For Release on Delivery

Expected at 10:00 a.m.

Thursday, July13, 2000

GAO/T-HEHS-00-151

SSA DISABILITY

Other Programs May

Provide Lessons for

Improving Return-to-Work

Efforts

Statement of Barbara D. Bovbjerg, Associate Director

Education, Workforce, and Income Security Issues

Health, Education, and Human Services Division

Testimony

Before the Subcommittee on Social Security, Committee

on Ways and Means, House of Representatives

United States General Accounting Office

GAO
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Mr. Chairman and Members of the Subcommittee:

Thank you for inviting me here today to discuss the practices of the

private sector and other countries in helping people with severe

disabilities return to work. Each month the Social Security

Administration’s (SSA) Disability Insurance (DI) program pays over $4

billion in cash benefits to people with disabilities. The DI beneficiary

population has grown significantly over the past 15 years, increasing by 67

percent, while benefit payments have nearly tripled. This growth has

contributed to the DI trust fund’s projected insolvency in 2023. Yet, during

this period of program growth, numerous technological and medical

advances, combined with changes in society and the nature of work, have

increased the potential for some people with disabilities to return to, or

remain in, the labor force. Many beneficiaries with disabilities indicate

that they want to work and be independent, and many can work if they

receive the supports they need, yet fewer than one-half of 1 percent of DI

beneficiaries leave the rolls each year to return to work.

The U.S. private sector, as well as other countries, has designed disability

systems to help disabled workers return to work. In recent years, a

growing number of private insurance companies have been focusing on

developing and implementing strategies for controlling disability costs by

enabling people with disabilities to return to work. Disability programs

financed by social insurance systems in other countries also focus on

return to work and have implemented practices similar to those in the U.S.

private sector.

Today I would like to discuss how disability systems in the private sector

and other countries encourage and facilitate return to work in three key

areas: (1) the eligibility assessment process, (2) work incentives, and (3)

staffing practices. I will describe these three elements for U.S. private

sector disability insurers and for other countries’ social insurance systems

and compare the practices of both with those of the DI program. We are

comparing these practices with those of the DI program because the work

experience of the DI population is most comparable to that of employees

covered under private disability insurance. However, many of the

comparisons discussed would be applicable as well to SSA’s other

disability program, Supplemental Security Income (SSI).

To develop this information, we conducted in-depth interviews and

reviewed policy documents and program data at three private sector

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Lessons for Improving Return-to-Work

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disability insurers: UNUMProvident, Hartford Life, and CIGNA.1 We also

interviewed program officials and other experts on the disability systems

of Germany, Sweden, and The Netherlands and reviewed policy

documents and studies of these programs. This work updates and expands

on our previous work in this area.2

In summary, the disability systems of the private insurers and the

countries we reviewed integrate return-to-work considerations early after

disability onset and throughout the eligibility assessment process. This

involves both determining—as well as enhancing—the ability of each

claimant to return to work. In addition, these systems provide incentives

for claimants to take part in vocational rehabilitation programs and to

obtain appropriate medical treatment and for employers to provide work

opportunities for claimants. Managers of these other systems also

explained to us that they have developed techniques—such as separating

(or “triaging”) claims—to use staff with the appropriate expertise to

provide return-to-work assistance to claimants in a cost-effective manner.

Although these practices are common to the private sector insurers and

the countries whose systems we examined, limited data exist on the costeffectiveness of these approaches.

SSA may face greater difficulty in returning some of its beneficiaries to

work than the private sector insurers, since DI covers a broader

population than the private insurers. Nevertheless, opportunities exist to

help disabled workers remain at or return to the work place. In

recognition of these opportunities, SSA has recently begun placing greater

priority on returning beneficiaries to work. Moreover, the new Ticket to

Work and Work Incentives Improvement Act of 1999 (Ticket to Work Act),

by expanding access to vocational rehabilitation services, is expected to

enhance work incentives for people with disabilities. However,

fundamental policy weaknesses in the DI program remain unchanged. As

we have reported in the past, these weaknesses include an eligibility

1Taken together, these three insurers have experience not only in long-term,

stand-alone disability insurance, but also in integrating short- and long-term

disability insurance with workers’ compensation and, in one instance, with health

care. These insurers are also among the largest long-term disability insurers in the

country, together covering about 52 percent of the long-term U.S. private

disability insurance market in 1997. We focused our analysis on the population of

applicants and beneficiaries whose disabilities are of such severity that they

would likely qualify for SSA’s disability benefits. In addition, we focused our

review on private insurers’ group disability insurance policies, which contain

return-to-work incentives.

2See SSA Disability: Return-to-Work Strategies From Other Systems May Improve Federal Programs

(GAO/HEHS-96-133, July 11, 1996).
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determination process that concentrates on applicants’ incapacities, an

“all-or-nothing” benefits structure, and return-to-work services offered

only after a lengthy determination process.

To address these policy weaknesses, we continue to believe—as we

recommended in 1996—that SSA should develop a comprehensive returnto-work strategy. In developing the strategy, SSA can draw upon the

experiences of other systems to identify elements of a new federal

disability system that could help each individual realize his or her

productive potential without jeopardizing the availability of benefits for

people who cannot work. Having identified these elements, SSA would

then be in a position to determine the legislative and regulatory changes

needed to test and evaluate the effectiveness of these practices in the

federal disability system.

DI provides monthly cash benefits to workers who are unable to work

because of severe long-term disability. Established in 1956, DI is an

insurance program funded by payroll taxes paid by workers and their

employers into a Social Security trust fund. Workers who have worked

long enough and recently enough become insured for DI coverage. In

addition to cash assistance, DI beneficiaries receive Medicare coverage

after they have received cash benefits for 24 months. In 1999, 4.9 million

disabled workers received DI cash benefits totaling about $46.5 billion,

with average monthly cash benefits amounting to $755 per person.3

To meet the definition of disability under DI, an individual must have a

medically determinable physical or mental impairment that (1) has lasted

or is expected to last at least 1 year or to result in death and (2) prevents

the individual from engaging in substantial gainful activity. Individuals are

considered to be engaged in substantial gainful activity if they have

countable earnings at or above a certain dollar level.4 Moreover, the

statutory definition specifies that, for a person to be determined to be

disabled, the impairment must be of such severity that the person not only

3In the same year, DI also paid about $4.9 billion in cash benefits to about 1.7

million spouses and children of disabled workers.

4Regulations currently define substantial gainful activity (SGA) as employment

that produces countable earnings of more than $700 a month for nonblind

disabled individuals. The SGA level for individuals who are blind is set by statute

and indexed to the annual wage index. Currently, the SGA for blind individuals is

$1,170 of countable earnings. SSA deducts from gross earnings the cost of items a

person needs in order to work and the value of support a person needs on the job

because of the impairment before deciding if work is considered SGA.

Background
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is unable to do his or her previous work, but, considering his or her age,

education, and work experience, is unable to do any other kind of

substantial work that exists in the national economy. SSA pays state

disability determination service (DDS) agencies to determine whether

applicants are disabled. The program offers people on the DI rolls

incentives that are intended to encourage beneficiaries to return to

work—and, potentially, to leave the rolls. For example, the DI work

incentives provide for a trial work period in which a beneficiary may earn

any amount for 9 months within a 60-month period and still receive full

cash and medical benefits.

Historically, SSA has given little emphasis to assisting beneficiaries in

returning to work, and we have made a number of recommendations for

improvement. For example, in 1996, we identified weaknesses in SSA’s

return-to-work efforts and recommended that SSA intervene earlier to

foster a greater emphasis on assisting disabled applicants and

beneficiaries in returning to the workforce.5 We also reported that the

disability determination process encourages work incapacity because

applicants have a strong incentive to emphasize their limitations in order

to qualify for benefits. In addition, we observed that the often lengthy and

cumbersome application process may itself reinforce applicants’

perceptions of their inability to work.6

SSA has recently begun to place higher priority on emphasizing return to

work for DI beneficiaries. For example, SSA recently established the

Office of Employment Support Programs to promote the employment of

disabled beneficiaries. In addition, the Ticket to Work Act is expected to

enhance work opportunities for people with disabilities. For example, this

new act expanded eligibility for Medicare for DI beneficiaries and created

a “Ticket to Work” voucher program that will allow beneficiaries a greater

choice of vocational rehabilitation and employment service providers. SSA

has also funded partnership agreements in 12 states that are intended to

help the states develop services to increase the employment of DI

beneficiaries.

5See GAO/HEHS-96-133, July 11, 1996.

6See SSA Disability: Program Redesign Necessary to Encourage Return to Work (GAO/HEHS-96- 62, Apr. 24, 1996).
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Private insurers provide disability insurance to a selected portion of the

U.S. working population. Unlike SSA, private sector insurers are able to

choose the industries to which they market their policies. The

characteristics of the private insurers’ beneficiaries can also differ from

those of SSA’s beneficiaries because private insurers can allow employers

who purchase their disability policies to vary coverage by type of

impairment or by class of employee. For example, employers generally

choose to limit coverage for mental impairments to a maximum of 24

months.7 Employers may also choose to provide long-term disability

coverage for only their white collar employees, rather than for all their

employees.

The private disability insurance industry, moreover, provides benefits to

many individuals who are not as severely disabled as the beneficiaries of

the DI program. However, for the insurers reviewed, almost two-thirds of

those receiving private long-term disability benefits also received DI

benefits.8 This group of beneficiaries, in the cases of the two insurers that

provided us with comparable data, was composed of a slightly higher

proportion of female and older beneficiaries than the overall DI

population. All the insurers had a lower proportion of beneficiaries with

mental impairments than the DI population.

Some private sector organizations have recognized the potential for

reducing disability costs through an increased focus on returning people

with disabilities to productive activity. To accomplish this comprehensive

shift in orientation, the private disability insurers have begun developing

and implementing strategies for helping claimants return to work as soon

as possible, when appropriate. Although the private sector insurance

companies expect a positive effect on return-to-work outcomes from these

strategies, it is too early to fully measure the effect of these changes. In

many cases, return-to-work processes have only recently been

implemented. Moreover, although the private insurers are now including

return-to-work provisions in the standard contracts that they are writing, a

large number of employees are still insured under prior contracts that lack

7The 24-month limitation on mental impairments does not include time spent in a

hospital or mental institution. Also, the three insurers vary in their descriptions of

the types of mental illness that are covered under this special limitation. One

insurer excludes bipolar affective disorders, psychotic disorders, and

schizophrenia from this limitation. In contrast, the DI program does not have

time-limited benefits for beneficiaries with mental impairments. In 1999, 26.8

percent of DI disabled workers with an available diagnosis had mental disorders.

8For claimants who receive both private and DI benefits, the private insurers

reduce their disability payments by the amount of the DI payment.

Private Disability Insurers

Implement Return-to-Work

Practices to Control Costs
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these provisions. While the insurers could not provide us with

comprehensive cost-effectiveness studies, their initial return-to-work rates

are promising. The private insurers reported that, in 1999, between 2 and 3

percent of their long-term disability beneficiaries who also received DI

benefits returned to work or were terminated from the private sector

disability benefit rolls because they were assessed as having the capacity

to work.

In contrast to the private sector, which covers a selected portion of the

U.S. working population, the experiences of Germany, Sweden, and The

Netherlands show that return-to-work strategies are applicable to a

population with a wide range of work histories, job skills, and disabilities.

However, these disability systems operate in a somewhat different social

and political context than the DI program. For example, public health care

programs in these countries ensure that the retention of health insurance

is not an issue in a worker’s decision on whether to apply for benefits,

participate in rehabilitation, or attempt returning to work. In addition,

disability systems in these countries offer short-term as well as long-term

benefits, which provides an important basis for comprehensive disability

case management.

The social insurance disability programs in these countries have invested

in return-to-work efforts and have implemented practices similar to those

in the U.S. private sector. While the German social insurance system has

had a long-standing focus on the goal of “rehabilitation before pension,”

the reorientation of Sweden and The Netherlands toward a return-to-work

focus has occurred mostly within the past decade. Although rigorous

studies demonstrating the cost-effectiveness of German, Swedish, or

Dutch programs generally do not exist, some limited studies and data

indicate positive results from the return-to-work approach in these

disability insurance systems.9

9For example, a 1990-92 study of certain return-to-work practices used by

Sweden’s social insurance offices concluded that social insurance costs had been

reduced by returning people to the workplace sooner. Practices assessed included

early screening and contact with disabled individuals.

Other Countries Also

Invest in Return-to-Work

Efforts
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All the private disability insurers and the countries we reviewed have

developed an eligibility process that includes assessing and enhancing the

ability of claimants to work throughout the process. To enable claimants

to return to work as quickly as possible, insurers incorporate return-towork considerations early in the assessment process and throughout a

customized evaluation of each claimant’s initial and continuing eligibility

for benefits. In contrast, SSA’s return-to-work efforts occur after its

eligibility assessment process. (See table 1.)

Table 1: Comparison of Eligibility Assessment Process Features of Private

Insurers and Other Countries With Those of SSA

Process feature Private insurers and other

countries

SSA

Disability definition Definition of disability shifts over

specified time period from less to

more restrictive, recognizing the

possibility of improvement in the

capacity to work through provision

of supports and services, such as

retraining.

“All-or-nothing” definition

characterizes individuals as

either unable to work or having

the capacity to work.

Early intervention Intervention occurs soon after

disability onset to identify returnto-work needs.

There is a long delay in providing

services because only individuals

who have been awarded

benefits—following an often

lengthy assessment process—

are eligible for return-to-work

services.

Ongoing assessment

of work potential

Work capacity is periodically

monitored and reassessed,

focusing on returning those with

work potential to work.

There is no integration of returnto-work considerations into either

the initial or the continuing

eligibility assessment process.

All the private insurers we observed incorporate return-to-work

considerations early in the assessment process to assist claimants in their

recovery and in returning to work as soon as possible. With the initial

reporting of a disability claim, these insurers, when appropriate,

immediately set up the expectation that the claimant will return to work.

The insurers’ process for assessing and assisting a claimant’s ability to

work is illustrated in figure 1.

The Eligibility

Assessment Process

Integrates Return-toWork Considerations

Throughout

Private Insurers

Incorporate Return-toWork Efforts From the

Beginning of the

Assessment Process
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Figure 1: Private Disability Insurers’ Eligibility Assessment Process
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After receiving a claim, the private insurers’ assessment process begins

with determining whether the claimant meets the initial definition of

disability. In general, for all the private sector insurers we studied,

claimants are considered disabled when, because of injury or sickness,

they are limited from performing the essential duties of their own

occupation, and they earn less than 60 to 80 percent of their predisability

earnings, depending upon the particular insurer.10 As part of determining

whether the claimant meets this definition, the insurers compare the

claimant’s capabilities and limitations with the demands of his or her own

occupation and identify and pursue possible opportunities for

accommodation—including alternative jobs or job modifications—that

would allow a quick and safe return to work. A claimant may receive

benefits under this definition of disability for up to 2 years.11

As part of the process of assessing eligibility according to the “own

occupation” definition, insurers directly contact the claimant, the treating

physician, and the employer to collect medical and vocational information

and initiate return-to-work efforts, as needed. Insurers’ contacts with the

claimant’s treating physician are aimed at ensuring that the claimant has

an appropriate treatment plan focused, in many cases, on timely recovery

and return to work. Similarly, early contact with the claimant’s employer is

used to encourage the employer to make accommodations for claimants

with the capacity to work.

If the insurers find the claimant initially unable to return to his or her own

occupation, they provide cash benefits and continue to assess the claimant

to determine if he or she has any work potential. For those with work

potential, the insurers focus on return to work before the end of the 2-year

period when, for all the private insurers we studied, the definition of

disability becomes more restrictive: after 2 years, the definition shifts from

10The private insurers generally define one’s “own occupation” as the occupation

a person is routinely performing at onset of disability. They generally assess how

the claimant’s own occupation is performed in the national economy, rather than

how the work is performed for a specific employer or at a specific location. Two

insurers have expanded their “own occupation” definition of disability to include a

reasonable alternative position. These insurers require that a claimant who is

judged able to do so accept a reasonable alternative position—a job in the same

general location offered by the claimant’s current employer—or risk losing cash

benefits. The claimant must be qualified to perform this alternative position—

which must pay the claimant more than 60 to 80 percent of predisability earnings,

depending upon the insurer—given his or her education, training, or experience.

11Our review of group disability insurance policies focused on those with an “own

occupation” definition of disability that changes to an “any occupation” definition

after 2 years.
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an inability to perform one’s own occupation to an inability to perform any

occupation for which the claimant is qualified by education, training, or

experience. Claimants may be found ineligible for benefits under the more

restrictive definition.12

The private insurers’ shift from a less to a more restrictive disability

definition after 2 years reflects the changing nature of disability and allows

a transitional period for insurers to provide financial and other assistance,

as needed, to help claimants with work potential return to the workforce.

During this 2-year period, the insurer attempts to determine the best

strategy for managing the claim. Such strategies can include, for example,

helping plan medical care or providing vocational services to help

claimants acquire new skills, adapt to assistive devices to increase

functioning, or find new positions. For those requiring vocational

intervention to return to work, the insurers develop an individualized

return-to-work plan, as needed. Basing the continuing receipt of benefits

upon a more restrictive definition after 2 years provides the insurer with

leverage to encourage the claimant to participate in a rehabilitation and

return-to-work program. Indeed, the insurers told us that they find that

claimants tend to increase their efforts to return to work as they near the

end of the 2-year period.

If the insurer initially determines that the claimant has no work potential,

it regularly monitors the claimant’s condition for changes that could

increase the potential to work and reassesses after 2 years the claimant’s

eligibility under the more restrictive definition of disability. In addition,

the insurer looks for opportunities to assist these claimants when changes

in medical technology, such as new treatments for cancer or AIDS, may

enable them to work.

The private insurers that we reviewed told us that they customize their

assessment and enhancement of a claimant’s ability to work throughout

the duration of the claim. To do this, disability insurers use a wide variety

of tools and methods when needed. Some of these tools, as shown in

tables 2 and 3, are used to help ensure that medical and vocational

12The private insurers generally use the same “own occupation” definition for

short- and long-term disability benefits. However, in the case of long-term

benefits, the definition shifts to the “any occupation” definition after 2 years.

When applying the “any occupation” definition, private insurers generally try to

identify several occupations that exist locally that could provide a sufficient salary

for the claimant. However, the insurer is obligated only to identify occupations

with a sufficient salary in the national economy and not to find specific job

openings or place the claimant in a new position.
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information is complete and as objective as possible. For example,

insurers consult medical staff and other resources to evaluate whether the

treating physician’s diagnosis and the expected duration of the disability

are in line with the claimant’s reported symptoms and test results. Insurers

may also use an independent medical examination or a test of basic skills,

interests, and aptitudes to clarify the medical or vocational limitations and

capabilities of a claimant. In addition, insurers identify transferable skills

to compare the claimant’s capabilities and limitations with the demands of

the claimant’s own occupation. This method is also used to help identify

other suitable occupations and the specific skills needed for these new

occupations when the claimant’s limitations prevent him or her from

returning to a prior occupation. Included in these tools and methods are

services to help the claimant return to work, such as job placement, job

modification, and retraining.

Table 2: Tools and Methods Used to Provide Medical Assessment

Task Tools and methods

Assess diagnosis, treatment, and duration of

the impairment and begin developing a

treatment plan focused on returning the

claimant to work promptly and safely.

Consultation of medical staff and other

resources, including current medical

guidelines describing symptoms, expected

results from diagnostic tests, expected

duration of disability, and treatment

Assess the claimant’s cognitive skills. Standardized mental tests

Validate the treating physician’s assessment

of the impairment’s effect on the claimant’s

ability to work and the most appropriate

treatment and accommodation.

Review of the claimant’s file, generally by a

nurse or a physician who is not the

claimant’s treating physician

Verify diagnosis, level of functioning, and

appropriateness of treatment.

Independent medical examination of the

claimant by a contracted physician

Evaluate the claimant’s ability to function,

determine needed assistance, and help the

claimant develop an appropriate treatment

plan with the physician.

Home visits by a field nurse or investigator

or accompanied doctor visits

Assess the claim’s validity. Home visits and interviews with neighbors or

others who have knowledge of the claimant’s

activities
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Table 3: Tools and Methods Used to Provide Vocational Assessment and

Assistance

Task Tools and methods

Identify transferable skills,

validate restrictions on and

capabilities for performing an

occupation, and identify other

suitable occupations and

retraining programs.

-- Test basic skills, such as reading or math.

-- Determine interests and aptitudes.

-- Evaluate functional capacities associated with an

occupation, such as lifting, walking, and following

directions.

-- Compare functional capacities, work history, education,

and skills with the demands of an occupation.

Enhance work capabilities and

help develop job-seeking skills.

-- Provide resume preparation, development of jobseeking skills, and help with job placement.

-- Assist in obtaining physical, occupational, or speech

therapy and access to employee assistance, support

groups, or state agency vocational rehabilitation or other

community services.

-- Identify and fund on-the-job training or other educational

courses.

Assess ability to perform own

or any occupation, assess

potential for accommodation,

and determine whether

sufficient salary is offered

locally or nationally for a

suitable occupation.

-- Observe and analyze the essential duties of the

claimant’s own occupation, another occupation for the

same employer, or an occupation of a prospective

employer.

-- Determine the general availability and salary range of

specified occupations.

Identify for a specified occupation the potential

employers and related job descriptions, salary range, and

openings.

Reaccustom claimant to a full

work schedule and enable

claimant to overcome

impairment and return to work.

-- Provide work opportunities for the claimant to gradually

resume his or her job duties.

-- Procure devices to assist with work or otherwise help to

modify the job.

The countries we studied also begin assessing return-to-work needs soon

after the onset of a disabling condition and integrate return-to-work

assistance that is tailored to meet individual needs throughout the

assessment process. These countries also provide short-term benefits on

the basis of a person’s inability to perform his or her current job because

of illness or injury. These short-term disability benefits—which may be

granted for a year or more—are similar to the private insurers’ provision of

benefits during the 2-year “own occupation” period of disability in that

they provide a transitional period for assessing an individual’s work

potential and providing treatment and rehabilitation.

For example, German laws and policies require that all applicants for

disability benefits be evaluated for rehabilitation and return to work.

Based on the principle that intervention should occur at the earliest

Other Countries Also

Provide Return-to-Work

Assistance Early After

Disability Onset and

Throughout the

Assessment Process
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possible stage of disability to minimize the degree and effect of the

impairment, intervention in Germany often begins when the health

insurance agency urges a disabled worker receiving short-term benefits to

apply for medical rehabilitation. In addition, vocational counselors often

discuss rehabilitation and return-to-work plans with disabled workers

while they are still in the hospital. The social insurance office then

evaluates the person’s capacity to work and, if necessary, refers the

applicant to vocational rehabilitation or other types of return-to-work

services and assistance. These return-to-work measures may include

assistance in retaining or obtaining a job or in selecting an occupation.

They may also involve providing basic training or retraining to prepare for

an occupation and developing workplace accommodations. As long as the

person continues to receive short-term disability benefits, the social

insurance office will monitor the case and periodically reassess the

person’s work capacity and need for return-to-work assistance. The office

will award long-term disability benefits only after it determines that a

person’s earning capacity cannot be restored through return-to-work

interventions.

Under Swedish laws and policies, both the private and public sectors are

responsible for the early identification of candidates for rehabilitation and

return to work. After an employee has been on sick leave for 4 weeks,

employers are responsible for determining whether the employee needs

some type of rehabilitation and are required to report this information to

the social insurance office. Social insurance offices closely monitor the

use of short-term benefits and intervene when employers disregard their

early intervention responsibilities.13 The social insurance office then

begins the process of determining whether the person will need vocational

rehabilitation to return to work. The office arranges for an assessment of

the disabled employee’s rehabilitation needs and works with the employer

and employee to develop a rehabilitation plan. Rehabilitation in Sweden is

not meant to be a lengthy process, but rather a short, intensive period of

medical and vocational training to help the individual return to work as

soon as possible. As in Germany, the social insurance offices in Sweden

periodically monitor and reassess the rehabilitation needs of individuals

receiving short-term disability benefits and, after the first year of benefits,

consider granting long-term benefits if the person’s rehabilitation potential

has not improved.

13Social insurance offices in Sweden have no mechanisms or sanctions to force

employers to comply with their rehabilitation responsibilities. We reported in 1996

that, according to social insurance office surveys, employers do not arrange for

rehabilitation examinations in about 40 to 50 percent of the cases.
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In The Netherlands, the employer has had increasing responsibility for

efforts to return the employee to his or her current job or a comparable

job within the company since the mid-1990s. This shift of responsibility

from the public to the private sector is intended to encourage greater

responsibility on the part of employers in the prevention and prompt

amelioration of employee health impairments. Under this policy, within

about 3 months of the onset of the disability, the employer must submit to

the social insurance agency a preliminary plan to return the disabled

worker to the workforce. A final plan must be submitted within about 9

months. If the employer determines that the disabled worker cannot

return to the workplace, or if the disabled worker has not returned to

work after 1 year of receiving short-term benefits, the social insurance

agency assesses the person’s condition to determine eligibility for longterm disability benefits. The assessment involves evaluations of the

applicant’s physical and mental capabilities, which are then matched

against different occupations to determine whether the person is capable

of performing any work.

Unlike the private sector and foreign countries, SSA does not integrate

efforts to return individuals to work into either its initial or continuing

eligibility assessment process. To be considered initially eligible for DI

benefits, applicants must meet the Social Security Act’s definition of

disability—an “all-or-nothing” definition that characterizes individuals as

either unable to work or having the capacity to work.14 Because the result

of the decision is either full award or denial of cash benefits, applicants

have a strong incentive to emphasize their limitations to establish their

inability to work and a disincentive to demonstrate any capacity to work.

The act’s definition of disability—under which a person is unable to do

any substantial work in the national economy—is comparable to the

private sector’s most restrictive definition.

14There are also distinct differences between the methods used by SSA and the

private insurers to determine a level of earnings beyond which an individual no

longer qualifies for benefits. SSA regulations, on one hand, apply a standard level

of countable monthly income for all people other than the blind (currently $700),

regardless of predisability earnings. In contrast, the private insurers we studied

establish an individualized level that is a proportion of each person’s predisability

earnings. For disabled beneficiaries with high predisability earnings, the private

sector’s individualized level represents a much greater incentive to work than

does SSA’s standard level. However, the private sector’s individualized level may

provide less of a barrier to qualify for benefits and thus may encourage more

people to apply for disability benefits.

SSA Does Not Incorporate

Return-to-Work Efforts

Into Its Eligibility

Assessment Process
SSA Disability: Other Programs May Provide

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Page 15 GAO/T-HEHS-00-151

In recent years, SSA has piloted numerous initiatives to redesign and

thereby improve its disability determination process. But while an internal

SSA evaluation recently recommended that the agency “create an

awareness and attitudinal change to accept employment support as a core

SSA mission,” the agency has not yet integrated return-to-work

considerations into its efforts to redesign its disability determination

process.15 Moreover, the recently enacted Ticket to Work Act was

intended to increase beneficiary access to vocational services but does not

change the point in the process at which beneficiaries may receive

assistance. Only those individuals who have met the Social Security Act’s

definition of disability and are approved for DI benefits will, under the

Ticket to Work Act, receive a ticket entitling them to receive return-towork services. There can be a long delay in receiving services: SSA’s

eligibility determination process ranges up to 18 months or longer for

individuals who are initially denied benefits and who then appeal. Since

many applicants have been unemployed before applying and remain

unemployed during the eligibility determination process, it is likely that

their skills, work habits, and motivation to work deteriorate during this

wait, thus decreasing their readiness to work.16 However, the Ticket to

Work Act authorizes SSA to carry out a demonstration project to test the

advantages and disadvantages of earlier referral of applicants and

beneficiaries for rehabilitation.17 SSA may also gain additional insights into

early intervention approaches through its funding of demonstration

projects in 12 states.18

15Social Security Administration, Employment Support Concept Development Plan, Apr. 12, 1999.

16See GAO/HEHS-96-62, Apr. 24, 1996.

17SSA has not yet designed such a project, and it is unclear how early SSA will be

intervening after onset of disability in this demonstration.

18For example, one state is testing the provision of short-term vocational services

to DI applicants with recent work histories, with an emphasis on early

intervention and quick employment.
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To facilitate return to work, all of the insurers and the countries we

studied employ incentives both for claimants to participate in vocational

activities and receive appropriate medical treatment, and for employers to

accommodate claimants. For claimants who could benefit from vocational

rehabilitation, insurers and the countries we studied require participation

in an individualized return-to-work program. They alsoprovide financial

incentives to promote claimants’ efforts to become rehabilitated and

return to work. To better ensure that medical needs are met, the insurers

and the countries we studied require that claimants receive appropriate

medical treatment and assist them in receiving this treatment. In addition,

they provide financial incentives to employers to encourage them to

provide work opportunities for claimants. Although these practices are

common to the private sector insurers and the countries we examined,

limited data exist to determine whether these incentives for claimants and

employers yield positive outcomes. In contrast to the practices of other

systems, the Ticket to Work Act makes participating in rehabilitation and

return-to-work services voluntary for DI beneficiaries. In addition, under

law and SSA regulations, receiving appropriate medical treatment is not a

prerequisite for award or continuing receipt of DI benefits. Moreover, DI

applicants and beneficiaries may not have access to appropriate medical

care.

All the private insurers we reviewed require claimants who could benefit

from vocational rehabilitation to participate in a customized program or

risk loss of benefits. As part of this program, the return-to-work plan for

each claimant can include, for example, adaptive equipment, modifications

to the work site, or other accommodations. All the private insurers

mandate the participation of claimants whom they believe could benefit

from rehabilitation, because they believe that voluntary compliance has

not encouraged sufficient claimant participation in these plans.19.

These insurers also make special financial incentives available to

claimants who participate in rehabilitation programs, as appropriate. All

insurers may defray costs associated with rehabilitation, such as child care

expenses. For example, one insurer may pay $250 a month per child, up to

$1,000 per month. This insurer also increases claimants’ benefit payments

19Although claimants may be involved in the development of the individualized

rehabilitation plans, the insurers make the final decision as to the types of

rehabilitation services claimants will receive.

Other Systems

Provide Incentives for

Claimants and

Employers to

Encourage and

Facilitate Return to

Work

Private Insurers Offer

Incentives to Claimants

and Employers to Promote

Return to Work
SSA Disability: Other Programs May Provide

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Page 17 GAO/T-HEHS-00-151

by 10 percent, up to a maximum of $1,000 a month, for those who

participate in rehabilitation.

In addition, all of the insurers told us that they encourage rehabilitation

and return to work by allowing claimants who work to supplement their

disability benefit payments with earned income.20 During the first 12 or 24

months of receiving benefits, depending upon the particular insurer,

claimants who are able to work can do so to supplement their benefit

payment and thereby receive total income of up to 100 percent of

predisability earnings.21 After this period, if the claimant is still working,

the insurers decrease the benefit amount so that the total income a

claimant is allowed to retain is less than 100 percent of predisability

income.

However, when a private insurer determines that a claimant is able, but

unwilling, to work, the insurer can reduce or terminate the claimant’s

benefits. Moreover, to encourage claimants to work to the extent they can,

even if only part-time, two of the insurers may reduce a claimant’s benefit

by the amount the claimant would have earned if he or she had worked to

maximum capacity. One insurer uses the claimant’s physician or three

independent experts qualified to evaluate the claimant’s condition to

determine a claimant’s maximum capacity to work. One of the insurers

may also reduce a claimant’s monthly benefit during the first year by the

amount that the claimant could have earned if he or she had not refused a

reasonable job offer—that is, a job that was consistent with the claimant’s

background, education, and training. Claimants’ benefits may also be

terminated if claimants refuse to accept a reasonable accommodation that

would allow them to work. For example, if a claimant with impaired vision

refuses the offer of a large-screen terminal that would allow the claimant

to work, the insurer can terminate his or her benefits.

20The private disability insurers we reviewed told us that their benefits generally

replace 60 percent of predisability earnings, depending upon the insurer.

21To illustrate, assume that Ms. Jones is a claimant with predisability earnings of

$1,000 per month and an insurance policy that replaces 60 percent of her

predisability earnings. She is currently not working. Under this scenario, her

income would be limited to $600 per month in disability benefits. However, if she

returned to work, even part-time, she would have the opportunity to increase her

total income to 100 percent of her predisability earnings or, in this instance,

$1,000. If she returned to work and earned $500 per month, the insurer would

reduce her benefit payment from $600 to $500 per month, so that her combined

earnings and benefit payment would provide a total monthly income equal to her

predisability income of $1,000.
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Since medical improvement or recovery can also enhance claimants’

ability to work, the private insurers we studied not only require, but also

help, claimants to obtain appropriate medical treatment. To maximize

medical improvement, private insurers require that the claimant’s

physician be qualified to treat the particular impairment. Additionally, two

insurers require that treatment be provided in conformance with medical

standards for type and frequency. Moreover, to help ensure that a claimant

is receiving appropriate treatment, the insurers’ medical staff work with

the treating physician as needed to ensure that the claimant has an

appropriate treatment plan. The insurers may also provide funding for

those who cannot otherwise afford treatment.

All private sector insurers we studied may also provide financial

incentives to employers to encourage them to provide work opportunities

for claimants. By paying for accommodations and offering lower insurance

premiums to employers, private insurers encourage employers to become

partners in returning disabled workers to productive employment. For

example, to encourage employers to adopt a disability policy with returnto-work incentives, all the insurers offer employers a discounted insurance

premium that they can continue to receive if their disability caseload

declines to the level expected for those companies that assist claimants in

returning to work. To this end, these insurers fund accommodations, as

needed, for disabled workers at the employer’s work site. 22

Germany and Sweden also require participation in rehabilitation.

Individuals there may be denied benefits for not participating in

rehabilitation when it is recommended by the social insurance offices.

Both these countries, as well as The Netherlands, also provide financial

incentives to encourage participation in rehabilitation. For example, they

provide supplementary benefits to cover rehabilitation-related expenses,

such as transportation and housing costs and the cost of educational

22Educating employers about the size and extent of disability costs is an important

element in motivating the employer to promote efforts to return claimants to

work. For example, private insurers educate employers about the direct and

indirect costs of not controlling lost time associated with disability, which was

estimated by one insurer to be 4 to 6 percent of an employer’s payroll.

Other Countries Also

Provide Incentives to

Claimants and Employers

to Encourage Return to

Work
SSA Disability: Other Programs May Provide

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Page 19 GAO/T-HEHS-00-151

courses, books, and study aids.23 Germany and Sweden also offer

transitional work opportunities that enable people with disabilities to

return to work part-time while earning disability benefits. These

individuals can gradually increase their daily work hours, and thus their

earnings, until they reach their maximum work capacity, with a

corresponding decrease in benefits.24 Similarly, The Netherlands provides

a supplemental wage to beneficiaries who work, allowing them to earn a

wage equal to their predisability earnings. The countries we studied also

provide appropriate medical treatment and rehabilitation services to

disabled individuals, and social insurance offices in Germany and Sweden

may terminate the disability benefits of individuals who refuse to follow

such medical recommendations.

In addition, Germany, Sweden, and The Netherlands provide financial

assistance to employers for the purchase of workplace accommodations

needed by disabled employees. For example, such assistance may pay for

technical aids, special staff or personal assistants to help a disabled

worker perform various work functions, or adaptations of the work

environment to meet the special needs of a disabled worker. These

countries also offer financial incentives for the employment of disabled

individuals by subsidizing the wages that employers pay them. Wage

subsidies are provided for a time-limited period of 3 to 4 years, with the

amount of the subsidy declining each year.25 Furthermore, in The

Netherlands, employers have an additional incentive to assist employees in

returning to work because the employers’ contributions to the disability

insurance fund are partially determined by the number of their employees

who became disabled in the prior year.

23Germany and Sweden also promote disabled workers’ efforts to return to work

by providing them with financial assistance to purchase technical aids; workplace

adaptations; and other work-related needs, such as personal assistants or

payment of transportation costs. Additionally, Sweden provides grants to

subsidize the purchase or modification of a vehicle if it is considered necessary

for vocational training or for traveling to work.

24In Sweden, individuals with reduced work capacity may work full-time and still

take part in the transitional work program.

25In Sweden, wage subsidies may be maintained at the same level and extended

beyond the 4-year period if authorities determine it is appropriate.
SSA Disability: Other Programs May Provide

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Page 20 GAO/T-HEHS-00-151

In contrast to the private sector and the countries we studied, SSA’s

disability programs do not require rehabilitation for beneficiaries,

regardless of their capacity to work. Instead, the recently enacted Ticket

to Work Act establishes a voluntary system that depends upon the

beneficiary’s motivation to pursue rehabilitation services. Thus, a

beneficiary who could benefit from rehabilitation might not choose to

seek such services. Further, in contrast to the private sector requirement

that an individual work to his or her maximum capacity, the Social

Security Act does not have such a requirement, which may act as a

disincentive to work. In particular, beneficiaries with low earnings may

find it more financially advantageous to periodically stop working, or work

part-time and continue to receive disability payments, than to earn more

than SSA’s limit of $700 a month in countable income and lose all cash

benefits after completing a trial work period. In recognition of the

potential work disincentive from this all-or-nothing benefit structure, the

Ticket To Work Act requires SSA to conduct demonstration projects under

which benefits are reduced by $1 for each $2 of a beneficiary’s earnings

above a level determined by SSA.

SSA also differs from the private sector and the countries we studied in

requiring medical treatment. The Social Security Act, along with SSA

regulations, requires that benefits be denied when an individual fails,

without good cause, to follow treatment prescribed by his or her

physician.26 However, if an applicant is not receiving treatment, SSA still

assesses the applicant’s eligibility for benefits and—if the applicant

qualifies—awards benefits, even if the applicant would not qualify for

benefits if treated. And unless medical treatment is prescribed, it is not a

prerequisite for continued receipt of benefits once they have been

awarded. Indeed, SSA found in 1999 that some beneficiaries with affective

disorders—who constitute one of the fastest-growing groups on the DI

rolls—were receiving no medical treatment. However, SSA has recently

begun a demonstration project to determine whether providing access to

the right medical treatment for beneficiaries with affective disorders will

26For benefits to be denied, treatment must be prescribed by the individual’s

treating physician (the licensed physician who attends to an individual’s medical

needs). When an individual has no attending physician, the treating physician is

the hospital or clinic where the individual goes for medical care.

SSA’s Return-to-Work

Incentives Are More

Limited Than Those Used

in Other Systems
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Page 21 GAO/T-HEHS-00-151

enable them to return to work.27 Nevertheless, access to medical treatment

may be limited for many DI applicants and beneficiaries.28

In contrast to the private sector and The Netherlands, SSA does not have

the legal authority to use financial incentives to encourage employers to

assist those with disabilities to return to work, thus limiting the agency’s

ability to influence employers. SSA, however, is currently funding

demonstration projects in 12 states to develop ways to increase

employment of DI beneficiaries and other people with disabilities and is

looking to employers for help. For example, a goal of one state project is

to solicit employer views on barriers to hiring DI beneficiaries and identify

strategies for, and educate employers about, increasing employment

opportunities for DI beneficiaries. In addition, the federal government

provides tax incentives, and states may provide other assistance to

employers to encourage them to return people with disabilities to work.29

27In addition, many beneficiaries with affective disorders were not being treated

by mental health professionals. Yet, research suggests that as many as 60 percent

of affective disorder cases can be controlled with appropriate treatment, and SSA

believes that providing appropriate medical treatment to beneficiaries with

affective disorders could help them return to work. Outside of the ongoing

demonstration project, SSA does not routinely intervene in the delivery of medical

services for its beneficiaries.

28DI applicants may not be covered by health insurance. In addition, new DI

beneficiaries have a 24-month waiting period before Medicare eligibility.

Moreover, Medicare generally does not cover the costs of certain treatment—such

as prescription drugs—that may be necessary to improve functioning for a return

to work.

29For example, small businesses may take an annual tax credit for a variety of costs incurred in providing employee accommodations, such as readers, sign

language interpreters, and adaptive equipment. Also, all businesses may take an

annual deduction for the expense of removing physical, structural, and

transportation barriers to disabled workers. Further, state vocational

rehabilitation agencies can provide various services to employers, such as

rehabilitation engineering services for architectural barrier removal and work site

modifications.
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Page 22 GAO/T-HEHS-00-151

Officials of each of the disability insurers and countries that we studied

told us that they have developed techniques for using the right staff to

assess eligibility for benefits and return those who can to work. Both the

insurers and the countries have access to individuals with a range of skills

and expertise. Moreover, officials told us that they selectively apply this

expertise as appropriate to cost-effectively assess and enhance claimants’

capacity to work. In contrast, SSA’s DDS teams of medical and

psychological consultants and disability examiners are hired and trained

to assess eligibility of applicants to receive cash benefits rather than to

enhance claimants’ capacity to work. As a result, the staff of SSA and the

DDSs do not have the expertise to carry out the role of returning disabled

workers to productive employment.

Each of the private disability insurers that we studied has access to

multidisciplinary staff with a wide variety of skills and experience who can

assess claimants’ eligibility for benefits and provide needed return-to-work

services to enhance the work capacity of claimants with severe

impairments. The private insurers’ core staff generally include claims

managers, medical experts, vocational rehabilitation experts, and team

supervisors.30 The insurers explained that they set hiring standards to

ensure that these multidisciplinary staff are highly qualified. Such

qualifications are particularly important because assessments of benefit

eligibility and work capacity can involve a significant amount of

professional judgment when, for example, a disability cannot be

objectively verified on the basis of medical tests or procedures or clinical

examinations alone.31 Table 4 describes the responsibilities of this core

staff of experts employed by private disability insurers, as well as its

general qualifications and training.

30The insurers also employ disability income specialists to assist claimants in

applying for DI benefits.

31According to one insurer, disabilities with subjective diagnoses include certain

types of mental illness, fibromyalgia, chronic pain (often back pain), and chronic

fatigue syndrome.

Other Systems Strive

to Use Appropriate

Staff to Achieve

Accurate Disability

Decisions and

Successful Return-toWork Outcomes

Private Insurers Seek to

Use Appropriate Staff to

Assess Eligibility and

Provide Return-to-Work

Services
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Page 23 GAO/T-HEHS-00-151

Table 4: Responsibilities and Qualifications of Staff Employed by Disability Insurers to Assess and Enhance a

Claimant’s Work Potential

Type of staff Responsibilities Qualifications and training

Claims managers -- Determine disability benefit eligibility.

-- Develop, implement, and monitor an individualized

claim management strategy.

-- Serve as primary contact for the claimant and the

claimant’s employer.

-- Focus on facilitating the claimant’s timely, safe

return to work.

-- Coordinate the use of expert resources.

One insurer gives preference to those with a

college degree and requires insurance claims

experience and specialized training and

education. Another requires a college degree, a

passing grade on an insurer-sponsored test, and

specialized training and coaching.

Medical and related

expertsa

-- Collect and evaluate medical and functional

information about the claimant to assist in the

eligibility assessment and help to ensure that

claimants receive the appropriate medical care to

enable them to return to work.

-- At one insurer, physicians also help train company

staff.

Medical staff include registered nurses with case

management or disability-related experience and

experts in behavioral and mental issues, such as

psychologists, experienced psychiatric nurses,

and licensed social workers. Two insurers also

employ board-certified physicians in various

specialties.b

Vocational rehabilitation

experts

-- Help assess the claimant’s ability to work.

-- Help overcome work limitations by identifying

needed assistance, such as assistive devices and

additional training, and ensuring that it is provided.

Rehabilitation experts are masters-level

vocational rehabilitation counselors. In addition,

one insurer requires board-certification and 5

years of experience.

Supervisors -- Provide oversight, mentoring, and training. One insurer gives preference to those with a

college degree and requires 3 years’ disability

experience, some management experience, and

specialized training. Another insurer requires a

college degree, more than 12 years’ disability

claims experience, and completion of courses

leading to a professional designation.

a

In one company, the medical expert is an employee of a company subsidiary but is often

colocated with the insurers’ employees.

b

One company, for example, employs 85 part- and full-time physicians, including

psychiatrists, doctors of internal medicine, orthopedists, family practice physicians,

cardiologists, doctors of occupational medicine, and neurologists.

The disability insurers we reviewed use various strategies for organizing

their staff to focus on return to work, with teams organized to manage

claims associated either with a specific impairment type or with a specific

employer (that is, the group disability insurance policyholder). One insurer

organizes its staff by the claimant’s impairment type—for example,

cardiac/respiratory, orthopedic, or general medical—to develop in-depth

staff expertise in the medical treatments and accommodations targeted at

overcoming the work limitations associated with a particular impairment.

The other two insurers organize their staff by the claimant’s employer,

because they believe that this enables them to better assess a claimant’s

job-specific work limitations and pursue workplace accommodations,
SSA Disability: Other Programs May Provide

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Page 24 GAO/T-HEHS-00-151

including alternative job arrangements, to eliminate these limitations.32

Regardless of the overall type of staff organization, each of the insurers

facilitates the interaction of its core staff—claims managers, medical

experts, and vocational experts—by pulling these experts together into

small, multidisciplinary teams responsible for managing claims.

Additionally, one insurer engenders team interaction by physically

colocating core team members in a single working area.

The disability insurers expand their core staff through agreements or

contracts with subsidiaries or other companies to provide a wide array of

needed experts. These experts—deployed both at the insurer’s work site

and in the field—provide specialized services to support the eligibility

assessment process and to help return claimants to work. For instance,

each insurer we studied contracts with medical experts beyond its core

employee staff—such as physicians, psychologists, psychiatrists, nurses,

and physical therapists—to help test and evaluate the claimant’s medical

condition and level of functioning. In addition, the insurers contract with

vocational rehabilitation counselors and service providers for various

vocational services, such as training, employment services, and vocational

testing.33

All of the private insurers we examined told us that they strive to apply the

appropriate type and intensity of staff resources to cost-effectively return

to work claimants with work capacity. The insurers described various

techniques that they use to route claims to the appropriate claims

management staff, which include separating (or “triaging”) claimants with

work potential and directing their claims to staff with the appropriate

expertise. According to one insurer, the critical factor in increasing returnto-work rates and, at the same time, reducing overall disability costs is

proper triaging of claims. In general, the private insurers separate claims

by those who are likely to return to work and those who are not expected

to return to work. The insurers told us that they assign the type and

32All three insurers, however, have behavioral care specialists specifically for managing psychiatric claims.

33Two insurers also contract with investigators and surveillance personnel to

investigate potential inconsistencies between the claimant’s statements and actual

activities. One company employs field-based investigators who verify claimant

information and assess the conformance of the claim to observed claimant

activities. These investigators usually have prior investigative experience and

receive ongoing training on current medical issues and other professional

education.
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intensity of staff necessary to manage claims of people who are likely to

return to work on the basis of the particular needs and complexity of the

specific case. This selective staff assignment is shown in table 5.

Table 5: Triage of Claims and Illustrations of Selective Staff Assignment for Claims Management

Triage category Staff assigned Types of return-to-work services provided

Likely to return to work

-- Condition requires medical

assistance and more than 1 year to

stabilize medically.

Medical specialist -- Recommend improvements in treatment plan to treating

physician.

-- Refer claimant for more specialized or appropriate medical

services.

-- Ensure frequency of treatment meets standards for

condition.

-- Condition requires less than a year

to stabilize.

Claims manager -- Monitor medical condition.

-- Maintain contact with employer and physician to ensure

return to work.

-- Obtain input from medical and vocational specialists as

needed.

-- Condition is stabilized and claimant

needs rehabilitation or job

accommodation to return to work.

Multidisciplinary team

including

-- Vocational expert

-- Medical expert

-- Claims specialist

-- Specialists as needed

-- Evaluate claimant’s functional abilities for work.

-- Customize return-to-work plan.

-- Arrange for needed return-to-work services.

-- Monitor progress against expected return-to-work date.

Unlikely to return to work

-- Claimant is determined unable to return to

work.

Claims manager -- Review medical condition and level of functioning regularly.

As shown in table 5, claimants expected to need medical assistance, such

as those requiring more than a year for medical stabilization, are likely to

receive an intensive medical claims management strategy. A medical

strategy involves, for example, ensuring that the claimant receives

appropriate medical treatment. Claimants who need less than a year to

stabilize medically are managed much less intensively. For these claims, a

claims manager primarily monitors the claimant’s medical condition to

assess whether the claimant has stabilized sufficiently medically to begin

vocational rehabilitation, if appropriate. Alternatively, claimants with a

more stable, albeit serious, medical condition who are expected to need

vocational rehabilitation, job accommodations, or both to return to work

might warrant an intensive vocational strategy. The private disability

insurers generally apply their most resource-intensive, and therefore most

expensive, multidisciplinary team approach to these claimants. Working

closely with the employer and the attending physician, the team actively

pursues return-to-work opportunities for claimants with work potential.
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Page 26 GAO/T-HEHS-00-151

Finally, claimants who are likely not to return to work (or “stable and

mature” claims) are generally managed using a minimum level of

resources, with a single claims manager responsible for regularly

reviewing a claimant’s medical condition and level of functioning.34 The

managers of these claims carry much larger caseloads than managers of

claims that receive an intensive vocational strategy. For example, one

insurer’s average claims manager’s caseload for these stable and mature

claims is about 2,200 claims, compared with an average caseload of 80

claims in the same company for claims managed more actively.

Regardless of the category into which a claim is placed, the claims

manager is responsible for identifying the appropriate experts and

involving them in the management of the claim as an essential element of

developing and implementing a customized claims management strategy.

The claims manager may informally use the assistance of experts or hold

an interdisciplinary team meeting, including clinical and rehabilitation

experts, to obtain advice on developing the claims management strategy

and help in determining which specialized experts need to be deployed to

manage the claim. Further, if the claims manager refers the claim to a

specialist, that specialist may determine that additional expertise is

required as well. But the insurers told us that they escalate a claim to staff

with progressively more training and specialization, and thus higher cost,

only if needed to resolve increasingly complex claims management issues.

To ensure that staff are utilized cost-effectively, the private insurers said

that they compute the return-on-investment accruing from investing in

return-to-work resources for a particular claimant.

Other countries’ social insurance offices also call upon various specialists,

such as physicians, vocational experts, and psychologists, in the process

of evaluating and enhancing a person’s ability to work. If the needed

expertise is unavailable in-house, the social insurance agency may

purchase the necessary services from other organizations. The expertise

applied is decided on a case-by-case basis depending on the case’s

complexity. For example, the social insurance offices in Sweden are

responsible for working with the regional and local employment and

rehabilitation offices to determine the appropriate types of rehabilitation

services for a claimant. Medical assessments of work capacity in Germany

34One of the insurers reviewed cases of claimants who were not expected to recover medically and to remain work-disabled for the duration of the policy

every 12 to 36 months.

Other Countries Also

Selectively Apply

Specialized Staff to Return

Claimants to Work
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Page 27 GAO/T-HEHS-00-151

and The Netherlands may also be supplemented by advice from vocational

or other experts.

Social insurance offices in Germany and Sweden select the appropriate

staffing and services to dedicate to particular cases on the basis of the

likelihood of a successful outcome. The staff assignments made and the

return-to-work actions taken by the social insurance offices depend on an

assessment of each applicant’s potential for returning to work. In complex

cases of potential long-term disability, more extensive evaluations

involving psychologists and vocational specialists may be conducted to

assess the work capacity of an applicant. In Germany, medical

rehabilitation is provided before an applicant’s condition is assessed to

determine whether vocational rehabilitation is necessary. Only if

successful rehabilitation seems unlikely, or if rehabilitation has been

provided without success, will the social insurance offices in Germany and

Sweden typically grant the person long-term disability benefits. But, in

contrast with the private insurers we examined, once an individual is

granted long-term benefits and therefore considered too severely disabled

to benefit from services, the social insurance offices rarely reassess the

person’s return-to-work potential and generally do not offer any return-towork services or benefits.

The Netherlands also dedicates resources to evaluating return-to-work

potential and providing rehabilitation services on the basis of the

particular return-to-work potential and needs of individuals. But unlike

Germany and Sweden, The Netherlands offers vocational rehabilitation to

disability beneficiaries who choose to pursue a work goal even after they

are granted long-term benefits.

In contrast to the private insurers and the foreign social insurance offices,

the focus of DDS staff who make determinations for SSA is to assess the

eligibility of applicants to receive cash benefits. The DDSs do not assess

what is needed for an individual to return to work or help an individual

with work capacity to return to work. Neither do they ensure that DI

applicants or beneficiaries receive medical treatment. To make initial

benefit eligibility determinations, DDSs rely on teams comprising a

disability examiner and a medical or psychological consultant. Since the

DDS teams do not carry out the variety of roles related to return to work,

they do not include staff with the vocational skills and expertise who are

incorporated in teams used by the private and foreign disability systems.

However, under the Ticket to Work Act, beneficiaries who voluntarily

choose to attempt a return to work may tap into vocational expertise

SSA Staff Are Not Focused

on Returning Claimants to

Work
SSA Disability: Other Programs May Provide

Lessons for Improving Return-to-Work

Efforts

Page 28 GAO/T-HEHS-00-151

outside SSA that could provide the additional services, expertise, and

supports to help them in their effort, but only after benefit award.

Moreover, while SSA funds the state DDSs, SSA’s regulations delegate

authority to each DDS to set hiring policies and determine how to organize

staff charged with carrying out the eligibility assessment function.

Consequently, in contrast to the standardized hiring practices used by the

private insurers, considerable variation can exist among the states in the

requisite qualifications for hiring key staff. For example, among the DDSs,

the required educational background for disability examiners ranges from

a high school diploma to some college to a college degree.

In addition, SSA separates beneficiaries into groups according to their

likelihood of medical improvement for the purpose of assessing continuing

eligibility for benefits, in accordance with law and regulation. The agency

invests greater staff resources in reviewing beneficiaries who are most

likely to medically improve than in reviewing those with less likelihood of

improvement. In contrast to practices of the private insurers and foreign

social insurance offices, SSA uses its resources to determine continuing

eligibility on the basis of medical improvement and does not separately

evaluate whether a beneficiary has the potential to return to work.35

Return-to-work practices used in the U.S. private sector and in other

countries reflect the understanding that people with disabilities can and

do return to work. In 1996, we recommended that SSA place greater

priority on helping disabled beneficiaries return to work. We also

recommended that the agency develop a comprehensive strategy for this

effort. While SSA has begun to focus more on return to work, it has yet to

adopt a comprehensive strategy for implementing this new approach. For

example, it has yet to integrate its return-to-work efforts with its initiatives

to improve the disability decision-making process. In short, we continue to

believe SSA is still not placing enough priority on identifying and

enhancing the work potential of its beneficiaries with disabilities. We also

continue to believe that SSA could do this more effectively without

jeopardizing the availability of benefits for people who cannot work.

35The law contains several exceptions that allow benefits to be terminated even when a person’s medical condition has not improved. For example, benefits may

be disallowed when new or improved diagnostic techniques reveal that the

impairment is less disabling than originally determined.

Concluding

Observations
SSA Disability: Other Programs May Provide

Lessons for Improving Return-to-Work

Efforts

Page 29 GAO/T-HEHS-00-151

We acknowledge that limited data exist on the cost-effectiveness of the

return-to-work approaches used in the other systems we examined. In

addition, SSA may face greater difficulty in returning some of its

beneficiaries to work than private sector insurers do, since DI covers a

broader population than the private insurers. Moreover, significant

differences exist between SSA’s disability programs and those of private

sector disability insurers and social insurance programs in other countries.

Some of these differences can be attributed to the particular laws and

regulations governing the programs. Although SSA would face substantial

constraints and challenges in applying the return-to-work practices of

other programs, we believe opportunities exist for providing the return-towork assistance that could enable more of SSA’s beneficiaries to reduce or

eliminate their dependence on cash benefits.

The Congress recognized the need to focus more on return to work when

it passed the Ticket to Work Act, which authorizes and requires SSA to

conduct return-to-work demonstration programs. Program managers and

policymakers will be able to learn from the experiences of these

demonstrations, and they can also draw upon the approaches of the other

systems to further strengthen and enhance a comprehensive return-towork focus. Adopting such a focus will, however, require fundamental

changes to the underlying philosophy and direction of the disability

programs, including the determination of disability. Policymakers will

need to carefully weigh the implications of such changes, but compelling

reasons exist to try new approaches. Current estimates project that the DI

trust fund will become insolvent in 2023. This financial strain, along with

advances in technology and medicine that can help individuals improve

their productive potential, provides ample reason for examining how

practices from other systems could be applied to improve SSA’s return-towork outcomes.

Mr. Chairman, this concludes my prepared statement. I would be pleased

to respond to any questions you or Members of the Subcommittee may

have.

For future contacts regarding this testimony, please call Barbara D.

Bovbjerg at (202) 512-7215. Carol Dawn Petersen, Barbara H. Bordelon,

Kelsey M. Bright, Julie M. DeVault, William E. Hutchinson, and Mark

Trapani also made key contributions to this testimony.

GAO Contact

and Staff

Acknowledgments
Page 30 GAO/T-HEHS-00-151

Social Security Disability Insurance: Raising the Substantial Gainful

Activity Level for the Blind (GAO/T-HEHS-00-82, Mar. 23, 2000).

Social Security Disability: Multiple Factors Affect Return to Work (GAO/THEHS-99-82, Mar. 11, 1999).

Social Security Disability Insurance: Factors Affecting Beneficiaries’

Return to Work (GAO/T-HEHS-98-230, July 29, 1998).

Social Security Disability Insurance: Multiple Factors Affect Beneficiaries’

Ability to Return to Work (GAO/HEHS-98-39, Jan. 12, 1998).

Social Security Disability: Improving Return-to-Work Outcomes Important,

but Trade-Offs and Challenges Exist (GAO/T-HEHS-97-186, July 23, 1997).

Social Security: Disability Programs Lag in Promoting Return to Work

(GAO/HEHS-97-46, Mar. 17, 1997).

SSA Disability: Return-to-Work Strategies From Other Systems May

Improve Federal Programs (GAO/HEHS-96-133, July 11, 1996).

Social Security: Disability Programs Lag in Promoting Return to Work

(GAO/T-HEHS-96-147, June 5, 1996).

SSA Disability: Program Redesign Necessary to Encourage Return to Work

(GAO/HEHS-96-62, Apr. 24, 1996).

(207082)

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