United States General Accounting Office

GAO Testimony

Before the Subcommittee on Oversight, Committee on

Ways and Means, House of Representatives

For Release on Delivery

Expected at 10:00 a.m.

Tuesday, March 4, 1997

SUPPLEMENTAL

SECURITY INCOME

Long-Standing Problems Put

Program at Risk for Fraud,

Waste, and Abuse

Statement of Jane L. Ross, Director

Income Security Issues

Health, Education, and Human Services Division

GAO/T-HEHS-97-88

Supplemental Security Income:

Long-Standing Problems Put Program at

Risk for Fraud, Waste, and Abuse

Madam Chairman and Members of the Subcommittee:

I am pleased to be here to discuss the Social Security Administration’s

(SSA) Supplemental Security Income (SSI) program and our decision to

designate the program one of our high-risk areas. As you know, the SSI

program provides means-tested income support payments to eligible aged,

blind, or disabled people. Since the program’s inception in 1974, the

number of individuals receiving SSI cash benefits has grown significantly.

About 6.6 million recipients now receive roughly $22 billion in federal

benefits. In the past several years, a major reason for growth in the SSI rolls

has been an increasing number of younger recipients with mental

impairments who have limited work histories. Rapid growth in the number

of children receiving SSI benefits has further contributed to changes in the

program’s character. The increased number and diversity of SSI recipients

have spurred criticism that the SSI program is increasingly susceptible to

fraud, waste, and abuse. Through our work, we have also demonstrated

that the SSI program has been adversely affected by internal control

weaknesses, complex policies, and insufficient management attention. (A

list of related GAO products dealing with SSI program vulnerabilities

appears at the end of this statement.)

Today, I would like to discuss several long-standing problems in SSI that

have caused us to designate the program as high risk. These problems

involve the methods SSA uses to verify recipients’ initial and continuing

eligibility for SSI benefits and the agency’s efforts to get SSI recipients into

the workforce. These deficiencies have placed the program at

considerable risk and contributed to significant annual increases in

overpayments to SSI recipients. Overpayments include payments to people

ineligible for the program, as well as to those receiving higher benefit

payments than their income and assets warrant. During 1996, SSA had $2.3

billion in overpayments that was owed to the agency, including

$895 million in newly detected overpayments during the year. In that year,

the agency was successful in recovering only $357 million of the total

outstanding debt.

To briefly summarize our findings, the SSI program has had significant

problems in determining initial and continuing financial eligibility because

of the agency’s reliance on individuals’ own reports of their income and

resources and failure to thoroughly check this information. Moreover, the

judgmental nature of SSA’s disability determination process and SSA’s past

failure to adequately review SSI recipients to determine whether they

remain disabled have also exposed the program to fraud, waste, and

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Supplemental Security Income:

Long-Standing Problems Put Program at

Risk for Fraud, Waste, and Abuse

abuse. Finally, SSA is at risk of paying some SSI recipients benefits for too

long because it has not adequately addressed their special vocational

rehabilitation needs nor developed an agencywide strategy for helping

recipients who can enter the workforce. The Congress has recently made

several changes that address program eligibility issues and increase the

frequency of SSA’s continuing eligibility reviews. SSA has also begun

addressing its program vulnerabilities and has made the prevention of

fraud and abuse a part of its plan for rebuilding public confidence in the

agency. However, our concerns about underlying SSI program

vulnerabilities and the level of management attention devoted to these

vulnerabilities continue. As part of our high-risk work, we are continuing

to evaluate the underlying causes of long-standing SSI problems and the

actions necessary to address them.

Background SSI provides cash benefits to low-income aged, blind, or disabled people.

Currently, the aged SSI population is roughly 1.4 million and the blind and

disabled population more than 5.2 million. Those who are applying for

benefits on the basis of age must be age 65 or older and be financially

eligible for benefits; those who are applying for disability benefits must

qualify on the basis of two criteria: financial and disability eligibility. To

qualify for benefits financially, individuals may not have income greater

than the current maximum monthly SSI benefit level of $484 ($727 for a

couple) or have resources worth more than $2,000 ($3,000 for a couple).

To be qualified as disabled, applicants must be unable to engage in any

substantial gainful activity because of an impairment expected to result in

death or last at least 12 months.

The process SSA uses to determine an applicant’s financial eligibility for SSI

benefits involves an initial determination when someone first applies and

periodic reviews to determine whether the recipient remains eligible. SSI

recipients are required to report significant events that may affect their

financial eligibility for benefits, including changes in income, resources,

marital status, or living arrangements, such as incarceration or residence

in a nursing home. To verify that the information provided by a recipient is

accurate, SSA generally relies on matching data from other federal and

state agencies, including Internal Revenue Service form 1099 information,

Department of Veterans Affairs benefits data, and state-maintained

earnings and unemployment benefits data. When SSA staff find

discrepancies between income and assets claimed by a recipient and the

data from other agencies, they send notices to SSA field offices to

investigate further.

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Supplemental Security Income:

Long-Standing Problems Put Program at

Risk for Fraud, Waste, and Abuse

To determine a person’s qualifications for SSI as a disabled person, SSA

must determine the individual’s capacity to work as well as his or her

financial eligibility. To determine whether an applicant’s impairment

qualifies him or her for SSI benefits, SSA uses state Disability Determination

Services (DDS) to make the initial assessment. Once a recipient begins

receiving benefits, SSA is required to periodically conduct Continuing

Disability Reviews (CDR) to determine whether a recipient’s condition

remains disabling.

Regarding returning recipients to work, the Social Security Act states that

to the maximum extent possible, individuals applying for disability

benefits should be rehabilitated into productive activity. To this end, SSA is

required to refer SSI recipients to state vocational rehabilitation agencies

for services intended to prepare them for returning to work. The act also

provides various work incentives to safeguard cash and medical benefits

while a recipient tries to return to work.

SSA Pays Inadequate

Attention to Verifying

Recipients’ Financial

Eligibility

To correctly determine an individual’s initial and continuing financial

eligibility, SSA needs accurate and timely information because it is much

easier to prevent overpayments than to recover them. SSA tries to get this

information directly from applicants and recipients but also supplements

these data through the use of computer matches with other federal and

state agencies. To do this, SSA compares federal and state data with

information claimed by SSI applicants. In many instances, these matches

allow SSA to detect information that SSI recipients fail to report; in other

cases, they provide more accurate information. However, our prior

reviews have found that data from computer matches are often quite old

and sometimes incomplete. For example, computer matches for earned

income rely on data that are from 6 to 21 months old, allowing

overpayments to accrue for this entire period before collection actions can

begin. This puts SSI at risk because it collects only about 15 percent of

outstanding overpayments. Another weakness in this process is that SSA

does not conduct some matches that could help to detect additional

overpayments. For example, SSA has not matched data from Aid to

Families With Dependent Children (AFDC) to detect SSI recipients who may

be receiving benefits from this program.

Our work in the last few years suggests that recipients do not always

report required information when they should and may not report it at all.

For example, last year we reported that about 3,000 current and former

prisoners in 13 county and local jails had been erroneously paid $5 million

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Supplemental Security Income:

Long-Standing Problems Put Program at

Risk for Fraud, Waste, and Abuse

in SSI benefits, mainly because SSA lacked timely and complete information

on their incarceration. Recipients or their representative payees did not

report the incarceration to SSA as required, and SSA had not arranged for

localities to report such information. SSA told us that it has begun a

program to identify SSI recipients in jails who should no longer be

receiving benefits.

Our ongoing SSI work is identifying similar program problems and

weaknesses as those noted in prior reports. For example, SSA staff have

indicated that recipients’ reporting of changes in living arrangements is

frequently subject to abuse. One common scenario involves recipients

who become eligible for SSI benefits and shortly thereafter report to SSA

that they have separated from their spouse and are living in separate

residences. SSA field staff suspect that these reported changes in living

arrangements take place because recipients become aware that separate

living arrangements will substantially increase their monthly benefits.

Another ongoing study of SSI recipients admitted to nursing homes has

found that despite SSA procedures and recent legislation to encourage

reporting such living arrangement changes, thousands of SSI recipients in

nursing homes continue to receive full benefits, resulting in millions of

dollars in overpayments each year. This happens because recipients and

nursing homes do not report changes in living arrangements and because

computer matches with participating states to detect nursing home

admissions are not done in a timely manner and are often incomplete.

Consequently, these admissions and the resulting overpayments are likely

to go undetected for long time periods.

In a final area related to financial eligibility, we recently reported that

between 1990 and 1994, approximately 3,500 SSI recipients transferred

ownership of resources, such as cash, houses, land, and other items valued

at an estimated $74 million, to qualify to SSI benefits. This figure represents

only transfers of resources that recipients actually told SSA about.

Although these transfers are legal, using them to qualify for SSI benefits

raises serious questions about SSA’s ability to protect taxpayer dollars from

waste and abuse and may undermine the public’s confidence in the

program. SSA has acknowledged and supports the need to work with the

Congress to develop legislation to address this problem.

To obtain more timely and accurate recipient data, SSA is currently testing

the use of online access to state databases to supplement the information

it receives. Online access provides direct connections between SSA’s

computers and the databases maintained by certain state agencies. Data

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Supplemental Security Income:

Long-Standing Problems Put Program at

Risk for Fraud, Waste, and Abuse

can be obtained immediately by SSA staff as soon as requested and used for

a variety of purposes, including verifying the amount of AFDC or other

benefit income a client reports. After reviewing this SSA initiative, we

concluded that nationwide use of online access to state computerized data

could prevent or more quickly detect about $130 million in overpayments

due to unreported or underreported income in one 12-month period.

Online access could save program dollars by controlling overpayments

and reducing the administrative expense of trying to recover them. In

responding to our review, SSA noted that it was exploring options for

expanding online access and was examining the cost-effectiveness of

doing so. Although some states can currently provide online access to

their data inexpensively and easily, SSA has moved slowly in this area. In

addition to state data, online access to other federal agencies’ data may

help SSA save program dollars. SSA has also moved slowly in this area,

however.

Program

Vulnerabilities Are

Associated With

Determining Disability

Eligibility

In addition to financial eligibility, for those who apply for disability

benefits, SSA must also determine their disability eligibility or their

capacity to work. SSA’s lengthy and complicated disability decision-making

process results in untimely and inconsistent decisions. Adjudicators at all

levels of this process have to make decisions about recipients’ work

capacity on the basis of complex and often judgmental disability criteria.

Determining disability eligibility became increasingly difficult in the early

1990s as younger individuals with mental impairments began to apply for

benefits in greater numbers. Generally, mental impairments are difficult to

evaluate, and the rates of award are higher for these impairments than for

physical impairments.

SSA’s processes and procedures for determining disability have placed the

SSI program at particular risk for fraud, waste, and abuse. For example, in

1995, we reported that SSA’s ability to ensure reasonable consistency in

administering the program for children with behavioral and learning

disorders had been limited by the subjectivity of certain disability criteria.

To address these problems, recent welfare reform legislation included

provisions to tighten the eligibility rules for childhood disability and

remove children from the rolls who have qualified for SSI on the basis of

less restrictive criteria. It is too early, however, to tell what impact the new

legislation will ultimately have on SSI benefit payments and SSA’s ability to

apply consistent disability policies to this population.

Page 5 GAO/T-HEHS-97-88
Supplemental Security Income:

Long-Standing Problems Put Program at

Risk for Fraud, Waste, and Abuse

In addition, we reported in 1995 that middlemen were facilitating

fraudulent SSI claims by providing translation services to non-Englishspeaking individuals who were applying for SSI. These middlemen were

coaching SSI claimants on appearing mentally disabled, using dishonest

health care providers to submit false medical evidence to those

determining eligibility for benefits, and providing false medical

information on claimants’ medical and family history. In one state alone, a

middleman arrested for fraud had helped at least 240 people obtain

$7 million in SSI benefits. SSI’s vulnerability to fraudulent applications

involving middlemen was the result of the lack of a comprehensive

strategy for keeping ineligible applicants off the SSI rolls, according to our

review. SSA told us that half of all SSI’s recently hired field office staff are

bilingual, a step that it believes will reduce the involvement of fraudulent

middlemen.

In light of the difficulty of determining disability and SSI’s demonstrated

vulnerability to fraud and manipulation, periodic reviews are essential to

ensure that recipients are disabled. Our work has shown, however, that

SSA has not placed adequate emphasis on CDRs of SSI cases. In 1996, we

reported that many recipients received benefits for years without having

any contact with SSA about their disability. We also noted that SSA

performed relatively few SSI CDRs until the Congress mandated in 1994 that

it conduct such reviews. Furthermore, SSA’s processes for identifying and

reviewing cases for continuing eligibility did not adequately target

recipients with the greatest likelihood for medical improvement.

Currently, SSA is implementing new review requirements in the welfare

reform law. In addition, SSA had about 2-1/2 million required CDRs due or

overdue in the Disability Insurance (DI) program and 118,000 SSI CDRs due

or overdue as of 1996. Despite the importance of CDRs for ensuring SSI

program integrity, competing workloads from implementing welfare

reform legislation will challenge SSA in completing the required number of

SSI CDRs.

SSA Has Not

Emphasized Return to

Work and Vocational

Rehabilitation

As mentioned previously, the Social Security Act states that as many

people as possible who are applying for disability benefits should be

rehabilitated into productive activity. We have found, however, that SSA

places little priority on helping recipients move off the SSI rolls by

obtaining employment. Yet, if only a small proportion of recipients were to

leave the SSI rolls by returning to work, the savings in lifetime cash

benefits would be significant.

Page 6 GAO/T-HEHS-97-88
Supplemental Security Income:

Long-Standing Problems Put Program at

Risk for Fraud, Waste, and Abuse

Technological and societal changes in the last decade have raised the

possibility of more SSI recipients returning to work. For example,

technological advances, such as standing wheelchairs and synthetic voice

systems, have made it easier for people with disabilities to enter the

workplace. Legislative changes, such as the Americans With Disabilities

Act, and social changes, such as an increased awareness of the economic

contributions of individuals with disabilities, have also enhanced the

likelihood of these individuals finding jobs. During the past decade, the

proportion of middle-aged SSI recipients has steadily increased.

Specifically, the number of SSI recipients between the ages of 30 and 49 has

increased from 36 percent in 1986 to about 46 percent in 1995 to about

1.6 million people. Thus, many SSI recipients have many productive years

in which to contribute to the workforce.

Despite these factors, SSA has missed opportunities to promote work

among disabled SSI recipients. In 1972, the Congress created the plan for

achieving self-support (PASS) to help low-income individuals with

disabilities return to work. The program allows SSI recipients to receive

higher monthly benefits by excluding from their SSI eligibility and benefit

calculations any income or resources used to pursue a work goal. SSA pays

about $30 million in additional cash benefits annually to PASS program

participants. Despite these cash outlays, almost none of the participants

leave the rolls by returning to work.

SSA has poorly implemented and managed the PASS program. In particular,

SSA has developed neither a standardized application containing essential

information on the applicant’s disability, education, and skills nor ways to

measure program effectiveness. We have recommended that SSA act on

several fronts to control waste and abuse and evaluate the effect of PASS on

recipients’ returning to work. In general, SSA has agreed with our

recommendations and taken some steps to more consistently administer

the PASS program.

In the past several months, however, some efforts have begun to place a

greater emphasis on returning disabled people to work. The

administration is seeking statutory authority to create a voucher system

that recipients could voluntarily use to get rehabilitation and employment

services from public or private providers and is also seeking legislation to

extend medical coverage for recipients who return to work. The Congress

has also put forth several proposals in these areas.

Page 7 GAO/T-HEHS-97-88
Supplemental Security Income:

Long-Standing Problems Put Program at

Risk for Fraud, Waste, and Abuse

Conclusion The problems we have identified in the SSI program are long-standing and

have contributed to billions of tax dollars being overpaid to recipients.

They have also served to compromise the integrity of the program and

reinforce public perceptions that the SSI program pays benefits to too

many people for too long. Although many of the changes recently enacted

by the Congress or implemented by SSA may result in improvements, the

underlying problems still exist.

Our work has shown that SSI’s vulnerability is due both to problems in

program design and inadequate SSA management attention to the program.

Revising SSA’s approach to managing the program will require sustained

attention and direction at the highest levels of the agency as well as

actively seeking the cooperation of the Congress in improving the

program’s operations and eligibility rules. One challenge for the new SSA

Commissioner will be to focus greater agency attention on management of

SSI and the future viability and integrity of this program.

This concludes my prepared statement. I will be happy to respond to any

questions you or other members of the Subcommittee may have.

Contributors For more information on this testimony, please call Jane Ross on

(202) 512-7230 or Roland Miller, Assistant Director, on (202) 512-7246.

Page 8 GAO/T-HEHS-97-88
Supplemental Security Income:

Long-Standing Problems Put Program at

Risk for Fraud, Waste, and Abuse

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Supplemental Security Income:

Long-Standing Problems Put Program at

Risk for Fraud, Waste, and Abuse

Page 10 GAO/T-HEHS-97-88
Page 11 GAO/T-HEHS-97-88
Related GAO Products

Social Security Disability: Improvements Needed to Continuing Disability

Review Process (GAO/HEHS-97-1, Oct. 16, 1996).

Supplemental Security Income: SSA Efforts Fall Short in Correcting

Erroneous Payments to Prisoners (GAO/HEHS-96-152, Aug. 30, 1996).

Supplemental Security Income: Administrative and Program Savings

Possible by Directly Accessing State Data (GAO/HEHS-96-163, Aug. 29, 1996).

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).

Supplemental Security Income: Some Recipients Transfer Valuable

Resources to Qualify for Benefits (GAO/HEHS-96-79, Apr. 30, 1996).

PASS Program: SSA Work Incentive for Disabled Beneficiaries Poorly

Managed (GAO/HEHS-96-51, Feb. 28, 1996).

Supplemental Security Income: Disability Program Vulnerable to Applicant

Fraud When Middlemen Are Used (GAO/HEHS-95-116, Aug. 31, 1995).

Social Security: New Functional Assessments for Children Raise Eligibility

Questions (GAO/HEHS-95-66, Mar. 10, 1995).

(105158) Page 12 GAO/T-HEHS-97-88
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