that it was difficult to 
keep on track. While the agency was moving ahead on a number of 
fronts simultaneously, it also was conducting several large 
tests. For example, in fiscal year 1998, SSA had five tests 
ongoing at over 100 sites involving over 1,000 test 
participants. These activities proved difficult to manage. 
Moreover, SSA's information technology initiative, which was to 
provide important support for the redesign effort, ran aground.
    Based on lessons learned, we recommended that SSA focus on 
those initiatives most crucial to improving the process. These 
can include efforts to increase consistency of decisions 
between the different levels of the process, efforts to help 
ensure the accuracy of decisions and those that achieve large 
efficiencies through the use of technology. We also recommended 
that SSA test promising initiatives together in an integrated 
fashion and at only a few sites.
    In addition, we recommended that SSA develop a 
comprehensive set of performance goals and measures to assess 
and monitor results and that SSA take steps to ensure the 
quality assurance processes are in place to both monitor and 
promote the quality of disability decisions.
    Both of these items are important because implementing 
process changes can be even more difficult than testing them 
and process changes may not operate as expected outside the 
test environment.
    After 2 years' experience under its scaled-back plan, the 
SSA's Commissioner issued a new disability plan in March 1999 
which builds on the positive elements of the previous plan. 
Consistent with our recommendations, SSA's plan places emphasis 
on certain areas most likely to make a difference, such as 
efforts to improve the consistency of decisions between the DDS 
and hearing level.
    In addition, SSA is moving to test and assess more changes 
in an integrated fashion, although the agency still continues 
large and in some cases stand-alone testing. However, much 
remains to be done in all of these areas and in some cases, 
such as the agency's information technology and quality 
assurance initiatives, SSA is essentially stepping back and 
adjusting course based on past experience.
    This most recent plan contains a new feature, a bold plan 
to overhaul operations at SSA's hearing offices. The plan 
contains some positive features. For example, most of the first 
sites under the new hearing process will be linked with an 
ongoing initial claims test so that SSA can see how these 
changes work together. However, this new initiative involves a 
large-scale roll-out of an untested concept and will no doubt 
be a challenge to implement. Some key stakeholders oppose this 
initiative and organizations naturally resist change.
    The SSA plan contains specific steps to help promote change 
such as establishing accountability for benchmarked processing 
times. But the large number of sites involved combined with a 
significant hearing office culture change required to make this 
work indicate the need for top management attention and careful 
evaluation of progress at each implementation stage.
    Turning now to SSA's continuing eligibility reviews, SSA 
has been far more successful. In fiscal year 1996, SSA and the 
Congress focused on providing funding to conduct 4.3 million 
overdue CDRs, and keep up with new CDRs as they become due. SSA 
developed a plan for a 7-year initiative and recently revised 
it about a year ago to produce more CDRs because the DDSs had 
completed more CDRs than expected under the original plan. SSA 
now plans to process a total of 9.3 million CDRs for the full 
7-year process.
    For the last 3 years, SSA has conducted more CDRs than 
planned. According to SSA officials, DDSs have been able to 
complete these additional CDRs, because they have received 
fewer initial claimant applications than expected. In fiscal 
year 2000, SSA plans to complete an additional 1.8 million 
CDRs.
    Despite SSA's good progress with CDRs, the agency is still 
challenged to improve its disability claims process. Today, 
SSA's top leaders have a window of opportunity to improve the 
process before the baby boom generation reaches its disability-
prone years and applications start to rise. Without their 
commitment and involvement, overcoming the natural resistance 
to change and ensuring that SSA makes real progress in 
improving this process could be difficult.
    Mr. Chairman, this completes my statement. I would be happy 
to answer any questions you may have.
    Thank you.
    [The prepared statement follows:]

Statement of Cynthia M. Fagnoni, Director, Education, Workforce, and 
Income Security Issues, Health, Education, and Human Services Division, 
U.S. General Accounting Office

    Messrs. Chairmen and Members of the Subcommittees: Thank you for 
inviting me here today to discuss the Social Security Administration's 
(SSA) management of its disability caseload. The nation's two major 
federal disability programs, Disability Insurance (DI) and Supplemental 
Security Income (SSI), provide an important economic safety net for 
individuals and families. Last year, about 11 million people received 
over $77 billion in benefits from these programs. Yet both programs 
have long suffered from a set of serious problems. The process of 
applying for benefits is complex and can confuse or frustrate the 
applicants. Also, SSA has a backlog of applications and appealed cases, 
and people often have to wait as long as a year for a final decision on 
their eligibility. Moreover, there are concerns about the fairness of 
the decision-making process because of the high percentage of 
applicants who are initially denied benefits and then, upon appeal, are 
approved. Finally' once people begin receiving benefits, SSA's reviews 
to determine whether these beneficiaries continue to be eligible have 
been inadequate.
    SSA, as the agency responsible for administering these disability 
programs, has recognized and taken action to address these problems. In 
1994, the agency embarked on an ambitious plan to fundamentally 
overhaul the disability claims process. Since then, SSA has tested a 
number of significant process changes and has taken other steps 
intended to provide the public with better service, reduce the work 
backlog, and improve the consistency of decisions. SSA has also taken 
steps to catch up on overdue reviews to determine whether individuals 
remain eligible for their benefits over time. Now that several years 
have elapsed since SSA began these efforts, you asked us to assess its 
progress. Today I will discuss (1) the status of SSA's efforts to 
improve its claims process, (2) lessons learned from the agency's 
efforts to date that can be applied to its current and future claims 
processing improvement plans, and (3) SSA's efforts to review the 
continuing eligibility of its beneficiaries. The information I am 
providing today is based primarily on our published reports (see the 
list of related GAO products at the end of this statement).
    In summary, SSA is only just beginning to make headway on improving 
its claims process but has been far more successful in catching up on 
overdue eligibility review of current beneficiaries. It is vital that 
SSA tackle its claims process problems now, before the agency is hit 
with another surge in workload as the baby boomers reach their 
disability-prone years.
    The agency's first ambitious redesign plan in 1994 yielded little. 
When the agency scaled back its plan in 1997, progress was slow, in 
part because even the scaled-back plan proved to be too large to be 
kept on track. In addition, SSA's proposed changes initially showed 
disappointing and inconclusive results. We made a number of 
recommendations designed to improve SSA's prospects for success as it 
continues its efforts to improve the claims process, and, in March of 
this year, SSA issued a new disability plan that is consistent with 
some of our recommendations. For example, it places emphasis on 
initiatives to improve the quality and consistency of decisions. 
However, much remains to be done. Moreover, the plan also includes a 
bold new initiative to revise operations at SSA's hearings offices. For 
SSA to avoid repeating some of the mistakes of the past, this hearings 
office initiative, as well as the entire set of steps outlined to 
improve the disability claims process, will require concerted 
management oversight and diligence.
    SSA's experience with catching up on its overdue disability 
reviews, on the other hand, has been more successful. The agency has 
exceeded its goals for the last 3 years and appears on track to 
complete the goals it laid out in a 7-year plan. However, the state 
agencies conducting these reviews must balance this large workload with 
their other work, such as determining eligibility for incoming claims. 
Unanticipated increases in any of the workloads could strain the 
agencies' ability to keep up their current pace.

                               Background

    DI and SSI both provide cash benefits to people with long-term 
disabilities. The DI program, enacted in 1954, provides monthly cash 
benefits to workers who have become severely disabled and their 
dependents or survivors. These benefits are financed through payroll 
taxes paid by workers and their employers and by the self-employed. In 
1998, 6.3 million individuals received DI benefits amounting to $47.7 
billion. SSI, on the other hand, was enacted in 1972 as an income 
assistance program for aged, blind, or disabled individuals whose 
income and resources have fallen below a certain threshold.\1\ SSI 
payments are financed from general tax revenues, and SSI beneficiaries 
are usually poorer than DI beneficiaries. In 1998, 6.6 million 
individuals received SSI benefits of $27.4 billion.\2\ For both 
programs, disability for adults is defined as an inability to engage in 
any substantial gainful activity because of a severe physical or mental 
impairment. The standards for determining whether the severity of an 
applicant's impairment qualifies him or her for disability benefits are 
spelled out in the Social Security Act and extensive SSA regulations 
and rulings.

    \1\ In 1998, almost 900,000 disabled children received SSI 
benefits.
    \2\ About 14 percent of disabled DI benefit recipients have incomes 
that also qualify them for SSI.

---------------------------------------------------------------------------
Problems Are Associated With Complex Disability Claims Process

    SSA's disability claims process has long suffered from problems 
associated with its complexity and fragmentation. Figure I shows the 
complex process, which is in part required by law. The process begins 
when a claimant contacts one of SSA's almost 1,300 field offices across 
the country to apply for benefits. Once the application is completed, 
field office personnel forward the claim to one of 54 state disability 
determination service (DDS) agencies.\3\ At the DDS, a team consisting 
of a specially trained disability examiner and an agency physician or 
psychologist reviews the available medical evidence and determines 
whether the claimant is disabled. If the claimant is dissatisfied with 
the initial determination, the process provides for three levels of 
administrative review: (1) a reconsideration of the decision by the 
DDS, (2) a hearing before an Administrative Law Judge at an SSA 
hearings office, and (3) a review by SSA's Appeals Council. Upon 
exhausting these administrative remedies, the claimant may file a 
complaint with a federal court. The cost of administering the 
disability programs reflects the demanding nature of the process: in 
fiscal year 1998, SSA spent about $4.3 billion, or almost 66 percent of 
its administrative budget, on its disability programs, even though 
disability beneficiaries are only 21 percent of the agency's total 
number of beneficiaries.
---------------------------------------------------------------------------
    \3\ Under a federal-state arrangement, SSA funds these DDSs, which 
are administered by the 50 states and the District of Columbia, Guam, 
Puerto Rico, and the Virgin Islands.

[GRAPHIC] [TIFF OMITTED] T6024.002

    The disability claims process has proved to be a lengthy 
one that can confuse and frustrate applicants. Since the early 
1990s, claimants applying for disability benefits have often 
had to wait over a year for a final decision on their 
eligibility. Delays can be caused by the need to obtain 
extensive medical evidence from health care providers to 
document the basis for disability.\4\ In addition, however, 
because of the multiple levels and decision points in the 
process, a great deal of time can pass while a claimant's file 
is passed from one SSA employee or office to another. Moreover, 
as a result of these multiple handoffs and the general 
complexity of the process, SSA believes claimants do not 
understand the process and have had difficulty obtaining 
meaningful information about the status of their claims.
---------------------------------------------------------------------------
    \4\ According to SSA, providers often do not understand the 
requirements, find the forms confusing, or feel burdened by the 
requests for evidence.
---------------------------------------------------------------------------
    Long-standing problems with this process were exacerbated 
when the number of claims for disability benefits increased 
dramatically between fiscal years 1991 and 1993--from about 3 
million to 3.9 million, or almost 32 percent.\5\ As a result, 
SSA's disability workload began to accumulate during this 
period. Most dramatically, the number of pending hearings 
almost doubled between 1991 and 1993--from 183,471 to 357,564. 
Since that time, the number of people applying for disability 
has fallen to just under 3 million per year; however, the 
hearings offices in particular have yet to recover. At the end 
of fiscal year 1998, there were still over 380,000 backlogged 
hearings. Moreover, SSA expects claims to begin to increase in 
the near future as the baby boom generation approaches its 
disability-prone years.
---------------------------------------------------------------------------
    \5\ This increase does not include applications for SSI by aged 
claimants.
---------------------------------------------------------------------------
    The current process also permits inconsistent decisions 
between the initial and appeal levels. In fiscal year 1996, 
about two-thirds of all those whose claims were denied at the 
reconsideration level filed an appeal, and, of these, about 65 
percent received favorable decisions at the hearing level. SSA 
has determined that, at the initial level, denial cases are 
more error-prone than are allowance cases, while at the hearing 
level, allowance cases are more error-prone. This inconsistency 
has been attributed to a number of factors. According to SSA, 
an Administrative Law Judge (ALJ) might arrive at a different 
decision than a DDS because the claimant's condition has 
worsened, or because ALJs are more likely than DDS 
decisionmakers to meet with claimants face-to-face, and thus 
have access to more or different information. However, SSA 
studies have also found that DDS and ALJ adjudicators often 
arrive at different conclusions even when presented with the 
same evidence.\6\ This is due, in part, to the fact that DDS 
and ALJ adjudicators use different approaches in evaluating 
claims and making decisions. This inconsistency of decisions 
has raised questions about the fairness, integrity, and cost of 
SSA's disability program. In fiscal year 1998, the cost of 
making a determination at the DDS level was $547 per case, 
while the cost of an ALJ decision was an additional $1,385.
---------------------------------------------------------------------------
    \6\ SSA, Office of Program and Integrity Reviews, Findings of the 
Disability Hearings Quality Review Process (Washington, D.C.: SSA, 
Sept. 1994) and Secretary of Health and Human Services, Implementation 
of Section 304 (g) of Public Law 96-265, Social Security Disability 
Amendments of 1980 (the Bellmon report) (Washington, D.C.: Department 
of Health and Human Services, Jan. 1982).

---------------------------------------------------------------------------
SSA Was Behind on Required Periodic Reviews

    In addition to determining whether a claimant is eligible 
to receive benefits, SSA is required by law to conduct 
continuing disability reviews (CDR) for all DI and some SSI 
disability beneficiaries. These CDRs are conducted by DDS 
personnel to determine whether beneficiaries continue to meet 
the disability requirements under the law. If DDS personnel 
find that a beneficiary's medical condition no longer meets the 
disability criteria, benefits will be terminated. SSA's 
regulations call for CDRs to begin anywhere from 6 months to 7 
years after benefits are awarded, depending on the 
beneficiary's potential for medical improvement given 
impairment and age. If a DDS terminates the benefits of a 
current beneficiary, the individual may ask the DDS to 
reconsider the initial decision and, if denied again, appeal to 
an ALJ and, ultimately, to federal court.
    Budget and staff reductions and large increases in initial 
claims work hampered DDS efforts to conduct the required CDRS. 
Previously, budget reductions in the late 1980s had led to DDS 
staff reductions, which in turn interfered with DDSs' ability 
to complete CDRs on time. By 1991, DDS staffing levels had 
begun to increase; however, DDS resources were diverted away 
from CDRs to process the growing number of initial claims. By 
fiscal year 1996, SSA had about 4.3 million DI and SSI CDRs due 
or overdue. As a result, hundreds of millions of dollars in 
unnecessary costs were incurred each year because ineligible 
beneficiaries were not identified and continued to receive 
benefits, and program integrity was undermined.

    SSA's Progress in Improving the Claims Process has Been Limited

    SSA has been engaged in a concerted effort to streamline or 
redesign its disability claims process for over 5 years. In 1994, it 
issued an ambitious plan with a multitude of initiatives, which was 
followed by a scaled-back plan in early 1997. The agency's progress 
throughout this period was slow, in part because even the scaled-back 
plan proved to be too large and cumbersome to be kept on track. In 
addition, SSA's strategy for testing proposed changes initially led to 
inconclusive and disappointing results. Moreover, SSA's new information 
technology effort to support the improved disability claims process ran 
aground. It is not uncommon for government agencies to experience 
difficulty in similar attempts to dramatically overhaul their 
operations, and we have made a number of recommendations to SSA to 
improve the likelihood of its success. For example, we recommended that 
SSA further sharpen its focus on those few initiatives with the 
greatest potential for success and that the agency rethink its testing 
approach.

SSA Has Made Little Progress Under Initial Redesign Plans

    To address long-standing problems and dramatically improve 
customer service, SSA embarked on a plan in 1994 to radically 
reengineer, or redesign, its disability claims process. This 
plan included 83 initiatives to be completed over 6 years, with 
38 near-term initiatives. SSA planned to provide an automated 
and simpler claim intake and appeal process, a simplified 
method for making disability decisions, more consistent 
guidance and training for decisionmakers at all levels of the 
process, and an improved process for reviewing the quality of 
eligibility decisions.\7\ From the claimant's perspective, the 
redesigned process was to offer a single point of contact and a 
more efficient process with fewer decision points. SSA had high 
expectations for its proposed redesigned process. The agency 
projected that the combined changes to the process would 
result, by fiscal year 1997, in a 25-percent improvement in 
productivity and customer service over projected fiscal year 
1994 levels, and a further 25-percent improvement by the end of 
fiscal year 2000--without a decrease in decisional accuracy. 
SSA did not expect the overall redesigned process to alter 
total benefits paid to claimants, but it estimated that the 
changes would result in administrative cost savings of $704 
million through fiscal year 2001, and an additional $305 
million annually thereafter.
---------------------------------------------------------------------------
    \7\ SSA has a 25-year-old process for reviewing the quality of 
disability decisions. Under this process, teams of independent 
reviewers reexamine a portion of the decisions made by DDS personnel 
and ALJs. However, the Social Security Advisory Board has reported that 
the current quality review process is flawed and should be revised.
---------------------------------------------------------------------------
    However, SSA did not actually realize these expected 
benefits. In our 1996 report on SSA's progress in redesigning 
the claims process, we concluded that, 2 years into the plan, 
SSA had yet to achieve significant progress.\8\ For example, 
SSA had not fully completed any of the 38 near-term initiatives 
it had hoped to accomplish in the first 2 years. As a result, 
the agency was unable to demonstrate that any of its proposed 
changes would work. The agency's slow progress was due in part 
to the overly ambitious nature of the redesign plan, the 
complexity of the redesign initiatives, and inconsistent 
stakeholder support and cooperation. In order to increase SSA's 
chance of success, we recommended in 1996 that SSA reduce the 
scope of its redesign effort by focusing on those initiatives 
considered most crucial to improving the process and testing 
those initiatives together, in an integrated fashion, at a few 
sites.
---------------------------------------------------------------------------
    \8\ SSA Disability Redesign: Focus Needed on Initiatives Most 
Crucial to Reducing Costs and Time (GAO/HEHS-97-20, Dec. 20, 1996).
---------------------------------------------------------------------------
    As a result of our findings, the overall lack of progress, 
and stakeholder concerns, SSA reassessed its approach to 
redesign and issued a revised plan in February 1997. The new 
plan focused on eight key initiatives, each one intended to 
effect a major change to the system.\9\ The plan also included 
updated tasks and milestones for each key initiative and 
expanded the time frame for the entire redesign project from 6 
to 9 years, ending in 2003. Five of the eight initiatives had 
near-term milestones; that is, they were to be tested, 
implemented, or both by the close of fiscal year 1998, while 
the others had longer-term milestones. Table I summarizes these 
initiatives.
---------------------------------------------------------------------------
    \9\ Some initiatives in the original implementation plan were 
deferred. Still others, considered to be good business practices, were 
``institutionalized;'' that is, SSA shifted responsibility for 
implementing them from the Disability Process Redesign Team to front-
line components without further testing or development.

 Table 1.--Initiatives in SSA's 1997 Plan to Redesign Its Claims Process
------------------------------------------------------------------------
           Near-term initiatives                     Description
------------------------------------------------------------------------
Single Decision Maker.....................  New decisionmaker position
                                             that would give DDS
                                             examiner authority to
                                             determine eligibility
                                             without requiring physician
                                             input
Adjudication Officer......................  New decisionmaker position
                                             that would help facilitate
                                             the process when an initial
                                             decision was appealed
Full Process Model........................  Process change that would
                                             combine the two above
                                             positions with a new
                                             requirement to interview
                                             the claimant before a
                                             denial and would eliminate
                                             the reconsideration and
                                             Appeals Council steps
Process Unification.......................  A series of ongoing
                                             initiatives that were
                                             intended to promote more
                                             consistent decisions across
                                             all levels of the process
Quality Assurance.........................  New procedures to build in
                                             quality as decisions were
                                             made and to improve quality
                                             reviews after decisions
                                             were made
------------------------------------------------------------------------

------------------------------------------------------------------------
           Long-term initiatives                     Description
------------------------------------------------------------------------
Disability Claims Manager.................  New decisionmaker position
                                             to combine the disability
                                             claims responsibilities of
                                             SSA field office personnel
                                             with DDS staff
Reengineered Disability (Computer) System.  Initiative to develop a new
                                             computer software
                                             application to more fully
                                             automate the disability
                                             claims process
Simplified Decision Methodology...........  Research to devise a simpler
                                             method for evaluating and
                                             deciding who is disabled
------------------------------------------------------------------------

    The new decisionmaker positions were intended to help make 
disability decisions faster and more efficiently. Each of these new 
positions was to be tested in a ``stand-alone'' fashion--that is, not 
together with other proposed and related changes. The Full Process 
Model initiative did, however, combine the two positions and other 
changes into a single test.
    Even under its scaled-back plan, SSA experienced problems and 
delays. In March 1999, we reported that SSA had made limited progress 
in redesigning its disability claims process. \10\ On the positive 
side, under its process unification initiative, which contains a number 
of initiatives to improve the consistency of decisions, SSA had 
provided uniform training to over 15,000 decisionmakers from all 
components of the claims process. Agency officials told us they believe 
this training and other related efforts have contributed to providing 
benefits to 90,000 eligible individuals 500 days sooner than they might 
have been provided over the last 3 years. However, overall, SSA had not 
met most of the milestones for testing or implementing its five near-
term initiatives, including its planned changes to its quality 
assurance process.
---------------------------------------------------------------------------
    \10\ See SSA Disability Redesign: Actions Needed to Enhance Future 
Progress (GAO/HEHS-99-25, Mar. 12, 1999). We reviewed only SSA's 
progress on its near-term initiatives in this report.
---------------------------------------------------------------------------
    Moreover, the agency had not yet demonstrated that its 
proposed changes would significantly improve the claims 
process. SSA's stand-alone tests of the two near-term 
decisionmaker positions consumed valuable staff time, and the 
results were marginal or inconclusive, thus not supporting the 
wider implementation of the positions. For example, in one 
test, SSA hoped that giving certain DDS staff (the Single 
Decision Makers) more authority to make decisions without 
requiring the usual physician approval would significantly 
reduce the time spent reaching an eligibility decision, but the 
test results showed an average improvement of only I day. As a 
result, rather than implement the two near-term positions, SSA 
decided to wait for preliminary results of its integrated test. 
Full and final results of the integrated test are not yet 
available, but current results show a higher percentage of 
individuals were appropriately allowed benefits at the initial 
level, the quality of decisions to deny benefits at the initial 
level improved, and claimants who appealed their initial 
decisions had access to the hearing process earlier (primarily 
because the test included eliminating the reconsideration 
step).
    As a result of the delays and less positive than expected 
results, SSA decreased its projected administrative savings and 
postponed the date for realizing any savings. Projections 
changed from saving 12,086 staff-years from 1998 to 2002 to 
saving 7,207 staff-years from 1999 to 2003.
    SSA's inability to keep on schedule and disappointing test 
results were caused, in part, by the agency's overly ambitious 
plan and the strategy for testing proposed changes. Like its 
original redesign plan, SSA's revised plan proved too large and 
unwieldy to be kept on schedule. SSA's approach of moving ahead 
on many fronts simultaneously--including conducting several 
large tests--was difficult to manage. For example, in fiscal 
year 1998, SSA had five tests ongoing at over 100 sites 
involving over 1,000 test participants.\11\ Each test included 
time-consuming activities, such as coordinating the activities 
of many state and federal offices and building consensus among 
such stakeholder Groups as employee unions and associations, 
state entities, and advocacy groups. In addition, SSA's 
decision to conduct stand-alone tests contributed to 
disappointing and inconclusive results because key supports and 
related initiatives, such as the improved information 
technology system, were not in place during the tests. SSA 
conducted these stand-alone tests because it wanted to 
institute the two near-term decisionmaker positions quickly, 
hoping to achieve speedy process improvement and administrative 
savings. When tested alone, however, these positions did not 
demonstrate potential for significantly improving the process. 
Finally, other limitations in SSA's test design and management 
made it difficult for SSA to predict how an initiative would 
operate if actually implemented. For example, in one test of a 
new decisionmaker position, hearings office staff did not 
handle the test cases and control cases as instructed; as a 
result, certain test results were not meaningful.

    \11\ These tests included one of the Single Decision Maker, the 
Adjudication Officer, the Full Process Model, Process Unification, and 
the Disability Claims Manager.

Progress on Key Information Technology Initiative Has Also Been 
---------------------------------------------------------------------------
Limited

    At the same time that SSA was working on its five near-term 
initiatives, the agency was also working on the three longer-
term initiatives (see table 1). We did not review two, which 
were still in the early stages. However, we did assess the 
agency's progress on its re-engineered disability system, which 
was to develop a new computer software application to automate 
the disability claims process.
    This new software application was expected to automate and 
integrate the many steps of the process: the initial claims-
taking in the field office, the gathering and evaluation of 
medical evidence in the DDSs, the payment process in the field 
office or processing center, and the handling of appeals in 
hearings offices. In the early 1990s, SSA began designing and 
developing this software, which was expected to increase 
productivity, decrease disability claims processing times, and 
provide more consistent and uniform disability decisions. 
However, since its early stages, the effort was plagued with 
performance problems and schedule delays. In July 1999, we 
testified before the Subcommittee on Social Security that after 
approximately 7 years and more than $71 million reportedly 
spent, SSA no longer planned to pursue this software 
development effort.\12\ This decision was based on findings and 
recommendations reported by the consulting firm Booz-Allen and 
Hamilton, which contracted in March 1998 to independently 
evaluate and recommend options for proceeding with the 
initiative. On the basis of its evaluation, Booz-Allen and 
Hamilton reported that the reengineered disability software 
contained defects that would increase, rather than decrease, 
case processing time at both field office and DDS sites. First, 
the software had performance problems that would increase field 
office interview time. Furthermore, implementing this software 
at the DDS sites would require that the DDS examiners' 
caseloads be reduced from 125 cases to 25 cases. Therefore, if 
this reengineered disability system had been implemented, DDSs 
would have had to increase their staff to maintain the current 
processing time.
---------------------------------------------------------------------------
    \12\ Social Security Administration: Update on Year 2000 and Other 
Key Information Technology Initiatives (GAO/T-AIMD-99-259, July 29, 
1999).

---------------------------------------------------------------------------
Redesign Challenges Warrant Sharper Focus

    SSA is not the only government agency that has had trouble 
overhauling or reengineering its operations. According to 
reengineering experts, many federal, state, and local agencies 
have failed in their reengineering efforts. One reason for this 
high degree of failure is the difference between the government 
and the private sector workplaces. For example, the flexibility 
to re-engineer a process is often constrained by laws or 
regulations that require that processes follow certain 
procedures--such as the requirement, in some cases, that a 
physician participate in disability cases involving children or 
mental impairments. Also, government agencies, unlike their 
private sector counterparts, cannot choose their customers and 
stakeholders. Agencies must serve multiple customers and 
stakeholders who often have competing interests. For example, 
as part of its redesign effort, SSA had identified over 100 
individual groups with a stake in the process--both internal 
and external to SSA--whose involvement was, in many cases, 
critical.
    In addition, following government procedures such as 
drafting and issuing new regulations and complying with civil 
service rules makes it difficult to implement changes at the 
quick pace often considered vital for successful reengineering 
efforts. Finally, public agencies must also cope with frequent 
leadership turnover and changes in the public policy agenda. 
For example, SSA faced several policy changes during the last 
few years, such as the need to redetermine the eligibility of 
thousands of children receiving SSI benefits, at the same time 
that the agency was trying to conduct large tests of process 
changes.\13\
---------------------------------------------------------------------------
    \13\ Through the Personal Responsibility and Work Opportunity 
Reconciliation Act, enacted in 1996 and commonly referred to as welfare 
reform, the Congress made changes to the SSI program to ensure that 
only needy children with severe disabilities receive benefits.
---------------------------------------------------------------------------
    In a March 1999 report, we made a number of recommendations 
to enhance SSA's prospects for future success. \14\ We based 
our recommendations on best practices from other reengineering 
efforts and lessons learned from SSA's experiences. We 
recommended that SSA further sharpen its focus on those 
initiatives that offer the greatest potential for achieving the 
most critical redesign objectives. Such initiatives include 
those that improve consistency in decision-making, such as 
process unification; those that help ensure accurate results, 
such as quality assurance; and those that achieve large 
efficiencies through the use of technology, similar to the 
goals of the reengineered disability computer system. We also 
recommended that SSA test promising concepts in an integrated 
fashion, so that the agency could judge how proposed changes 
would work in synergy with other changes, and at only a few 
sites, to more efficiently identify promising concepts. In view 
of the large investments of time and resources involved in 
conducting tests, we also recommended that SSA establish key 
supports and explore feasible alternatives before committing 
significant resources to testing other specific initiatives.
---------------------------------------------------------------------------
    \14\ GAO/HEHS-99-25, Mar. 12, 1999.
---------------------------------------------------------------------------
    In addition, implementing process changes can be even more 
difficult than testing them, and process changes may not 
operate as expected outside the test environment. Therefore, we 
recommended that SSA develop a comprehensive set of performance 
goals and measures to assess and monitor the results of changes 
in the disability claims process on a timely basis. We also 
said SSA should take steps to ensure that quality assurance 
processes are in place to both monitor and promote the quality 
of disability decisions. SSA agreed with parts of our 
recommendations, including the need to emphasize process 
unification and quality assurance.

     SSA's New Claims Process Plan has Positive Features but Faces 
                         Continuing Challenges

    After 2 years' experience under its scaled-back redesign plan, 
SSA's Commissioner issued a new, broader disability plan in March 1999 
that outlined a comprehensive package of initiatives the agency planned 
to take to improve its disability programs. Among these initiatives are 
SSA's planned next steps for improving the disability claims process 
and the integrity of the disability programs.\15\ Consistent with our 
previous recommendations, SSA's plan places emphasis on certain areas 
most likely to make a difference, such as process unification efforts 
to improve the consistency of decisions between the DDS and hearing 
levels. In addition, SSA is moving to test and assess more changes in 
an integrated fashion, although the agency still continues large-scale, 
and in some cases stand-alone, tests. Finally, SSA has laid out a bold 
plan to overhaul operations at its hearings offices, which is a needed 
change but is likely to prove challenging to implement.
---------------------------------------------------------------------------
    \15\ The plan also includes initiatives to enhance beneficiaries' 
opportunities to work.

---------------------------------------------------------------------------
New Plan Builds on Past Success, but Much Work Remains

    Under its new plan, SSA decided to build on the 
improvements identified through its 1997 plan and make changes 
in some areas where the earlier plan did not bear fruit. Table 
2 summarizes the new plan's initiatives to improve the 
process.\16\
---------------------------------------------------------------------------
    \16\ This plan also includes provisions to update the medical and 
vocational guidelines for the disability eligibility process. See SSA, 
Social Security and Supplemental Security Income Disability Programs: 
Managing for Today, Planning for Tomorrow, Mar. 11, 1999.

  Table 2.--Initiatives to Improve the Disability Claims Process in the
                             March 1999 Plan
------------------------------------------------------------------------
                Initiatives                          Description
------------------------------------------------------------------------
Enhance consistency of decisions..........  Implement further process
                                             unification initiatives,
                                             such as more training,
                                             unified policy and
                                             guidance, and better
                                             documentation of the
                                             reasons for DDS decisions.
Enhance quality of decisions..............  Develop a more comprehensive
                                             quality review system.
Improve information technology and support  Develop and deploy a fully
                                             automated disability claims
                                             process, using an
                                             electronic folder to
                                             transmit data from one
                                             location to another.
Streamline the disability claims process..  Test final prototype, which
                                             includes the successful
                                             features of the integrated
                                             Full Process Model test and
                                             adds a new feature to
                                             better document reasons for
                                             DDS decisions.
                                            Continue to test the
                                             Disability Claims Manager
                                             position.
                                            Overhaul hearings office
                                             procedures.
------------------------------------------------------------------------

    SSA's new plan is consistent with some of our 
recommendations, but much remains to be done. The plan 
emphasizes three areas that we agree offer the greatest 
potential for improving the overall claims process: process 
unification, quality assurance, and improved efficiencies 
through the use of technology. The plan commits the agency to 
further process unification activities, such as more training, 
continued efforts to increase uniformity in the way policy and 
guidance for the DDSs and ALJs are written, and added steps to 
improve how thoroughly decisions are documented. For the 
remaining two initiatives, SSA is essentially stepping back and 
adjusting course on the basis of its experience over the last 
few years. The plan outlines steps the agency plans to take to 
offer a more comprehensive quality review system, and SSA 
officials told us they are going to use an outside contractor 
to review the agency's approach to quality assurance. Finally, 
the plan outlines SSA's next steps to improve information 
technology and support for the disability claims process. SSA 
plans to use the lessons learned from the failed computer 
support pilot to develop and deploy an automated disability 
claims process for use by SSA's 1,300 field offices. This 
strategy includes using an electronic folder to transmit data 
from one processing location to another, rather than the 
current process of moving a paper folder from one location to 
another.
    SSA's new approach to streamlining the claims process 
contains some improvements over its prior approach, but it also 
contains some drawbacks that could block or hinder the agency's 
success. Consistent in principle with our recommendations, SSA 
is testing a prototype that incorporates a number of 
initiatives and process changes in an integrated fashion. In 
addition to testing most of the features of the earlier 
integrated test, the prototype also adds one new feature to 
improve documentation on how decisions are made. This new 
feature is expected to improve both the accuracy of decisions 
and customer service, which is consistent with our 
recommendation to focus on quality. On the other hand, this 
feature is also likely to add to the time and cost of 
processing a final decision. Although we support integrated 
testing, by not adding this new feature until the final test, 
SSA is again testing a new initiative on a large scale and 
without a good idea of how the change will affect the entire 
process. This prototype began on schedule this month, according 
to SSA officials. However, the agency has not yet completed its 
evaluation plan for this prototype test, so it is difficult to 
tell how or when the results will be determined.
    SSA is also continuing some tests that run contrary to our 
recommendation that it conduct more integrated tests at only a 
few sites. For example, SSA is testing the feature designed to 
improve decisional documentation alone, outside the prototype, 
as well as integrated within it. SSA is also continuing to 
conduct a large stand-alone test of the proposed Disability 
Claims Manager, the decisionmaker position that would combine 
the disability claims responsibilities of SSA field office 
personnel and DDS personnel.\17\
---------------------------------------------------------------------------
    \17\ SSA is incorporating the Disability Claims Manager position 
with its final prototype test at three sites.
---------------------------------------------------------------------------
    This stand-alone test involves nearly 300 people at more 
than 30 sites. This test is also inconsistent with our 
recommendation to establish key supports and explore feasible 
alternatives before committing significant resources to testing 
specific initiatives, SSA has not systematically explored 
alternatives to the Disability Claims Manager--an initiative 
that would require significant change from the current system.

New Initiative to Reform Hearings Offices Will Be Challenging 
to Implement

    Finally, the 1999 March plan introduces a new initiative to 
improve the hearing process in order to significantly reduce 
processing time from the request for a hearing to final 
disposition. SSA issued a more detailed description of this 
initiative, called the Hearing Process Improvement Initiative, 
in August 1999. To develop this initiative, an SSA team worked 
with a consultant group to, among other things, analyze current 
processing and workload data and identify root causes for 
delays. The team found that processing delays were caused by 
multiple handoffs and a high degree of functional 
specialization, by the fact that no manager had overall 
responsibility for ensuring effective work flow in hearings 
offices, and by inadequate automation and management 
information. This initiative commits SSA to reduce hearing 
processing time from a projected level of 313 days in fiscal 
year 1999 to less than 200 days in fiscal year 2002 through a 
set of bold and significant changes in how the hearings offices 
do business.
    For example, SSA plans both to implement a new work flow 
model that will result in fewer handoffs and speedier case 
handling and to set processing time benchmarks for the overall 
hearing process and for certain tasks within the process. SSA 
also plans to make significant changes in the hearings office 
organizational structure by creating processing groups or teams 
that will be held accountable for improved work flow. Finally, 
SSA plans to improve the automation of data collection and 
management information to better manage appealed case 
processing. Rather than formally testing these changes, SSA 
plans to begin a phased implementation at 37 of its 140 
hearings offices located in 10 states in January 2000 and then 
to assess the results to fine-tune the process before further 
implementation.
    We have not yet fully assessed this new initiative, but the 
appeals level of the process is an area that deserves 
attention. Most of the previous initiatives focused on 
improving the process at the initial determination level, 
leaving problems at the hearing level largely unresolved. SSA's 
bold plan for hearings office change contains some positive 
features but will no doubt be a challenge to implement. On the 
positive side, most of the 37 sites scheduled for the initial 
implementation of the new hearing process will be associated 
with the initial claims processing prototype sites, so that SSA 
can see how these changes work together. However, this new 
initiative involves a large-scale rollout of an untested 
concept. Rather than pilot test this change over a number of 
years, SSA has decided to use a more speedy approach to 
wholesale change. Organizations naturally resist change, and 
some key stakeholders oppose this initiative. A lack of 
stakeholder support could hinder SSA's ability to effect 
change. SSA's plan contains specific and concrete steps to help 
promote change, such as establishing accountability for 
benchmarked processing times. However, the large number of 
sites involved, combined with the significant changes in 
hearings office operations required to make this work, require 
top management attention at each stage of implementation.

SSA is Making Good Progress in Conducting Continuing Disability Reviews

    While SSA has experienced problems making changes to its claims 
process, it has made good progress in catching up on conducting 
required CDRs to determine whether beneficiaries remain eligible for 
benefits. In fiscal year 1996, to reduce the unnecessary program costs 
that result from not performing CDRs, SSA and the Congress focused on 
providing funding to conduct overdue CDRs and keep up with new CDRs as 
they become due. SSA developed a plan for a 7-year initiative to 
conduct about 8.2 million CDRs during fiscal years 1996 through 2002. 
To fund this 7-year initiative, the Congress authorized a total of 
about $4.1 billion. On the basis of the Congress' commitment to fund 
increased CDR workloads, SSA negotiated with the DDSs to increase their 
efforts to hire new staff. During fiscal years 1996 and 1997, the first 
2 years of SSA's CDR initiative, a total of 1.2 million CDRs were 
processed.
    In March 1998, SSA prepared a revised CDR plan because, among other 
reasons, the DDSs had completed more CDRs than expected under the 
original plan. Also, SSA revised the plan to include new requirements 
contained in the 1996 welfare reform law. Among other changes, this law 
tightened the criteria to be used to determine whether a child is 
disabled and required SSA to make a one-time redetermination of the 
eligibility of children already on the rolls who may not have met the 
new criteria. Under the new CDR plan, SSA set a goal of 8.1 million 
CDRs for fiscal years 1998 through 2002. Including, the 1.2 million 
CDRs already processed during fiscal years 1996 and 1997, SSA planned 
to process a total of 9.3 million CDRs for the full 7-year period.
    Now in the fifth year of the 7-year CDR plan, SSA is processing a 
rapidly growing volume of CDRs. For the last 3 fiscal years (1997-99), 
SSA has conducted slightly more CDRs than planned. According to SSA 
officials, DDSs have been able to complete these additional CDRs 
because they have received fewer initial claims applications than 
expected and because of improvements made by SSA to its process. In 
fiscal year 2000, SSA plans to complete an additional 1.8 million CDRs. 
Table 3 summarizes the number of CDRs planned and actually completed.

                                         Table 3.--CDR Workloads Under SSA's 7-Year Plan, Fiscal Years 1996-2002
--------------------------------------------------------------------------------------------------------------------------------------------------------
                 CDRs  (in thousands)                       1996          1997          1998          1999          2000          2001          2002
--------------------------------------------------------------------------------------------------------------------------------------------------------
Planned...............................................          500           603         1,245         1,637         1,804         1,729         1,721
Actual................................................          498           690         1,392         1,664   ............  ............  ............
--------------------------------------------------------------------------------------------------------------------------------------------------------
Source: SSA reports and officals.

    In its most recent published Annual Report on CDRs, SSA stated that 
of the approximately 690,000 CDRs processed in fiscal year 1997, over 
89,000 resulted in termination of benefit eligibility because of 
medical improvement and the renewed ability to work. SSA's Office of 
the Chief Actuary estimates that after all appeal steps are completed 
about 50,000 individuals will no longer receive benefits. By the end of 
fiscal year 2002, the CDRs processed in fiscal year 1997 are expected 
to result in $2.1 billion in reduced program outlays. Overall, SSA 
expects to realize, on average, lifetime program savings of about $6 
for every $1 in administrative costs.
    DDSs must balance their CDR workloads with their other work, and 
unanticipated increases in any of these workloads could create 
competition for DDS resources. For example, in our September 1998 
report to the Subcommittee on Social Security, we noted that SSA's 
then-new CDR plan made important assumptions about the numbers of 
initial disability applications and requests for reconsideration.\18\ 
The plan assumes the current pattern of economic strength and low 
unemployment will continue. If SSA's assumptions do not hold true, 
increases in the number of initial disability applications above the 
currently estimated levels could result. The plan also assumes that 
there will be no reconsideration request workload during fiscal years 
2000 to 2002 because, at the time the plan was written, SSA's plan for 
redesigning the disability process called for eliminating the 
reconsideration step after fiscal year 1999. Because the concept of 
eliminating the reconsideration step is still being tested in the 
redesign prototype, it is not clear how SSA plans to make adjustments 
for coping with this workload.
---------------------------------------------------------------------------
    \18\ Social Security Disability: SSA Making Progress in Conducting 
Continuing Disability Reviews (GAO/HEHS-98-198, Sept. 18, 1998).
---------------------------------------------------------------------------
    One remaining workload uncertainty involves the way that CDRs are 
conducted. When a beneficiary's medical condition is not expected to 
improve, SSA sends the beneficiary a brief questionnaire, called a 
mailer. These mailer CDRs cost about $50 each. The other CDRs involve 
full medical reviews, in which the DDS obtains a new and updated 
medical assessment of the beneficiary's condition. These reviews are 
more costly (about $800 each in fiscal year 1996) because they are 
labor-intensive and involve work by staff in headquarters and field 
offices as well as DDS personnel. Prior to 1993, all CDRs conducted by 
DDSs were full medical reviews. To streamline the process, SSA began 
using mailers as a screening device. When using the mailer, SSA takes 
an additional step to determine whether the responses, when combined 
with other predictive data, indicate that medical improvement may have 
occurred. If so, the beneficiary then receives a full medical CDR. 
About 2.5 percent of mailer cases are referred for the more extensive 
full medical review.
    When we completed our 1998 report, SSA's ability to use the mailers 
to the full extent planned was not yet certain. The decision to conduct 
a CDR through a mailer is based on statistical profiles for estimating 
the likelihood of medical improvement derived from beneficiary 
information such as age, impairment, and length of time on the 
disability rolls. For several beneficiary groups, SSA was still working 
to develop statistical formulas for selecting appropriate mailer 
recipients. Officials told us recently that the agency is still working 
to perfect its mailer profiles but that they expected the ratio of 
mailers to medical reviews to be about 50-50 in fiscal year 2000. If 
SSA found that it had to conduct more full medical reviews than 
expected, this, too, would increase the DDS workload.

                              Observations

    Despite SSA's good progress in catching up on its required CDRS, 
the agency is still challenged to improve its disability claims 
process, which remains essentially unchanged outside the test 
environments. Today, SSA has a window of opportunity within which to 
improve its processes before claims again start to rise significantly. 
An economic downturn could increase unemployment, which in turn could 
result in more applications for disability benefits. Moreover, the 
aging baby boom generation is nearing its disability-prone years. Taken 
together, present and future workloads highlight the continuing 
pressure on SSA to move expeditiously to improve its disability claims 
process.
    Perhaps the single most important element of successful management 
improvement initiatives is the demonstrated commitment of top leaders 
to change. Top leadership involvement and clear lines of accountability 
for making management improvements are critical to overcoming 
organizations' natural resistance to change and building and 
maintaining the organizationwide commitment to new ways of doing 
business. In addition, as SSA moves to complete testing of its 
prototype and implement changes at its hearings offices, it is vital 
that the agency take steps to enable it to closely monitor the results 
of changes and to watch for early warnings of problems. These steps 
include maintaining its momentum to improve the consistency in 
decisions, proceeding with plans to improve its quality assurance 
measures, and developing a more comprehensive and meaningful set of 
performance measures. Finally, SSA's track record on developing and 
implementing its disability claims processing computer system has not 
been good, and it will be important for the agency to follow industry 
best practices and apply lessons learned from past efforts to increase 
its chances of successfully deploying a system that can support its new 
process.
    Messrs. Chairmen, this concludes my prepared statement. I will be 
happy to answer any questions you or other Members of the Subcommittees 
may have.

                    GAO Contacts and Acknowledgments

    For future contacts regarding this testimony, please call Cynthia 
M. Fagnoni at (202) 512-7215. Individuals making key contributions to 
this testimony included Kay Brown, Yvette Banks, Julie DeVault, and 
William Hutchinson.

                          Related GAO Products

    Social Security Administration: Update on Year 2000 and 
Other Key Information Technology Initiatives (GAO/T-AIMD-99-
259, July 29, 1999).
    Supplemental Security Income: Progress Made in Implementing 
Welfare Reform Changes: More Action Needed (GAO/HEHS-99-103, 
June 28, 1999).
    SSA Disability Redesign: Actions Needed to Enhance Future 
Progress (GAO/HEHS-99-25, Mar. 12, 1999).
    Social Security Disability: SSA Making Progress in 
Conducting Continuing Disability Reviews (GAO/HEHS-98-198, 
Sept. 18, 1998).
    Social Security Administration: Technical Performance 
Challenges Threaten Progress of Modernization (GAO/AIMD-98-136, 
June 19,1998).
    Social Security Administration: Software Development 
Process Improvements Started, but Work Remains (GAO/AIMD-98-39, 
Jan. 28, 1998).
    Social Security Disability: SSA Is Making Progress Toward 
Eliminating Continuing Disability Review Backlogs (GAO/T-HEHS-
97-222, Sept. 25, 1997).
    Social Security Disability: SSA Must Hold Itself 
Accountable for Continued Improvement in Decision-Making (GAO/
HEHS-97-102, Aug. 12, 1997).
    Business Process Reengineering Assessment Guide (GAO/AIMD-
10.1.15, Ver. 3, Apr. 1997).
    SSA: Significant Challenges Await New Commissioner (GAO/
HEHS-97-53, Feb. 20, 1997).
    SSA Disability Redesign: Focus Needed on Initiatives Most 
Crucial to Reducing Costs and Time (GAO/HEHS-97-20, Dec. 20, 
1996).
    Appealed Disability Claims: Despite SSA's Efforts, It Will 
Not Reach Backlog Reduction Goal (GAO/HEHS-97-28, Nov. 21, 
1996).
    SSA Disability Redesign: More Testing Needed to Assess 
Feasibility of New Claim Manager Position (GAO/HEHS-96-170, 
Sept. 27, 1996).
    Social Security Disability: Backlog Reduction Efforts Under 
Way; Significant Challenges Remain (GAO/HEHS-96-87, July 11, 
1996).

                                

    Chairman Shaw. Ms. Johnson.
    Chairman Johnson. Thank you, Mr. Chairman.
    Thank you very much for your testimony, Ms. Fagnoni.
    It is discouraging because it conflicts in tone with the 
statement of the Commissioner in my estimation. Would you agree 
with that?
    Ms. Fagnoni. I think what we focused on and put in context 
was the fact that SSA has been attempting to redesign this 
process for a number of years, and I think SSA is at a point 
now where it believes its about to make some significant 
improvements. But it does have a long history of some 
difficulties in trying to accomplish what is a very difficult 
and challenging undertaking.
    Chairman Johnson. Do you know how much money has been 
dedicated to redesign initiatives?
    Ms. Fagnoni. We have asked SSA that question, and it's 
actually been very difficult for them to estimate. We do know, 
and I think we have cited it in our testimony, that they have 
estimates of how much they hope to save through disability 
redesign.
    And over the years, SSA has reduced the estimate of what it 
hopes to save from this effort in part as a result of some of 
the early initiatives that didn't pan out as they had hoped.
    Chairman Johnson. It sounds like CBO. You indicate that the 
failure to conduct CDRs has resulted in hundreds of millions of 
dollars of unnecessary costs because of ineligible 
beneficiaries remaining on the rolls.
    SSA has been able to catch up on these reviews since we 
appropriated some additional money in 1995 to support that 
effort. And, according to your testimony SSA estimates that it 
would realize $6 in savings for every $1 of administrative 
costs. In your view, now, is that a realistic assessment?
    Ms. Fagnoni. To date, SSA still remains on track with its 
CDR plan and assuming its assumptions hold, they will be able 
to stay on track. There are some assumptions that SSA has made 
that if they were to change might pose difficulties. That has 
to do with, for example, if the initial claims applications 
were to begin to rise again due to, say, economic factors 
changing, that might add to workloads which would make it more 
difficult to also conduct the CDRs. But at this point they 
remain on track.
    Chairman Johnson. Their emphasis on teamwork and change in 
the working relationships within the agency, is, I think, very 
important. Are there things that they should be doing that they 
are not doing? They are certainly making an effort in this 
area, the Commissioner really seems to be conscious of it and 
working on it. It does seem to me hard to imagine it really 
succeeding without some physical reorganization of where people 
sit and who they communicate with.
    Now, my experience has been in other industries but it does 
seem to me that real change requires some rearrangement of the 
chess board. So, A, do you think that is necessary; and B, do 
you think there are things that the Commissioner should be 
doing but isn't or is he moving along just fine on a very 
difficult project?
    Ms. Fagnoni. We have work underway that will start to take 
a look at how SSA is preparing its work force for the future 
and that would include what plans SSA may have to reconfigure 
where people are located. In the absence of any physical 
relocation I think what SSA has attempted to do--a lot of it 
was through technology that so far has not panned out--was to 
try to link locations through technology. They still have an 
effort under way under their current redesign process to try to 
develop what they call electronic folders so that information 
can be in essence handed-off, not physically with a physical 
folder, but rather electronically. That might help with hand-
offs and help even when people are not located in the same 
spot.
    But you are right. It's more challenging when you have a 
process where different pieces of the process are located in 
different places and different offices and requires a special 
amount of training and the use of effective technology to try 
to link those sites together and have them working together.
    Chairman Johnson. Is there any State in which the State 
initial determination work force is in the same room, co-
located with the Federal work force?
    Ms. Fagnoni. Not to my knowledge. The SSA did have an 
effort underway, for example, where even though they were not 
co-located, they were testing out an effort where over the 
phone somebody in the field office could actually hand-off the 
initial claim once they had talked through the nondisability 
aspects of the claim to a disability determination service 
examiner. So, that even though they were not co-located the 
hand-off would be seamless.
    This is something that to date SSA, while they allowed some 
sites to test this, has not really pushed this kind of effort.
    Chairman Johnson. I am very interested in this because it 
also relates to the training program that is being developed. 
And we have found through our review of the welfare reform 
system that where the State departments of social services and 
the State departments of labor have crossed-trained so that 
there is a seamless knowledge of the broad eligibility and 
referral system, so that the same worker knows eligibility and 
work referral, you get far better results.
    Now, that hasn't happened in a lot of States, but the 
degree to which there is real integration at the bureaucratic 
level is closely related to the success in not only getting 
people the assistance they need but supporting them in changing 
their lives. So, since the agency is moving increasingly toward 
managing disabled people, which have more service needs than 
retirees, simple sort of retirees, this issue of integration of 
work forces across Federalist lines is going to be, I think, an 
important one.
    Ms. Fagnoni. They do have an initiative underway that they 
call process unification and you heard a little bit about that 
early training effort to try to have the disability examiners 
and the ALJs, for example, understanding more consistently what 
the policies are. They actually have now contracted with an 
outside organization to take a look at quality assurance and 
making sure that there is a consistent way to look at the 
quality of decisions which could then, in turn, help improve 
decisions.
    Chairman Johnson. I yield to my colleagues now, but my 
experience in those things has been you can get everybody up--
and it's true in this body, too--you can get everybody up to 
the same understanding but if you don't keep working together 
and keep that communication you lose it all over again.
    Ms. Fagnoni. Right.
    Mr. Collins [presiding]. Mr. Cardin.
    Mr. Cardin. Thank you, Mr. Chairman.
    Ms. Fagnoni, I found your testimony very interesting and 
very helpful. I think the key is to have in place some 
performance measures or quality to determine whether the 
process is working right or not. We looked at this chart that 
was presented to us on the average process time and quite 
frankly we don't know whether it's good or bad. We haven't 
really established what the right standards should be. It's 
interesting to point out though that on the initial claims, 
that the time has not changed that dramatically between 1994 
and 1998, and the overwhelming majority of people fall into 
that first category of initial claims.
    So, I guess my question to you is, can you give us any help 
as to what we should be looking for as far as how to evaluate 
whether we are making progress in these new procedures or not? 
Is it the length of time? Is it the uniformity around the 
Nation? Is there a way that we can evaluate that? We obviously 
don't want to set any quotas in place because that wouldn't be 
fair on determinations as to whether they are successful or not 
successful in overturning a prior ruling. How do we know 
whether we're making progress or not?
    Ms. Fagnoni. We have said in reports and testimonies that 
one of the things we think is important for SSA to do is 
measure performance across the entire process. And by that, we 
mean something that might look like an improvement in one part 
of the process may have repercussions for another piece. And if 
they are not looking at the entire process together, they won't 
have as good a sense of whether or not they are accomplishing 
their goal.
    Basically the goal is to both try to make the right 
decision more quickly but also to make sure that there is 
quality assurance, to make sure that it is the correct 
decision. So, there has to be that balance between trying to do 
things more efficiently but not in the process of that somehow 
undermining the quality of the decisions.
    Mr. Cardin. That is certainly a good comment. On the 
testing, and I think that is--if I understand what your 
testimony is, that you don't want to see SSA roll-out a new 
process without testing. But you don't want to see them test it 
as an individual process, you want integrated testing. Can you 
explain that somewhat in more understandable english? What do 
you want them to do?
    Ms. Fagnoni. Well, actually under their new prototype they 
are, in fact, as we said, testing a set of specific initiatives 
as one whole process. We think that is important and a better 
approach than when SSA has tested, for example, one piece of 
that process called the single decisionmaker, that is part of 
the whole prototype.
    They have also tested that single decisionmaker separately. 
And when they tested it separately, it didn't pan out very 
well. But they found when they tested that in conjunction with 
some other changes they were making, there was more promise. 
That position showed more promise. And what that showed us was 
that again back to this point that one specific change might 
have repercussions or might need the support of another kind of 
change, and unless they test that altogether they won't really 
understand how the new process should work.
    Mr. Cardin. Thank you.
    Thank you, Mr. Chairman.
    Mr. Collins. Thank you.
    Ms. Fagnoni, in your review and in the area of the 
Administrative Law Judges, and also in the area of technology, 
did you find that all of the Administrative Law Judges or most 
of them or a portion of them or any part of them had had the 
sufficient equipment, computers and office equipment that they 
needed to perform their duties?
    Ms. Fagnoni. I believe this is an area where SSA is working 
to improve the technology at the hearings offices, as a part of 
trying to ensure that the ALJs can process the cases more 
efficiently. So, I think SSA has recognized that there is some 
need for improvement in the types of technology and equipment 
that the offices have.
    Mr. Collins. Did you find it sufficient? Did they have the 
sufficient equipment that they needed?
    Ms. Fagnoni. I think overall our assessments of SSA's 
technology is that they have been challenged and they have 
difficulties trying to improve their technology and that there 
is considerable need for work.
    Mr. Collins. Do I take that as it is not sufficient?
    Ms. Fagnoni. Right. It needs improvement.
    Mr. Collins. OK. Well, that's the same thing I hear from 
them, when I meet with them and talk to them by phone or 
whatever, that there is a lot of room for improvement in the 
area of--in fact, some of them have told me that they had to go 
out and buy their own personal computer to have the equipment 
in their office to work with.
    In the area of the Administrative Law Judge, did you 
investigate their limits of authority or just how much 
authority they had over the hearings, themselves, and over the 
counsel representing the claimant?
    Ms. Fagnoni. Mr. Collins, that is an area that I would say 
we haven't looked in depth. I probably cannot comment on how 
much authority they have and whether or not it might change 
under the new hearings improvement process.
    Mr. Collins. But wouldn't that have a lot to do with 
processing of applicants' claims is to just how the 
Administrative Law Judge can handle the hearing and the 
requirement that they can have over the counsel, the attorney 
that is representing the applicant?
    Ms. Fagnoni. We did do a study, actually it was for you and 
then-Chairman Bunning, where we looked at what are the factors 
that affect how quickly cases can move through those offices 
and what kind of controls the ALJs might have over attorney 
representatives, particularly where there were concerns that 
they may be not quickly enough coming forward and being 
prepared for the cases.
    And what we found was that there are some administrative 
actions that the ALJs can take if they feel that a 
representative is not adequately representing a client. We also 
reported that SSA had put some additional regulations in place 
to try to beef up a little bit of the actions the ALJ can take 
if they weren't satisfied with the representatives.
    But we also found at the same time that some of the reasons 
why the cases were taking so long had to do with the nature of 
how cases are reviewed at the OHA level. And one of those 
factors was the fact that they do review, as the Commissioner 
pointed out, evidence de novo, which means at that point the 
claimant or the representative can bring forth new information 
and that can add to the amount of time it takes to process 
those appeals.
    Mr. Collins. But there is a quite a bit of difference in 
the findings of the first review than when it gets to the 
Administrative Law Judge under an appeal.
    Ms. Fagnoni. Right.
    Mr. Collins. There are a lot of cases that are reversed.
    Ms. Fagnoni. Right.
    Mr. Collins. A lot of decisions reversed.
    Ms. Fagnoni. Right.
    Mr. Collins. And a lot of times the decisions that are 
reversed are not necessarily based on new evidence or new 
information, according to your report here, is that right?
    Ms. Fagnoni. In some cases the new evidence can be a 
factor. Also, another factor is that this, in many cases, may 
be the first time that the claimant has had a face-to-face 
interaction, and that has an influence on the outcome. We also, 
in looking at why decisions differ between the DDS level and 
the appeals level, found that there are different weights that 
the two entities place on different kinds of evidence. The DDSs 
tend to rely more heavily on medical evidence, whereas the ALJs 
had the additional information from the face-to-face interview 
and from the attorney representative.
    These are some of the factors that SSA is attempting to try 
to work through in its processing of cases to try to make sure 
that there is some more consistency in the way the decisions 
are decided. Also, the two entities were relying on different 
documents and sources for guidance when they were applying 
their judgments.
    Mr. Collins. And there is a lot of difference in the cost 
of making a determination at one level than the other level, is 
that not true?
    Ms. Fagnoni. That's correct.
    Mr. Collins. And what are those differences? Do you know?
    Ms. Fagnoni. It's in our testimony.
    Mr. Collins. At the top of page 6.
    Ms. Fagnoni. Yes. We say at the DDS level it was $547 per 
case and the ALJ decision was an additional $1,385 per case. 
So, there is an additional cost.
    Mr. Collins. What contributes to that difference?
    Ms. Fagnoni. I think a lot of the factors have to do with 
the amount of time it takes to prepare the cases, to hear the 
new evidence. The way that dollar figures are calculated, an 
awful lot of SSA's costs have to do with resources that are 
used in that process.
    Mr. Collins. Do you normally have attorneys at the first 
level?
    Ms. Fagnoni. It's not as likely and my understanding is 
that in recent years it's become more and more likely that at 
the appeal level there will be an attorney involved.
    Mr. Collins. And who pays the cost of that attorney?
    Ms. Fagnoni. If the decision is rendered so that the 
claimant receives an award, the attorney is paid a portion of 
the award. My understanding is that if it is denied, then no 
fee is charged.
    Mr. Collins. Well, there are a lot more reversals at the 
second level?
    Ms. Fagnoni. That's correct.
    Mr. Collins. So, that contributes then, too--to part of the 
additional cost is the cost of the attorneys.
    Ms. Fagnoni. Right, that's right.
    Mr. Collins. So, we need to be more efficient at the first 
level then, is that what your report is actually saying?
    Ms. Fagnoni. That is correct and that is quite a bit of 
what SSA is attempting to accomplish--what they call it is make 
the correct decision earlier in the process. I think the 
Commissioner is correct, though, that there will always be 
reasons why people appeal and some need to re-look at cases but 
the effort is to try to have more of that done earlier in the 
process and fewer cases that need to go to appeal.
    Mr. Collins. I have to go vote. There will be someone back 
here in just a moment to fill my chair.
    And, thank you, ladies, very much.
    Ms. Fagnoni. Thank you.
    [Recess.]
    Chairman Johnson. We will reconvene the hearing.
    We now have at least two of us. Let me start by asking you 
about your testimony. It notes a problem with the disability 
process that has been longstanding and that is the 
inconsistencies that exist between the decisions made at the 
initial claim level and at the appeals level. This is partly 
due to the fact that different approaches are used to evaluate 
claims at each level. But how can this inconsistency be 
reconciled if the Administrative Law Judges use legal criteria 
that is different from that used at the initial stage?
    And we did have testimony from the Commissioner that they 
are trying to create a system in which there is consistent 
criteria used. So, to what extent is this continuing to be a 
problem? To what extent are the initiatives of SSA going to 
address it and what is your evaluation of where they are with 
this problem?
    Ms. Fagnoni. You are correct that one of the reasons why 
there are differences in the decisions made between the initial 
and the appellate levels is that the disability examiners and 
the ALJs are using, were using and are using different sources 
of information for their policies and procedures. And SSA is 
working on this. SSA has issued some policies for the purpose 
of having both the ALJs and the DDSs adhere to that same 
policies.
    So, SSA has made some efforts to provide for a greater 
consistency in the basis upon which the decisions are made, but 
SSA is still continuing this and this is a challenging area. I 
do think there is only so far that SSA can go in reaching 
consistency in decisions when you have an appellate level where 
things are allowed to be determined de novo. I mean there are 
going to be some differences in decisions on some appeals and 
some appeals that are overturned.
    Chairman Johnson. Well, I guess the concerning thing to me 
is that if the facts are different and sometimes the facts do 
evolve, the facts are different, the decision should be 
different.
    Ms. Fagnoni. Right.
    Chairman Johnson. But what I am hearing is that the 
criteria is different. Now, the criteria should be consistent. 
The eligibility for disability should be set in a consistent 
manner. That the appeals process is considering different 
information is not surprising. Sometimes you can't get people 
to really buckle down and get serious about it at the first 
level. I mean we've had that through our casework sometimes. 
People say, well, I thought they would understand that. No. You 
have to have evidence. You know, you do have to have statements 
and so on.
    So, sometimes the facts can change. But is this a problem 
of the facts changing or is this a problem of inconsistent 
criteria? Are the law judges using different criteria?
    Ms. Fagnoni. What we had found was that they did--they were 
going directly to the laws, regulations, and SSA rulings, for 
example, while the disability examiners were using SSA's policy 
guidelines, which contain interpretations of laws, regulations, 
and rulings. In our research, we found that the way the two are 
written was fairly consistent. I think there was still a 
concern that because the sources were different this could 
account for some of the differences in the decisionmaking. And 
this is an area that SSA is working on, that has not been 
completed.
    Chairman Johnson. So, the regulations are not binding on 
the judges?
    Ms. Fagnoni. I think what the judges will tell you is that 
they will ultimately go to the laws and regulations when they 
are making their judgments. And I think what SSA is trying to 
do is administer, when it administers policy pronouncements, to 
make sure that these are considered, whether it's at the 
initial or the appellate level.
    Chairman Johnson. It does seem to create an uneven system 
and, therefore, an unfair system if the judges have the right 
to ignore the regulations.
    And then there has been an effort to improve the hearings 
process, the hearing process improvement initiative. What is 
your assessment of that initiative?
    Has SSA learned from its mistakes?
    Ms. Fagnoni. SSA is going to be moving out with that 
initiative without testing it, which is something that is a 
risk. But at the same time I think that SSA feels it needs to 
move forward quickly to make some improvements in its hearing 
process. But as you will hear, I think, from people later 
today, there is resistance to this change, and this is 
something that has been a challenge to SSA as it has tried to 
move forward and make changes. It has met with resistance and 
has had challenges in trying to overcome that.
    Chairman Johnson. But is your evaluation that the 
resistance is the normal resistance that one gets with change 
or that, in fact, the plan is not well-thought out and that's 
why it's being resisted?
    Or, can you make that judgment?
    Ms. Fagnoni. I think, at this point, we have not been given 
enough detail about how this process will unfold to really 
understand how well-founded the resistance is. But, clearly, it 
is something that SSA is going to need to work through if the 
improvement is to succeed.
    Chairman Johnson. And just last, do you know how long it 
takes a private insurance company to process a disability 
claim?
    Ms. Fagnoni. We don't. Actually we have been asked that 
recently and we tried to see if we could get information and 
the data just weren't available to allow us to make some kind 
of comparison.
    Chairman Johnson. I think we need to keep working on that.
    And if there is a big disparity, we need to do more work to 
find out why.
    Mr. Portman.
    Mr. Portman. Thank you, Madam Chair.
    I appreciate it. I really have two areas I would like to 
touch on and then ask you about some specific recommendations 
in your report. The first is this notion of the rate of initial 
determinations that are overturned. I have initially questioned 
the Commissioner about the two-thirds rate which is apparently 
an obsolete number. It is no longer accurate. Now, it is in the 
50 percent to 55 percent, I understand, is that your 
understanding?
    Ms. Fagnoni. That is what they were saying, about 53 
percent, that the approvals have come down----
    Mr. Portman. Reversals.
    Ms. Fagnoni [continuing]. At the appeals level but that the 
approvals have gone up at the initial level.
    Mr. Portman. Right.
    And let's assume it is 50 percent or 55 percent, that is 
still, of course, extremely high and would indicate that there 
is a major dysfunction either at the intake side or at the end 
of the process, the hearings process. And I think what you are 
saying to Mrs. Johnson is, you see an issue at the 
Administrative Law Judge level of inconsistency of application 
of the criteria that are used at the intake level, is that 
accurate?
    Ms. Fagnoni. I think it is just making sure that the 
consistency is there at both places, not that there is one or 
the other that is doing something other than they should.
    Mr. Portman. But it wouldn't really matter if they were 
inconsistent with one another at the hearing side, so long as 
they were consistent with something at the initial.
    Ms. Fagnoni. That's what I meant.
    Mr. Portman. In other words----
    Ms. Fagnoni. Between the initial and the appeal.
    Mr. Portman. So, we've got a disconnect somewhere between 
the criteria that are being applied at the initial 
determination level and even at the administrative review 
level, which I understand there is also another level there 
that you talk about in your report, and then the criteria that 
are being applied at the end of the process.
    Having said that, in your opinion, is most of the problem--
and, again, some of these cases should clearly be reversed. I 
am not saying that the reversal rates are unreasonably high. I 
am suggesting that perhaps part of the problem is at the intake 
side, not just that the criteria are not being established that 
are consistent. But there may be a real issue as to adequate 
information being developed at the front-end, taking our time 
more at the front-end so that the back-end makes more sense.
    But do you think the problem, if you were to put it in 
percentage terms, is more at the front-end or at the hearing 
end? Is it \50/50\? Is it \25/75\ or how would you characterize 
it?
    Ms. Fagnoni. SSA's approach, I think, is not unreasonable. 
If they do more at the front end to try to make that decision 
the appropriate decision and not have as many cases go to the 
appeal level, then that will be a better fit----
    Mr. Portman. It saves time, it saves taxpayer money.
    Ms. Fagnoni. That is right. And I should mention, there are 
a number of factors why there may be different decisions at the 
two levels. One thing that has been identified is that the DDSs 
in the past had not always taken care to lay out their 
explanations for why they reached their decisions. And, so, 
when the ALJs were assessing those cases they really did not 
understand well enough the rationales that the DDSs were using 
to make those decisions.
    And one piece of SSA's efforts is to try and improve those 
explanations so they will be more useful at the appellate 
level.
    Mr. Portman. Particularly, establishing the factual record 
so that the ALJ has that record that the initial determination 
had.
    Second area is timing. And again, Ms. Johnson asked you 
about the private side. It would be helpful actually if GSA 
could give us some information or GAO could give us some 
information on the private sector versus the public sector in 
terms of insurance. Now, the folks who access the Social 
Security disability system, although it's a social insurance 
system and defined as such by SSA, it's a different group of 
people than those who would be looking to private insurance.
    One could argue that it's a group of people that is 
different in the sense that they need their claims processed 
more rapidly but it's a group that actually is more in need of 
expedited review.
    I think what you will find based on anecdotal evidence, is 
that the private sector does it much more rapidly. And, so, 
although I agree with you that at the initial level you want to 
take your time and get it right so you don't have to waste 
time, money and taxpayer time in this case at the appeals end, 
there also has to be some lessons to be learned from the 
private sector as to how they do process claims more rapidly. 
And I think that is something that again you all perhaps could 
provide some good input on.
    Final question, as my yellow light is on. You say in your 
testimony that in the March 1999 SSA plan, is that the most 
recent plan, that they follow some but not all of your 
recommendations. Could you be more specific about that as to 
which recommendations have been implemented and which have not? 
And how you think by implementing the rest of your 
recommendations it might affect the success of the effort?
    Ms. Fagnoni. Key among the recommendations that SSA has 
taken into consideration and is implementing is the idea of 
testing a few key things together in an integrated fashion. And 
the prototype is an example of that, where instead of testing 
components individually they are testing different new 
decisionmaker pieces and the expanded rationales altogether so 
that they can really see how the different pieces interact with 
one another and achieve the overall goal.
    At the same time SSA is continuing to test some of these 
specific initiatives separately and that is something that has 
not worked well for them in the past. And the concern we have 
about that kind of testing is that it can draw energies and 
resources away from their other efforts. And we have 
recommended for some time that they really focus on those 
efforts that we have the most payoff and do them in an 
integrated fashion and follow them through. And I think they 
are still trying to do some stand-alone tests that could divert 
resources and make it more difficult for them to focus their 
efforts.
    We have also recommended that they establish performance 
measures which they have, but we want to make sure that they 
establish them for the entire process so that, for example, if 
something that happens in the front end takes more time, they 
would need to see whether it has an effect on the back end. 
Because what you wouldn't want to have is more time at the 
front end and no overall positive effect from that effort.
    Mr. Portman. Right.
    Ms. Fagnoni. So, that was another--having the performance 
measures. And we have also recommended that they make sure that 
there is quality assurance, both throughout the process as well 
as after it is completed, because as part of trying to do 
things differently at the front end, we also need to make sure 
that they are making the correct decisions at the front end.
    And some of these are aspects that SSA is still developing. 
But we do see in the prototype an effort to test in an 
integrated fashion which we think is a positive step.
    Mr. Portman. Thank you.
    Thank you, Madam Chair.
    Chairman Johnson. Mr. Cardin.
    Mr. Cardin. Thank you, Madam Chair.
    Just following up on Mr. Portman's point.
    I guess I have some concern about us spending a lot of 
attention on the percentages as being the performance standards 
for quality. On first blush, the reversal rates going from in 
the 60 percentages to in the 50 percentages when you get to the 
judges appears to be a positive direction, but I'm not sure. I 
just don't know. A lot depends on how many appeals are taken to 
that level, what percentages of appeals.
    And, as you point out, a lot is dependent upon how well the 
process works in the front end when you get into the appeals 
process. I think it underscores the point of your testimony 
where we have to have sound performance measures.
    And I am not sure we spent a lot of time thinking about how 
we evaluate the progress we are making other than looking at 
percentages or looking at how long it takes to get through the 
process. And I really do think we have got to spend a lot more 
time thinking about these performance measures as to how 
successful we are. If we place people on disability very 
quickly who shouldn't be there, that is not good either.
    Ms. Fagnoni. Right, that is right.
    Mr. Portman. So, I really think that we need to think about 
this. Or if we reverse decisions that shouldn't be reversed, 
that is not good either.
    Ms. Fagnoni. That is right.
    Mr. Portman. And, of course, we want independence with our 
judicial reviews and there may very well be a difference in the 
way that the judges look at disability matters as the way it is 
being administered. And if that happens, then we also have a 
problem that we need to correct, because I mean some people are 
getting benefits, where others, in similar circumstances, are 
not.
    So, I think there is a lot of interaction here that we 
really need to think about and I applaud you for pointing out 
that we need to have performance evaluation standards and we 
need to think about that more than we have in the past.
    Thank you, Ms. Johnson.
    Chairman Johnson. Thank you very much for your testimony.
    Ms. Fagnoni. Thank you.
    Chairman Johnson. I would call up now the final panel.
    Ron Niesing, president, National Council of Social Security 
Management Associations, Inc., from Green Bay, Wisconsin; Mr. 
Skwierczynski, president, National Council of Social Security 
Administration Field Operations Locals, from Chicago; Michael 
Brennan, president, National Council of Disability 
Determination Directors; The Honorable Ron Bernoski, 
Administrative Law Judge and president, Association of 
Administrative Law Judges, from Milwaukee; The Honorable 
Kathleen McGraw, Administrative Law Judge and Chair, Social 
Security Section of the Federal Bar Association, Atlanta, 
Georgia; and Nancy Shor, executive director, National 
Organization of Social Security Claimants' Representatives, 
from New Jersey.
    It is a pleasure to have you all and we will start with Mr. 
Niesing. I am sorry, but we are rather late in getting to you. 
I hope it has not been an inconvenience.
    Mr. Niesing.

STATEMENT OF RON NIESING, PRESIDENT, NATIONAL COUNCIL OF SOCIAL 
  SECURITY MANAGEMENT ASSOCIATIONS, INC., GREEN BAY, WISCONSIN

    Mr. Niesing. Thank you, Chairman Johnson for the 
opportunity to present the views of over 3,000 members of the 
Management Team in Social Security Field Offices and tele-
service centers on disability program issues.
    SSA is the face of the Federal Government for many of your 
constituents. We assist the public during life changing events, 
such as retirement, the death of a loved one or when serious 
disability strikes. The Social Security Advisory Board has just 
issued a very important report that touches upon many of the 
important issues that impact directly on our management of the 
disability program. The report is based on actual visits to 
field offices where service is delivered to the public.
    During these visits, discussions were held with employees, 
managers and community groups. Important and far-reaching 
recommendations were made as a result of these visits. We 
strongly agree with the Advisory Board recommendations. First, 
SSA's administrative budget must be excluded from the statutory 
caps placed on discretionary spending. The agency could hire 
staff that is needed to process current and projected work.
    Second, the agency needs to develop a long-term service 
delivery plan that would show how public services will be 
delivered. Our association has actually delivered such a plan 
from the perspective of those who serve on the frontlines. This 
plan has been shared with the Commissioner and hopefully will 
serve as a starting point for discussion of service delivery 
planning.
    Third, the agency needs to have a work force in place to 
address the retirement wave for current employees. We must have 
funding to advance hire for retiring employees so that we can 
take advantage of their expertise for training and mentoring of 
new staff.
    Why do we agree with these recommendations? First, our 
workloads. In the last 15 years, we have experienced 
considerable growth in disability workloads. 1.6 million claims 
were filed this year. More dramatic increases were realized in 
the SSI disability program. By the mid-90s, 2.25 million SSI 
claims were filed annually; 90 percent of them for disability. 
Continuing disability reviews have increased to 1.8 million to 
be processed for fiscal year 2000.
    The baby boom generation is now entering the peak years for 
disability incidence. SSA actuaries project an increase of 47 
percent in Social Security disability claims and 10 percent in 
SSI claims.
    Disability claims are complex and labor-intensive 
workloads. The process is still largely paper-driven and 
disability issues are difficult to explain and difficult to 
understand for filers. For SSI claims, we must also develop 
issues such as income, resources, living arrangements and 
family composition.
    Second, staffing issues. Staff in field offices have 
declined almost 1,000 positions in the past 6 years. The number 
of claims representatives--those responsible for largely 
handling disability workloads--has increased slightly but these 
small increases have not kept pace with the growing volumes of 
work, the complexity of work and, in addition, clerical support 
positions have basically disappeared.
    Additional resources would allow for more complete 
development up front, perhaps reducing the amount of time 
needed in the States to make a medical decision and ultimately 
reducing perhaps the number of appeals that are filed.
     Management positions have also been cut to meet NPR 
initiated mandates to reduce staff/management ratios to 15 to 
1. There has been an 83 percent drop in frontline supervisors 
since 1993, down from 2,194 to only 380 today.
    As a result there has been a decrease in quality reviews, 
less time devoted to training, mentoring and coaching, and 
reduced public relations activities that are important in 
getting information out to the public on disability.
    Third, most current employees will retire over the next 10 
years. We are in the initial planning stages to handle this 
crisis but we do not have a service delivery plan or vision in 
place that dictates how or where we will process future 
workloads and place employees.
    Finally, I would like to touch upon a number of our 
disability initiatives. The disability claims manager or DCM 
position, combines into a single position the roles of the 
Federal claims representative, the State disability examiner, 
and the medical consultant. The result is a single point of 
contact for beneficiaries. Interviewing and collection of data 
is more complete. Employees have increased job satisfaction, 
morale and feel they are providing better service to the 
public.
    Processing times under the DCM pilot are significantly 
lower. Cases in a New Jersey site have been taking 73 days to 
process compared to 147 days in other New Jersey offices. In a 
Georgia office, processing times are 42 days lower for Social 
Security claims and 43 days lower for SSI claims.
    Claims quality is at least equal to or better than the 
claims quality as claims are processed under the current 
process.
    Allowance rates are also somewhat higher, thereby, reducing 
the number of claims going to hearings and appeals. We are 
looking at a new employment support representative position 
that will start in January which supports return to work 
initiatives as currently being looked at in Congress.
    These employment support representative positions need to 
be placed in field office settings where we can meet face-to-
face with claimants and take advantage of community contacts 
that have already been established with the medical community.
    In summary, to process this workload effectively we need 
budget constraints lifted, increased staff and long-term 
service delivery planning.
    I appreciate the opportunity to cover these issues with you 
today.
    Thank you.
    [The statement of Mr. Niesing follows:]

Ron Niesing, President, National Council of Social Security Management 
Associations, Inc., Green Bay, Wisconsin

    The National Council of Social Security Management Associations 
(NCSSMA, Inc.) has served as the voice of Social Security 
Administration (SSA) field office and teleservice center management for 
30 years. As president, I represent over 3,000 members of SSA's 
management team in 1,393 facilities located across the nation. NCSSMA 
works constructively with Agency management officials to advance the 
mission of the SSA. We encourage the establishment of policies that 
best serve the public interest, and we work to ensure that the 
necessary resources are in place to deliver responsive and efficient 
service to the American public.
    For many of our citizens today, the SSA serves as the face of the 
Federal government. More people visit or call a Social Security office 
each day than any other agency. Individuals also visit our facilities 
to inquire about state and local services, or they have questions about 
other Federal agency programs. Your constituents rely on our staffs, 
serving on the front-lines, during important, life-changing events such 
as retirement, the unexpected death of a loved one, or when a serious 
disability strikes. We applaud the recent report of the Social Security 
Advisory Board in its findings on improving the services of the Social 
Security system and we are pleased that their research reflected many 
of the concerns that Social Security managers have expressed in recent 
years.
    In the following sections, we provide information on the growth of 
disability workloads since the mid-1980's. The complexity of these 
workloads is highlighted. We review the downsizing of SSA staff and 
management over the same period, and provide some insight into the 
effect of reduced staff in how workloads are handled. New initiatives 
to address the disability workload are covered. Finally, suggestions 
are offered that can result in better public service and improvements 
in the disability process.

                     Growth in Disability Workloads

    We applaud you for holding this important hearing on the disability 
program. In the last 15 years, we have seen significant growth in the 
disability workload at Social Security. In 1985, disability related 
activities constituted about one-fourth of the Agency's total 
workyears. Over the intervening 15 years, disability workloads have 
grown to claim one-third of the Agency's resources in the processing of 
new claims, conducting continuing disability reviews (CDR's), and 
handling other post entitlement issues for beneficiaries and their 
families.
    In 1985, the Agency processed almost 1.25 million applications for 
Social Security disability benefits. The number of new disability 
filings peaked at almost 1.9 million new cases in 1995 before beginning 
to level off at between 1.5 and 1.6 million cases annually toward the 
end of the current decade. During the same period of time, even more 
dramatic increases were realized in the filing of disability claims 
under the Supplemental Security Income (SSI) program. In the mid-1990's 
almost 2.25 million new claims for SSI benefits were filed each year, 
almost 90% of them for disability benefits. The effect of recent 
legislative changes makes it more difficult for some children to become 
eligible for SSI benefits; this can be seen in the more recent 
statistics on SSI claims filings.
    Other disability-related workloads have also grown. Until the mid-
1990's, our field offices were conducting approximately 200,000 CDR's 
each year. As Congress became more concerned about the burgeoning 
number of individuals on the disability rolls, legislative mandates 
were passed, and additional resources given, which set specific targets 
for the Agency to conduct CDR's. The number of CDR's increased 
dramatically, hitting almost 1.65 million for fiscal year 1999. A 
target of over 1.8 million CDR's has been established for the current 
fiscal year. The number of Agency workyears dedicated to this workload 
has more than doubled during the same period.
    The picture for the future provides positive evidence that these 
workloads will continue to grow. The baby boom generation is now 
entering their peak years for the incidence of disability and SSA will 
see another dramatic increase in the number of disability claims being 
filed. SSA actuaries are projecting an increase of 47% in the number of 
Social Security disability beneficiaries between now and 2010. A lower 
but still significant increase of approximately 10% will occur in the 
number of SSI recipients receiving a disability benefit.

                    Disability Workloads Are Complex

    These numbers are important because the disability process is one 
of the more complex and labor-intensive workloads handled by the 
Agency. Administrative expenses devoted to both the Title II and Title 
XVI disability programs are significantly higher than they are for the 
retirement and survivor's programs. Much of the disability process is 
still paper driven, as medical and work histories are still processed 
by paper application. Disability issues can be exceedingly complex. 
Work related issues, such as substantial gainful employment, trial work 
periods, extended periods of eligibility, and other work incentive 
provisions are difficult to explain and difficult to understand for new 
beneficiaries.
    Processing claims under the SSI program is even more labor-
intensive, difficult, and time consuming. Not only must a disability 
determination be made, but field office employees must develop issues 
such as income, resources, living arrangements, and family composition 
before a final determination of eligibility can be made. Many of these 
individuals are then selected for annual reviews of their eligibility 
status.

      More Resources Are Needed to Handle the Disability Workload

    While our workloads have grown in volume and complexity, the staff 
allocated to process this work has diminished over the years. During 
the last five years, staff in field offices has declined almost 1,000 
positions. Most non-medical development for disability claims is 
completed by the staff in SSA field offices. While the number of claims 
representatives, the position responsible for developing and processing 
disability applications, has increased by 604 positions over the last 
six years, these increases have not kept pace with the increased volume 
and complexity of overall workloads. Due to the pressure of increased 
workloads, claims representatives are forced to cut corners in order to 
meet productivity goals. The interview process for disability claims is 
very long and the program is difficult to understand for many 
claimants. One way to reduce interview time is to eliminate 
explanations of various disability claims procedures, relying on 
claimants to read this information on their own in pamphlets and other 
printed material provided at the interview.
    The majority of the overall cuts in SSA have been in the management 
ranks. These cuts were made to meet NPR-initiated staff to management 
ratios of 15:1. Most significant were reductions of 83% in the number 
of Operations Supervisor positions, from 2,195 supervisors in 1993 to 
only 380 in 1998. How have these reductions in management affected the 
disability process? Quality reviews have been curtailed in most 
facilities.
    NCSSMA conducted a survey of managers from across the country, 
covering all the regions and all types of offices--large and small, 
urban, suburban, and rural. A large majority of these managers feel 
quality has slipped due to the decrease in quality reviews. As new 
policies and procedures are implemented, there is less time devoted to 
training, mentoring, and to follow-up reviews to ensure staff 
understanding. There is less management available to control workloads 
and to ensure that staff is meeting Agency priorities.
    Compounding the current shortage of staff is the impending 
retirement wave that will be hitting SSA over the next ten years. The 
challenge will be to replace experienced workers, provide training and 
mentoring for new employees, and at the same time meet Agency goals for 
workload processing and quality. This will be a difficult challenge 
unless SSA can replace staffing losses before they actually occur. 
Advanced hiring would allow experienced employees, before their 
retirements, to serve as trainers and mentors for new staff. The Agency 
would be in a better position to continue meeting public service needs 
under this scenario.
    With sufficient resources, our community-based field offices and 
employees are in a perfect position to assist disabled individuals and 
their families in filing for disability benefits and pursuing 
initiatives to return to work. Our employees and management have worked 
for years with community resources and medical providers. Field offices 
provide the only opportunity to meet face-to-face with beneficiaries, 
employers, advocates, and medical providers. All of these can work 
together as a team to process claims and assist workers in their 
efforts to return to work.

       New Initiatives Can Improve the Overall Disability Process

    The Disability Claims Manager (DCM) position is in a three year 
pilot. The pilot combines into a single position and within a single 
organizational unit the roles of a federal SSA claims representative 
and state disability examiner and medical consultant. The result is a 
single point of contact for the beneficiary for the claims-taker and 
decision-maker on their disability application.
    There are many benefits to the DCM position. Interviewing and the 
collection of data and information are more complete. The claimant is 
better informed about the disability process and more likely to pursue 
medical records and appear for special examinations. If an individual 
is filing for both Social Security and SSI disability, they will have 
one person working on their application compared to four or five under 
the current process.
    What are the results of the DCM pilot to date? Employees in both 
the federal and state pilot sites like working in the DCM position. 
They have experienced increased job satisfaction and morale, have 
exhibited renewed pride in their completed work, and they see the new 
process as an improvement in public service. Claimants and their 
families are more satisfied with the disability process in the DCM 
pilot. They have an improved understanding of the process, work more 
willingly with their medical providers to secure evidence, and even 
when denied, have expressed more satisfaction with the manner in which 
their claim was handled.
    What about processing times and quality in the DCM pilots? In the 
12 state sites and 21 federal sites located in 15 states, overall 
processing time is 14 days lower in DCM cases than in non-DCM cases. 
There are even more dramatic results in specific areas. Cases processed 
in Camden, New Jersey averaged 73 days overall time compared to 147 
days in other New Jersey cases. In Marietta, Georgia, all claims are 
processed in less than 54 days compared to 88 days for cases handled 
throughout the Atlanta Region. The results are even better for 
allowances, with almost 42 days saved in Social Security disability 
claims and 43 days in SSI disability claims. Early results show claims 
quality equal to or slightly better than traditional processes. 
Allowance rates are also higher, meaning fewer claims are going to the 
hearings and appeals stages.
    A new disability process is now being piloted in ten states. The 
full process model (FPM) has been started after five years of various 
disability redesign efforts and pilots. Briefly, FPM calls for the 
elimination of the reconsideration step of the appeals process and the 
implementation of the single decision-maker in the state disability 
determination services. It is still too earlier to report on any 
results, but it is hoped that processing time and quality of decisions 
will improve.
    SSA is also looking at improving its delivery of services to 
disabled individuals who want to return to work. A new position, the 
Employment Support Representative (ESR), will be piloted in 27 sites 
across the country. The ESR will engage in public information and 
outreach activities to increase public awareness of work incentive 
provisions. They will also work closely with claimants, advocates, 
employers, and other service providers to identify work opportunities. 
This position is still in the design phase, but promises significant 
improvements in public service. Placing this position in field offices 
will allow SSA to take advantage of community contacts and 
relationships that have already been established while allowing the 
claimant the opportunity for face-to-face contacts with the ESR.
    The Office of Hearings and Appeals (OHA) has made some significant 
strides in reducing the number of pending hearings and the time needed 
to process these hearings. However, it is still taking over 300 days to 
process a hearing request. The Hearings Process Improvement Plan (HPI) 
will introduce a new processing system in which groups of cooperative 
teams will work in concert to reduce processing times and improve 
quality and productivity. However, we are still concerned about the 
degree of involvement by Administrative Law Judges (ALJ's) in some of 
the more routine aspects of hearings processing. ALJ's may still be 
involved in administrative functions that would more effectively be 
handled by first-line supervisory staff. ALJ's will still have the 
discretion to review files for appointment times and to assess whether 
the file is truly ready to be scheduled for a hearing. There is a 
hierarchy of positions from the GS-14 to the GS-9 level that should be 
capable of handling such routine matters, allowing ALJ's to spend more 
of their time hearing cases and writing decisions.

                             What is Needed

    NCSSMA encourages Congress to exclude the SSA administrative budget 
from the statutory caps that have been imposed on the total amount of 
discretionary spending. This would be an effective first step toward 
ensuring that SSA is able to deliver world class service to its 
disabled constituents and their families. SSA is a high impact agency 
with a unique service delivery mission. Spending for the Agency should 
be set to allow for the needs of our customers, not to fit within caps 
that fall into overall federal government spending targets.
    With or without a release from government spending caps, NCSSMA 
calls upon SSA to ensure that there are sufficient resources provided 
to offices that are on the front-lines of service delivery. We must 
increase the number of staff and management in our field offices that 
handle the interviewing, development, and final processing of 
disability workloads. We need sufficient staffing resources and state-
of-the-art technology in place to allow employees at our 800 # to 
answer public telephone calls to completion. This would free up 
resources in our program service centers to more timely process 
workloads that can not currently be handled in our network of 1,346 
community-based field offices.
    SSA must begin working on a transition plan that will address the 
future needs of the Agency as most of our current employees will be 
retiring in the next ten years. SSA needs to re-look at the management 
staffing in its field offices. Many large, urban offices in areas with 
difficult service areas have staff to management ratios well above the 
15:1 target. Restoration of some of these management positions will 
result in better training, mentoring, coaching, and development of new 
employees. New training technologies must be made available to all 
facilities in SSA.
    Pilots such as the DCM, have shown excellent results to date. It 
has already been determined that the historic federal-state 
relationship can not be jeopardized as a result of this pilot. NCSSMA 
urges SSA to look for ways to use the successes of the DCM process, 
even if current relationships have to be changed. Finally in the area 
of pilots, we urge OHA to continue looking for ways to streamline their 
internal processes to ensure that ALJ's are concentrating their time 
and talents in the actual judging of cases.
    As SSA continues to pilot new positions and methods for handling 
the disability workload, we encourage the Agency to begin working on a 
long-range vision for service delivery that will cover all its 
programs. Such a vision or strategy will allow the Agency to steer new 
policies and procedures in the direction of the ultimate vision.

                                

    Chairman Johnson. Thank you very much.
    Mr. Skwierczynski.

STATEMENT OF WITOLD SKWIERCZYNSKI, PRESIDENT, NATIONAL COUNCIL 
  FIELD OPERATION LOCALS, COUNCIL 220, AND CO-CHAIR, NATIONAL 
 PARTNERSHIP COUNCIL, SOCIAL SECURITY ADMINISTRATION, AMERICAN 
 FEDERATION OF GOVERNMENT EMPLOYEES, AFL-CIO, CHICAGO, ILLINOIS

    Mr. Skwierczynski. Thank you, Madam Chair.
    My name is Witold Skwierczynski, and I am with the union. I 
represent 50,000 Social Security employees and we have a work 
force that is 73 percent women, we have an aging work force. 
The average age of our employees is about 46 years old. Our 
employees are veterans. They are dedicated. They are hard 
working. They care deeply about the Social Security program and 
especially the disability program.
    And, unfortunately, there are some bad things to report 
about the disability program today and there are also some good 
things to report. Bad things. Our employees are, because of 
staffing constraints, our employees are having an extreme 
difficulty handling the workloads that they are assigned. 
Stress and morale problems have increased. The Advisory 
Committee report echoes that.
    Some of our workloads are not being processed. The agency 
oftentimes lurches from crisis to crisis in order to respond to 
congressional demands and public complaints. The SSA Advisory 
Committee report indicates which is the reality that since 1982 
we have lost 29 percent of field staff. The general civilian 
Federal work force has decreased by 12 percent for that time. 
So, SSA has taken an extreme cut in staff.
    Your Committee hearing announcement indicated that 
workloads are going to be increasing substantially over the 
next 11-year period. It is very difficult to complete those 
workloads under any scenario without additional staff support.
    The SSA Advisory Board calls for that as well as 
technological improvements and also recommendations to take the 
administrative budget off of the spending cap and the union 
strongly echoes and supports those recommendations.
    Mr. Niesing indicated that the disability claims manager is 
one of the agency's pilots. And the disability claims manager 
is a part of the 1994 redesign. He explained what it does. 
There is a little over 200 of those disability claims managers 
in a variety of States around the country. Phase I of the pilot 
just ended. The agency employed an outside firm, the Lewin 
Group, to evaluate Phase I.
    What happened in that evaluation? It was a screaming 
success. We had a lowering of processing time on an average of 
8 percent; approvals, cases that were approved on initial 
claims were 20 days less processing time on the average; the 
quality of the claims indicates that there is somewhat of a 
less error rate than the current process. The customer 
satisfaction based on focused reports is extremely high.
    Customers like one-stop service, they like the explanation 
face-to-face of their disability criteria and they like the 
claimant participation.
    We have numerous testimonials that some claimants and 
beneficiaries have sent to us. In Marietta, Georgia, we had a 
claimant who said that she left the DCM interview feeling 
really good about the experience and about the 30-day 
processing time of her claim. Her arthritis support group had 
only told her horror stories about the bureaucratic problems of 
Social Security. She thought the disability claims manager was 
a breath of fresh air.
    And at Phoenix, Arizona, a claimant said the DCM program is 
a God-send. It puts humanity back into the system. Compared to 
the horror stories that person heard from their peers, they 
thought that the disability claims manager was a great success 
and they wanted to know how they could ensure implementation, 
further implementation across the country.
    In Springfield, Illinois, a claimant wrote that even though 
she was denied her benefits, she was pleased with the 
explanation that she received and understood why she was denied 
and applauded the DCM project for providing a good rationale 
for her denial.
    The employees, 84.6 percent of the employees that are 
participating are more satisfied with their job than they were 
with their previous job. This is a success story. Now, what is 
the agency's attitude? You heard Commissioner Apfel. He said 
nothing about the DCM project. The agency is suppressing the 
success of this project. And I think Congress needs to ask some 
hard questions about why they are suppressing the success of 
this project.
    The head of operations for the agency canned an article 
that described the successes of Phase I in the agency magazine. 
You know, questions need to be asked why is this happening?
    The agency officials have made statements around the 
country how there is no hope for the DCM being implemented and 
I think the main reason for that is they feel that there is a 
lot of resistance from the States.
    This is a program that works. This is a program that should 
be applauded, not suppressed.
    We are interested in a roll-out of this project if, in 
Phase II, which is beginning now and it goes through September 
30 of next year, shows continuing success of this project. We 
think that it ought to be rolled out and we think Congress 
should be looking closely at it.
    The prototypes, one problem that we have been having, as a 
union, and also with employees--and Chairman Johnson addressed 
the issue about teaming--is that in recent past many of these 
agency initiatives, such as the hearings process review, the 
implementation of the prototypes, have been done without union 
or employee involvement and the employee specialist, which is 
the whole return to work initiative, those three projects were 
all done with strictly management work teams who made 
management-
related decisions about implementation of those programs.
    The union or employees were neither to participate in the 
decisionmaking process nor were we in many times informed that 
these work groups were operating. We think that the teaming 
that Chairman Johnson seeks from the grassroots level is 
extremely important. The people who do the job know best how to 
do the job. And I think it is essential that Congress examine 
why the employees who are processing disability claims are not 
involved pre-decisionally in the process in many of these 
projects.
    The prototypes that the agency has implemented are of great 
concern to the union. And the reason for our concern is that we 
feel that from a claimant perspective an appellate route, the 
reconsideration is being eliminated. That will result 
inevitably to more hearings being filed and a potential further 
backlog of a hearing process.
    In addition, the problem with the prototypes is that the 
supposed pre-decision interview that the claimant does, because 
it's done by an employee of the State, is almost guaranteed to 
be a telephonic interview. Studies have shown and the focus 
group reports and surveys of the claimants are that they are 
much more comfortable with a face-to-face interview, they get a 
better explanation of the rationale of the decision and have a 
better opportunity to interact with the decisionmaker in the 
process. The DCM does that. The prototypes do not.
    The other problem that we see in the project is the 
potential of eliminating community-based service. If more and 
more work is shifted to centralized employees who can deal with 
the disability public telephonically, there will be pressures 
to close Social Security offices and to eliminate the ability 
of claimants to make a choice to have face-to-face service.
    Chairman Johnson. We are going to have to give the other 
people their 5-minute testimony, but we will get back to some 
of these things in the question period.
    Mr. Skwierczynski. OK. Thank you.
    Chairman Johnson. We are liberal with the lights under my 
guidance but I cannot ignore them completely.
    Thank you very much for your testimony.
    [The prepared statement follows:]

Statement of Witold Skwierczynski, President, National Council Field 
Operation Locals, Council 220, and Co-Chair, National Partnership 
Council, Social Security Administration, American Federation of 
Government Employees, AFL-CIO, Chicago, Illinois

    Dear Chairman Shaw, Chairwoman Johnson, and members of the 
Subcommittees, my name is Witold Skwierczynski. I am the President of 
the AFGE National Council of SSA Field Operation Locals, AFGE Council 
220. I am also the Co-Chair of the AFGE-SSA National Partnership 
Council. On behalf of the 50,000 working men and women represented by 
AFGE at the Social Security Administration (SSA), I appreciate this 
opportunity to appear before the joint hearing of the Subcommittee on 
Social Security and Human Resources of the Committee on Ways and Means 
to discuss SSA's management of the disability caseload.
    I want you to know that AFGE Council 220 is particularly proud of 
the highly dedicated and productive employees who deliver direct 
service to the disabled and other members of the public either face-to-
face or by phone. These SSA workers are found in over 1,200 field 
offices and 36 teleservice centers located in communities across the 
country. These SSA workers, 73% of who are female share a ``can do'' 
attitude that helps SSA continue to rank high among government agencies 
in the quality of service that it provides to the public. However, 
constraints on staffing, i.e. ``doing more with less'' and the 
increased complexity and size of the workloads, predictably have 
strained resources. Compounding the current staffing shortage is, as 
pointed out in SSA's current Strategic Plan, the problem of SSA's aging 
workforce. Over 20 percent of the Agency's employees will be eligible 
for retirement between now and 2002.
    The Social Security Advisory Board report titled ``How the Social 
Security Administration Can Improve its Service to the Public'' dated 
September 1999 has drawn some conclusions about the effect inadequate 
human resources could have on the Agency's ability to deliver quality 
service. This topic may form the nucleus for a future hearing not only 
for the disabled but also for all members of the public.
    Between 1982 and 1998, as part of the sustained effort to downsize 
government, the number of civilian employees was reduced by about 12 
percent. Employment in SSA declined by about 26 percent while the 
number of beneficiaries increased significantly faster than the 
population as a whole. At the end of FY 1998, there were 42,544 
employees in regional and field offices, program service centers and 
teleservice centers out of 65,407 total SSA employees. While workloads 
have grown in size and complexity, resources have declined. For 
example, examine the expansive increase in the number of benefit 
estimates to be mailed to workers. This is up from 36 million in FY 99, 
to 126 million in FY 2000. SSA neither sought, nor did Congress 
provide, budgetary consideration for additional resources to handle 
this workload. This is another issue impacting service to your 
constituents that you may wish to examine at a future hearing.
    Severely disabled men, women and children come into their 
community-based Social Security offices for face-to-face contact with 
their government. They must meet strict criteria before being awarded 
benefits. The nature of the disability must be permanent, last a 
minimum of 12 months, or result in death. AFGE Council 220 workers 
believe that your disabled constituents deserve community-based, 
quality service and we think you will agree.
    Recognizing a need for improvement in the disability program, and 
at the urging of Congress, SSA in 1994 announced a redesign of the 
disability process. The remarks presented here focus on Commissioner 
Apfel's announcement of his decisions regarding this Disability Process 
Redesign. These decisions have become part of the Agency's broader 
strategic planning.
    Prior to announcing his decisions on improving the management of 
the disability program, Commissioner Apfel expressed the view that the 
``status quo won't go'' regarding the disability program. He warned 
that SSA can not expect an infusion of resources to support the 
redesign effort, that there would not be any major shift of resources 
between components or between SSA and the Disability Determination 
Services (DDSs), and that change would occur incrementally. The Union 
is cognizant of this and believes our comments are consistent with 
SSA's goals of making its disability programs both more responsive to 
our claimants and beneficiaries and more accountable to the nation's 
taxpayers. However, we believe that no set of initiatives to improve 
the disability process will be successful without first recognizing 
that prompt action by the Administration and Congress is needed to 
adequately staff the Agency with additional front-line employees. We 
share the Advisory Board's conclusion that failure to do this will 
result in a serious deterioration in public service. Direct-service 
staffing shortages are causing employees to have difficulty in keeping 
up with their growing workloads. The emphasis in meeting processing 
time goals is causing burnout and affecting employee morale. As the 
representative of the majority of SSA workers who struggle under these 
workload pressures, AFGE thinks inaction is unconscionable. In the long 
run, the investment made in additional staff will pay off for disabled 
constituents and for all taxpaying citizens through timely and accurate 
service.
    We conclude that SSA's plans to improve the initial claim process 
must include the Disability Claim Manager (DCM) in Field Offices (FOs). 
The DCM is consistent with the Commissioner's intent to streamline the 
disability adjudicative process. The DCM is a single interviewer who 
develops both the medical and non-medical part of a disability claim. 
I'll have more to say about how the DCM improves the initial disability 
claims process in a minute. In our judgment, the Agency must be much 
more pro-active in its support of the DCM concept and begin planning 
for national implementation after a thorough analysis of test data. An 
independent assessment of the DCM process conducted by the Lewin Group 
indicates that a disability decision-maker knowledgeable in both 
medical and non-medical claim issues and working with directly with the 
disabled applicant and/or representative can provide accurate decisions 
earlier in the process and more quickly.

                        Community-Based Service

    AFGE has vigorously supported and been involved in all phases of 
Disability Redesign. The Commissioner's five stated goals are to 
provide a customer friendly process, lower customer waiting times for a 
decision, make an appropriate allowance earlier, provide efficiency in 
administrative cost, and provide a satisfying work environment for 
employees. We believe that SSA must work to increase public support, 
which can only happen at the community level. We concur with the Social 
Security Advisory Board's assessment that the public's trust in the 
integrity of the disability program is of the utmost importance. We 
agree with the Advisory Board's assertion that cooperation is essential 
in achieving our objectives. We believe that both current and earlier 
Disability Process Redesign pilots have shown Field Office employees 
should be involved in all phases of the disability process and that the 
objectives of Redesign can best be met by providing service at the 
local office level. There are numerous examples of public service 
deterioration, e.g. within the Internal Revenue Service (IRS), which 
occurred as a result of over emphasizing ``centralized'' work 
processing. The appropriate commitment of time, energy and needed 
resources in the local offices can insure an efficient and claimant 
friendly disability process and increased job satisfaction for 
employees.

                     Disability Claim Manager (DCM)

    A claimant for disability benefits from the Social Security 
Administration faces a lengthy, bewildering process. Under the current 
system, there is little involvement of the claimant and/or 
representative in obtaining needed medical evidence. An initial 
decision from SSA will likely take more than three months.
    The independent assessment of Phase I of the DCM test conducted by 
the Lewin Group indicates that the DCM process has succeeded in 
improving claimant satisfaction to the extent that a single point of 
contact has made the process feel much more personal. Anxiety has been 
reduced by eliminating the need for claimants to identify a different 
contact person at each juncture in the adjudicative process. The 
Disability Claim Manager encourages claimants to work with their 
physicians to provide complete and accurate medical records in support 
of their applications. Claimants are responsive because they understand 
that doing so will speed up the processing of their claim. In the area 
of DCM processing time, there is also good news.
    DCM's obtain Medical Evidence of Record (MER) from targeted sources 
and work with hospital social workers, advocates and other individuals 
in the local community in taking and processing claims. These 
relationships developed at the local level benefit the disabled 
claimants as well as the individuals and organizations assisting them 
in processing their claims. The outside sources are invested in 
obtaining and providing the MER at the initial interview and in most 
cases at no cost because it means faster and more accurate decisions 
for their clients. For example, the DCM unit in Denver, CO received 
recognition from the Denver Mental Health Corporation that works with 
the chronically mentally ill in that community. These claims can be 
difficult and the DCM's offer excellent service. Claims allowed earlier 
in the process result in a source of income and medical coverage for 
the disabled. Establishing these local relationships, we can arrange 
for obtaining MER electronically and by FAX.
    Our customers should be able to access the disability process in 
the way they choose. The claimant needs to be able to talk to a medical 
adjudicator at the beginning of the disability claims process. The DCM, 
as an integral part of disability program implemented in the FO, can 
provide this service for the claimant. Implementing the DCM working 
within the FO structure can assure the claimant continuity of service 
between the medical and non-medical parts of their claim. This has 
improved the credibility of our process and will be particularly 
effective in helping the SSI claimant navigate our complex initial 
disability claims process. SSA is invested heavily in testing this new 
process and has contracted with an outside evaluator, the Lewin Group 
in assessing the effectiveness of this new process. We urge the Agency 
and the Commissioner to insure commitment from the state DDSs to begin 
implementation of these initiatives at the earliest possible date.

                       Return-to-Work Initiative

    AFGE supports the effort of the Administration and Congress to 
increase the number of adults with disabilities who return to work. On 
March 13, 1998, President Clinton signed Executive Order 13078, which 
created the Presidential Task Force on the Employment of Adults with 
Disabilities. A key component of the Task Force's mission is to analyze 
existing federal programs and policies to determine what changes can be 
made to remove barriers to work. In addition, the Senate and the House 
passed legislation to address barriers to people with disabilities who 
attempt to work.
    One provision of this legislation which we support directs SSA to 
establish a corps of work incentive specialists within the Agency to 
focus on improving service delivery to beneficiaries who return to work 
and on increasing outreach to beneficiaries advocates, and 
rehabilitation providers. Accordingly, SSA is making plans to implement 
an Employment Support Representative (ESR) position within the Agency.
    While we applaud the efforts the Agency is making in order to 
increase the number of disabled adult beneficiaries who work, we 
believe the Agency's approach to the problem is fundamentally flawed. 
SSA's decision to exclude front-line employees from helping to plan and 
develop a return-to-work strategy has resulted in a minuscule, 
ineffective proposal. Current plans call for deployment of only 27 such 
work incentive specialists as part of a nationwide test. AFGE believes 
that such a small number of Specialists is hardly sufficient to 
generate enough information to decide how best to rollout the new 
position across the country. We ask that the Administration and 
Congress provide SSA with additional staffing resources that will 
enable the Agency to move forward with an aggressive, community-based 
work incentives outreach program that will insure disabled 
beneficiaries have equal access to employment support services 
regardless of where they live.
    We also conclude that the Agency work incentives service delivery 
plan should focus on the Employment Support Representative performing 
his or her duties in the Field Office. This model allows claimants and 
those assisting them by providing timely answers to their questions and 
concerns. Hand-offs will be minimized and decisions will be local. 
Timely processing of work-related issues will reduce overpayments and 
beneficiary frustration with the system. Local placement of the 
Specialist will enhance SSA's ability to interact with local 
organizations that support work efforts of disabled people. The ESR 
will also be able to act as an on-site resource person for other 
employees within the office. The community-based ESR will be able to 
consolidate functions currently performed within different components 
of the Agency. Travel costs will be reduced since the ESR will 
concentrate on the community where the Field Office is located.

                               Conclusion

    Labor-Management Partnership and the Disability Process Redesign 
are inextricably connected. SSA and AFGE worked together to write the 
recommendations that comprised the Disability Redesign proposal. 
Several tests, pilots, and prototypes started during the Redesign have 
demonstrated the efficacy of working in partnership and cooperation 
with the Union in planning and implementing improved processes.
    We deplore the Agency's move away from Partnership beginning in 
February 1997 when a unilateral decision was made to decrease AFGE 
representation on the Disability Process Redesign Team (DPRT) which 
oversees the Redesign effort. SSA created an Executive Disability 
Steering Committee with no Union representation. Recently the Agency 
began an effort to improve the hearings process. Again, this is 
occurring without any AFGE participation. The Agency is moving forward 
its Office of Hearings and Appeals (OHA) reorganization plans despite 
our serious concerns that, according to SSA's own figures, the with the 
elimination of the reconsideration and appeal step will result in an 
estimated 25,000 additional cases coming before Administrative Law 
Judges. We also feel that the Agency reorganization of Hearings Offices 
will needlessly create additional layers of management.
    Furthermore, as I noted earlier, SSA has decided to move forward 
with its work incentives service improvement plan, with no substantive 
AFGE involvement. The Agency has decided to turn its back on the 
representatives of front-line workers who actually serve disabled 
beneficiaries. Failure to include employees and their representatives 
in SSA's effort to improve the disability process will be greeted with 
cynicism and doomed to failure.
    The Social Security Advisory Board recommends cooperation and 
teamwork in the disability process. DDS manipulation and resistance 
resulted in much of Redesign not being realized. This failure dismays 
us. Parochial state concerns don't result in improved service delivery 
for the American public. DDS has opposed expanded piloting of the DCM 
model even though it would result in better service to the public. I 
urge Congress to investigate the states' refusal to provide better 
public service. Federal employees can process both disability and non-
disability aspects of claims quickly, accurately, and successfully. The 
public likes one stop service, which the DCM provides. Any attempt to 
shift public access of the disability claim process from federal 
employees to the states will be opposed by AFGE.

                                

    Chairman Johnson. Mr. Brennan.

STATEMENT OF MICHAEL W. BRENNAN, PRESIDENT, NATIONAL COUNCIL OF 
               DISABILITY DETERMINATION DIRECTORS

    Mr. Brennan. Thank you.
    Chairman Johnson, Members of the Subcommittee, on behalf of 
the National Council of Disability Determination directors, 
thank you for the opportunity to appear here today to present 
our views regarding the Social Security Administration's 
management of its disability workloads.
    The NCDDD is a professional organization comprised of the 
directors and other management staff with the State disability 
determination services. The DDSs participate in the disability 
program by making the initial determinations of eligibility for 
disability and by conducting continuing disability reviews.
    How effectively SSA manages the disability workload is a 
primary concern of our organization. SSA's disability programs 
exist in a climate of increasingly scarce resources. SSA has 
requested that the DDS fiscal year 2000 budget reflect a 4.2 
increase in overall workloads, a 5.6 increase in CDR workloads, 
no additional hiring except for replacement hiring of 
attrition, and no increase in medical costs per case.
    To say that these expectations are challenging would be an 
understatement. The NCDDD has serious reservations regarding 
the level of public service that the DDS will be able to 
provide given the fiscal year 2000 funding limitations.
    We will, as in the past, attempt to manage within the 
budget that we are provided. However, we believe it realistic 
to anticipate interruptions to service delivery. Moreover, it 
is our belief, our concern that the level of funding that is 
being provided is insufficient to enable process unification 
efforts to continue. Process unification is the No. 1 strategic 
priority of the NCDDD.
    Since the disability reform legislation of the eighties, 
there has been an obvious demarcation between the first two 
steps of the initial disability process which take place in the 
DDSs and the third step which involves a hearing before the 
Administrative Law Judge in the Office of Hearings and Appeals.
    The ALJ reversal rate of DDS decisions has been as high as 
65 percent, prompting the Social Security Advisory Board to 
conclude that one of the primary reasons that the disability 
programs do not share the level of public confidence enjoyed by 
other programs administered by SSA is the longstanding and 
widespread perception that the agency is unable to apply the 
statutory definition of disability in a uniform and consistent 
manner.
    From start to finish, most individuals whose cases go 
through the initial decision, reconsideration and an ALJ 
hearing process will wait well over a year for a decision. This 
is likely to be a period of considerable economic hardship for 
claimants and their families. Disability determinations must be 
both accurate and timely.
    As part of its effort to redesign the initial disability 
claims process, SSA embarked on an effort to more closely align 
the adjudicative perspectives of the DDS and the OHA. This 
began with revisions to 9 SSA rulings that have come to be 
known as processing unification rulings.
    In addition, national training for all 14,000 adjudicators 
in the DDS and OHA has been provided. This effort is showing 
positive results in the DDS. More claimants are being allowed 
earlier in the process, the ALJ reversal rate of DDS decisions 
has decreased to about 55 percent. At the DDSs, we're hearing 
almost daily from OHA, that receipts are down. Moreover, those 
cases that do arrive at OHA are said to be better documented. 
This results in a more timely decision by the ALJ.
    For several years now SSA who has been testing a redesign 
of the initial process called the full process model. The FPM 
consists of several significant changes to the initial process 
and data from the pilots show encouraging results.
    The NCDDD believes that a phased roll-out is a reasonable 
approach. Not only will the prototype provide an evaluation of 
the modification to the full process model, it will provide a 
setting that will determine if the FPM results can be 
replicated in the field.
    While we believe in the potential of the process changes, 
we do have some major concerns. First, cost. It is proposed 
that the elimination of the reconsideration step will provide 
the funding for the improvements at the initial claims level. 
Our organization is not convinced that the elimination of 
reconsideration will result in sufficient savings to pay for 
the enhancements to the front-end of the process. This is an 
area that must be closely monitored.
    Second, the hearings process improvement plan. SSA and OHA 
are to be commended for designing a plan for managing the 
disability process at OHA. The plan is pragmatic and it is 
based on sound management principles. We believe that it can 
result in significant improvements at OHA.
    The prototype process however will not be judged a success 
if it succeeds in the DDS but not in OHA or vice versa. 
Implementation and successful execution of the HPI will be a 
determinant of the success of the new process.
    In summary, the NCDDD believes that the new process will 
result in a more timely decision for disabled individuals, and 
improve the consistency and decision outcomes between the DDS 
and OHA.
    Without adequate funding for SSA's disability programs, 
however, improvements in the level of service that can be 
provided to disabled individuals will be problematic.
    Madam Chair, and the Subcommittee, thank you.
    [The statement of Mr. Brennan follows:]

Statement of Michael W. Brennan, President, National Council of 
Disability Determination Directors

    Mr. Chairman, Madam Chairman, and members of the subcommittees, on 
behalf of the National Council of Disability Determination Directors 
(NCDDD), thank you for the opportunity to appear here today to present 
our views regarding the Social Security Administration's (SSA) 
management of its disability caseloads.
    The NCDDD is a professional organization comprised of the directors 
and other management staff of the state Disability Determination 
Services (DDS) agencies. The DDSs participate in the disability program 
by making the initial determinations of eligibility for disability and 
by conducting continuing disability reviews (CDR). How effectively SSA 
manages the disability workload is a primary concern of our 
organization.

                          Workload and Budget

    SSA's disability programs exist in a climate of increasingly scarce 
resources. Last year the DDSs were informed that the Agency was facing 
a flat line budget for the next five years. The most that could be 
hoped for in this scenario was to maintain current staffing levels in 
the DDSs.
    SSA administers the DDSs by regulation. The DDSs must comply with 
SSA Regulations and other written guidelines without regard to cost. To 
do otherwise exposes DDS management personnel to the consequences of 
allegations that they are not complying with the law. There is a finite 
limit to the number of dispositions that an examiner can process. DDS 
administrators have learned through experience that unremitting 
pressure on examiners to increase productivity encourages shortcuts on 
documentation. In order to comply with SSA's regulations, the DDSs must 
have adequate staffing levels.
    SSA has requested that the DDSs fiscal year 2000 budget reflect:
     A 4.2% increase in overall workloads
     A 5.6% increase in CDR workloads
     No additional hiring (replacement hiring of attrition 
considered only), and
     No increase in medical cost per case.
    To say that these expectations are challenging would be an 
understatement. The NCDDD has serious reservations regarding the level 
of public service that the DDSs will be able to provide given the FY 
2000 funding limitations. We will, as in the past, attempt to manage 
within the budget we are provided. However, we think that it is 
realistic to anticipate interruptions to service delivery with the 
austere funding level that is being proposed. Moreover, it is our 
belief that the level of funding that is being provided is insufficient 
to enable process unification efforts to continue.
    Process Unification is the number one strategic priority of the 
NCDDD.

                               Background

    Since the disability reform legislation of the 1980's there has 
been an obvious demarcation between the first two steps of the initial 
disability process which take place in the state DDSs and the third 
step of the process which takes place in the Office of Hearings and 
Appeals (OHA). SSA discovered in a series of interviews and surveys 
with disability applicants that the initial and reconsideration denial 
of their disability claims by state DDSs was viewed as a bureaucratic 
precursor to a favorable decision by an Administrative Law Judge (ALJ).
    During the course of the late 1980's and early 1990's there was a 
tremendous upsurge in initial disability applications. This was 
compounded by the fact that SSA was required by the courts to 
readjudicate thousands of disability claims where it was determined 
that SSA was not following its own regulations. There was tremendous 
pressure on the DDSs to process this huge workload.
    In the early part of this decade there was fundamental difference 
in the adjudication approach in the DDS compared to the adjudicative 
approach in OHA. DDS decisions focused primarily on objective medical 
evidence to reach conclusions about an individual's ability to work. In 
many cases, this led to conclusions that did not give sufficient weight 
to such things as treating physician opinion or the claimants symptoms 
and credibility.
    While education and experience had prepared the attorneys at OHA to 
apply complex legal concepts, they were not provided extensive training 
in the medical aspects of disability. Accordingly, ALJ decisions were 
heavily weighted towards subjective complaints and opinions. The ALJ 
reversal rate of DDS denial decisions was 65%. Prompting the Social 
Security Advisory Board to conclude that, ``One of the primary reasons 
that the disability programs do not share the level of public 
confidence enjoyed by other programs administered by SSA is the 
longstanding and widespread perception that the agency is unable to 
apply the statutory definition of disability in a uniform and 
consistent manner.''
    For most Americans, the wherewithal to obtain food, clothing, and 
shelter and to meet their other material needs comes primarily from 
earnings from employment. When an individual is suddenly prevented from 
earning a living because they develop a disabling impairment, the 
consequences can be tragic. A favorable decision may mean the 
difference between a home and homelessness, regular preventive medical 
care or treatment in the emergency room of a free clinic. It is vital, 
therefore, that disability determinations be both accurate and timely.
    From start to finish most individuals whose cases go through the 
initial decision, reconsideration and ALJ hearing process will wait 
well over a year for a decision. This is likely to be a period of 
considerable economic hardship for claimants and their families.
    Currently, processing time at OHA is about 300 days. A case that is 
adjudicated by an ALJ ten months after the DDS decision, is not the 
same case that was adjudicated by the DDS. There are legitimate reasons 
for ALJ awards: impairments get worse, claimants get older, new 
evidence is submitted. Yet a high ALJ reversal rate contributes to the 
perception that there are two different processes.

                          Process Unification

    As part of its effort to redesign the initial disability claims 
process, SSA embarked on an effort to more closely align the 
readjudicative perspectives of the DDSs and OHA. This began with 
revisions to six SSA Rulings that have come to be known as the process 
unification rulings. In addition, national training for all 14,000 
adjudicators in the DDS and OHA has been provided to more closely align 
the adjudicative perspectives of both organizations.
    This effort is showing positive results. In the DDS, more claimants 
are being allowed earlier in the process. The ALJ reversal rate of DDS 
decisions has decreased to about 55%. In the DDSs, we are hearing from 
OHA that receipts are down. Moreover, those cases that do arrive at OHA 
are said to be better documented. This results in a more timely 
decision.

                               Prototype

    For several years SSA has been testing a redesign of the initial 
process called the Full Process Model (FPM). The FPM consists of 
several significant changes to the initial process including enhanced 
roles for the disability examiner and the medical consultant in the 
DDS, a conference with the claimant before a claim is denied by the 
DDS, and elimination of the reconsideration step. Data from the pilots 
showed positive results.
    Early in fiscal year 1999, SSA was considering a national rollout 
of a modified FPM. The modifications included a decision rationale in 
the DDS and elimination of the adjudicative officer position at OHA. 
The NCDDD and other stakeholders were opposed to a national rollout of 
the modified FPM. SSA reconsidered its decision to rollout the process 
on a national basis and instead decided to implement the process in ten 
DDSs constituting 20% of the national workload.
    Our organization supports the concept of the prototype. We believe 
that it is another incremental step towards process unification. Based 
on positive feedback from DDSs involved in the FPM pilot and the data 
showing improvements in the process outcomes, the NCDDD felt that a 
phased rollout would be a reasonable approach. Not only will the 
prototype provide an evaluation of the changes to the FPM, it will 
provide a setting that will determine if the FPM results can be 
replicated in the field.
    The NCDDD has been actively involved in the planning for 
implementation of the prototype process. We believe that the changes to 
the initial process can result in significant improvements in public 
service. If the prototype process works the way it is designed to work, 
the DDSs will be preparing better documented disability determinations. 
The DDSs will be allowing cases that heretofore would have not been 
allowed until the ALJ hearing. Moreover, a better documented case at 
OHA translates into a more timely hearing.
    While we believe in the potential of the process changes, we do 
have some significant concerns.
     Cost.--It is proposed that the elimination of the 
reconsideration step will provide the funding for the improvements at 
the initial level. The NCDDD is not convinced that the elimination of 
reconsideration will result in sufficient savings to pay for the 
enhancements to the front end of the process. This is an area that must 
be closely monitored.
     Evaluation.--We see this area as perhaps the most critical 
piece of the implementation plan. In the short run, the evaluation must 
provide for the rapid identification of problems. Over the long run, 
the evaluation must provide decision makers with the appropriate and 
sufficient information on which to base decisions as to the efficacy of 
the prototype process.
     Quality Assurance.--For the past five years, the DDSs have 
been anticipating improvements to SSA's quality assurance system. The 
modifications to the initial process in the DDSs will result in a 
significant change to the way we do business. The current way of 
providing quality assurance in the DDS will undergo a dramatic change. 
We expect and anticipate similar changes to the SSA's current quality 
assurance process.
     The Hearings Process Improvement (HPI).--SSA and OHA are 
to be commended for designing a plan for managing the disability 
process at OHA. The plan is pragmatic and is based on sound management 
principles. We believe it can result in significant improvements at 
OHA. The prototype process will not be judged a success if it succeeds 
in the DDS but not in OHA (or vice versa). Implementation and 
successful execution of the HPI will be a determinant of the success of 
the new process.
    In summary, the NCDDD believes that the prototype process is a step 
in the direction of process unification. It will result in more timely 
decisions for disabled individuals and improve the consistency in 
decision outcomes between the DDS and OHA. Without adequate funding for 
SSA's disability programs, however, improvements in the level of 
service that can be provided to disabled individuals will be 
problematic.
    Mr. Chairman, Madam Chairman, thank you again for the opportunity 
to be here today.

                                

    Chairman Johnson. Thank you, Mr. Brennan.
    The Honorable Mr. Bernoski.

 STATEMENT OF THE HON. RONALD G. BERNOSKI, ADMINISTRATIVE LAW 
    JUDGE, OFFICE OF HEARINGS AND APPEALS, SOCIAL SECURITY 
     ADMINISTRATION, MILWAUKEE, WISCONSIN, AND PRESIDENT, 
            ASSOCIATION OF ADMINISTRATIVE LAW JUDGES

    Judge Bernoski. Thank you, Madam Chair.
    Thank you for inviting us to testify here at this hearing. 
I appear as the president of the Association of Administrative 
Law Judges.
    First, regarding Social Security workloads. We have made a 
substantial improvement in this area. The backlog has been 
reduced by over 200,000 cases since 1995 and the processing 
time has been reduced to less than 1 year.
    With regard to the HPI, which is the Hearing Process 
Improvement. We were not included in the creating of this 
program and it has not been published for notice or comment. 
While the goal of providing development for Administrative Law 
Judges is laudable, we believe that it is not necessary to 
reorganize OHA when the same result can be achieved at a lesser 
cost by improving the current system.
    The HPI places employees in teams. This change retains the 
deficiencies of the current system. That is, all of the 
responsibility for the case is placed on the Administrative Law 
Judge but the Administrative Law Judges do not have the 
capacity to control the flow of the work product. Until this 
problem is fixed the system will remain flawed.
    The HPI is not necessary because workloads and processing 
times have dropped significantly. The HPI is not claimant-
friendly and it places emphasis on case numbers and not on 
claimants. The HPI takes control of the case from the judge and 
gives it to the staff. It also reassigns the hearing conference 
from the judge to the staff. This is contrary to the position 
description of the Administrative Law Judge and contrary to the 
law which requires the judge to control and develop the case.
    The HPI is also inconsistent with the Administrative 
Procedure Act which places control of the hearing under the 
Administrative Law Judge. Further, Social Security regulations 
specifically provide that the Administrative Law Judge is to 
determine whether conducting a prehearing conference is 
necessary and the OPM regulations provide that only an 
Administrative Law Judge can perform an Administrative Law 
Judge function.
    We must remember that these legal requirements are placed 
in the law for the benefit of the claimant and not for the 
benefit of the judge.
    The HPI will also assign staff attorneys to other duties 
instead of writing cases. This will cause a decision writing 
backlog as it has in the past.
    We believe that the objective of the HPI can best be 
achieved by doing the following: First, by improving the 
current system and adhering to the job description of the 
Administrative Law Judge and legal analyst and by giving the 
current legal analyst the responsibility to develop the case 
for the Administrative Law Judges. Second, by enhancing the 
training of the support staff with a better training product. 
And, third, by developing uniform rules for hearing procedure.
    We also recommend that the due process hearing in Social 
Security be strengthened. This can be done by creating a 
benefits review board in place of the Appeals Council as has 
been recommended by the Judicial Conference of the United 
States. Or, by creating an Office of Administrative Law Judges 
in the Social Security Administration, under the direction of a 
chief judge who reports directly to the Commissioner.
    Other groups, such as the American Bar Association and the 
Federal Bar Association favor the improving and strengthening 
of the ALJ hearing within the Social Security system.
    We suggest that a commission be created under the 
jurisdiction of the Judiciary Committee because it has 
jurisdiction over the Administrative Procedure Act. This 
commission should study the Social Security hearing process and 
other benefit program hearings and make its findings and 
recommendations to the Judiciary Committee for further 
legislative action.
    The GAO in its report, refers to a different approach 
between the DDS and the ALJ adjudication system. It is more 
than just a different approach. The ALJs use a legal standard. 
We apply the Federal law to the case, and we often use both 
medical and legal experts at our hearings. The ALJ decision 
must be based on the evidence in the record before that judge 
and it must be consistent with the law. The ALJs are more 
constrained in their decisionmaking than the DDS. The DDS can 
use more intuitive reasoning when it is analyzing the 
impairment of the claimant, while the Administrative Law Judge 
is bound more by the medical opinion evidence in the record.
    The statement was made that Administrative Law Judges 
ignore the regulations. This is not true. The regulations are 
part of the Federal law. That is clear in administrative law. 
The courts have repeatedly said this. When we apply the Federal 
law, as we do, we apply the regulations in each and every case.
    Now, with relationship to the salary structure of 
Administrative Law Judges that Commissioner Apfel referred to. 
He made a slight misstatement. He referred to the fact that 
Administrative Law Judges are paid at a ceiling of $125,000. 
That is true for one judge. That's the chief judge in the 
agency. Administrative Law Judges are paid on a three-tiered 
system. The chief judge; then there is a second-tier which are 
the regional chief judges, there are 10 of these judges. The 
rest of us, the working judges, are in the lowest tier. We are 
paid between the mid-seventies and about $113,000, with most of 
us being in the $70-to-$90,000 classification because we are 
going through the various levels in the third tier.
    That concludes my statement.
    Thank you very much.
    [The prepared statement follows:]

Statement of the Hon. Ronald G. Bernoski, Administrative Law Judge, 
Office of Hearings and Appeals, Social Security Administration, 
Milwaukee, Wisconsin, and President, Association of Administrative Law 
Judges

                            I. Introduction

    My name is Ronald G. Bernoski, I am an Administrative Law Judge 
assigned to the Office of Hearings and Appeals of the Social Security 
Administration in Milwaukee, Wisconsin.
    This statement is presented in my capacity as President of the 
Association of Administrative Law Judges (Association) which is an 
organization having the stated purpose of promoting full due process 
hearings to those individuals seeking adjudication of controversies 
within the Social Security Administration (SSA) and of promoting 
judicial education for Federal administrative law judges.
    The Association has a membership of approximately 700 
administrative law judges. This is the largest organization 
representing the interest of Federal administrative law judges.

                  II. OHA Hearing Process Improvement

    The subject matter for the hearing relates in part to the SSA 
Hearing Process Improvement (HPI) of the Office of Hearings and Appeals 
(OHA). There have been several recent attempts to reorganize OHA and we 
requested to be included in the planning for any such change. However, 
our Association was not brought into either the planning or development 
phase of the program and we have not received any comprehensive 
briefing on the HPI. We are therefore not able to make any extensive 
comments on the proposed change. We understand that HPI will be tested 
at various OHA offices and that the instruction program for the 
trainers is about to commence.
    The press release for this hearing stated that ``while caseloads 
have grown, so have waits to get on the rolls.'' However, according to 
reports from Social Security, caseloads have not grown and the ``waits 
to get on the rolls'' have been substantially reduced. We have been 
advised that during FY 99 OHA issued dispositions in 596,999 cases, the 
case backlog has been reduced to 311,958 compared to 547, 690 cases 
pending in FY '95. The case backlog hovered at about 500,000 cases for 
three years, which means that we have adjudicated over 200,000 from the 
backlog, an outstanding achievement, and case processing time has been 
reduced to less than a year. We have also been advised that case 
dispositions now exceed case receipts and that during FY 2000 
dispositions will exceed receipts by 30,000 cases. These are large 
numbers and the results show that the SSA is the largest and most 
productive adjudication system in the western world. SSA administrative 
law judges work hard to provide timely and efficient service to the 
public.
    We understand that the goals of HPI are to provide analysis and 
development of cases before they are assigned to administrative law 
judges. This is a laudable goal. However, it is not necessary to expend 
millions of dollars to reorganize OHA when the same result can be 
accomplished by providing training to the legal analysts. In fact, the 
present job description of the legal analyst requires case analysis and 
development of each case prior to the administrative law judge 
scheduling the case for hearing. This responsibility was withdrawn from 
these employees when the case backlog was large to increase their case 
productivity. HPI is now apparently creating new job titles to perform 
established work duties. The same result can be achieved at a lesser 
cost by restoring the job function to the current employees. The agency 
could achieve more benefit by adopting uniform rules of procedure for 
the hearing process and by enhancing training for its employees. The 
agency should build upon the training currently provided to SSA 
administrative law judges by the Association at its annual conference.
    We have concern about several aspects of the HPI which have been 
generally disclosed. We understand that the HPI is a management concept 
with staff support to administrative law judges structured in teams. It 
is not clear as to the number of judges or teams that will be grouped 
together. The cases will apparently be 
assigned to these teams for development. This case assignment has the 
potential of direct conflict with the Administrative Procedure Act, 
which provides that ``[a]dministrative law judges shall be assigned to 
cases in rotation so far as practicable'' \1\ We believe that assigning 
cases to either a person or team for development instead of to an 
administrative law judge violates both the spirit and intent of that 
statute.
---------------------------------------------------------------------------
    \1\ 5 U.S.C. Sec. 3105.
---------------------------------------------------------------------------
    The HPI places development responsibility for the case within the 
control of a team. This assignment is in direct conflict with numerous 
Federal court decisions which have held that the administrative law 
judge has the duty and responsibility to develop the record for both 
the claimant and the agency.\2\ The HPI policy clearly can not overrule 
this established law. We also have a question as to the authority of 
the administrative law judge after the case has been transferred to the 
judge for hearing. Will the administrative law judge have authority to 
return the case to the team for further development? If not, will the 
judge have adequate support staff to develop the record? A similar 
question exists regarding post-hearing development. Will the 
administrative law judge have authority to return the case to the team 
after the hearing for development? If not, will the judge have adequate 
support staff to perform this work? The HPI, therefore, has the 
potential to deny the judge the support necessary to perform his/her 
mandated legal responsibility.
---------------------------------------------------------------------------
    \2\ Cases are too numerous to cite.
---------------------------------------------------------------------------
    The HPI makes a vague reference to prehearing conferences. Current 
SSA Regulations provide that only the administrative law judge has the 
authority to determine if conducting a prehearing conference will 
facilitate the hearing.\3\ We question how the administrative law judge 
will be able to conduct this prehearing conference before the case is 
assigned to the judge for hearing. The HPI does not amend the existing 
regulations and established principles of administrative law clearly 
compel an agency to follow its rules. This creates a conflict between 
the HPI and existing regulations. The regulations of the Office of 
Personnel Management also provide that an agency may not detail an 
employee who is not an administrative law judge to an administrative 
judge position.\4\
---------------------------------------------------------------------------
    \3\ 20 CFR 404.961 and 416.1461.
    \4\ 5 CFR 930.209
---------------------------------------------------------------------------
    The HPI process, as we understand it, has the potential to add 
another layer of bureaucracy. It provides for a preliminary conference, 
not previously required, which requires the attendance of the claimant 
and/or a representative.
    The HPI will transfer many of the staff attorneys who are currently 
writing decisions for administrative law judges to other functions 
which do not include decision writing. We understand that there is no 
plan to replace these decision writers. This reduction in decision 
writing support will cause a backlog in the unwritten administrative 
law judge decisions. We warned of a similar problem in Action #7 of the 
prior SSA Short Term Initiatives. Our warning was not accepted by the 
agency and a large decision writing backlog occurred, which required a 
crisis response by the agency. We anticipate the same problem with the 
HPI.
    This change is the third step in the development of the current 
staff organization of OHA. When the SSA hearing system began, the 
hearing offices were organized under the ``unit system.'' Each judge 
was assigned a support staff to assist in administering the case. Under 
this system the judge was responsible for the case and the staff was 
accountable to the judge. The system worked well because it assigned 
specific work duties to particular support persons, developed personal 
accountability for the case and connected the staff action to the 
judge. However, in the 1980's OHA reorganized the staff structure under 
a plan known as ``reconfiguration.'' This system left the 
administrative law judge responsible for the case, but removed the 
support staff to various ``pools'' under the direction of supervisors. 
The judge now has all the responsibility for the case but no authority 
to direct any of the effort on the work product of the case other than 
his or her own labor. Our Association took strong objection to the 
change and predicted it would fail because of its obvious deficiencies. 
The current change to the HPI is an acknowledgment of the failure of 
``reconfiguration'' and a confirmation of our prediction of its 
weaknesses. We believe that we must now take care to not further worsen 
the system, because HPI fails to address the specific weaknesses of 
``reconfiguration.'' The teams are just small pools of employees with 
all the deficiencies of ``reconfiguration.''
    The management concept of HPI is contrary to the principles of 
Total Quality Management (TQM), which is the stated management system 
of SSA. The basic theory of TQM is to eliminate middle management and 
place decision making at the lowest possible level in the employment 
chain. HPI adds more layers of middle management and denies decision 
making at the lowest level, i.e., the administrative law judge level.
    During the 105th Congress, a hearing was conducted before the House 
Judiciary Subcommittee on Commercial and Administrative Law. The 
subject matter of the hearing related to the hearing office process and 
structure in one OHA hearing office. When the current management system 
was described to the Subcommittee, the then ranking member [now Sen. 
Reed (D-RI)] was astonished and questioned how the agency could 
accomplish as much work as it did with this office procedure.

                     III. Social Security Hearings

    The hearing system of SSA is one of the oldest in the Federal 
system. The SSA hearings and appeals system started in the 1940 with 12 
Referees and has grown into the largest institution for the 
administration of justice in the western world. The first Chairman of 
the Office of the Appeals Counsel (now Office of Hearings and Appeals) 
was the Hon. Joseph E. McElvain. Chairman McElvain was particularly 
interested in the independence of the Referees in making 
determinations. In fact, he told an interviewer in 1966 that decisional 
independence of the Appeals Council had been of concern to him even 
before he agreed to head the organization. McElvain went on to tell the 
interviewer that he continued to protect the independence of the 
Referees, even insisting on completely separate office space for the 
Referees in the Regional Offices.\5\
---------------------------------------------------------------------------
    \5\ A Quest For Quality, Speedy Justice, Department of Health and 
Human Services, Social Security Administration, (1991, pages 1 and 2)
---------------------------------------------------------------------------
    The U.S. Supreme Court acknowledged the history and tradition of 
the SSA hearing system in the case of Richardson v. Perales, 402 US 389 
(1971), when the court stated that:

          We need not decide whether the APA has general application to 
        social security disability claims, for the social security 
        administrative procedure does not vary from that prescribed by 
        the APA. Indeed, the latter is modeled upon the Social Security 
        Act.

    After the adoption of the historic Administrative Procedure Act 
(APA) in 1946 the U.S. Supreme court in the case of Universal Camera 
Corp. v. National Labor Relations Board, 340 U.S. 474 (1951), discussed 
the impact of that legislation on the function of the hearing examiners 
(now administrative law judge) as follows:

          To the contrary, Sec. 11 of the Administrative Procedure Act 
        contains detailed provisions designed to maintain high 
        standards of independence and competence in examiners. . . . 
        Both statutes thus evince a purpose to increase the importance 
        of the role of examiners in the administrative process.

    The U.S. Supreme Court continued to define the role and 
responsibilities of the Federal administrative law judge. In the case 
of Butz v. Economou, 438 US 478 (1978), the court described the duties 
of the Federal administrative law judge as follows:

          There can be little doubt that the role of the modern federal 
        hearing examiner or administrative law judge within this 
        framework is ``functionally comparable'' to that of a judge. 
        His powers are often if not generally, comparable to those of a 
        trial judge. He may issue subpoenas, rule on proffers of 
        evidence, regulate the course of the hearing, and make or 
        recommend decisions. See Sec. 556(c). More importantly, the 
        process of agency adjudication is currently structured so as to 
        assure that the hearing examiner exercises his independent 
        judgment on the evidence before him, free from pressures by the 
        parties or other officials within the agency. Prior to the 
        Administrative Procedure Act, there was considerable concern 
        that persons hearing administrative cases at the trial level 
        could not exercise independent judgment because they were 
        required to perform prosecutorial and investigative functions 
        as well as their judicial work . . . and because they were 
        often subordinate to executive officials within the agency . . 
        . Since the securing of fair and competent hearing personnel 
        was viewed as ``the heart of formal administrative 
        adjudication,'' . . . the Administrative Procedure Act contains 
        a number of provisions designed to guarantee the independence 
        of hearing examiners. They may not perform duties inconsistent 
        with their duties as hearing examiners . . . When conducting a 
        hearing under Sec. 5 of the APA, 5 USC Sec. 554, a hearing 
        examiner is not responsible to or subject to the supervision or 
        direction of employees or agents engaged in the performance of 
        investigative or prosecution functions for the agency . . . Nor 
        may a hearing examiner consult any person or party, including 
        other agency officials, concerning a fact at issue in the 
        hearing, unless on notice and opportunity for all parties to 
        participate. Hearing examiners must be assigned to cases in 
        rotation so far as is practicable . . . They may be removed 
        only for good cause established and determined by the Civil 
        Service Commission after a hearing on the record. Their pay is 
        also controlled by the Civil Service Commission.

    The Congress and other Federal courts have recognized the merit of 
the SSA hearing system. In 1983 the Subcommittee on Oversight of 
Government Management of the Committee of Governmental Affairs in the 
United States Senate conducted a hearing which inquired into the role 
of the administrative law judge in the Title II Social Security 
Disability Insurance Program. The Committee issued its conclusions on 
September 16, 1983, which provided in part as follows:

          The APA mandates that the ALJ be an independent, impartial 
        adjudicator in the administrative process and in so doing 
        separates the adjudicative and prosecutorial functions of an 
        agency. The ALJ is the only impartial, independent adjudicator 
        available to the claimant in the administrative process, and 
        the only person who stands between the claimant and the whim of 
        agency policy. If the ALJ is subordinated to the role of a mere 
        employee, an instrument and mouthpiece for the SSA, then we 
        will have returned to the days when they agency was both 
        prosecutor and judge.\6\
---------------------------------------------------------------------------
    \6\ 98th Congress, 1st Session, Committee Print, S. PRT. 98-111, 
U.S. Government Printing Office, October, 1983.

    In the case of Salling v. Bowen, 641 F. Supp. 1046 (1986), a 
Federal district court reviewed a SSA test project relating to the use 
of government representation in Social Security disability cases. The 
court granted a permanent injunction enjoining further use of the 
---------------------------------------------------------------------------
project, and stated as follows:

          We have seen that the administrative procedures in making 
        Social Security disability determinations are a cumbersome 
        ``Rube Goldberg'' process at best, which have been further 
        encumbered by a threat to the independence of the ALJs who are 
        the only people in the entire system who are oriented towards 
        the main goal which should be the seeking of truth and the 
        ultimate triumph of justice. This experimental administrative 
        program has been improperly implemented from its inception in 
        violation of the Secretary's Public Regulations. . . .

    This case and Senate Committee Report stand for the principle that 
the Commissioner must respect the independent fact finding role of the 
administrative law judge, which is protected by the U.S. Constitution, 
Federal case law and the APA. The case also clearly holds that the 
policies of the Commissioner must be consistent with his rules and 
regulations. As stated, we have concern that the HPI is inconsistent 
with both existing law and regulations.
    The SSA administrative law judges demonstrated their commitment to 
the rule of law in the 1980's when they stood between an oppressive 
government and the people, at great personal risk, to protect the due 
process and equal protection rights of the citizens of this nation. The 
American Bar Association issued a commendation to the SSA 
administrative law judges, which stated:

          Be It Resolved, That The American Bar Association hereby 
        commends the Social Security Administrative Law Judge Corps for 
        its outstanding efforts during the period from 1982-1984 to 
        protect the integrity of administrative adjudication within 
        their agency, to preserve the public's confidence in the 
        fairness of governmental institutions, and to uphold the rule 
        of law.

                 IV. Threats to the SSA Hearing System

    The function of an independent administrative law judge is not a 
monument to the administrative law judge. It is a protection provided 
by the Constitution and law to the citizens of this nation. The 
administrative law judge is not free to establish policy for the 
agency. The administrative law judge is bound to follow the 
Constitution, statutes, Federal circuit law and agency regulations. The 
administrative law judge is only free to use his/her independent 
judgment to make a decision on the evidence in the record. The decision 
must be supported by both the facts in the record and the controlling 
law. Americans have fought and died to protect their rights under the 
Constitution and it would be a grievous error to adopt policies which 
curb or limit the basic rights of due process and equal protection 
under the law.
    The SSA has adopted a series of policies during the last several 
years that we believe have the objective of asserting undue influence 
and control over the decisions of SSA administrative law judges 
contrary to the Constitution, the Administrative Procedure Act and the 
decisions of the U.S. Supreme Court.
    In January 1997 SSA issued a memorandum, prepared by the Office of 
the General Counsel, which stated that the agency may establish 
practices and programmatic policies that administrative law judges must 
follow. The memorandum further concluded that administrative law judges 
may be disciplined for violations of these policies even if such 
policies are not consistent with the law.\7\ We are concerned that this 
memorandum is the beginning of a structure that the agency will use to 
enforce its policies upon administrative law judges regardless of 
whether the policies are consistent with Federal circuit law. The 
Association has requested that this memorandum be withdrawn, but the 
agency has not done the same.
---------------------------------------------------------------------------
    \7\ Legal Foundations of the Duty of Impartiality in the Hearing 
Process and its Applicability to Administrative Law Judges, Office of 
the SSA General Counsel, (January 28, 1997).
---------------------------------------------------------------------------
    The SSA has subsequently taken another step to implement the 
objective of the ``impartiality memorandum.'' It has changed the agency 
disciplinary procedure for administrative law judges. Previously this 
function was within the authority of the Associate Commissioner of OHA. 
This procedure has been changed and the Associate Commissioner of OHA 
now only has the authority to investigate claims and prefer 
disciplinary charges against administrative law judges to the Merits 
Systems Protection Board. The Office of General Counsel now has the 
responsibility to prosecute the case for the agency before the Merit 
Systems Protection Board. The Association is of the opinion that this 
change co-mingles the policy making and adjudication function of the 
agency. It places the Office of the General Counsel, which has a policy 
making function, in a position where it can force agency policy on 
administrative law judges through its disciplinary power. This creates 
a ``chilling effect'' for administrative law judges and violates both 
the spirit and letter of the Administrative Procedure Act. We have 
requested that the agency return to the former procedure but the same 
has been denied.
    During the last year the SSA/OHA attempted to reorganize the Office 
of Hearings and Appeals and remove all responsibility from the Chief 
Judge for daily operations of the adjudication function of the agency. 
This change would have removed the Chief Judge from the chain of 
authority and would have had the Regional Chief Judges reporting 
directly to the Associate Commissioner. This proposed change would have 
violated the Administrative Procedure Act by joining the independent 
adjudication function with the policy making branch of the agency and 
would have politicized the SSA hearing process. The agency withdrew the 
proposed reorganization after considerable concern was expressed to the 
agency by Members of Congress and other interested groups and persons.
    SSA has also recently attempted to convince the Office of Personnel 
Management (OPM) to change the criteria for selecting administrative 
law judges and instead adopt a method of ``selective certification'' 
that would have placed disproportionate weight on the experience of 
staff attorneys of the agency. This change would have changed a long 
standing method for selecting administrative law judges that had been 
developed in conjunction with legal groups including the American Bar 
Association. The change would have discriminated against veterans, 
women and other minorities, federal attorneys in other agencies and 
attorneys engaged in the private practice of law. It would have allowed 
the SSA to determine the composition of the administrative law Corps by 
its selection process for staff attorneys. OPM decided to not grant the 
request of SSA only after strong objections were raised to the proposal 
by the Chairpersons of the House Subcommittee on Civil Service and 
House Judiciary Subcommittee on Commercial and Administrative Law.
    Each of these efforts consisted of an attempt by SSA to obtain a 
greater measure of control of the administrative law judge function in 
the agency. These are the exact types of undue agency influence that 
the drafters of the Administrative Procedure Act intended to prohibit.

                           V. Recommendations

    We believe that a more meaningful result can be achieved by 
improving and strengthening the administrative law judge hearing 
structure of SSA to bring it into full compliance with the requirements 
of the Due Process Clause of the U.S. Constitution, the Administrative 
Procedure Act and related case law. For many years this Association 
advocated establishing a unified Corps of administrative law judges for 
all Federal agencies. We have also recommended that a Review Commission 
be created for the SSA administrative law judge adjudication function, 
or that an Office of Administrative Law Judges be created in SSA under 
the direction of a chief judge who reports directly to the 
Commissioner. (See attached).
    It should be noted that even the Department of Health and Human 
Services (before SSA was separated from that department) has questioned 
the wisdom of having the judges employed by the same agency whose cases 
they decide. In a May, 1981 Management Oversight Review Report in the 
Office of Hearings and Appeals and the SSA, the Office of the Inspector 
General found that the appeals process could be more effectively 
located outside the Social Security Administration. The report 
highlighted the appearance of impropriety and the incongruity in having 
one arm of the SSA making the basic eligibility determinations in cases 
while the Office of Hearings and Appeals arm of SSA adjudicates that 
decision. It went on to question the wisdom of the arrangement of 
putting the Office of Hearings and Appeals under the direction of an 
Associate Commissioner because the SSA staff controls the resources, 
space, equipment and supplies of the Office of Hearings and Appeals 
which, if restricted, could indirectly control the number and quality 
of the hearings held.
    The recent attempts by SSA to control the administrative law judge 
function of the agency, are current examples of agency conduct that 
meets the concerns of the agency Inspector General.
    Other groups in the legal community share our concern with the 
current danger signs in the SSA administrative adjudication system and 
support a change to the hearing structure that strengthens the 
administrative law judge function. The American Bar Association is on 
record with a resolution which supports the independence of the 
administrative law judge in Social Security hearings. The Resolution 
stated that it supports ``reforms in the Social Security disability 
adjudication process to eliminate the backlog that threatens the 
ability of Social Security administrative law judges to assure due 
process, including:

          (2) that certain measures be taken at the hearing level to 
        assure the integrity of the fact-finding function; and
          (3) that claimants for disability benefits continue to be 
        entitled to a due process hearing before an administrative law 
        judge.\8\

    \8\ Policy and Procedures Handbook, American Bar Association, 1995-
1996, page 186.

    The Judicial Conference of the United States issued a report which 
recommended that the quality of the Social Security hearing be improved 
by creating a Social Security Benefits Review Board for the SSA 
administrative law judge hearing.\9\ Recently the Social Security 
Disability Section of the American Trial Lawyers Association 
recommended that the Public Affairs Committee of that organization 
formally support the proposals of the Association to improve the SSA 
hearing system.
---------------------------------------------------------------------------
    \9\ Long Range Plan for the Federal Courts, Judicial Conference of 
the United States, December 1995.
---------------------------------------------------------------------------
    The Association recommends that a Commission be created under the 
jurisdiction of the House Judiciary Subcommittee on Commercial and 
Administrative Law because of the subcommittee's jurisdiction over the 
administrative hearing conducted under the Administrative Procedure 
Act. The Commission should be given the mission to study ways to 
improve the administrative hearing system of the Social Security 
Administration. The Commission should also study the hearing system of 
other benefit programs and determine whether several adjudication 
systems should be heard by a single benefits review commission or 
board. This takes into consideration the fact that Social Security now 
adjudicates HCFA cases for the Department of Health and Human Services. 
The Commission should make a report of its findings and recommendations 
to the Subcommittee within one year. The Commission should include 
representatives from groups such as the American Bar Association, the 
Federal Bar Association, the American Trial Lawyers Association, the 
Association of Administrative Law Judges, the Federal Administrative 
Law Judge Conference, the Judicial Conference of the United States, 
claimants groups and claimant representative organizations.
    The objective is to develop an administrative hearing system for 
SSA, which meets the requirement of the Constitutional due process 
hearing, the Administrative Procedure Act and Federal law.
    Rather than adopting the costly HPI, we recommend that the agency 
improve its current management system by:
    1. Adhering to the job descriptions of administrative law judges 
and legal analysts;
    2. Adopting uniform rules for hearings practice and procedure in 
consultation with the Association; and,
    3. Enhancing the positions of support staff through training.
    [Attachments are being retained in the Committee files.]

                                

    Chairman Johnson. Thank you, Judge Bernoski.
    Now, we will hear from Judge McGraw.

 STATEMENT OF HON. KATHLEEN McGRAW, ADMINISTRATIVE LAW JUDGE, 
 AND CHAIR, SOCIAL SECURITY SECTION, FEDERAL BAR ASSOCIATION, 
OFFICE OF HEARINGS AND APPEALS, SOCIAL SECURITY ADMINISTRATION, 
                        ATLANTA, GEORGIA

    Judge McGraw. Thank you, Chairperson Johnson.
    Thank you for convening this hearing this morning. I am 
very pleased to be here on behalf of the Federal Bar 
Association at the request of its President Jackie Goff. As you 
probably know, the Federal Bar Association is the foremost 
professional association for attorneys who practice before 
administrative agencies and Federal courts. Unlike the other 
panelists before you here this morning, the Federal Bar 
Association does not represent the narrow interests of any one 
specific group. Rather, the Federal Bar encompasses all 
attorneys and judges involved in disability adjudication.
    The primary concern of the Federal Bar Association is the 
effectiveness of the adjudicatory process. Our highest priority 
is assuring the integrity, independence, fairness and 
effectiveness of the disability hearing process.
    For most claimants, a disability hearing is their first and 
only encounter with the legal system in the United States and 
is on a matter of paramount importance to both them and their 
families. It is the FBA's position that the key to a disability 
decision is an individualized assessment of a claimant's 
impairments.
    Two people with identical medical impairments may have very 
different functional limitations flowing from those 
impairments. I could have a herniated disk, Ms. Shor could have 
a herniated disk. I may be completely debilitated by pain, Ms. 
Shor may be able to function perfectly well on a day-to-day 
basis. One of us would be disabled, the other would not. How 
does SSA decide which one of us with a herniated disk is 
disabled and which one of us is not?
    I submit to you that at the first levels of decision, the 
DDS examiners, they are relying primarily upon the objective 
medical evidence. The two people with the same impairment will 
get the same decision at the DDS level. If those people move on 
to the OHA level, something more happens in a due process 
hearing. They receive an individualized assessment. That judge 
will for the first time see the two of us face-to-face. The 
judge will look at the total record and hear the testimony of 
the claimant regarding her or his subjective complaints. The 
judge has to make a credibility assessment as to whether that 
person is telling the truth about their subjective complaints.
    Judges are trained to make this determination. It is a 
legal process. This is not to say that the folks at the DDS 
would be unable to perform this determination but there has 
been much talk here this morning about process unification 
training. Process unification training was an attempt to get 
all examiners and judges using the same standards.
    I was a process unification trainer. I went across the 
country, and it became clear to me that at the DDS level they 
are relying on objective evidence. DDS examiners said, we do 
not have the time or the capability to make that difficult 
credibility assessment that the judges make. And, therein, I 
think lies the difference in the two levels of adjudication.
    OHA is the place where this credibility assessment has to 
occur. And OHA was doing a fairly good job of that until the 
numbers crunch of the nineties. It put an unbelievable strain 
on the system. And I think what happened was Social Security 
program folks looked at how quickly the DDS was doing its job 
and said, if we could control the judges and get them to do 
things the way that the DDS is doing them, maybe they could 
move faster as well.
    Well, that cannot be done if you are going to preserve the 
integrity of the due process hearing. You have to have that 
individualized assessment.
    HPI, the hearing process improvement plan, is coming up and 
it has a lot, it has some good things, some good ideas in it. 
OHA desperately needs improved automation. It needs 
streamlining. It needs development of cases for judges. And it 
needs group-based accountability for the work.
    I applaud those things but I do believe that judges have to 
be in charge of this process. In order to have this 
individualized assessment it needs to be headed up by judges. I 
would also say that the No. 1 difficulty for me as a judge 
doing my job is a lack of accountability within OHA for 
performance by its employees. Employees need to have a 
quantifiable performance appraisal system in place so that 
performance can be assessed on a very objective basis.
    The FBA has made a number of specific recommendations with 
respect to disability adjudications. They are in my written 
testimony and I hope that you will give them consideration. I 
would be glad to answer any questions you have about them.
    Thank you very much.
    [The prepared statement follows:]

Statement of Hon. Kathleen McGraw, Administrative Law Judge, and Chair, 
Social Security Section, Federal Bar Association, Office of Hearings 
and Appeals, Social Security Administration, Atlanta, Georgia

                              Introduction

    Chairman Shaw, Chairwoman Johnson and Members of the Subcommittee: 
I am Kathleen McGraw, chair of the Social Security Section of the 
Federal Bar Association. I am an administrative law judge in the Office 
of Hearings and Appeals of the Social Security Administration in its 
Atlanta North office. As an Administrative Judge for the U.S. Merit 
Systems Protection Board for 13 years and as an Administrative Law 
Judge for Social Security for the past four years, I have heard and 
decided well over 2,000 appeals. I am very pleased to be here today 
representing the Federal Bar Association at the request of its 
President, Jackie Goff. My remarks today are exclusively those of the 
Social Security Section of the Federal Bar Association and do not 
reflect the official position of the Social Security Administration.
    Thank you for convening this hearing this morning on a matter of 
critical importance to the Federal government's delivery of effective 
services to the American people. As you know, the Federal Bar 
Association is the foremost professional association for attorneys 
engaged in the practice of law before federal administrative agencies 
and the federal courts. Fifteen thousand members of the legal 
profession belong to the Federal Bar Association. They are affiliated 
with over 100 FBA chapters in many of your districts. There are also 
over a dozen sections organized by substantive areas of practice such 
as the Social Security Section, of which I am the Chair.
    Unlike other organizations associated with Social Security 
disability practice that tend to represent the narrow interests of one 
specific group, the Federal Bar Association's Social Security Section 
encompasses all attorneys involved in Social Security disability 
adjudication. Our members include:
     Attorney Representatives of claimants
     Administrative Law Judges (ALJs)
     Staff Attorneys at the Office of Hearings and Appeals
     Attorneys at the Social Security Administration's Office 
of General Counsel
     U.S. Attorneys
     U.S. Magistrate Judges, District Court Judges and Circuit 
Court Judges
    The greatest interest of the FBA's Social Security Section is in 
the effectiveness of the adjudicatory processes associated with 
hearings in the Office of Hearings and Appeals, the appeal process at 
the Appeals Council and judicial review in the federal courts. Our 
highest priority is to assure the integrity, independence, fairness, 
and effectiveness of the Social Security disability hearing process for 
those it serves--both Social Security claimants themselves and all 
American taxpayers who have an interest in assuring that only those who 
are truly disabled receive benefits.
    A hearing at the Office of Hearings and Appeals is a critical event 
in the life of a Social Security claimant. For many, it is their only 
encounter with the legal system and it is their only opportunity for a 
face to face hearing on a matter of paramount importance to them and 
their families.

      An Individualized Assessment is Key to a Disability Decision

    The key to disability adjudication is an individualized assessment 
of each claimant's impairments. Any two people with identical medical 
conditions may have very different limitations flowing from those 
conditions. One may be disabled and the other not. A due process, 
individualized hearing is essential to fair adjudication.
    The Social Security Section of the FBA believes that the assurance 
and preservation of an impartial hearing process relies critically upon 
the separation of the regulatory and adjudicative functions within 
Social Security. Judges, not bureaucrats, need to be in charge of the 
adjudicative function, with the necessary support from the 
administrative branch.
    Why is this the case? A decision was made some time ago that the 
hearing to which the disability claimant was entitled would be 
conducted by an Administrative Law Judge. A judge, of course, is a 
person trained in principles of law, including the law of evidence. A 
judge is expected to know when evidence supports a disability decision 
and when it does not. A judge is trained to evaluate evidence 
pertaining to witness credibility, a skill that cannot be overstated in 
the Social Security arena. And a judge knows when additional evidence 
is needed and how and from where that evidence can be gathered. The 
judge also is expected to be familiar with case law from the federal 
District and Appeals Courts. And it has been decided that the judge is 
to oversee a nonadversarial adjudication process, a process in which 
the claimant is usually represented and the government is not. Given 
the nature of the adjudicative process, the role of the judge is 
pivotal in the delivery of the due process to which more than lip 
service must be paid.
    Within Social Security there has been an ongoing tension, some 
might call it a struggle, between the regulatory or program side of the 
agency and the adjudicative side which is the Office of Hearings and 
Appeals.
    As you know, the Social Security Administration has contracted with 
the States to handle the first two levels of decision-making in 
disability cases. Examiners in the State Agencies collect the medical 
evidence and, with input from medical consultants, make the initial and 
reconsideration determinations. At these levels, historically, there is 
no face to face interaction between the examiner and the claimant. It 
is strictly a determination based on documentary evidence which is 
primarily medical in nature.
    It is probably fair to say that there are those who believe the 
State Agencies doing these initial and reconsideration determinations 
do them quickly and efficiently, while the Office of Hearings and 
Appeals does not. Accordingly, under this view, if program and 
operations people within Social Security could ``control'' the judges, 
they could better control the workload at the Office of Hearings and 
Appeals and make it more efficient. Cases could be done faster and in 
larger numbers, under this view.
    The fact is, however, that due process hearings are not the same as 
the determinations made at the State Agencies. Claimants are entitled 
to a hearing in front of an impartial judge who will take the time 
necessary to give each person a full and fair hearing. To afford 
claimants their due process rights in an individualized hearing takes 
time, and there is more to efficiency than numbers and speed. 
Efficiency encompasses making the right decision at the earliest point 
possible. State Agency determinations are affirmed only about 50% of 
the time by ALJs. In contrast, ALJ decisions are affirmed about 80% of 
the time by the federal courts.
    The task an ALJ performs is a difficult one, and the product of the 
process--the ALJ decision--is subject to review by the federal courts. 
It needs to be the product of legally trained employees. A U.S. 
Magistrate Judge recently told me that Social Security cases are the 
most difficult ones he handles because he needs to become totally 
conversant with all the evidence of record in order to be able to 
render a fair decision based on the individual circumstances in each 
case. He acknowledged that disability cases take a lot of time if they 
are accorded the attention they deserve.
    The processes at the State Agency and the Office of Hearings and 
Appeals are fundamentally different. State Agency decisions are driven 
almost exclusively by the objective medical evidence of record, which 
often is sparse and incomplete at that level. ALJs consider not only 
the objective evidence but also the claimant's subjective complaints. 
They often are assisted in their task by able practitioners who marshal 
and present the evidence. Ultimately, however, it is the responsibility 
of the judge to see that all pertinent evidence has been gathered to 
enable the fair adjudication that the regulations contemplate.
    To reach a decision, inevitably there must be an assessment of the 
claimant's credibility. In fact, the Social Security Administration has 
made clear in its regulations and rulings that a disability 
determination must include an assessment of the claimant's subjective 
allegations such as pain, and the courts have repeatedly made clear 
that such an assessment is critical. Credibility assessments are 
difficult to make and even more difficult to articulate. State Agency 
examiners recoil from the task and instead rely solely on objective 
findings. Therein lies the fundamental difference between the two 
bureaucratic determinations at the State Agency and the disability 
decision at the hearing level.
    Three years ago, Social Security, as a part of redesign, undertook 
a massive training of all disability adjudicators, called Process 
Unification Training. It focussed on eight Social Security rulings that 
reiterated existing rules and policy on assessing credibility, medical 
opinion, and residual functional capacity. State Agency examiners, 
medical consultants, quality reviewers, judges and writers were all 
trained together for the first time. As a facilitator for this 
training, I traveled across the country and interacted with all 
components being trained. It became clear to me during this training 
that State Agency examiners, although hardworking and well-trained in 
the medical area, were not assessing a claimant's subjective 
allegations. Moreover, they were overwhelmed by the prospect of having 
to do so. They uniformly agreed they did not have the time to make such 
assessments and produce the number of determinations expected of them.
    They were confounded by the task of assessing a claimant's 
subjective allegations and articulating a reasoned basis for their 
conclusion. Notwithstanding the clear message from the Process 
Unification training that State Agency Examiners were expected to 
perform individualized assessments and rationalize their 
determinations, they have failed to do so. State agencies balked at 
this requirement, and examiners' determinations continue to be devoid 
of rationale and continue to be driven almost exclusively by the 
objective findings. It is the only way they can maintain the production 
expected of them. Meanwhile, the Office of Hearings and Appeals 
continues to assume the thorny obligation of assessing the subjective 
allegations of claimants.
    It was the intent of Process Unification to have the correct 
decision for a claimant rendered at the earliest point possible in the 
process. During the training, I heard State Agency examiners say they 
sometimes tell claimants to appeal to the Office of Hearings and 
Appeals because the judge will be able to allow their claims based on 
their subjective complaints but they, the examiners, could not based 
solely on the objective evidence of record. If the examiner were to 
allow the case, it would result in an error being assessed by the 
Disability Quality Branch of Social Security. This would adversely 
impact the examiner's performance evaluation and the so-called accuracy 
rate for the State Agency. In this way through its Quality Control 
Branch, Social Security can control the decision-making process of the 
State Agencies. An independent ALJ, who is not subject to performance 
ratings, can apply the law as it should be applied. This independence 
is the essence of the due process hearing and the reason Social 
Security perceives the Office of Hearings and Appeals and its judges as 
being beyond its control. Again, this is the root of the tension 
between Social Security and its adjudicatory branch--the Office of 
Hearings and Appeals.

                    Reform of the Disability Process

    When the Social Security Administration became overwhelmed by the 
number of cases that were inundating the Office of Hearings and Appeals 
in the mid-1990's, Social Security embarked on a redesign of the 
disability process. Many initiatives were undertaken including 
Screening Units, the Senior Attorney Program, and the Adjudication 
Officer (AO) program. The first two initiatives were designed to cull 
out the cases that could be paid on the record without a hearing.
    The third initiative, the Adjudication Officer Program, was 
designed to have the Adjudication Officer develop the case, allow it if 
it could be allowed, and if not, pass it on to the Administrative Law 
Judge as a fully developed case ready to be heard. The concept was a 
good one, but the program did not work because the AO's could not 
produce the numbers of cases per day necessary to handle the disability 
workload. Moreover, although a face to face meeting was contemplated 
between the AO and the claimant, those meetings did not occur, and 
often the AO's could not accurately assess the severity of the 
claimant's subjective complaints.
    The latest initiative, the Hearing Process Improvement Plan (HPI) 
is an effort to distill the ideas of redesign. The concept behind the 
plan--the development of the case for the ALJ--is a good one. The 
problem with the plan, however, is that it envisions control and 
development of the cases prior to hearing by persons other than judges, 
without input from judges, and predominantly by persons without legal 
training.
    The plan appears to be the product of judges. At the head of HPI 
there is one Regional Chief Administrative Law Judge. Moreover, the 
plan is known as the plan of the Regional Chief Administrative Law 
Judges. It was not until after the plan was unveiled, however, that 
there was any significant effort to solicit input from the judges in 
the hearing offices who perform the daily work of adjudicating cases.
    While Social Security's Chief Administrative Law Judge had limited 
input in the early stages of the development of HPI, since the 
beginning of 1999 he has been out of the loop. The Regional Chief Judge 
in charge of HPI answers to the Deputy Commissioner for Disability and 
is working in Baltimore, not Falls Church where the Office of Hearings 
and Appeals and the Chief Judge are located. The Regional Chief Judge 
is not working for and through the Chief Judge and Associate 
Commissioner, who run the Office of Hearings and Appeals. A recent 
preliminary proposal within Social Security, in fact, to remove the 
management authority of the Chief ALJ over the local hearing offices 
and ALJs would have seriously diminished the role of the Chief ALJ and 
all ALJs. Fortunately, the agency more fully considered the merits of 
that proposal and ultimately rejected it. However, the organizational 
and cultural attitude that prompted such a proposal to emasculate the 
authority of the Chief Administrative Law Judge continues to persist 
within the agency and lies at the heart of this tension between its 
regulatory and adjudicatory components.
    In the course of redesign a myriad of memos has been generated by 
Social Security officials outside the Office of Hearings and Appeals. 
The tenor of many of these memos is an antipathy for the Office of 
Hearings and Appeals and its independent ALJs and an expression of the 
need for Social Security to take control of the hearing process. One 
such memo stated in part:

          A significant portion of the problem with OHA is that the 
        ALJs exercise wide discretion to interpret the law and 
        regulations as they see them and in relation to their local 
        environment, while the rest of the agency follows a philosophy 
        of a national program with one set of meticulously laid out 
        policies and procedures . . .
          A more productive process could be achieved through an 
        operational structure with non-ALJ control/management. A change 
        in culture needs to be introduced which instills accountability 
        for productivity. ALJs need to understand and accept they are a 
        part of the organization working toward organizational, not 
        individual, goals. The hearing entity should include strong 
        non-judicial leadership--titles and degrees do not matter . . . 
        As stated before, OHA should be under the Deputy Commissioner 
        for Operations with the regional staff and hearing offices 
        under the Regional Commissioner.

    There is concern that the HPI plan may be the first step down the 
very slippery slope to an Office of Hearings and Appeals controlled by 
non-ALJs. The office structure under HPI is a move away from judge 
control. While the Hearing Office Chief ALJ still is the titular head 
of the office, the ALJs themselves are entirely out of the chain of 
command. Working for the Hearing Office Director, who many anticipate 
will be an employee new to the Office of Hearings and Appeals coming 
from the program side of Social Security, the analysts and technicians 
will develop cases before they are seen by or assigned to a judge. The 
plan does allow for ``standing orders'' from the ALJs as to how they 
want cases developed, but the staff will have no idea for which judge 
they are developing a case so those orders will mean little or nothing. 
Moreover, within a processing team of approximately 16 employees, who 
will support four judges, there is only one position exclusively for an 
attorney--the Legal Advisor. The analysts, which are GS-9/11/12 
positions, are for either attorneys or paralegals. While there is 
conflicting information as to the agency's final plans, there appears 
to be a shift away from attorneys, and under HPI those who are 
attorneys will in many cases be supervised by non-attorneys--a 
situation that may run afoul of Bar requirements in many states.
    The work of the Office of Hearings and Appeals is judicial in 
nature. It requires the input of attorneys. While there is a legitimate 
place for paralegals in the process, the trend seems to be to supplant 
the attorneys with paralegals. Ironically, the grades for both are 
identical. Thus, for no additional money Social Security could be 
employing lawyers educated in the concept of due process and the 
evaluation of evidence; yet, the preference seems to be to hire 
paralegals who may not have a college degree let alone training in 
these critical legal concepts. That is not to say that many of the 
Office of Hearings and Appeals paralegals do not do a creditable job. 
It is to point out, however, Social Security's inclination to de-
legalize the hearing process.
    It should also be pointed out that when one hears the term 
``paralegal,'' one assumes a certain level of training in the law. At 
Social Security, that is not the case. The title ``paralegal'' has been 
given to a job that for the most part is held by employees who have 
been promoted from clerk-typist, to clerk, to legal assistant to 
paralegal. These employees have no legal training and are in no better 
position to analyze evidence and write legal decisions containing 
credibility assessments than the examiners in the State Agencies. It is 
the perception that legal training is not necessary to perform these 
tasks. This represents another change in the perception of the Social 
Security Administration about the due process hearing.
    This de-legalization of the hearing process is also manifesting 
itself in other respects, including the representation of claimants by 
attorneys. The current version of H.R. 3070, Ticket to Work and Work 
Incentives Improvement Act, proposes to assess a ``user fee'' when the 
Social Security Administration has approved and certified direct fee 
payment to attorneys (from past-due benefits payable to beneficiaries) 
for their representation of claimants. The proposed fee would be 
computed at a rate of 6.3% of the fee paid to attorneys who use the 
statutory withholding and direct fee payment mechanism. Attorney fees 
for Social Security claimants using the mechanism are already capped 
and are highly regulated. The user fee will reduce the net fee paid to 
the attorney and will discourage involvement by members of the 
disability bar in Social Security disability cases. Yet, disability 
claimants are often a segment of the population most in need of 
competent representation. The due process hearing--a legal process--is 
critical to the fair assessment of their claims.
    HPI's proponents anticipate a 21% decrease in processing time and 
16% increase in productivity through its implementation. Judges are 
currently producing on average about two cases per workday or 42 per 
month. There is a breaking point. All the efficiencies in the world 
relating to case development cannot change the fact that in order to 
provide a claimant a fair hearing, the judge must read the entire 
record in a case, including all the medical evidence. That takes time. 
Claimants are not widgets whose cases can be mass-produced. Each 
deserves the individual attention of the judge with a careful weighing 
of the evidence and assessment of credibility.
    The ALJs nationwide are doing their job well and efficiently. 
Associate Commissioner Rita Geier recently issued ``Dialog 2000,'' 
setting forth the accomplishments of the Office of Hearings and Appeals 
for fiscal year 1999. Specifically, at the hearing level there were 
596,999 dispositions and a total of 311,958 cases pending at end of 
year--the lowest level of pending cases since FY 1992. Average case 
processing time was down to 316 days from 371 the previous year. Ms. 
Geier described these as ``great accomplishments for our claimants and 
for public service.''

              The Need for Management Authority by Judges

    The foremost problem within the Office of Hearings and Appeals is 
not the judges or the configuration of offices. Rather, it is the fact 
that the judges have no managerial authority over the staff who work 
for them. This diminishes significantly the accountability of employees 
for the tasks they are charged with performing. For example, hearing 
clerks are responsible for scheduling cases, monitoring cases in post-
development and releasing decisions. Legal Assistants are responsible 
for ``pulling'' cases (ordering the evidence in the file) and 
associating mail with the files. Writers are responsible for writing 
decisions. None of these employees is managed by judges, the persons 
most affected by their work product--or lack thereof. Moreover, there 
are no quantifiable standards by which their performance is measured. 
When tasks are not done in a timely manner, are not done correctly, or 
not done at all, it is the claimants who ultimately suffer the 
consequences--their cases are delayed. Employees at the Office of 
Hearings and Appeals seldom suffer consequences for poor performance. 
The good employees carry the load for the non-producers, and morale is 
low.
    Under HPI, Social Security has announced three areas of 
improvement:
     Administrative efficiencies, such as the elimination of 
handoffs, to streamline case processing;
     A group-based approach that will better ensure 
accountability; and
     Improvements in automation and data collection to provide 
the tools for monitoring and tracking case progress more efficiently.
    Let me speak to each of these initiatives, starting with the last 
first. No one can argue that the Office of Hearings and Appeals does 
not need improvement in the area of automation and data collection. The 
systems and equipment are way behind the times. Only in the past year 
has each employee been provided with a computer, and the case tracking 
systems are very outdated. There is a vast opportunity for improvement 
in this area.
    As for eliminating handoffs, it does not appear that HPI will 
accomplish this goal. For example, currently under the Senior Attorney 
program, a case goes to a senior attorney who either allows it and 
issues a decision or returns it for ALJ processing. Under HPI, the case 
analysts, who may or may not be attorneys, must hand the case off to 
the judge if they think it should be allowed. The judge must review and 
concur and then return it for disposition. This does not eliminate 
handoffs.
    As for the group approach providing more accountability, 
unfortunately it will in all likelihood lead to less accountability. 
Right now, each employee has a specific job to do and it is painfully 
clear when it is not done. Under HPI, it will be difficult to know who 
is doing what, since case technicians will be responsible for a large 
array of tasks. Nonetheless, there presently are no consequences for 
failure to perform, even when it is clear what an employee is supposed 
to be doing. Absent some commitment to genuine assessment of 
performance with quantifiable standards and consequences for failure to 
perform, HPI will not improve this problem. The reconfiguration talks 
about accountability but offers no mechanism for achieving it.

                    Recommendations for Improvement

    The key to improving the Office of Hearings and Appeals is to put 
the judges in charge of the people who work for them. As the system now 
runs and as it would probably run under HPI, the support function 
operates oblivious to the day to day needs of the judges. The support 
function takes on a life of its own and judges are viewed as 
interfering with that function when they voice dissatisfaction or even 
try to express how they might better be served.
    All this said, it cannot be ignored that justice delayed is justice 
denied. A wait of approximately one year for an ALJ decision, which has 
been the norm over the past few years, is unacceptable. The Office of 
Hearings and Appeals must do better and is doing better.
    There are many reasons for the delays. First and foremost is the 
dramatic increase in receipts at the Office of Hearings and Appeals. In 
10 years the dispositions have more than doubled from 280,000 in FY 
1988 to 596,999 in FY 1999. Staff has been increased by 50%, but a 
backlog was inevitable. As of 1996, average processing time was at an 
all time high of 378 days. It was reduced to 316 days in FY 1999--a 
significant decrease.
    This swell of cases, however, has moved through the hearing offices 
and is now located at the Appeals Council which is currently 
overwhelmed by its workload. In FY 1999, claimants waited on average 
460 days for a decision, and a wait of up to two years is not unusual. 
Moreover, the quality of the decisions is spiraling downward, according 
to practitioners and ALJs. The number of voluntary remands by U.S. 
District Court, where Social Security's attorneys agree to a remand 
based on deficiencies in the record that were not caught by the Appeals 
Council, is growing. Clearly help is needed at the Appeals Council 
level. One proposal under consideration is the elimination of the 
Appeals Council request for review as the final step in the 
administrative appeals process for disability claims. Given the current 
glut of cases, where review is cursory at best, the Appeals Council is 
doing little or nothing to contribute to the individualized assessment 
of a claimant's case. One might ask if the resources of the Appeals 
Council could not be put to better use at the hearing level, which is 
the only point where a claimant gets a true individualized assessment 
in a face-to-face impartial hearing.
    Curiously, Appeals Council judges who are reviewing the 
Administrative Law Judge's decisions are not themselves Administrative 
Law Judges. They have not gone through the rigorous screening and 
selection process for ALJs. Rather, they are attorneys at the GS-15 
level. They are assisted by a staff of analysts, who encumber non-
attorney positions, although some of the incumbents happen to be 
attorneys. This anomaly raises serious question about the value of 
Appeals Council review.
    Grounded in the premise that a Social Security disability 
determination requires an individualized assessment of a claimant's 
impairments and their impact upon the claimant, the Social Security 
Section of the Federal Bar Association offers the following 
recommendations for improvement of Social Security disability case 
management:
     Ensure the separation and independence of the adjudicative 
function from the regulatory function within the Social Security 
Administration.--This could be done in a number of ways, one of which 
would be to make the Chief Administrative Law Judge answerable directly 
to the Commissioner of Social Security.
     Put judges in charge of the personnel who work for them.--
The support function needs to truly provide support to the work of the 
judges and not take on a life of its own oblivious to the needs of the 
judges.
     Pursue the concepts within HPI of thorough case 
development under supervision by judges and of improved automation and 
data collection methods.--Implement a real performance appraisal system 
with quantifiable standards and take improvement action when warranted.
     Strengthen the attorney presence within the Office of 
Hearings and Appeals to better accomplish the legal work of the Office 
of Hearings and Appeals.--Attorneys are educated in the evaluation and 
analysis of conflicting evidence, and they understand the concept of 
due process that is at the heart of the individualized assessment to 
which each claimant is entitled.
     Eliminate the reconsideration determination as planned by 
the Commissioner.--It is a rubber stamp. Instead, put those resources 
into the initial determination thereby allowing State Agency examiners 
to take the time to assess a claimant's credibility. This is currently 
planned in the HPI prototype states.
     Eliminate the Appeals Council request for review.--This is 
currently being tested in the Full Process Model, but further 
consideration should be given to the idea. Attorney representatives 
have indicated that this step is of minimal value in the process.
    With the implementation of these recommendations and a heightened 
regard throughout the Social Security Administration for the 
responsibilities and independence of its administrative judiciary, the 
disability management process would become significantly more efficient 
and effective.
    This concludes my prepared remarks. Thank you once again for the 
opportunity to appear before you today. The Social Security Section of 
the Federal Bar Association looks forward to working with you and the 
Social Security Administration in improving disability workload 
management. I would be happy to answer any questions you may have.

                                

    Chairman Johnson. Thank you very much, Judge McGraw.
    Ms. Shor.

   STATEMENT OF NANCY G. SHOR, EXECUTIVE DIRECTOR, NATIONAL 
  ORGANIZATION OF SOCIAL SECURITY CLAIMANTS' REPRESENTATIVES, 
                    MIDLAND PARK, NEW JERSEY

    Ms. Shor. Thank you very much, Chairman Johnson, and 
Members of the Subcommittees here today.
    I am very pleased to be here today to speak about the 
management of the disability programs and I am going to offer a 
particular focus on the hearings and appeals process. But I 
certainly want to commend you for holding a hearing today on 
programs on which so many with disabilities depend.
    By way of background, I have been the executive director of 
the National Organization of Social Security Claimants' 
Representatives for 20 years. We are a nationwide association 
of almost 3,500 attorneys and others who routinely represent 
people with disabilities in their claims for Social Security 
and SSI benefits. Our members' collective experience is at 
every level of the process. To a limited degree, they represent 
claimants at the initial and the reconsideration level. The 
bulk of their work is at the hearing level and at the Appeals 
Council and pursuing cases into Federal court.
    We have heard a lot this morning on the subject of 
performance criteria and assessment criteria and we would like 
to ensure that not only are efficiency and timeliness factored 
in but also the fairness of the process and the accuracy of the 
ultimate decision. These are not widgets. These are people with 
disabilities and that's how the system has to treat them.
    Very briefly, the redesign plan currently underway at the 
Social Security Administration is suggesting two very 
significant changes at the very front-end of the process. One 
is, in addition to the system and one is a subtraction from the 
system. The first, the addition is the pre-decision interview, 
the PDI, which we certainly support as an opportunity for a 
face-to-face meeting between the claimant and the 
decisionmaker. We have concerns about how PDI may be 
implemented but we are very optimistic that this is an 
opportunity that will allow a claimant to better and more fully 
present their case and lead to an accurate decision at the 
initial level.
    We also support, with some apprehension, the elimination of 
reconsideration which over the years has served as a paper 
review. Not very many decisions were changed from an initial 
denial. Only about 11 percent were awarded benefits at 
reconsideration. We are apprehensive, as I believe Social 
Security is as well, as to what will be the impact on the 
numbers of cases coming directly to the Office of Hearings and 
Appeals as a result of the elimination of reconsideration.
    The hearings and appeals process is really the focus of 
where our members do their representation of Social Security 
disability claimants and in light of some of the earlier 
comments this morning, I just did want to suggest that it is 
perfectly plausible that a decision denying benefits coming 
from a disability examiner at a State agency can certainly be 
correct on the basis of the evidence in the file at that time, 
and a decision of an Administrative Law Judge subsequently 
awarding benefits may also be perfectly accurate in light of 
several factors, including the worsening of the individual's 
condition, new evidence which has been gathered, the 
opportunity to take testimony from the claimant and from the 
claimant's witnesses, as well as the opportunity to call 
vocational expert and medical experts to the hearing and, 
finally, because a large proportion of claimants at the hearing 
level are represented and the attorneys and other 
representatives are knowledgeable about the system and how best 
to present a claimant's case.
    Speaking specifically to the initiative entitled, Hearing 
Process Improvement Plan, we have not a great deal of 
information about it. But based on what we have seen and the 
over-arching goal of it, we are certainly supportive. The over-
arching goal that Social Security has identified is to move 
cases through the Office of Hearings and Appeals in a more 
timely manner. And it would be impossible, I think, for anyone 
not to support that as long as no sacrifices are made in the 
accuracy of the decisionmaking process including due process 
rights of the claimant and the decisional independence of 
Administrative Law Judges.
    In my written testimony, I have identified several of the 
concerns, many of the concerns that we have about how HPI may 
be implemented but in many ways it is premature for us to offer 
our observations in practice because HPI has not yet begun.
    We will certainly be vigilant in monitoring the role that 
HPI makes in how OHA functions, as I am sure you will be as 
well.
    Very briefly, we are concerned, deeply concerned about the 
delays at the Appeals Council which absolutely dwarf the delays 
at the Office of Hearings and Appeals. It is hard to choose a 
word beyond, unbelievable, and we are alarmed that the Social 
Security Administration has selected this time to increase the 
workload at the Appeals Council by beginning an energetic 
program of own-
motion review.
    Not only do we not think that the Appeals Council has the 
proper resources to undertake an additional workload but we are 
apprehensive as well that we are turning to revisit the Bellmon 
review and that checkered past back in the early eighties.
    Our members do support a continued right of review for 
aggrieved claimants into the Federal District Courts as 
presently constituted.
    I would want to highlight that we believe the most 
fundamental problem within the disability adjudication process 
is development of the cases. One result of that is that 
frequently denials from the State agency disability examiners 
are not just because a person has not established disability, 
but because the file may be incomplete. Due to uncooperative 
doctors, difficulty getting a hold of evidence, oftentimes, 
denials are based more on incomplete files than they are on 
files that establish non-disability.
    And we believe that until the development problems, 
development of the record problems are addressed, claimants are 
going to find themselves drawn further and further into an 
extremely lengthy hearing and appeals process.
    Finally, I certainly want to commend the Committee for the 
work that you have done on the work incentives legislation. We 
are very supportive of it. We are very optimistic that 
beneficiaries will get full explanations from Social Security 
as to how they can avail themselves of it, and that the high 
goals that this Committee has set for this legislation can be 
realized.
    And we certainly want to commend you again for holding the 
hearing today.
    Thank you very much.
    [The statement of Ms. Shor follows:]

Statement of Nancy G. Shor, Exectutive Director, National Organization 
of Social Security Claimants' Representatives, Midland Park, New Jersey

    Chairman Shaw, Chairman Johnson, and Members of the Subcommittees: 
I am very pleased to be here today to speak about management of the 
disability programs, with a particular focus on the hearings and 
appeals process. I commend you for holding this hearing on these 
programs on which so many people with disabilities depend.
    For the past twenty years, I have been the executive director of 
the National Organization of Social Security Claimants' Representatives 
(NOSSCR). Neither NOSSCR nor myself has received any government grants 
or contracts in the current or past two years. NOSSCR's current 
membership is approximately 3,450 attorneys and others from across the 
country who represent claimants for Social Security and Supplemental 
Security Income benefits. Collectively, we have many years of 
experience in representing claimants at every level of the process and 
welcome this opportunity to share some observations and concerns with 
you.
    Today's hearing focuses on SSA's management of the disability 
program caseloads. Two extremely important criteria for such a review 
are efficiency and timeliness. But these are not the only criteria. 
Today's hearing should be directed to ensure the fairness of the 
process of determining whether or not a claimant is entitled to 
benefits. The American public needs to know that the system treats 
claimants fairly, so they can know that the process will be fair in the 
event they become disabled in the future.

         A. The Hearings and Appeals System--A Sound Structure

    A claimant files an application for benefits, most often at 
a Social Security district office. Under the current system, 
the state disability determination agency decides whether or 
not that claimant is eligible for benefits. If the claim is 
denied, the claimant can file for a reconsideration by the same 
state agency. If the claim is denied on reconsideration, the 
claimant can pursue the appeal to an Administrative Law Judge 
at SSA's Office of Hearings and Appeals. If the claim is denied 
by the ALJ, the claimant can file a request for review with the 
Appeals Council. (If the claim is allowed by the ALJ, the 
Appeals Council may exercise own-motion review.) A claimant who 
is denied by the Appeals Council can file suit in federal 
district court.

1. Redesign for Initial and Reconsideration Levels

    The redesign plan makes two significant changes in the 
initial and reconsideration steps. The opportunity for a ``pre-
decision interview'' (PDI) will be added to the former, and the 
latter will be eliminated. At this time, we believe that these 
changes are positive. We have long advocated the value of 
providing claimants with a face-to-face meeting with a 
decision-maker. Our support is tempered, however, by concerns 
about how the concept of PDI is implemented. How will the 
interviewer memorialize the meeting? Will most PDIs be brief 
telephone conversations and not face-to-face meetings? Will 
claimants be discouraged from pursuing an appeal, if the PDI 
decision on their application is a denial?

2. Hearings and Appeals Process

    A claimant's right to file a request for hearing before an 
Administrative Law Judge (ALJ) is central to the fairness of 
the adjudication process. This is the right to a full and fair 
administrative hearing by an independent decision-maker who 
provides impartial fact-finding and adjudication, free from any 
agency coercion or influence. The ALJ asks questions of and 
takes testimony from the claimant, may develop evidence when 
necessary, considers and weighs the medical evidence, evaluates 
the vocational factors, all in accordance with the statute, 
agency policy including Social Security Rulings and 
Acquiescence Rulings, and circuit case law. For claimants, a 
fundamental principle of this right is the opportunity to 
present new evidence in person to the ALJ, and to receive a 
decision from the ALJ that is based on all available evidence.
    Current processing times at most of the Offices of Hearings 
and Appeals (OHA) across the country, though decreasing, are 
still unacceptably high. SSA's response is a top-to-bottom 
reorganization plan termed ``Hearing Process Improvement 
(HPI).'' It is based on assessments that the current process 
simply takes too long. The most recent quarterly data show an 
average of 314 days between a request for hearing and the 
hearing itself. HPI's goal is to reduce that to 180 days. We 
certainly support changes in the process that will reduce or 
eliminate unnecessary delays for claimants.
    We do, however, approach HPI with serious concerns for any 
violations of claimants' due process rights to a full and fair 
hearing, as well as any encroachments on the decisional 
independence of Administrative Law Judges. For example, if ALJs 
are expected to be more productive because many of their ``non-
judicial'' functions are being removed and reallocated to 
staff, is this a way of giving them quotas? What will be the 
impact on the complete development of cases and the recognition 
of issues? Will a process which relies on case technicians to 
screen cases for on-the-record decisions prove adequate? 
Unfortunately, the authority which senior attorneys now have to 
issue fully favorable on-the-record decisions is scheduled to 
expire. Will cases be ``certified'' as fully developed before 
they actually are? Our experience with the recent Adjudication 
Officer project suggests that this often happened there. What 
about new evidence? SSA offers assurances that ALJs will accept 
new evidence at the hearing, but in light of processing goals, 
will they feel free to do so? Although clearly the agency and 
the ALJs prefer that all evidence be submitted as early in the 
process as possible, a practice which NOSSCR fully supports, 
the ALJs must accept new evidence. SSA offers assurances that 
the ALJs may keep the record open for post-hearing development, 
but will they be encouraged not to? SSA offers assurances that 
ALJs can decide that the development is a ``certified'' case is 
not complete, and undertake that development themselves, but 
again, will they be encouraged not to? Will the prehearing 
conferences have value, or will they be just a formality, as 
they often were in the adjudication officer program?
    What we know about HPI at this time comes from SSA's plans 
and statements, and not from any actual implementation. While 
we support efforts to decrease processing time at the hearing 
offices, we will be vigilant in monitoring any encroachments on 
claimants' due process rights, including the decisional 
independence of ALJs. As part of a process to move cases 
efficiently and fairly, we would urge SSA to retain the senior 
attorney program.
    Turning to the Appeals Council, we can only describe 
processing times there as unbelievable. It is not at all 
unusual for a claim to be at the Appeals Council for more than 
18 months. A claimant cannot go forward with an appeal into 
federal district court until the Appeals Council has acted. As 
a result, claimants are increasingly returning to the front end 
of the process and filing new applications. This generally 
provides them with no relief, however, because SSA policy is to 
join the second application to the first which is pending at 
the Appeals Council. Thus, while their medical and financial 
situations are deteriorating, claimants hear nothing on their 
Social Security appeals for many months. We share our clients' 
frustrations with the length of time that their appeals wait at 
the Appeals Council.
    Yet, we see no agency plans to address delays at the 
Appeals Council. In fact, while delays at the Appeals Council 
grow, SSA has authorized extensive own-motion review by the 
Appeals Council. This review is limited to only those ALJ 
decisions that are favorable to claimants. The review resonates 
with overtones of Bellmon review, which resulted from a mandate 
in the early 1980's to review favorable decisions exclusively 
from ALJs whose allowance rates were considered ``too high.'' 
The court struck down that Bellmon review because it interfered 
with the decisional independence of ALJs by ``targeting'' those 
ALJs who had higher allowance rates. By its plans to review 
only claimant-favorable ALJ decisions, this new own-motion 
review plan is subject to the same criticism. What message does 
it send to claimants? What message does it send to ALJs? We 
believe that any own-motion review program that the Appeals 
Council conducts must be even-handed, so that the Council 
reviews both favorable and unfavorable decisions and that there 
is no perception of bias.
    The last and very important component of the hearings and 
appeals structure is access to review in the federal court 
system. At this level, the review is not de novo; rather, the 
judges are applying the substantial evidence test. We believe 
that both individual claimants and the system as a whole 
benefit from the federal courts hearing Social Security cases. 
Given the wide variety of cases they adjudicate, federal courts 
have a broad background against which to measure the 
reasonableness of SSA's practices. Federal court review in 
Article III courts should be maintained.

           B. How Evidence is Obtained--An Unreliable Process

    Developing the record so that relevant evidence from all sources 
can be considered is fundamental to full and fair adjudication of 
claims. The decision-maker needs to review a wide variety of evidence 
in a typical case, including, for example, the medical records of 
treatment, opinions from medical sources, pharmacy records of 
prescribed medications, statements from former employers, and 
vocational assessments. The decision-maker needs these types of 
information to determine the claimant's residual functional capacity, 
ability to return to former work, and ability to engage in other work 
which exists in the national economy in significant numbers.
    Unfortunately, very often the files that claimants with denials 
from the reconsideration level bring to our members show how little 
development was done at the initial and reconsideration levels. Until 
this lack of development is addressed, the correct decision on the 
claim cannot be made. Claimants are denied not because the evidence 
establishes that the person is not disabled, but because the limited 
evidenced gathered cannot establish that the person is disabled.
    A properly developed file is usually before the ALJ because the 
claimant's counsel has obtained evidence or because the ALJ has 
developed it. In fact, the redesign plan relies on claimants' 
representatives to obtain the evidence. Not surprisingly, these 
different evidentiary records can easily produce different results on 
the issue of disability. This is one part of the explanation for the 
wide disparity in the claims files at the DDSs and at OHAs.
    To address this, the agency needs to emphasize the full development 
of the record at the beginning of the claim. This includes an 
explanation to claimants of the need to submit evidence as early as 
possible. The benefit is obvious: the earlier a claim is adequately 
developed, the earlier it can be correctly decided.

           C. Legislative Reforms--Encouraging Return to Work

    NOSSCR supports efforts that encourage disabled beneficiaries to 
return to work. Many of them fear losing medical insurance. They fear 
that even a brief episode of employment will terminate their Social 
Security benefits, even if they are unable to sustain that employment. 
Many do not understand the provisions in the current law for trial work 
periods and extended periods of eligibility. SSA needs to provide more 
information and answers to specific questions on an on-going basis for 
those on the disability rolls who are able to consider a return to the 
workforce.
    We appreciate the House Ways and Means Committee's efforts in 
developing work incentives legislation. We hope that this Congress will 
pass legislation that will remove barriers to work and ensure maximum 
benefit for people with disabilities. We urge that the legislation be 
paid for with offsets that do not harm the very people with 
disabilities whom the legislation is designed to help.

                             D. Conclusion

    We commend the two Subcommittees for holding this joint hearing 
today to look at SSA's management of its disability programs. We are 
committed to supporting the basic structure of the hearings and appeals 
process, and to working with the agency on reducing the backlogs. 
Better development of the claims before they reach OHA would produce a 
great benefit, both to claimants and to the hearings and appeals 
process. In formulating any plans to decrease processing time and to 
move cases more quickly, we urge SSA to be mindful of its 
responsibility to administer a hearings and appeals process which 
respects claimants' due process rights and decisional independence for 
ALJs. Today's claimants and future claimants are entitled to no less.

                                

    Chairman Johnson. Thank you very much.
    And I thank the panel for their comments, and for their 
straightforwardness, and for their depth.
    What I am hearing is a considerable disagreement about the 
HPI process, is that correct? And would those of you who have 
now heard the others' testimony want to enlarge on your support 
for the current proposal or opposition to it?
    Judge Bernoski. I think there is a great deal of 
uncertainty with the program because of the way it was created. 
As I indicated in our testimony, the Administrative Law Judges, 
our association, was not brought into the development or 
creation of the process. As it is unfolding, it is an unknown, 
as Nancy Shor indicated.
    There are some problems, and those are the problems that I 
outlined in my testimony. We have serious reservation and 
concern with them. There is a function shifting here which is 
contrary to the existing law and regulations which is 
problematical under the best of circumstances.
    Chairman Johnson. Do you think those things can be worked 
out?
    Judge Bernoski. Well, the law problems would require a 
change in the regulations. Where it conflicts with the 
statutory law it could be worked out only with a change in the 
program. As Nancy Shor indicated, the over-arching goal of 
getting a fully developed case to the Administrative Law Judge 
is certainly laudable and we agree with that. But maybe, just 
improving the present system, as we indicated, and better 
training of the current staff could accomplish the same result 
with less confusion.
    Chairman Johnson. It is very interesting to me that all of 
the participants have not been involved in the planning. And it 
does seem odd that you would not have been involved in the 
planning and it does seem odd to me that the union members 
would not have been involved in the planning.
    I think that is a pretty old-fashioned way of doing things.
    Mr. Brennan. I do have to speak up and say that while the 
association may not have been involved, there were a number of 
Administrative Law Judges that helped in the development of 
this, the hearings process improvement.
    Judge Bernoski. There were some Administrative Law Judges. 
Unfortunately, the Administrative Law Judges that were in the 
program didn't represent anyone. We represent the over-arching 
group. And, so, the people that are participating are 
representing primarily their own interests and not the 
interests of the broader group.
    Chairman Johnson. I doubt that they would agree with that. 
But I get your point.
    Judge McGraw. I would also point out that the judges who 
were involved were really a part of management and I think that 
it is important to have grassroots involvement. I believe that 
judges need to be able to direct the work of development of 
cases. And I foresee HPI as creating a unit of workers separate 
and apart from the judges doing a job without the input of 
judges and, to a great extent, even with fewer lawyers than are 
now involved in the process.
    I see a tendency toward the use of paralegals, non-legally 
trained employees doing this work. And I really think that it 
needs to be under the direction of judges.
    Chairman Johnson. The other thing I just would like to 
bring up to any of the rest of you who have any comments is Mr. 
Skwierczynski's discussion of the DCM pilot and his belief that 
it has been a big success. And then last, does anyone want to 
comment on the money that we gave you in 1995, was it well 
spent?
    Mr. Skwierczynski. If I could just add, the Lewin Group 
that evaluated the first phase issued a report. And what I 
would like to do if it would be acceptable is offer this as an 
exhibit or attachment to my testimony, because this is the 
independent party that reviewed it, the Phase I, is the party 
that indicates it is a success.
    Chairman Johnson. We will accept that as part of the 
record.
    Mr. Brennan.
    Mr. Brennan. When we set up this pilot, and there were 
members of the NCDDD as well as AFGE and other folks from 
around the organization that set it up, it was determined that 
because it takes about 2 years to train a disability examiner 
and it takes about 2 years to train a Social Security claims 
representative, that this pilot would have to extend for about 
3 years. Phase I was a success. But now we are going to get 
into some more difficult aspects of the program and I do not 
have any problems with what Lewin said about Phase I, but I 
think that it needs to be acknowledged that the pilot is 
supposed to run for 3 years and that will not be completed 
until I believe next year.
    Chairman Johnson. Thank you.
    Mr. Cardin.
    Mr. Cardin. Thank you, Madam Chair.
    And let me thank each of our participants here for not only 
their testimony today but their willingness to work with us as 
we really plough new fields, hopefully, in figuring out what is 
the best system to help the millions of people who are affected 
by this. And I think we cannot lose sight of the fact that we 
are dealing with people's lives here, millions of people's 
lives, and we have to figure out a more efficient way. It is 
not a turf battle. We have got to work together to figure out 
how to do it.
    Let me just ask, one point that has concerned me is that if 
I understand it, the council fee issue, Ms. Shor, I do not 
necessarily agree with the Commissioner or what Congress did in 
regards to the user fee because, quite frankly, there are some 
mutual benefit here. We have imposed restrictions on what 
attorneys can charge to protect the beneficiary and then, yes, 
we do the collections. So, I think there is some mutual benefit 
to what we have set up here and I am not sure that the user fee 
fairly represents the assessment of costs.
    On the other hand, as I understand it, your fee can very 
much be determined by the amount of the arrearages. That is the 
amount of money that has not been paid. And does that not act 
as a reverse incentive for an attorney to delay a case because 
their fees can be greater by delaying a case?
    I know lawyers never want to do things like that but it 
does seem to me there is an inherent conflict here.
    Ms. Shor. I have been in my position for 20 years and for 
20 years I have heard that suggestion made. And for 20 years we 
have been offering testimony and doing everything we can to 
assist Social Security in developing cases so they can be paid 
as early in the process as possible.
    Mr. Cardin. I understand that and I understand that you 
are--and we are all working to do that but for the individual 
practitioner, attorneys are particularly sensitive to the 
appearance of a conflict. It seems to me that the system has an 
apparent conflict in it and that we should be getting 
suggestions perhaps to modify that.
    Ms. Shor. I think two points I would like to make may be 
helpful. The first is that most claimants don't choose to hire 
a lawyer until they are up to the hearing level. So, even 
though our members are very interested in representing 
claimants at the initial level, it takes the claimant's 
initiative to hire an attorney. And most claimants going into a 
Social Security office, it's the last thing on their mind that 
they are going to have any problem with getting an application 
approved.
    So, most claimants don't hire an attorney until they are 
pretty far into the process and are facing the rather 
terrifying prospect of coming up against an ALJ.
    And second, most of the delays within the processing at the 
ALJ level are not attributable to attorneys. Attorneys have 
filed the request for hearing or the claimant has come to them 
after the request for hearing has been filed and the attorney 
works on the case and will eventually receive a notice from OHA 
that a hearing date has been selected in approximately 3 weeks.
     Our members are very active in identifying cases that can 
be paid in what we call an on-the-record situation which means 
that there doesn't need to be a hearing with the scheduling and 
all of the time attendant with that. We are very interested in 
identifying cases that can be paid on the record, in large 
measure, because it will get the case through more quickly and 
get the clients into pay status more quickly.
    Mr. Cardin. I think that is a very fine answer but I can 
still see an individual practitioner who needs to request a 
postponement for whatever reason, in the best interests of 
their client, being in a conflict situation because it can mean 
that that individual practitioner's attorney's fees are higher 
by the delay.
    And that, in and of itself, presents a conflict that we 
should try to avoid. And I think your answer is as strong as it 
can be. I would just urge us to work to get potential or 
apparent conflicts out of the situation where lawyers are 
confronted.
    Thank you, Madam Chair.
    Chairman Johnson. Thank you.
    Mr. Portman.
    Mr. Portman. Thank you, Madam Chair, and thank you for the 
good testimony because you are shedding light on a lot of these 
issues. I wish we had had the Commissioner after you all, as 
well as GAO.
    But let me ask one specific question. In your testimony, 
Mr. Skwierczynski, you say that Congress should investigate 
States' refusal to provide better service due to some States 
opposition to establishing disability processing centers and 
expanding pilot testing of a disability claims manager 
position. Can you flesh that out a little more? And then I 
would love Mr. Brennan to comment on that as to whether that is 
an issue whether Congress ought to take up?
    Mr. Skwierczynski. Part of the process when the redesign 
was proposed in 1994 was the agency dealt with a variety of 
stakeholders regarding implementation of the redesign concepts. 
And they dealt with the union and we negotiated some agreements 
regarding implementation of the disability claims manager and 
also disability processing centers. And we had agreed that 
disability processing centers in Social Security we have large 
processing centers, six of them around the country and a 
headquarters processing center. There are seven large 
processing centers, each of which have close to 1,000 workers 
in there. And they would be, all of those processing centers 
have disability examiners in place, already trained, who don't 
require any massive training effort to learn how to process a 
disability claim.
    And what we agreed with, with the agency was that we would 
have in these disability processing centers, experiments on 
doing a soup to nuts disability claim, where individuals 
probably telephon-
ically, those who chose to file by telephone, would, their 
applications would be taken in these processing centers and 
those employees would be empowered to make decisions both on 
the disability aspects and the nondisability aspect of their 
claim. Theoretically meaning that you would have quicker 
processing time, less handoffs, a streamlining of the 
operation.
    States opposed it and we had a stakeholders meeting and 
they actually agreed to experiment with it, and didn't uphold 
their agreement and they were never implemented.
    Mr. Portman. And, Mr. Brennan, do you have any comment on 
that? Is this your understanding of how it has operated and 
what should happen now with regard to investigating that?
    Mr. Brennan. Actually it wasn't, Mr. Portman. Let me 
explain that. When the original memorandum of understanding was 
signed between SSA and AFGE the State DDSs didn't have much 
input in that. The number of DCMs that were requested was 
something that we couldn't contemplate and still do our primary 
workload. We take our obligation to provide the safety net to 
the disabled people very seriously.
    The DCM, as I just related, requires a lengthy training 
period both on the Federal side and on the State side. Our 
objection was not to the DCM, it was our inability to deal with 
all the training and all the issues surrounding that that would 
have had to go on.
    We have fully cooperated with the pilot as it turned out 
and I am not aware of the payment center issue except for the 
fact that we said there were x number of employees that would 
be State employees, there were x number of employees that would 
be Federal employees and our organization said how you place 
those, would you put them in a field office or would you put 
them in a payment center, is totally up to you.
    We had no objections to where they wanted to put them. It 
was a numbers thing with us.
    Mr. Portman. Is it your understanding that this issue 
should be resolved at SSA level or based on your testimony, you 
indicated that Congress ought to hold additional hearings on 
this, is that correct?
    Mr. Skwierczynski. Well, I think it is my opinion that what 
we have here is a process, the disability claims manager which 
combines the two functions, which--and frankly, the employees I 
represent have not done the disability function before. And 
what the evidence indicates is that they have quickly learned 
it and they are providing excellent service and it is possible 
for an individual to do both parts of the function, both the 
nondisability aspects and the disability aspects. And if that 
process streamlines the operation, if the public likes it, 
which they appear to like it, then it seems to me we should be 
strongly encouraging its implementation.
    The agency unfortunately is not doing that at all. In fact, 
they are down-playing the success story of the first phase of 
the disability claims manager pilot and instead top officials 
are around the country telling our employees who are involved 
with it that it is not going to fly.
    And I think that when we hear statements like it is a dead 
issue, the culture does not exist currently for further roll 
out of this project, the Congress will never agree to pass 
legislation to allow an individual to do both aspects of the 
disability claim, we are puzzled. If something is claimant-
friendly, if something is perceived by the public, if the 
public has a chance to face-to-face deal with the 
decisionmaker, if you can streamline the process, cut down the 
error rate, make it faster, let's explore how to do it?
    Mr. Portman. Well, I would agree. My time is up but I do 
have some additional questions. Maybe the Chair will recognize 
me later. Maybe I should go right now.
    With the indulgence of the Chair, a couple of further 
questions. Ms. Shor, you mentioned earlier and I know I am 
taking this out of context, but the terrifying prospect of 
coming up against an ALJ. And I am terrified to ask these two 
ALJs these questions but I am going to anyway, as terrifying as 
it is.
    But, you know, I again, getting back to some of the initial 
questions that came up earlier that I think you were sitting in 
the audience as we raised them about the process, itself, the 
amount of time that it takes, No. 1; and No. 2, the degree to 
which cases, initial determinations are overruled. I mean I 
still think more than half of the cases being overturned at 
your level is a system that is dysfunctional.
    Now, what I hear you saying is that process unification has 
its limits. And that there are certain roles that are legal 
roles that must be reserved for an ALJ. And I, of course, 
cannot dispute that. But I do think that there has to be more 
we can do at the initial stage where the ALJ is not involved 
but where people who do not have your training can make 
individual assessments.
    And I listened to Judge McGraw's statement, understanding 
again that she knows a lot more about this system than I do, 
you have spent a lot of time looking at process unification. 
But this notion that an individualized assessment can only be 
made by an Administrative Law Judge and I am a recovering 
attorney, myself, so, you know, just to get that on the record. 
But I understand the degree to which it is a question of law or 
interpreting the statute in an individualized sense. Obviously, 
that is something that should be reserved for the 
Administrative Law Judge.
    But why not at the entry level, which in this case would be 
at the DDS level, and I understand there is some concern among 
the DDS representatives and they can speak for themselves but 
this is not something that they would necessarily be 
comfortable with, but an individual assessment should be made 
at the initial level in my view. And, again, I am not an expert 
on your process, and I may be missing something but this notion 
that somehow you need to have a judge to be individualized and 
that anybody who does an individualized assessment without the 
training of a judge is somehow incapable. And you mentioned the 
herniated disk. I am a herniated disk sufferer myself and you 
are right, herniated disks can mean different things to 
different people. And it relies in large measure, as you know, 
on the initiative the person takes to get the right kind of 
physical therapy and treatment and stretching.
    But I don't see why people can't look beyond the objective 
data and get into the individualized case so that at the end of 
the day the process takes less time, No. 1; and No. 2, there is 
not this additional cost that is in our current system of more 
than half the cases being overturned on appeal.
    Thank you, Madam Chair, for your indulgence.
    Judge McGraw. Mr. Portman, I didn't mean to imply that a 
DDS examiner could not make an individualized assessment. And, 
in fact, it was the point of process unification training with 
the Social Security rulings, one of which involved the 
assessment of symptoms and the assessment of credibility. The 
intention of process unification training was that DDS 
examiners would do credibility assessments and would attempt to 
consider allegations such as pain.
    Being a trainer, I was out there, I listened to the DDS 
examiners and they said that we do not have the time to do 
that. We don't know how to do that. And we don't have the 
resources. Social Security, if you really want us to do this, 
you are going to have to plough a lot of resources into DDS 
because we do huge numbers of cases and we simply cannot take 
the time to do that. You also have to be able to articulate the 
basis for your credibility assessment.
    That takes time. And DDS examiners were saying constantly 
we don't have the time to do that. I had DDS examiners come up 
to me and say, ``I sometimes tell claimants keep going, because 
if you get to the judge level, they will be able to assess your 
pain.'' I'm not saying it cannot be done, I'm saying that given 
the system it hasn't been done.
    Process unification training, the goal of it was to have 
DDS examiners do it. I am telling you it is not being done by 
DDS examiners.
    Mr. Portman. I appreciate your response. And, Mr. English, 
you have been very patient. My only response would be that as 
GAO has pointed out, we need better performance measurements, 
first; and No. 2, to the extent we have those the cost will 
either be incurred at the outset or they will be incurred at a 
higher degree at the appeals level. And there will be a cost, 
when more than half the cases are being reversed, obviously, 
the system is not working. And, so, I would encourage you to 
continue your efforts and to push for that and I appreciate 
your clarification on the individual assessment.
    Thank you, Madam Chair.
    Chairman Johnson. Thank you, Mr. Portman.
    Mr. English.
    Mr. English. Thank you, Madam Chair.
    This is a particularly timely and useful panel. It is the 
best assemblage I have ever seen of expertise on the issue. And 
this discussion is timely because since I came to Congress in 
1994, my single largest source of casework in my district 
office has been Social Security disability cases that for the 
most part have been protracted in a most extraordinary way and 
in a way that is impossible to explain to constituents.
    So, I am grateful to all of you for coming and all of you 
helping us unravel this knot and I am curious. I think all of 
you heard Commissioner Apfel's testimony earlier. He laid out a 
fairly aggressive timetable, I thought, for shortening the 
average hearing process time to less than 200 days by the year 
2002.
    You have seen the hearing process improvement initiative 
laid out. Mr. Niesing, do you think that this is a realistic 
timetable, less than 200 by 2002?
    Mr. Niesing. Well, certainly as the disability numbers come 
down, the hearings numbers come down. I think part of it is 
just the factor of the volume of the work that they produce and 
the volume of hearings that have gone to that level. They have 
gone down.
    So, certainly you are going to have a lessening in the 
number of days to process. One of our concerns though I think 
which is opposite is in the hearing process improvement looking 
at it from the perspective of a field office manager, it just 
seems like the ALJs and even though a lot of what they do is 
predicated by law, it just seems like they are spending a lot 
of time in the minutiae of cases and getting involved in 
looking at whether a hearing is actually ready or whether it 
fits with their schedule and so on and so forth. And our 
feeling is that we need to remove some of those functions and 
let ALJs do what ALJs should do, and that is judging cases.
    Now, that is from the perspective of a field office manager 
and looking at the fact that I don't get involved in those kind 
of things in claims that are flowing through my office. You 
know, I leave that up to the staff who are assigned those kind 
of functions.
    Mr. English. Following upon a thread in your testimony, you 
mentioned that due to the Administration's national performance 
review initiatives the number of supervisors at local Social 
Security offices has declined from over 2,000 to less than 400. 
And that as a result, quality reviews have been curtailed in 
most facilities.
    In your view, what has been the fallout of fewer quality 
checks and are there more payment inaccuracies?
    Mr. Niesing. Well, I think that there are two things to 
answer there. First of all, I think it is a staffing issue for 
one thing. I think that the fact that we have growing workloads 
and, yet, our staff have declined. Our claims representatives, 
when we do a disability interview, spend probably less time 
than they could of have in the past on looking, working with 
the claimant and getting like claimant observations, getting 
better descriptions of claimants which I think would help in 
the disability determination services as far as making their 
decisions.
    And then because of that, you know, also having less 
supervisors, if we want to review that kind of process and look 
at a disability claim or review disability claims that are 
flowing through our offices it is difficult or more difficult 
to do that now when you don't have a supervisor in the office 
perhaps to perform that function.
    Mr. English. Similarly, on the question of resources, Mr. 
Skwierczynski, you note in your testimony that resources are 
inadequate to handle growing workloads because of budget cuts. 
And that more resources should be provided to hire new staff. 
However, and I think that the Chair noted this, that my 
impression is that SSA's administrative expenses were 
substantially increased in 1995, specifically for this purpose. 
Were the staffing cuts in your view budget related or were they 
caused by SSA decisions to direct resources elsewhere?
    Mr. Skwierczynski. Well, there are two problems. The 1997 
legislation regarding the spending caps has made it very 
difficult for the agency to obtain additional staff from 
Congress. And before that, the Administration, the Clinton 
administration had staffing ceilings that were established for 
the agencies which also made it difficult.
    Now, what the agency does, if you appropriate resources, 
for instance, to do CDRs, what really happens is that the 
agency concentrates a lot of energy to do CDRs and stops doing 
other facets of the work process. The agency, for instance, has 
an 800-number and in order to meet the commitments that they 
have made to--they call them the Porter commitments for 
Congressman Porter over in appropriations--in order to meet the 
commitments to answer the 800-number, they have shifted 
extraordinary amounts of staffing resources into meeting the 
800-number whose real job is to do something else. And the 
something else that they are assigned to do doesn't get done.
    So, when I say there is a need for additional resources, I 
say the agency, as a whole, needs to stop lurching from crisis 
to crisis and from problem to problem. The disability problems 
that the agency has, has caused the agency to pump a lot of 
resources into hearings and appeals but when they do that they 
are not getting additional staff from you overall, from 
Congress, they are shifting it from other areas. So, the people 
I represent who work in the 1,300 field offices and tele-
service centers, they are getting hit with some staffing 
problems.
    And our offices have the staffing in our basic field 
offices, where the claimants come face-to-face and meet us, has 
dropped considerably in the last 15 years. And what the 
agency's response to that is, well, let's increase our 
telephone service and try to make do with the resources that 
they have. But certain things don't get processed and I think 
the Advisory Committee report acknowledges that. If you ask an 
employee, if you go back to your district and maybe visit a 
Social Security office and talk to the workers----
    Mr. English. And I have.
    Mr. Skwierczynski [continuing]. You will know that post 
entitlement work is given a second priority and often sits and 
doesn't get processed.
    Mr. English. I know that and I have visited our local 
office and I think they do a terrific job for what they are up 
against.
    Madam Chair, I have one other brief question if I could be 
indulged and I will keep it brief if you will indulge me.
    Thank you.
    Judge McGraw, one question I needed to ask you and it has 
to do with a provision that had been proposed by the Clinton 
administration that you reference in your testimony. It having 
been folded recently into the ticket to work bill, which was 
reported out of our Committee and that is specifically the user 
fee.
    I wonder--my impression from Commissioner Apfel's testimony 
is that the agency feels that it has been doing a great deal of 
work that is in effect work being done reducing the workload of 
the attorneys in the system and not charging them for it. Do 
you think that is a fair assessment and can you elaborate on 
your concern that this fee might ultimately reduce access to 
the appropriate legal services for claimants?
    Judge McGraw. I don't believe--I did not understand 
Commissioner Apfel to say that the agency is lessening the task 
of the attorney who has to appear in a disability hearing. I 
think that attorneys continue to do a great deal of work in 
that regard. With respect to discouraging attorneys 
participation I think that is the 
No. 1 concern about the user fee. There are lots of 
practitioners who belong to the Federal Bar and they have 
uniformly said to me that attorney fees are hard enough to get 
in Social Security cases, it takes forever to get them paid. 
And now, they are being slapped with what they perceive to be a 
tax. That is 6.3 percent has nothing to do with anything other 
than a tax. And the feeling is that it is hard enough to get 
the money and this may be the straw that breaks the camel's 
back. We may be losing practitioners saying, it's hard enough 
as it is.
    It is particularly difficult in SSI cases where there is no 
withholding by Social Security for attorneys to get their fees. 
SSI claimants often go off and do not pay the attorney.
    So, it's a difficult situation for representatives with 
respect to being paid.
    Mr. English. Thank you, Judge.
    And Madam Chair, I really appreciate your indulgence.
    Chairman Johnson. Before I turn the gavel back over to my 
colleague, Mr. Shaw, let me just ask the panel if you agree 
with the following statement.
    That the claimant needs to be able to talk to a medical 
adjudicator at the beginning of the disability claims process 
if they choose.
    Mr. Skwierczynski. I would wholeheartedly endorse that. And 
that is the whole focus of the disability claims manager, the 
ability of the claimant to talk to the person who makes the 
decision on their claim.
    Chairman Johnson. But do they currently have that right to 
talk to a medical adjudicator?
    Mr. Skwierczynski. No. In the prototype States only on a 
pre-decision interview they can have a telephonic conversation. 
But the only really place where they--and the DDS is in many 
States--where I am from in Chicago, in Illinois, there is a DDS 
in Springfield. And no one from Chicago is going to be 
traveling to Springfield to have an interview with someone in 
the DDS. The DDS does not move. They are in one spot and that 
is it.
    The only people that are located, community-based, are 
people who work in Social Security field offices.
    Chairman Johnson. Is that part of the rationale then to 
have people cross-trained so that they can do both aspects?
    Mr. Skwierczynski. That people are cross-trained. Well, the 
disability claims manager is an attempt to see if one 
individual is capable of doing both the adjudicative tasks for 
the nondisability portion of the claim and the disability 
issues and make a decision on the disability issues. There was 
some skepticism before the DCM started whether an individual 
could do that because there is a lot to know in order to do 
both initiatives.
    The Phase I of the pilot indicates that it is feasible and 
that the people who are, the 200-or-so people who are involved 
in the pilot are capable of doing both of those tasks.
    Chairman Johnson. This goes to the disagreement between you 
and Judge McGraw on that point.
    Mr. Skwierczynski. I did not hear your question.
    Chairman Johnson. This goes to the disagreement between you 
and Judge McGraw on that point in the sense that she felt that 
when she participated in the training that people felt that 
they didn't want to have that responsibility.
    Mr. Skwierczynski. Well, she was talking about disability 
examiners and DDSs who do not see the claimant. So, when 
Congressman Portman asked the question about the ability of a 
non-judge to make a credibility determination I would think it 
would be very difficult for someone over the telephone to make 
a full credibility determination.
    However, if one were in a face-to-face interview, say in a 
Social Security field office, I don't see anything that would 
inhibit an individual to make an assessment of pain or other 
factors or other credibility factors in the course of 
interviewing an individual at the initial stage.
    Chairman Johnson. Hmm-hmm.
    Mr. Brennan.
    Mr. Brennan. Just to follow-up a little bit on a couple of 
things. First of all, disability examiners do make credibility 
assessments and they do make individual assessments on each 
claim. Second point, the way it is now, I mean if you're 
talking about a right to talk to the medical disability 
examiner, of course, the claimant has a right to do that. In 
many cases, the disability examiners will call the claimant and 
discuss their impairments, get additional information. Many 
DDSs send out an introductory letter explaining who they are 
because it is a State/Federal program and sometimes people get 
confused about it.
    We routinely send out letters, we routinely speak to people 
about it. As to the issue about whether you need to see 
somebody face-to-face to make a credibility determination, I 
suggest you don't. Judges do cases on the record, as DDSs do. I 
think there are some cases where you might need to do that and 
the new prototype process will certainly avail people or give 
the claimants the ability to do that.
    Chairman Johnson. Thank you very much.
    Chairman Shaw. I would like to question the two judges in 
regard to the measure of productivity as it relates to the 
tremendous backlog. I think both of you were here when we were 
questioning the Commissioner as to the tremendous length of 
time that is required to get these cases to final adjudication, 
particularly those that go through the appellate process.
    I have two questions I would like for both of you to 
answer. Do some judges have extraordinary backlogs, longer than 
other judges? And, second, how would you suggest that we 
measure the productivity of the judges?
    Judge McGraw.
    Judge McGraw. Mr. Shaw, as far as--in our office I know 
that judges--no one judge has a larger backlog than another. 
And, in fact, I would point out that OHA is becoming more and 
more current. The delay is decreasing dramatically. I used to 
look at cases that were about 13, 14 months old. I am now 
looking at cases that are about 6 months old.
    Chairman Shaw. Now, are you on the initial hearing bench? 
You are not on the appellate?
    Judge McGraw. Yes. I am on the initial hearing bench. And I 
believe that with the decrease in the caseload at OHA, cases 
are going to move through much more quickly. And in respect to 
the--I think that in the nineties a huge number of cases came 
in. I think they have moved through OHA and I think they are 
now sitting at the Appeals Council, the big bulge is at the 
Appeals Council now.
    And with respect to the Appeals Council I did want the 
opportunity to point out to you, you were asking earlier about 
the Appeals Council judges and whether they had tenured 
protection. And I wanted to make sure you understood that ALJs 
at the initial hearing level go through the OPM selection 
process and they are secure. They have tenure. They cannot be 
removed except for misconduct.
    The Appeals Council judges are GS employees. They are GS-
15, subject to performance appraisal like any other government 
employee. And I just wanted you to understand that there is a 
specific difference between the status of the ALJs and the 
administrative Appeals Council judges.
    I think that that should be corrected.
    Chairman Shaw. So, it seems backward that the judges that 
stand in judgment of you have less tenure and they also have 
lower pay.
    Judge McGraw. That is correct.
    Judge Bernoski. Mr. Chairman, with relationship to the 
question of the backlog, from a matter of personal experience, 
as far as I am talking about the delay of the case going 
through the process and the number of days waiting for a 
hearing. I remember back in the mideighties, we went through a 
period of time when the caseload dropped down precipitously. 
And even at that time, it was noted that about a 4- to 6-month 
period was about as rapidly as you could move the case to the 
hearing stage after the case came into the office because, 
first of all, attorneys have schedules themselves. Their 
workload is scheduled out 4 to 6 months, so, our cases are 
compatible to some extent with their calendars because we 
schedule a hearing, you know, we coordinate with their 
availability.
    Also, many times those cases aren't ready for hearing. The 
attorney does more work on the case and, so, they are 
accumulating evidence and preparing the case for hearing. So, 
about 4 to 6 months, in my opinion, is about as rapidly as you 
can realistically hear that case after it comes into the 
hearing office just for the reasons I mentioned.
    Chairman Shaw. What is the delay following the hearing and 
your reaching your verdict and handing down your opinion?
    Judge Bernoski. From the hearing to the decision? I would 
say in our office it is about--from 30 to 90 days, depending on 
where the case is written. You see, some of the cases are 
written in the office by our own decision writers, those cases 
are handled quicker because the case is kept in the office, 
retained there and the decision is written. Some of the cases, 
if they fall behind, are sent to other offices and writing 
centers to be written. Those cases take longer just because of 
the logistics of the situation, putting the case in the box, 
sending it out, writing it, send it back. So, there is a loss 
of time just in the way the process is working.
    Chairman Shaw. What is the length of time of the average 
hearing?
    Judge Bernoski. An average hearing would run approximately 
an hour to an hour and a half.
    Chairman Shaw. And then it takes a month or better to get 
the written verdict?
    Judge Bernoski. Correct.
    Chairman Shaw. What can we do to correct that? I mean you 
must, when you come out of the courtroom, have a feel of what--
--
    Judge Bernoski. Correct. Most of the judges I believe, make 
their decision immediately after the hearing. But there are 
times where the case is held open after the hearing, because 
the claimant has a right which is generally protected by the 
judge, to add evidence to the record subsequent to the hearing. 
So, if that happens, that would be what I would call claimant-
induced delay.
    Chairman Shaw. If that doesn't happen, how long does it 
take you to render your written opinion?
    Judge Bernoski. My draft decision, I make almost 
immediately. The written decision, if it is done in the office 
would come out approximately 30 days later.
    Chairman Shaw. You were trying to shorten that process. 
There are stenographers covering your cases, I assume. I am 
correct on that, that you could almost just dictate it from the 
bench at the conclusion of the case if you are comfortable in 
doing that. Would anything preclude from doing that?
    Judge Bernoski. Well, strange enough, our association had 
made that recommendation to the agency at one time, especially 
in favorable decisions. To render the decision from the bench, 
we thought that would be a reasonable way to handle a favorable 
decision. A denial decision, of course, is more difficult. It 
takes more reasoning, it has to be----
    Chairman Shaw. Well, if you are denying it, you would just 
as soon they get out of the courtroom.
    Judge Bernoski. It takes more time, of course, because you 
have to prepare a better record for the appellate review. But a 
claim that is paid on a favorable case, there is no reason why 
it could not be a bench decision with an order following.
    Chairman Shaw. Are you prevented from doing that now?
    Judge Bernoski. The Social Security Administration frowns 
upon it, yes.
    Chairman Shaw. We should take a look at that.
    I want to get into one last area. I got into this with the 
Commissioner and he agreed that there are some real problems in 
the delay of awarding attorney's fees.
    Ms. Shor, you and I had a conversation about this earlier 
this morning with regard to the delay. And it's hard to say 
that we are performing a service for the attorney if we make 
them wait for their fee forever. Judge McGraw, you made mention 
in answer to some of Mr. English's questions with regard to the 
length of time.
    What is the average length of time following the 
disposition of the case in which the fee can be distributed to 
the attorney?
    Ms. Shor. I think when the system is working smoothly, 
probably 3 or 4 months but much more frequently the system is 
not working smoothly and it is easily over a year.
    And, in addition, it is oftentimes that the claimant's past 
due benefits are held up as well and that is certainly a source 
of concern to us. On occasion, the attorney's fee is going to 
be less than the amount that Social Security is withholding and 
so that some of the money they are withholding will ultimately 
go to the attorney but some of it will go to the claimant and 
they are not getting it either.
    Chairman Shaw. Then this chart that is over here to the 
left, showing that it takes as much as 900 days to go from the 
initial filing to the conclusion of the appellate level, or it 
takes 400 days just to get through the hearing process and I 
assume that is an average. I can say that actually then you may 
have concluded the case but there is another 30 to 120 days 
before the claimant gets his money and before the attorney is 
paid.
    Well, I think there is something we can do about that. 
Judge McGraw, do you agree with what Ms. Shor just had to say?
    Judge McGraw. I do not handle, I am not involved in the 
payment of the fees but I do hear constant complaints from 
attorneys about the delay in receiving payments.
    Chairman Shaw. Well, I am concerned about the attorneys 
being delayed particularly since we are going to tax them for 
this great service that we are going to give them. But I am 
more concerned about the claimants and the people that really 
are the disabled who really need this money. That is 
unconscionable that this delay has occurred and I can assure 
you that we will be working with the Commissioner to shorten 
that time.
    Mr. Skwierczynski. Congressman, the agency did pilot an 
initiative called the adjudicative officer, which the intention 
of that was to have an in-between step between the 
reconsideration stage and the hearing stage to have a trained--
somebody who is trained on making disability decisions who 
would review the case on the record and could make a decision 
if only a favorable decision, not a denial, and in that way 
screen a number of cases that may have been denied at the 
reconsideration stage but actually should have been approved or 
because of the course of time the claimant's condition changed 
in such a way that one could make an approval based on the 
record.
    Now, that resulted in a certain percentage of cases being 
processed much more quickly. And would have the effect of 
reducing the processing time. That individual also had the 
ability to have conferences with the attorney, solicit 
additional medical evidence so that when the hearing occurred 
there would be a full evidence of record and there would be 
less likely to have situations where the judge would suspend 
the hearing or schedule it at another time because there was a 
lack of medical evidence.
    Now, that is an initiative which I thought as a union 
representative we had people who were doing that job, which was 
quite successful. But the agency canned that initiative and 
they never issued any kind of final report of an analysis of 
the success or failure of that initiative. I suspect that one 
of the reasons that it was eliminated or canned was because of 
resistance from ALJs and the Office of Hearings and Appeals.
    The people who were adjudicative officers, who were not 
necessarily employees of the Office of Hearings and Appeals and 
there was sort of a reluctance in that unit for outsiders to be 
engaged in making decisions that ought to be, in their opinion, 
done by ALJs.
    But we thought that was a very successful initiative. That 
ended on September 30, unfortunately, and I think further 
exploration of that by your Committee about why the agency 
canned that program is necessary.
    Judge McGraw. I would beg to disagree with those statements 
that there was dissatisfaction by ALJs. I was in a State where 
we had the DDS doing the AO project, and I was an AO judge. I 
welcomed the project. I think they did an excellent job. I 
believe that the project ran into trouble because the AOs were 
unable to produce the numbers of cases that are necessary to 
make the program viable.
    They were doing the kind of work that ALJs do and they were 
finding that it is very time consuming. And I believe it is 
numbers that brought a halt to that program. But I welcomed it, 
it was very well done in Georgia.
    Judge Bernoski. I concur with that. I was also one of the 
so-called AO judges. I worked on a test project and I heard 
these cases from the AOs and the reason that it was terminated 
as far as I understand was for the exact reasons that Judge 
McGraw indicated.
    Mr. Skwierczynski. The problem, congressman, is the agency 
never issued a final analysis of the reasons and why they 
terminated the project. They just terminated it. And I think 
that is where you and your colleagues may want to question the 
Commissioner and other agency officials about why they just 
made a decision to terminate a project without having a 
reasoned analysis and a reasoned final report on the pilot.
    Chairman Shaw. I will correspond with the Commissioner and 
ask for a written reply to the question that has been raised 
that we will leave the record open and have that inserted in 
the record of this hearing. And that it does raise a very 
serious question.
    I want to thank all of you for being with us this afternoon 
and for your patience in dealing with the schedule of those of 
us sitting up here.
    And we appreciate your good work. We are all here to serve 
the people and we can do a better job and I think a lot of 
questions have been raised that the Congress will have to 
address. The question of the delay in the payment of the 
attorney's fees, the problem that the Commissioner acknowledged 
that as a problem and he is working on it and we will be 
working with him.
    And we will be particularly paying attention to the delay 
in payment to the beneficiaries, the disabled who had put in 
for this because there is no excuse for that and the system has 
to be streamlined in order to take care of that.
    [The following questions submitted by Chairman Shaw, and 
Mr. Brennan's responses are as follows:]

Letter from Michael W. Brennan, President, National Council of 
Disability Determination Directors to Hon. E. Clay Shaw, Jr., Chairman, 
Subcommittee on Social Security

                            National Council of Disability 
                                    Determination Directors
                                                  December 14, 1999
The Honorable E. Clay Shaw, Jr.
Chairman, Subcommittee on Social Security
Committee on Ways and Means
U.S. House of Representatives
Washington, DC 20515

    Dear Chairman Shaw:

    The National Council of Disability Determination Directors (NCDDD) 
is appreciative of the opportunity to respond to your questions 
regarding the Disability Claims Manager position which is currently 
being tested by the Social Security Administration (SSA).
    Question 1. The Social Security Administration (SSA) is currently 
testing the Disability Claims Manager (DCM) position. Please discuss 
the testing process, the history as to how it was agreed to and the 
role of the Disability Determination Services (DDS).
    Response. In 1994, SSA issued a plan to redesign the initial 
disability process. Although SSA regulates and monitors the disability 
programs, disability determinations are made by the state DDSs. The 
DDSs are staffed with about 14,000 employees; 6,000 of which are 
disability examiners. Logically, since most of the work involved in the 
initial disability process takes place in the DDS, the majority of the 
redesign changes have the greatest impact on processes that occur in 
the DDS.
    The original redesign plan included 83 initiatives. The DDSs were 
involved in most of the initiatives. In 1997, SSA scaled back the 
number of initiatives and focused on eight key initiatives. The DDSs 
have been involved in seven of the eight key initiatives. A significant 
number of DDS employees have been involved in the following pilots. 
Single Decision Maker, Adjudication Officer, Full Process Model, and 
the Disability Claims Manager.
    Early in fiscal year 1996, SSA negotiated a series of ``memoranda 
of understanding'' with the American Federation of Government Employees 
(AFGE). Without any consultation with the states, SSA and AFGE agreed 
to pilot the DCM position with 750 federal and 750 state employees. 
And, after one year, the pilot would expand to include another 1,500 
DCM. The NCDDD had several concerns.
    The redesign plan viewed the concept of the DCM to be dependent on 
certain process improvements (enablers) such as the redesigned 
disability system, and the revised decision methodology. The NCDDD had 
reservations regarding the practicality of a pilot of this size without 
the enablers that were viewed as essential to the success of the 
concept.
    Despite our reservations, there was agreement by the states that 
the DCM could and should be tested under controlled and observed 
conditions. There was concern, however, that SSA's intention to develop 
1,500 DCM positions (3,000 in a two year period) would constitute a 
roll out rather than a test and that once the project had begun on such 
a large scale it would be very difficult to control.
    Additionally, while 750 employees may be insignificant to an 
organization the size of SSA with 65,000 employees, there are only 
6,000 state disability examiners. The involvement of such a large 
number of state disability examiners in the DCM pilot would have 
compromised the ability of the states to process the initial, the CDR, 
and the legislatively mandated workloads that are the primary 
responsibility of the DDS.
    We expressed our concerns to SSA and in a series of meetings 
involving all stakeholders (including NCDDD, AFGE, the National 
Association of Disability Examiners (NADE), and the state unions), an 
agreement on the number of DCMs that would participate in the pilot was 
reached. The final number was determined on the basis of a careful 
analysis of what would be required to produce valid test results plus 
an additional number as a hedge against attrition.
    Professionals in the area of research design from SSA's Office of 
Quality Assurance and the Office of Workforce Analysis were consulted 
and helped in determining the final number of DCMs that would be 
required as well as the parameters of the test. It was concluded that 
because of the length of the training required for the DCM the 
evaluation would take up to four years to complete. All stakeholders 
agreed to conduct the test with 230 DCMs rather than the number 
originally agreed to by SSA and AFGE (1,500).

    Question 2. What impact has the DCM test had on the State DDS's 
ability to process other workloads?
    Response. The total claims processing impact of the testing of the 
DCM position has varied considerably within the thirteen states 
involved in the test. However, initially in almost all of the states, 
participation meant devoting considerable resources to training the 
federal DCMs that could have been used for processing other workloads. 
In some states, training the federal DCMs meant delays in hiring and 
training examiners, which compounded the negative impact. Additionally, 
most states assigned some of their most knowledgeable and productive 
examiners to be state DCMs and to be trainers and coaches for the 
federal DCMs.
    State DCMs had to spend many weeks in training that would have 
otherwise been spent in processing normal workloads as examiners. State 
computer systems, accounting systems, and telephone systems had to be 
modified to accommodate the federal DCMs as well as the additional 
duties to be assumed by the state DCMs. Currently, the DCMs are 
collectively about half as productive as an equal number of mainstream 
disability examiners. Although it is somewhat difficult to definitively 
quantify the impact of the DCM testing, it is obvious that the DCM test 
has consumed resources that could have been utilized to produce 
thousands of additional claims.

    Question 3. Has the National Council of Disability Determination 
Directors (NCDDD) made any suggestions to SSA on how to improve the DCM 
testing process? If so, what was the agency's response to these 
suggestions?
    Response. The NCDDD reaction to the agency's announcement that the 
initial DCM test would involve 750 state DCMs and 750 federal DCMs and 
the subsequent discussions and negotiations which led to a test with a 
smaller number of DCMs was the single most important ``suggestion'' we 
made to the agency. This suggestion was accepted by all stakeholders 
and consequently limited the negative impact of the DCM test on the 
ability of the DDSs to to process normal workloads. Otherwise, the 
negative impact would have been seven or eightfold.
    Since that time we have been closely involved in the testing and 
our many suggestions have been acted on appropriately by the agency. 
That is to say, even when not accepted our suggestions have been given 
thoughtful consideration.

    Question 4. What is the NCDDD's position on the Lewin Report on 
Phase I of the DCM test.
    Response. Individuals who adjudicate disability claims are 
required, as a matter of routine, to deal with the interplay of 
abstract medical, vocational, and legal concepts. Although disability 
examiners are provided a formal training period of from four to six 
months, the bulk of the knowledge is learned on the job and with the 
help of supervisors, quality assurance specialists, and program 
physicians. It is the DDS experience that it takes about two years 
before a return is realized on the training investment. Trainee 
examiners are started out with the most non-complex claims and receive 
a reduced claim intake as well as intensive coaching and mentoring.
    Our primary concern with the long term viability of the DCM concept 
has to do with two efficiency issues. DCM requires a substantially 
increased investment in training resulting from the fact that more 
training time is required to learn the wider range of job duties (the 
current DCMs have yet to be trained in the full range of claims 
representative or disability examiner job duties). Second, our initial 
estimate (which is consistent with the preliminary results) was that 
the DCMs would not be able to achieve the level of productivity that is 
required in view of the workload and the available resources.
    The NCDDD believes that the Lewin Report was a very thorough and 
valuable assessment of Phase I of the test. However, the primary 
conclusion that, ``. . . the DCM is a ``viable'' approach to processing 
claims, in the limited sense that certain key are outcomes are within 
the ballpark of outcomes under the current process.'' is premature. 
Phase I of the DCM test was conducted in a ``test tube'' environment. 
While there is much to be positive about in Phase I; Phase II of the 
test will, hopefully, provide a more real world setting. Decisions 
about the ``viability'' of the DCM concept need to be postponed until 
the serious questions posed in Phase II are answered, since what is 
possible is not often efficient or reasonable.
    This concludes the NCDDD response to your follow up questions to 
the joint subcommittee hearing on October 21, 1999. However, we have a 
comment that we would like to be part of the record.
    For the past four years the DDSs have committed significant 
resources to redesign pilots. This participation has continued even 
though our resources have been stretched almost to the breaking point 
by the additional CDR workloads and the additional and complicated 
workloads created by legislation during the same time period.
    The effort of the states to work in partnership with SSA and other 
stakeholders despite the considerable adversity of the past four years 
is testimony to the hard work, the commitment, and the dedication of 
DDS employees. We believe that effort to be worthy of the approbation 
of honest critics.
    We want to thank you, once again, for the opportunity to provide 
additional information relating to the DCM position.
            Sincerely,
                                         Michael W. Brennan
                                                          President
    Thank you very much and the hearing is now concluded.
    [Whereupon, at 1:58 p.m., the hearings was adjourned.]
    [Submissions for the record follow:]
                               American Bar Association    
                                  Government Affairs Office
                                                   November 3, 1999
The Honorable E. Clay Shaw
Chair, Subcommittee on Social Security
Committee on Ways and Means
U.S. House of Representatives
Washington, DC 20515

The Honorable Nancy Johnson
Chair, Subcommittee on Human Resources
Committee on Ways and Means
U.S. House of Representatives
Washington, DC 20515

    Dear Mr. and Madam Chair:

    On behalf of the American Bar Association, I write to you with 
respect to the hearings your Subcommittees held on October 21, 1999, 
regarding the Social Security Administration's management of disability 
cases. We appreciate the opportunity to submit this letter and request 
that it be included in the hearing record.
    As the national representative of the legal profession in the 
United States, the American Bar Association strives to promote the rule 
of law and to ensure fairness and integrity in our justice system, 
particularly for members of society who are least able to advocate for 
themselves. Over the years, the Association has drawn upon the 
considerable expertise of members with backgrounds as claimant 
representatives, administrative law judges, academicians and agency 
staff, to develop a wide-ranging body of recommendations for a fair and 
efficient Social Security appeals process. We have carefully followed 
the Social Security Administration's efforts to improve the disability 
appeals process, and we commend the agency on these steps. We agree 
with the premise that the correct decision should be made as early in 
the process as possible.
    However, we are concerned about the continued backlog in processing 
appeals, particularly at the Appeals Council stage, and about the 
impact of delays on public confidence in the system, on agency staff, 
and, most importantly, on claimants. The timeliness and the quality of 
decision-making has a profound effect on the lives and well-being of 
millions of Americans for whom Supplemental Security Income and Social 
Security disability benefits constitute the sole source of income and 
access to health care. We should do all we can to ensure that the 
system works accurately and efficiently.
    With its ``Hearing Process Improvement'' plan, the Social Security 
Administration hopes to improve efficiency and create consistency of 
decision-making at all levels of the disability appeals process. We 
support these goals. In too many cases, claims are denied at the 
initial stages but awarded at the hearing level, simply because the 
evidence presented is more complete by the time it is presented to the 
administrative law judge. We suggest that the initial stages could be 
improved by providing claimants with a statement of the applicable 
eligibility requirements, the claimant's responsibilities, a 
description of the administrative steps in the process, an explanation 
of relevant medical and vocational evidence, and notice of the 
availability of legal representation. We also encourage SSA to take 
affirmative steps to compile accurate documentation and to supplement 
reports (particularly those from treating physicians) that are not 
sufficiently detailed or comprehensive. Agency staff could speed up the 
process by educating the medical community about eligibility criteria 
used in the disability program, and the kind of evidence required to 
establish eligibility for benefits, and by assisting claimants in 
compiling necessary documentation and in supplementing incomplete 
reports.
    We support the Social Security Administration's plan for pre-
decision interviews and urge the agency to ensure that these interviews 
are face-to-face wherever possible. In cases where denial of the claim 
is possible, the interview stage would provide the opportunity for 
staff to inform claimants of reasons why the finding of disability 
cannot be made; ensure that they have access to all the evidence in 
their file, including medical reports; provide them the opportunity to 
submit further evidence; and advise claimants' health care providers of 
deficiencies in the medical evidence and give them the opportunity to 
supply additional information.
    The ABA supports the plan to eliminate the reconsideration level of 
appeal. If the quality of intake and development of evidence at the 
early stages is improved, there is little reason for reconsideration, 
particularly given the historically low reversal rate and substantial 
delays involved at this level.
    We also agree wholeheartedly with the need to reduce processing 
times at the Office of Hearings and Appeals, and with efforts to 
improve this system. However, we caution that any new administrative 
processes must preserve claimants' rights to due process, including a 
hearing on the record and the opportunity to present new evidence 
before an administrative law judge whose authority as an independent 
fact-finder is assured. The hearing offers claimants a full and fair 
review of the claim, and provides administrative law judges the 
opportunity to take testimony from the claimant, develop evidence when 
necessary, consider and weigh medical evidence, and evaluate vocational 
factors so as to reach an impartial decision.
    Like those who testified at the hearing, we are disturbed by the 
lengthy processing times at the Appeals Council level and hope to see 
improvement in the very near future. We were also quite surprised and 
concerned about reports of extensive own-motion Appeals Council review 
of decisions of administrative law judges, particularly since those 
reviews are limited to decisions that are favorable to claimants. The 
ABA has advocated for many years for a complete study of Appeals 
Council procedures and functions to determine whether own-motion review 
is even necessary and to explore possible changes in the Council's 
role. Past attempts by the agency to direct the rate at which 
administrative law judges allowed claims (Bellmon reviews) severely 
compromised the independence and impartiality of administrative law 
judge decision-making. The scope of such review must be limited to 
clear errors of law or lack of substantial evidence for factual 
conclusions, with the latter based on specific documentation and review 
of the hearing tapes.
    We look forward to working with your Subcommittees and with the 
Social Security Administration on these issues in the future. Thank you 
for the opportunity to submit this letter for the record of the 
hearings.
            Sincerely,
                                            Robert D. Evans

                                

Statement of the American Federation of State, County and Municipal 
Employees (AFSCME), Communication Workers of America (CWA), and Service 
Employees International Union (SEIU)

    We are pleased to have the opportunity to submit testimony 
on behalf of the American Federation of State, County and 
Municipal Employees (AFSCME), the Communications Workers of 
America (CWA), and the Service Employees International Union 
(SEIU). We represent approximately 8,000 workers in the 
Disability Determination Services (DDS) Offices across the 
country. We have been involved with the Redesign Process on 
many levels since 1994, serving on the Advisory Board and 
participating in the SSA Work Groups. We also represent the DDS 
workers in some of the prototype states.
    We have grave concerns about some of the elements of the 
prototype and national implementation of a program that has not 
been tested fully. While certain elements have been tested 
individually, the current prototype has not been tested as an 
integrated whole. This alarms us since the word ``prototype'' 
is not synonymous with ``test.'' If you listen carefully, you 
learn that we are now testing a model so that it can be refined 
and implemented nationwide.
    For example, SSA has decided it wants to eliminate the 
first level of appeal, known as Reconsideration. In an earlier 
pilot project, SSA substituted a new position (labeled 
``Adjudication Officer'') for the current Reconsideration 
process. The prototype now underway, however, does not include 
the Adjudication Officer position; it merely drops the 
Reconsideration step. There is no empirical justification for 
this--it's just a stab in the dark. We do not anticipate major 
cost savings or reductions in waiting times for clients. On the 
other hand, it will force additional claimants to hire an 
attorney or drop their claim altogether.
    In addition, we are concerned that eliminating mandatory 
physician involvement in the decision process will reduce the 
accuracy and credibility of state disability decisions. 
Physician involvement establishes a two-person review of the 
medical evidence. There are broad differences in the background 
and training of physicians and disability examiners. The 
program should provide benefits to claimants based on solid, 
uniform medical background and training of the people making 
the medical decision. The physicians have a depth of knowledge 
of most of the disease processes, in contrast to the training 
for the enhanced examiner position (known as a Single Decision 
Maker), which consists of lectures on body systems. Such 
limited medical knowledge does not permit them to sort out 
limitations on the literally hundreds of medical conditions 
that claimants allege. We think that SSA is inviting a flood of 
complaints from the public (and Congressional offices) and 
possibly even lawsuits if physicians do not review each case.
    Finally, we echo the budgetary concerns voiced by the 
National Council of Disability Determination Directors. The 
disability claims process is complicated, and understanding the 
new process innovations is more complicated. But for the people 
whose hands move disability cases every day, the impact of the 
changes is simple: Do more with less. SSA is requiring more 
written documentation of decisions. SSA is requiring telephone 
conferences with people whose claims are being denied. These 
are significant additional duties for an examiner juggling more 
than 100 cases at a time. For FY00, SSA is predicting a 4.2 
percent increase in workloads and telling states to hold 
staffing levels constant. Everyone would like faster, more 
accurate decisions on disability claims, but it's not going to 
happen if we continue to disregard the laws of physics.
    In summary, we hope that members of the subcommittee 
continue to monitor closely the implementation of the 
prototypes and hope that you will consider the opinions of the 
workers on how the new process is actually working.

                                

Statement of Lisa Russell Hall, Staff Attorney, Office of Hearings and 
Appeals, Social Security Administration, Paducah, Kentucky

    I am a staff attorney with the Office of Hearings and Appeals. I 
support the comments presented by the Federal Bar Association. The FBA 
thoroughly and accurately represents the difficulty issues currently 
being addressed by the Social Security Administration in regards to the 
Office of Hearings and Appeals, particularly in regards to the planned 
Hearing Process Improvement.
    Traditionally, there has been a tension between SSA's position 
disability determinations under the Social Security Act are medical 
decisions which can be processed rather quickly based solely on medical 
findings and the OHA view that disability determinations are legal 
decision, which involve due process concerns. With HPI, the conflict is 
brought to a head; HPI is the first step is undermining judicial 
independence, by giving processing benchmarks precedence over thorough 
and fair case development. The Administration is at a crossroads. It is 
imperative that this committee directs the future path SSA will take 
once and for all.
    No matter which direction is chosen, great changes must occur. If 
the Committee determines that OHA is performing a ``medical'' process, 
the OHA in its current form should be dissolved in its entirety. It is 
unreasonable for the taxpayers of this country to be paying the 
salaries of the Administrative Law Judges to make medical 
determinations. The support staff comprised of GS-12 and GS-13 
paralegals and attorneys is not needed if this is a medical process. 
The ALJs should be replaced with GS-8 disability hearing officers, this 
is strictly a medical determination.
    It is my position that OHA performs a legal service in 
administering the disability programs. If the committee chooses to 
affirm this role for OHA, HPI must be stopped to preserve the integrity 
of the decision making process. However, changes still have to occur. 
Here are my suggestions:
    1. Office Analysis: The projected average processing time for cases 
is 313 days. As this is an average, some offices are doing much better 
and some are doing much worse. A committee, composed of OHA leaders 
with at least 15 years of OHA office level experience, should look at 
each office to determine what the very productive offices are doing 
right and how specifically the less productive offices can be improved. 
Under HPI, which implements broad changes across the board, some 
offices are being ``fixed'' which are not ``broken.''
    2. Education Requirements: Currently, OHA employs a 
significantnumber of ``paralegals,'' many of whom have only high school 
education. When ``paralegal'' positions are filled, former clerks are 
promoted fromwithin; the jobs are not advertised to outside applicants. 
Real paralegals with legal experience and training are not given an 
opportunity to compete for these jobs. For future ``paralegal'' hires, 
at least 20 hours of college classes in subjects such as legal 
research, legal writing and administrative law should be required. If 
such an education is not required, the job position should be renamed 
``administrative assistant'' and the position should be reclassified at 
a lower GS level.
    Further, the value of the attorneys' education should be 
recognized. Under HPI, SSA builds a career path where the 
``paralegals'' can assumemost management positions and supervise 
attorneys. On multiple occasions, the HPI committee has stated that 
education is not as important as ``real world experience.'' This 
position is absurd. If the OHA process is a legal process, a legal 
education should have some value to the agency. In many offices, 
attorneys are justifiable assigned the more difficult cases and assist 
the paralegals in their case developments. The value of legal expertise 
should be reflected by promotion of agency staff attorneys to the level 
of GS-13 and the continuation of the successful Senior Attorney 
Program.
    3. Adversarial Process: The role of agency staff attorneys should 
be expanded to make the hearing process adversarial in nature. 
Currently, it is entirely the responsibility of the ALJ to develop the 
case fully at the hearing while remaining impartial. This is 
particularly difficult in cases with active and aggressive claimant's 
representatives. The Agency should have a representative present to 
ensure that both sides of the case are fully developed and act as a 
safeguard to ensure no issues are overlooked. By requiring the staff 
attorneys to represent the Agency at hearing, the taxpayers are more 
likely to have a full and fair hearing regarding the distribution of 
benefits. More cases of fraud would be exposed.
    Further, the Agency would be more effectively using the skills of 
it licensed staff. Finally, the ALJs' role would shift from being case 
developers to full time adjudicators, making better use of their time 
and expertise. SSA should be using the staff attorneys similar to the 
INS, whose agency attorneys present cases and issues at hearings.
    4. Empower Management: One of the largest problems OHA faces is the 
inability of management to effectively supervise its employees. OHA 
employees are not held to performance standards. Employees are not 
given real assessments of their work performance. There is little 
management can do to eliminate non-productive workers or reward 
productive workers. To increase overall agency productivity, management 
must be given the tools to manage its work force.
    With concentration on these areas, great steps can be made to 
improve the quality of work performed at SSA and increase service to 
both the taxpayer and the claimant. The broad, sweeping changes 
proposed by the supporters of HPI do not effectively address the 
underlying problems of the agency. The changes proposed will be 
expensive considering the amount of training involved and the 
significant number of unnecessary promotions proposed. I hope the 
committee will consider the comments of Administrative Law Judge McGraw 
very carefully.

                                

Statement of International Union, United Automobile, Aerospace and 
Agricultural Implement Workers of America (UAW)

    This written statement is being submitted on behalf of the 
International Union, United Automobile Aerospace and 
Agricultural Implement Workers of America (UAW). We represent 
the disability examiners, psychiatrists, physicians and 
clerical staff of the Michigan Disability Determination 
Service. The members of the UAW have been involved in many 
aspects of the Redesign Process including the Adjudication 
Officer (AO), Single Decision Maker (SDM), Disability Claims 
Manager (DCM), and Process Unification (PU). We appreciate this 
opportunity to present this statement and to provide helpful 
insights, based on our members' long experience, into improving 
service to our claimants--your constituents in Michigan, as you 
may know, is an SSA Prototype state. We wish to express some of 
our concerns over certain aspects of Prototype.
    In general, the UAW supports the concept of Prototype in 
making the disability process more efficient and customer 
friendly. However, we do have some concerns over SSA's 
willingness to give us the proper tools and funding to do the 
job.
    We need, and want, better training what SSA actually wants 
us to do. Of the training given so far, most has been through 
the Interactive Video Training (IVT) run by SSA. Much of the 
IVT sessions have been lacking in ``real world'' specificity. 
The content of the IVT indicates they have been crafted and 
implemented by those without recent and relevant field 
experience at either the DDS or SSA Field Office level. This is 
borne out by the fact that many of the key documents and forms 
mandated by SSA to use in the Prototype seem to be adrift in a 
sea of constant change. As an example, SSA wanted a written 
rationale explaining the basis for the disability decision on 
all initial disability claims. When they discovered how much 
time it would take, the rationale was changed into the Key 
Issues Index (KII), a checklist to be used. SSA then killed the 
KII and replaced it with the Disability Determination Sheet, 
which evolved into the DDS form and is now the DD sheet. The DD 
sheet, which has had many more revisions then name changes, 
still remains a checklist. Keep in mind, the absolute last and 
final version of the DD sheet still contains at least one type 
that must be manually corrected in each case. If you find this 
somewhat confusing as to what form is to be used when and in 
what manner, you're not alone.
    SSA also wants us to assess claimant credibility but has 
not offered any training on assessing credibility in mental 
impairment cases. Yet assessing claiming credibility remains an 
important and integral part of Prototype. This lack of training 
is an impediment to providing ``world class'' service to our 
claimants. In fact, given the number of cases that have a 
mental impairment component to them, it is a disservice to 
those same claimants.
    SSA also wants increased disability examiner participation 
in evaluating statutory mental impairment claims. In her 
October 8, 1999 letter to Linda Dorn, Director of the Michigan 
DDS. Assistant Regional Commissioner Donna Mukogawa provided 
the Office of Disability's interpretation of who is responsible 
for assessing psychiatric impairments (Attachment #1). Their 
interpretation clearly represents a significant change from 
pre-Prototype practice and may run contrary to legislative 
intent. Despite this, SSA has not provided any additional 
training to date in the area of psychiatric impairments.
    And now for the Claimant Conference (CC). It began life as 
the Pre-Denial Interview (PDI). That term was deemed too 
politically incorrect so it became the Pre-Decisional Interview 
thus enabling the same acronym to be used. At this point in 
time, SSA was not actively discouraging face-to-face contact at 
the PDI between the decision maker and the claimant. That 
changed. The PDI became the Claimant Conference (CC) and face-
to-face contact in the CC process became actively discouraged 
by SSA. In fact, forms have been drafted and issued as desk 
aids to help disability examiners discourage claimants from 
having a face-to-face CC. And the only training on the CC was a 
DDS in-house training session on interviewing skills done 
October 28, 1999 at 9:00 a.m. The training consisted of 
watching two videotapes with a Q and A, and short presentation 
given by a Michigan DDS examiner who was sent to Baltimore for 
a three-day training session. Keep in mind, SSA envisions the 
CC to have the same allowance rate as the now defunct 
reconsideration step in the 10 Prototype states. However, 
without training and with an ever-changing concept of the CC, 
is this possible? We don't know.
    For Prototype to work, process unification must work. The 
DDSs and OHA must adjudicate similar claims in a similar 
fashion. We agree. In the Prototype states, OHA starts its 
Hearing Process Improvement (HPI) plan on January 1, 2000. For 
Prototype and HPI to work, adequate funding must be in a place 
to pay for the requisite training, implementation, staffing and 
evaluation. SSA plans to pay for all of this from the savings 
realized by the elimination of the reconsideration step in the 
appeal process. Yet, SSA tells us we will have ``flat budgets'' 
over the next few years. Essentially, this means that we will 
have a shrinking budget. This, despite the fact the Social 
Security Advisory Board's recommendation, found on page 49 of 
its September, 1999 report, suggests otherwise. In fact, the 
Advisory Board reports that SSA expects its disability caseload 
to increase over the same years they want to ``flat line'' the 
DDS budgets. We can't do the work without the money to process 
the cases. To fund for Prototype with a flat line budget as SSA 
suggests, what will be sacrificed? Training? Staffing? 
Acquisition of medical records? Accurate decisions? All these 
scenarios lead to less efficient claimant service.
    We ask these Subcommittees and the Congress to ensure that 
adequate training and funding is made available to the DDSs so 
that the disabled population we service is not disadvantaged by 
the changes being made in the disability process.

    [Attachments are being retained in the Committee files.]

                                

Statement of Terri Spurgeon, President, National Association of 
Disability Examiners, Lansing, Michigan

    On behalf of the members of the National Association of 
Disability Examiners (NADE), thank you for this opportunity to 
comment on the Social Security Administration's management of 
its disability caseload.
    NADE is a professional association with the majority of our 
members being disability examiners, quality assurance and 
public relations personnel, hearing officers, physicians, 
administrators and support staff employed in the state 
Disability Determination Service (DDS) agencies. However, our 
membership also includes physicians, psychologists, attorneys, 
advocates, representatives from private insurance companies, 
Social Security claims representatives and other professionals 
not in the DDSs who work with, and are interested in, the 
evaluation of disability claims. We believe it is the diversity 
of our membership, as well as our experience working directly 
with the Social Security and SSI disability programs, which 
provides us with a unique perspective and understanding of 
those programs and the public they serve. Many of our members 
have been, or are currently, involved in testing the process 
changes envisioned in the Redesign initiative. For a number of 
reasons we are concerned about the management of the disability 
caseload.
    Since 1994, SSA has piloted various initiatives in an 
effort to redesign the disability claims process. In March 1999 
Commissioner Apfel announced his decision to prototype a new 
disability process which encompassed several of those 
initiatives. This new process creates new roles for both the 
disability examiner and the State Agency medical consultant and 
includes a claimant conference (an opportunity for the 
applicant to talk directly with the decision maker if a fully 
favorable decision cannot be made based on the evidence already 
in file), elimination of the reconsideration level of appeal 
and improvements in the hearings process. At the DDS level 
claims will no longer require medical sign-off except where 
required by statute. This is expected to allow State Agency 
medical consultants additional time to assist with the more 
difficult and complex claims. The prototype involves 10 states 
and approximately 20% of the initial disability caseload 
(continuing disability reviews are not included in the new 
process).
    NADE applauded the Commissioner's decision to proceed with 
a prototype rather than national rollout. Although the time 
frame to prepare for implementation of the new process was 
short we felt that the October 1, 1999 start up date was 
feasible. Unfortunately, however, many of the operating 
instructions and notification letters necessary to implement 
the new process were not available to the DDSs by that date and 
as late as mid-October claims which were ready for a claimant 
conference were being held pending operating instructions and 
training. This is unfortunate for DDS staff and for individuals 
applying for disability benefits but it continues a long 
established pattern by SSA of proceeding with its announced 
plans regardless of whether the necessary tools for 
implementing those plans are in place, or even exist.
    Moreover, we continue to be concerned that elimination of 
the reconsideration step will impact negatively on the Office 
of Hearings and Appeals by increasing the number of appeals to 
that level. Statistics and claimant satisfaction surveys 
available from the pilots have shown that the claimant 
conference (formerly known as the pre-decision interview or 
PDI) actually had a negative impact on the claimant's 
satisfaction with the process if the claim was denied and 
increased the likelihood that the individual would file an 
appeal. In addition, for the new process to succeed, changes at 
the front end must necessarily be accompanied by changes at the 
hearings level. These have been proposed. Unfortunately, we are 
already seeing strong resistance by certain elements within OHA 
to the announced changes at this level. NADE agrees with the 
opinion offered by the GAO and the Social Security Advisory 
Board that the planned changes at the hearings level will be 
very difficult to implement and will require the active 
involvement and strong support of SSA leadership.
    Despite our reservations NADE is committed to providing 
full support for the new process. While we do not believe in 
change for the sake of change we strongly support any 
initiative to assure that claims which should be allowed are 
allowed at the earliest level possible. In numerous previous 
testimonies we have expressed our commitment to the concept of 
a nationally uniform disability program with consistent 
application of policy at all levels in the adjudicative 
process. It is our hope that the process currently being 
prototyped, which does include process unification initiatives 
and improvements at the hearing and appeals level, will lead to 
this uniformity.
    It is important to recognize that the initiatives contained 
in the new prototype process will increase processing time for 
initial claims. They will also almost certainly increase the 
administrative costs of the program. However, we believe that 
while all government agencies must be fiscally responsible it 
is imperative that SSA's administrative budget is sufficient to 
ensure efficient operation--and that it provides appropriate 
resources for the DDSs and the Field Offices. Ensuring that the 
Field Offices and the DDSs have adequate and well-trained staff 
is essential to reaching SSA's stated goal of strengthening the 
public's understanding of the Social Security programs. We are 
concerned that the cost savings projections forecasted by the 
elimination of the reconsideration step will not be sufficient 
to pay for the increased front end costs associated with the 
new disability process. If the projections are incorrect, then 
where will SSA obtain the necessary funds to pay these new 
costs? There does not seem to be a contingency plan in place 
and we have been warned that SSA cannot expect to receive 
additional new appropriations. However, at all levels, and for 
all components, adequate resources, including appropriate 
staffing levels, ongoing training initiatives, and clear and 
timely operating instructions, must be provided.
    The Telecenters and Field Offices are the first point of 
contact for most disability applicants. While disability is a 
relatively small part of their workload the quality of the 
completed application at this level can have a significant 
impact on the efficiency with which the claim is processed at 
the DDS level. It is important, then, that these components 
work together to provide quality service to all applicants. To 
do this requires ongoing communication and an emphasis on 
teamwork. Unfortunately, communication between the Field 
Offices and the DDSs was severely curtailed with the workforce 
reductions in the 1980s. Efforts to increase communication 
between all components have recently been initiated and these 
efforts must be maintained. This, again, will require adequate 
staffing levels and coordinated training initiatives. SSA must 
invest in the training of its personnel to insure that those 
who take the applications for disability benefits, as well as 
those who adjudicate the claims, have the necessary skills and 
knowledge to do so.
    The new disability process requires experienced staff. It 
also requires new skills for both the disability adjudicator 
and the State Agency medical consultant. Unfortunately, the 
reality of staff turnover in the DDSs is that the experience 
level in these offices is at its lowest point ever. Nearly 50% 
of all disability examiners have less than two years of program 
experience. This is a critical statistic since it has long been 
acknowledged that it takes a new disability examiner a minimum 
of two years to become proficient at the job and to be a 
productive employee. In addition, in FY'96 Congress 
appropriated funding specifically earmarked for continuing 
disability reviews. This has resulted in significant program 
savings. However, these congressionally mandated reviews have 
diverted experienced DDS staff from initial claims processing. 
This could be problematic for states involved in the prototype.
    SSA's Strategic Plan recognizes the employees of SSA and 
the DDSs as the Agency's most important asset. A highly 
skilled, high performing and highly motivated workforce is 
critical to SSA's ability to achieve its mission. Ongoing 
training is essential if the new process is to succeed. 
Adjudicators must have sufficient program and medical knowledge 
to conduct a claimant conference and to do so in a manner which 
can be understood by the applicant. Because process unification 
requires the disability adjudicator to evaluate not only the 
objective medical evidence but to also consider the 
individual's subjective complaints and to assess credibility, 
the adjudicator must also have appropriate training and 
experience in this area. State agency medical consultants must 
be able to explain complex medical issues to the adjudicator 
and frequently must do so in a way that will allow the 
adjudicator to then explain these issues to the applicant. 
Further, the Social Security Advisory Board, in its August 1998 
report, concluded that, ``The most important step SSA can take 
to improve consistency and fairness in the disability 
determination process is to develop and implement an ongoing 
joint training program for all of the 15,000 disability 
adjudicators, including employees of the State disability 
determination agencies (DDSs), Administrative Law Judges (ALJs) 
and others in the Office of Hearings and Appeals (OHA) and the 
quality assessment staff who judge the accuracy of decisions 
made by others in the decision making process.'' NADE would 
echo that sentiment Ongoing training is important; joint 
training is essential.
    Nationally uniform decisions with consistent application of 
policy at all adjudicative levels, requires a consistent and 
inclusive quality assurance review process. Without ongoing, 
joint training and an inclusive and consistent quality review 
process the decision making process will remain fragmented and 
public confidence in the program will not be restored. NADE 
has, on several occasions, urged SSA to address the problems 
and the perceived problems in the federal quality assurance 
review process. We have frequently expressed concerns that the 
quality assurance review process is too fragmented and allows 
for at least the perception that the process is not nationally 
consistent. It must be recognized that SSA's quality assurance 
review process does have a significant ability to shape 
disability policy and impact program costs and caseloads 
through subtle messages imparted by tighter or looser reviews, 
the kinds of decisions that are selected for review, or even by 
increasing or decreasing the size of the review sample. The 
quality assurance review process can and should be a major tool 
for identifying and correcting errors in policy and procedure 
to assure that program policy is implemented in a manner that 
is consistent and fair to individuals. Likewise, the quality 
assurance review process should apply in a similar manner to 
decisions made by the DDSs and by OHA.
    Commissioner Apfel, in his testimony, compared our 
disability programs with those in other developed countries. As 
he stated, ``Comparisons aren't always simple.'' By the same 
token we would like to point out that it is not reasonable to 
compare private disability insurance programs and the Social 
Security and SSI disability programs. As the Commissioner 
noted, ``SSA's programs have always awarded benefits on the 
basis of a single strict standard of disability defined by 
statute.'' Not only is SSA's standard stricter than private 
insurance programs, the documentation requirements are 
stricter. Decisions made by private insurance disability 
programs are not subject to the extensive quality assurance 
review process to which Social Security and SSI disability 
claims are and these companies are able to make decisions using 
a more liberal documentation standard. In addition, private 
disability programs offer partial or short term disability 
programs. They rely on the decision made on the individual's 
Social Security claim to determine eligibility for long term 
benefits.
    Agreeing with Chairman Shaw that, ``Ensuring that American 
workers who experience a disability have all the protection 
they paid for is a core function of the SSA,'' NADE recently 
prepared a Position Paper calling for the elimination of the 
five month waiting period for Title II applicants. Title II 
disability beneficiaries must currently wait five full calendar 
months from the onset of their disability before they can begin 
receiving cash benefits. The Title XVI (SSI) beneficiary, on 
the other hand, can begin receiving benefits immediately. This 
fosters a perception that the Title II program is unfair to the 
disabled worker who has actually paid into the system. This is 
particularly evident in cases involving claimants with terminal 
illnesses. Many of these claims are closed by the DDSs as ``no 
decision'' cases due to the fact that the claimant died during 
the waiting period. We have been strongly encouraged by recent 
actions by the Congress and by SSA to address many issues that 
deal with the public's confidence in the disability program and 
the public's perception of ``fairness'' between the two 
disability programs. NADE strongly urges Congress and SSA to 
work together to produce legislation that will eliminate, or 
significantly reduce, the waiting period. We offer the 
expertise of our membership to assist in this effort.
    Mr. Chairman, Madam Chairman and members of the 
subcommittees, NADE members take pride in the quality of the 
service we deliver. We understand and appreciate that the 
Social Security and Supplemental Security Income programs make 
an enormous difference in the quality of life of millions of 
people. We are proud of our part in the administration of these 
programs. We welcome this opportunity to comment on the Social 
Security Administration's management of its disability caseload 
and to offer our support of, and suggestions for, improvements 
in the process. Thank you.

                                

Statement of Harold D. Davis, Supervisory Attorney, Office of Hearings 
and Appeals, Social Security Administration, Fort Smith, Arkansas, and 
President, National Association of Senior Social Security Attorneys

                            I. Introduction

    My name is Harold D. Davis. I am employed as the Supervisory Staff 
Attorney in the Office of Hearings and Appeals of the Social Security 
Administration (SSA) in Fort Smith, Arkansas.
    This statement is being presented in my capacity as President of 
the National Association of Senior Social Security Attorneys (NASSSA), 
a professional/management association recognized by the agency and 
representing primarily Supervisory Staff Attorneys and Regional 
Attorneys within the Office of Hearings and Appeals (OHA).

                             II. Background

    The last decade has seen explosive growth in the size of the 
disability programs administered by the SSA. The press release which 
announced this hearing noted that since 1989 the number of 
beneficiaries receiving Disability Insurance Benefits (commonly known 
as DIB or Social Security disability) under Title II of the Act has 
increased 56%; while the number of persons receiving Supplemental 
Security Income disability (SSI) under the provisions of Title XVI of 
the Act has increased 71% to 5.1 million. This rapid growth in the 
disability programs has also led to many problems, including long and 
unacceptable delays in the length of time deserving claimants must wait 
before receiving benefits. In addition, given the serious solvency 
issues facing the Social Security trust funds, this explosive growth 
rate has serious budget implications which Congress, as well as the 
agency, must address.
    The serious budget implications of this runaway growth in the 
disability programs is underscored by the solvency issues facing the 
Social Security trust funds. Moreover, it should be noted that 
individuals who are approved for DIB under Title II of the Act are also 
entitled to Medicare after two years. Therefore, the high allowance 
rate on Social Security disability also has serious budget implications 
for the Medicare Trust Fund. Given the serious budget problems facing 
it, the added drain of disabled individuals on the Medicare Trust Fund 
takes on an added sense of importance and urgency.

                    III. Social Security Initiatives

    In order to meet the challenges presented by an ever-expanding 
disability workload, and longer delays experienced by deserving 
disability claimants before receiving benefits, SSA has attempted to 
streamline the adjudication process involved in the disability programs 
by what is commonly described as the Disability Redesign. Two key 
features of the Disability Redesign are proposals to abolish the second 
step of the appeals process. Currently, before being given an 
opportunity for a hearing, claimant's claims are adjudicated at an 
initial step and at a reconsideration step. Removal of the second step 
would allow claimants to request a hearing before an Administrative Law 
Judge (ALJ) after receiving only consideration at the initial step, or 
one denial. A second proposal has been to abolish the Appeals Council, 
the step in the administrative appeals process following the issuance 
of a hearing decision. This change would allow claimants who receive an 
unfavorable hearing decision from an ALJ to immediately file a civil 
action in federal court.
    Another more recent initiative has been to completely reorganize 
the OHA in an attempt to streamline the hearing process. This 
initiative has gone by several names in the past and is currently being 
labeled the Hearing Process Initiative (HPI). Unfortunately, none of 
these initiatives address the real issues facing the agency in its 
administration of disability programs.
    While HPI has yet to be rolled out, the agency plans to pilot the 
program in several states beginning early next year. One of the stated 
goals of the HPI has been to reduce delays in the hearing process by 
reducing the number of ``handoffs'' of the casefile within OHA and 
develop more of the medical record prior to the hearing. While this 
appears to be a worthwhile goal, we contend that it is unnecessary to 
expend millions of dollars to reorganize the entire OHA to achieve the 
stated goal. Rather, it is NASSSA's position that HPI is fatally flawed 
because it ignores the historical distinction made between 
administrative and legal functions within OHA and increasingly places 
the Administrative hearing process in the hands of non-lawyers.

       IV. HPI Diminishes the Role of the Law and Lawyers in the 
                      Administrative Legal Process

    OHA represents the appellate branch of the SSA and it was designed 
to be under the control of lawyers and judges. After all, the ALJ 
hearing is the third, and arguably the most important, step in the 
administrative appeals process. In most cases, the ALJ is the finder of 
fact, and in that way, occupies a position similar to that of a trial 
court. Except for the small possibility of substantive review by the 
Appeals Council, the ALJ hearing decision represents the last step 
before the case goes to court. As an appellate body, the function of 
OHA is to protect due process of law and ensure that each claimant 
receives a fair and impartial adjudication of his or her case based on 
the merits of the case. Anything short of this represents a failure of 
due process of law and a complete failure of OHA's mission.
    When cases leave OHA, they are frequently bound for the federal 
courts. This means that the same case which is denied at the ALJ 
hearing level is very likely to be the subject of a civil action. In 
fact, it is no exaggeration to say that the case which is denied at the 
ALJ hearing level may ultimately be decided by the United States 
Supreme Court. Therefore, prudence would dictate that SSA take great 
care to make sure that each case is adjudicated in a competent and 
legally sufficient manner before it proceeds to court. To accomplish 
this, the agency must do at least two things. First, it must see to it 
that each hearing be conducted in a competent manner. Second, it must 
see to it that the hearing decision is well written and able to 
withstand legal scrutiny. The hearing decision must be clearly and 
understandably written, articulate sound rationales in the application 
of law to facts, and represent an individualized assessment of the 
merits of a particular claimant's case. For these reasons, hearing 
decision writing should remain under the control of attorneys who are 
trained in the law and who possess the advocacy skills needed to 
produce a hearing decision which is both legally sufficient and able to 
withstand legal scrutiny. However, the unfortunate reality is that SSA 
is currently attempting to de-emphasize the role of lawyers with OHA, 
thereby creating an environment which may result in the denial of due 
process for claimants.
    Nowhere can this de-emphasis of the role of lawyers with OHA be 
seen more vividly than in SSA's gradual shift from using attorneys to 
write ALJ hearing decisions to that of using non-attorneys to write 
hearing decisions. Many of the non-attorneys have no demonstrable 
writing ability and neither have they been afforded a formal education 
with the necessary training to enable them to perform legal research, 
legal analysis, or legal writing. It should be noted that although SSA 
refers to these non-attorney hearing decision writers as ``paralegal 
specialists,'' that term should be used advisedly in this context. For 
the most part, these individuals have never had any formal training in 
either law, legal research, or writing. In fact, many have no formal 
education beyond high school. It is completely unrealistic for SSA to 
expect these writers to be able to write ALJ hearing decisions which 
are both legally sufficient and able to withstand legal scrutiny. This 
is particularly true where a claimant is represented by legal counsel. 
Most claimant's are represented at the hearing by legal counsel and 
frequently the claimant's counsel submits a brief and cites case law 
which MUST be answered in the hearing decision.
    Another essential element critical to a legally defensible hearing 
decision is a thorough discussion of the evidence in that particular 
case. This requires an evaluation of credibility of the evidence of 
record, including the testimony offered at the hearing. After all, due 
process of law requires that the claimant be given a fair and impartial 
adjudication of his or her claim based on its merits. In the case of an 
unfavorable hearing decision (which is likely to be appealed to court), 
this may well require that the credibility of some of the evidence 
(including testimony offered at the hearing) be impeached. While this 
process is time consuming, it is absolutely essential if the case is to 
be legally sufficient and able to withstand judicial scrutiny.
    Good legal writing involves advocacy skills which attorneys learn 
as part of their trade. However, non-attorney writers may or may not 
possess these skills. Unfortunately, in order to accommodate the 
increasing number of non-attorney hearing decision writers in its ranks 
and in an attempt to increase productivity of its writers, SSA is 
currently attempting to de-emphasize individualized assessment of the 
merits of a claimant's case, and is turning instead to hearing 
decisions filled with ``canned language'' and ``boilerplate,'' which is 
short on rationale and devoid of any individualized assessment of the 
merits of a claimant's case.
    Hearing decisions written in this manner fail to meet the essential 
requirements of due process and have little chance of withstanding the 
scrutiny of the courts. In fact, we would like to point out that in the 
late 1980's, OHA was required to perform a wholesale overhaul of its 
hearing decision writing methodology as a direct result of the high 
number of court remands. An inquiry revealed that the courts and U.S. 
Attorneys objected to what was perceived by them as ``cookie cutter'' 
hearing decisions which were long on canned language and conclusory 
statements and short on rationale and a meaningful evaluation of the 
evidence. In response, the agency shifted away from boilerplate and 
toward a more meaningful evaluation of the merits of the claimant's 
case as required by law.
    It seems that in 10 years, we have come full circle. For the sake 
of producing higher numbers of hearing decisions and accommodating 
employees with lesser writing skills, we are now returning to hearing 
decisions filled with boilerplate, conclusory statements, and only a 
cursory evaluation of the merits of the case at hand. The predictable 
result will be that within two years (or less) this agency will once 
again be awash in court remands and forced to make wholesale revisions 
in its approach to hearing decision writing once again. While this 
``canned language'' approach to hearing decision writing may produce 
some short term benefit, it is a very short-sighted approach and will 
ultimately produce heavier workloads and larger backlogs due to the 
increased number of court remands. Moreover, we would point out that 
the agency frequently pays legal fees to the claimant's attorney under 
the Equal Access to Justice Act when cases are remanded to the ALJ by 
the courts. The cost to the public of these additional remands could be 
staggering.
    The shift from using attorneys to non-attorneys to write ALJ 
hearing decisions makes little sense, especially when considering the 
cost to the agency of hiring paralegal specialists can equal or exceed 
the cost of hiring staff attorneys. Both positions are GS-12's and 
paralegal specialists frequently have more seniority, thereby 
warranting a higher wage. For SSA to expect non-attorneys with no legal 
background or training to produce a legally sufficient hearing 
decision, able to withstand judicial scrutiny, is unrealistic and 
bespeaks a fundamental misunderstanding of both the legal process and 
OHA's mission. Yet, SSA has recently indicated that it will continue to 
turn away from using lawyers to write hearing decisions and rely 
instead on non-attorney writers. Regardless of its motivation, this 
decision does not serve the taxpayers.

       V. HPI Blurs the Historical Distinction Between Legal and 
                  Administrative Functions Within OHA

    Under HPI, the agency has indicated its intention to decrease the 
number of Staff Attorneys and increase the number of paralegal 
specialists used to write hearing decisions. In addition, under the 
current proposal, both the positions of Supervisory Staff Attorney 
(Supervisory Attorney Advisor) and Hearing Office Manager (HOM) will be 
abolished. In their place, two new positions, Hearing Office Director 
(HOD) [GS-14] and Process Group Supervisor PGS [GS-13] will be created. 
Both of these positions will have administrative supervision over 
hearing decision writing and other legal functions within the hearing 
office. Yet, these positions are being created as non-attorney 
positions. While attorneys may apply for these positions, it is NOT 
necessary to be an attorney to qualify for either position. It is 
disturbing that these positions will have administrative supervision 
over attorneys and the production of legal documents.
    Another example of the agency assigning legal functions to a non-
attorney is the automatic conversion of the HOM to a paralegal 
specialist position under HPI. This despite the fact that the HOM is a 
purely administrative position which requires only a high school 
education and does not involve writing ability, research, or other 
skills appropriate to legal analysis or writing.
    We are not saying that none of the paralegal specialists employed 
by OHA are capable of writing hearing decisions which are legally 
sufficient. Neither are we suggesting that none of the individuals 
functioning as HOM's are capable to performing the job of a paralegal 
specialist. What we are saying is that hearing decision writing is the 
creation of a legal product which ultimately must withstand the 
scrutiny of the courts. For that reason, hearing decision writing 
should remain under the control of attorneys who are trained in the law 
and who possess the advocacy skills needed to produce a hearing 
decision which is legally sufficient and able to withstand judicial 
scrutiny. This is especially true since the agency can hire attorneys 
for no more money than it is currently paying paralegal specialists.

                     VI. Conflict Within the Agency

    Even the casual observer of the SSA can soon discern that there is 
a culture of conflict within the agency. In fact, SSA has been 
described as an ``agency at war with itself.'' This conflict centers 
around a power struggle between the administrators on one hand and the 
lawyers (represented by OHA) on the other. The administrators criticize 
OHA, the ALJs in particular, for their lack of program knowledge and 
technical expertise. The lawyers criticize the administrators for their 
lack of knowledge of the law and lack of concern for due process. It is 
no exaggeration to state that neither side entirely trusts or 
understands the other.
    After 25 years of experience within the SSA (7 years of it in a 
field office), the author has come to realize that both sides have a 
valid point of view. While both sides are partially correct, neither 
side is entirely correct. It is true that there is a disturbing lack of 
program knowledge within OHA, and that this lack of technical expertise 
is particularly evident among the ALJ corps. For the most part, ALJs 
who are hired have no prior agency experience and have little in the 
way of technical knowledge of SSA programs. Probably more troubling 
still is the attitude which is openly displayed by many judges that 
they do not need program knowledge to do their job.
    This is an untenable situation, especially since Social Security 
hearings are informal and non-adversarial in nature. While the claimant 
may, and usually does, have counsel present at the hearing, no one 
represents the agency, other than the ALJ. Therefore, the ALJ must 
always wear two hats, and sometimes three. In addition to being an 
impartial arbiter, the ALJ has the added burden of representing the 
agency (that is, the taxpayers) and, in those cases in which the 
claimant is not represented, the ALJ has the added obligation of 
representing the claimant as well.
    Under the best of circumstances, this is a difficult, and perhaps, 
an impossible task. But clearly, it is not possible for an ALJ to 
represent the agency's point of view if he or she does not have a 
thorough knowledge of SSA programs and policies. Indeed, how can one 
represent a point of view he or she does not fully understand? Two 
remedies might restore the proper balance. First, require that 
candidates for the ALJ position have significant experience in SSA 
programs and policies, either as an attorney within the agency or as a 
private attorney who devotes a significant percentage of his or her 
practice to Social Security law. The current method of selection gives 
candidates very little credit for agency experience. In fact, the Merit 
Systems Protection Board recently held that the OPM discriminated 
against attorneys with agency experience. Giving greater credit for 
agency specific experience would significantly improve the hearing 
process in a short period of time. Unfortunately, under the present 
scheme, it is very difficult for agency attorneys to become ALJ's. 
Despite a mandate contained in the 1984 Disability Benefits Reform Act, 
SSA has yet to create a mechanism which would allow attorneys within 
OHA a meaningful opportunity to obtain experience needed to qualify to 
be come ALJs. Second, consider making Social Security hearings 
adversarial and allow the agency to be represented by counsel at the 
hearing. While such a change would involve some significant costs 
initially and would involve some initial increases in backlogs and 
waiting times; it would ultimately prove cost effective in the long run 
with lower allowance rates, decreased backlogs of claims, and shorter 
waiting times.

                            VII. Conclusion

    The press release which announced this hearing also noted that two-
thirds of those individuals who file claims for disability under Title 
II or XVI eventually have their claim approved. A large percentage of 
these cases are approved at the hearing level. This fact suggests that 
there may be something wrong with the appeals process. However, this 
situation may be viewed in one of the following two ways: it could mean 
that many people who are truly disabled are having their claims denied 
at the initial and reconsideration levels or it could also mean that 
too many cases are being approved at the ALJ level. The fact that the 
agency has seen explosive growth in its disability programs may also be 
related to the high allowance rate.
    It is widely believed that too many disability cases are being 
approved at the hearing level. Truly, it is difficult to believe that 
two-thirds of those individuals applying for disability benefits meet 
the very stringent standard for disability as it is defined in the 
Social Security Act. The large backlog of claims and the long period of 
time which deserving claimant must wait before receiving benefits are 
problems which are directly related to the large allowance rate. The 
widely held perception is that the persistent claimant will eventually 
be rewarded and found to be disabled. This perception has some basis in 
fact and as long as it persists, it is unlikely that the twin problems 
of large backlogs of claims pending and long waiting periods to receive 
benefits will be solved.
    Many feel that in order to solve these problems, it is necessary to 
overhaul OHA and the hearing process. This is probably a valid point of 
view, but great care must be taken not to compromise the mission of 
OHA, which is to assure the claimant's right to due process and a fair 
and impartial adjudication of his or her claim based on its merits. 
Placed in that context, SSA must realize that the mission of OHA goes 
to the very heart of the mission of the agency in general. It is clear 
that change is needed within OHA; however, it is also clear that before 
enacting any changes in OHA and the administrative appeals process, 
great care must be taken to see to that the requirements of due process 
of law are satisfied. In order to accomplish this, the agency must 
accept the fact that it must allow OHA to serve its function and that 
means allowing it to maintain some degree of autonomy and respecting 
the role of its attorneys and judges in the process. If the agency 
continues to de-legalize the hearing process, the results will be 
disastrous.
    On behalf of the members of NASSSA, I would like to thank the joint 
chair and the members of the subcommittees for their gracious 
invitation to offer testimony. I sincerely hope our testimony has been 
useful. Thank you for your kind attention.
  

                                
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