Supplemental Security Income: SSA Is Taking Steps to Review Recipients' Disability Status
Published: 1996-10-30T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: Pursuant to a congressional request, GAO reviewed the Social Security Administration's (SSA) strategy for conducting legally required continuing disability reviews (CDR) on Supplemental Security Income (SSI) recipients, focusing on: (1) SSA plans to conduct legally required SSI CDR in fiscal years 1996 through 1998; (2) the resources committed to meeting this requirement; (3) how SSA selects recipients for SSI CDR; (4) the potential benefits of conducting CDR on the SSI population; and (5) potential options for improving the CDR process.
section_title: What GAO Found
paragraphs: GAO found that: (1) SSA planned to conduct required CDR on about 118,000 SSI recipients in fiscal year (FY) 1996; (2) SSA also planned to conduct an additional 100,000 CDR on SSI recipients that were not legally required; (3) as of June 1996, SSA had completed about 60 percent of the required CDR; (4) other competing priorities may make it difficult for SSA to conduct all required SSI CDR after FY 1996; (5) in FY 1996, SSA limited its selection for CDR to those recipients for whom medical improvement is either expected or possible; (6) SSA estimates that conducting CDR will result in removing only about 5 percent of SSI recipients from the rolls, but without CDR, the number of ineligible recipients will likely increase over time; (7) SSA estimates that conducting CDR on SSI adult recipients for whom medical improvement is expected or possible results in about $3 in federal program savings for every $1 spent conducting CDR; and (8) SSA needs to establish less rigid requirements for determining who should be scheduled for CDR, ensure that contact is made with all SSI recipients, and develop a legislative proposal to obtain the authority needed to extend this new process to all recipients.

section_title: Letter
paragraphs: In recent years, the Congress has been concerned that ineligible individuals may be receiving disability benefits under the Supplemental Security Income (SSI) program, which provides benefits to low-income disabled and blind individuals. These concerns stem, in part, from frequent allegations of fraud, waste, and abuse in the program. For example, we recently confirmed allegations that some ineligible non-English-speaking applicants were illegally obtaining benefits through the use of middlemen, who provide translation and/or other services for a fee to help individuals apply for benefits. Concerns about the program also stem from sharp increases in the number of SSI recipients in recent years. From 1990 to 1996, the population of disabled SSI recipients increased by over 40 percent, from about 3.4 million to nearly 4.8 million.
To help ensure that only eligible individuals are receiving SSI benefits, the Social Security Independence and Program Improvements Act of 1994 required that the Social Security Administration (SSA) review the disability status of a minimum number of SSI recipients. In August 1996, the Congress enacted the Personal Responsibility and Work Opportunity Reconciliation Act of 1996, which amended the Social Security Act to require SSA to conduct continuing disability reviews (CDR) within the first year of life on all low-birth-weight babies receiving SSI benefits and at least once every 3 years on all other SSI recipients under age 18 for whom medical improvement is likely. The 1996 legislation repealed the requirement that SSA conduct CDRs on one-third of SSI recipients attaining age 18 in each of fiscal years 1997 and 1998 and replaced it with the requirement that, starting on the date of the legislation’s enactment, SSA redetermine medical eligibility on the basis of adult criteria for all recipients within 1 year of their 18th birthdays.
To assist in your oversight of the SSI program, you asked us to examine SSA’s strategy for conducting the legally required CDRs on SSI recipients. In response, we addressed the following questions:
What steps is SSA taking to conduct legally required SSI CDRs in fiscal years what resources has SSA committed to meeting this requirement and what additional resources, if any, are needed; how does SSA select recipients for SSI CDRs; what are the potential benefits of conducting CDRs on the SSI population; what potential options exist for improving the CDR process?
In companion reports, we discussed SSA’s general strategy for conducting CDRs, which are also required under the Disability Insurance (DI) program.The DI program provides disability benefits to individuals who have enough work experience to be insured under Social Security.
To address these questions, we (1) interviewed federal and state officials; (2) reviewed relevant laws, regulations, policies, procedures, and reports; and (3) reviewed SSA data on CDR work plans, budgets, costs, savings, and previously conducted CDRs. Furthermore, we reviewed the process SSA uses in selecting recipients for CDRs and the composition of the formulas used to estimate the likelihood of benefit termination for that process. We estimated savings from benefit terminations after CDRs using assumptions provided by SSA; the Health Care Financing Administration (HCFA), which administers the Medicaid program; and the Congressional Budget Office. In addition, to characterize the population of SSI recipients currently due or overdue for CDRs, we analyzed SSA data from the Supplemental Security Income Record Description (SSIRD) for a 15-percent sample of the SSI disabled population due or overdue for CDRs on the basis of SSA’s current system for scheduling CDRs. We used SSIRD data as provided and did not evaluate its accuracy or the validity of SSA formulas used in the selection process. (App. I contains more details on our scope and methodology.)
subsections: section_title: Background
paragraphs: The SSI program provides financial assistance to disabled people whose income and resources are below specified amounts. As of January 1996, about 2.6 million adults and 1.1 million children were receiving SSI disability benefits and an additional 1.1 million adults were receiving both SSI and DI benefits. Most SSI recipients qualify for Medicaid coverage, and 48 states and the District of Columbia also supplement federal SSI payments with state SSI benefits. In 1995, SSI disability recipients received a total of about $21 billion in federal SSI benefits and $2.6 billion in SSI state supplements.
Reviewing recipients’ disability status, especially those most likely to improve, is an important component of good program management. Even though the SSI program was created to provide benefits to people who are severely disabled or terminally ill, some people do improve through treatment, surgery, or the passing of time. Amidst concerns about fraud, waste, and abuse in the SSI program, the Congress passed the Social Security Independence and Program Improvements Act of 1994, which required SSA to conduct CDRs on one-third of SSI recipients attaining age 18 and another 100,000 recipients in each of fiscal years 1996 through 1998.
The 1996 amendments to the Social Security Act required that SSA conduct CDRs on all low-birth-weight babies within their first year of life and at least once every 3 years on all children under age 18 whose conditions are likely to improve. The amendments single out low-birth-weight babies because historically a relatively high percentage of these babies, about 40 percent, have had their benefits terminated after CDRs. The 1996 amendments replaced the requirement that SSA conduct CDRs on one-third of recipients attaining age 18 with the requirement that SSA redetermine disability eligibility using adult criteria for all recipients attaining age 18.These redeterminations differ from CDRs in that SSA bases decisions for disability eligibility redeterminations on whether recipients meet eligibility requirements; for CDRs, SSA bases eligibility decisions on whether recipients’ impairments have improved since the last determination. Since these disability eligibility redeterminations can be counted as CDRs on SSI recipients, this report examines SSA’s plans to conduct both of these types of reviews. In addition, this report focuses on CDRs of SSI-only recipients because provisions in the 1994 and 1996 laws apply only to recipients who are receiving disability benefits solely under the SSI program, and not under both the SSI and DI programs. Legislation has required CDRs of DI beneficiaries, including those also receiving SSI benefits, since 1980.
The number of SSI CDRs required by the 1994 and 1996 legislation represent large increases over the number conducted in previous years. In fact, the number of CDRs required in fiscal year 1996 alone exceeds the total of all SSI CDRs conducted in fiscal years 1991 through 1995 (see table II.1). According to SSA, it conducted few CDRs of SSI recipients in those years because the agency had limited resources and no legal requirement existed. However, because SSA had the authority to conduct SSI CDRs, SSA continued to schedule SSI recipients for CDRs and, as a result, about 1.9 million SSI adults and children are now due or overdue for CDRs. Tables II.2 through II.4 present selected characteristics, including age, impairment, and length of time receiving benefits, for the SSI population who were due or overdue for CDRs in fiscal year 1996.
SSA administers the SSI program with the help of state agencies, called disability determination services (DDS). DDSs make disability determinations for SSA, process initial applications, assess recipients’ potential for medical improvement, and set due dates for and conduct CDRs. DDSs determine when recipients will be due for CDRs on the basis of their potential for medical improvement. On the basis of recipients’ impairments and ages, DDS officials classify individuals into one of three categories: medical improvement expected (MIE), medical improvement possible (MIP), or medical improvement not expected (MINE). Individuals are then scheduled for CDRs at 6- to 18-month intervals if classified as MIE, at least once every 3 years if classified as MIP, and once every 5 to 7 years if classified as MINE.
In recent years, given limited resources for conducting CDRs and the large backlog of 2.4 million DI CDRs due or overdue, SSA developed new processes in an effort to conduct CDRs in a more cost-effective manner. SSA developed a mailer CDR process to obtain self-reported information on current medical conditions, treatments received, and work activities as a low-cost alternative to full medical CDRs. The full medical CDR process is labor-intensive and generally involves (1) 1 of 1,300 SSA field offices that determines whether disabled recipients continue to meet the financial eligibility requirement regarding income and resources and (2) 1 of 54 state DDSs that determines whether recipients continue to be disabled, which frequently involves medical exams by at least one doctor. The average cost of a full medical CDR is about $1,000, while the average cost of the mailer CDR is between about $25 and $50.
In addition, on the basis of the outcomes of previously conducted CDRs on DI beneficiaries, SSA developed statistical formulas to estimate the likelihood of benefit termination as a result of CDRs using recipient characteristics, such as age, impairment, length of time on disability rolls, and previous CDR activity. SSA sends mailer CDRs to a portion of individuals who it estimates, on the basis of its formulas, have the lowest likelihood of benefit termination. Cases selected for mailer CDRs are later sent to DDSs for full medical CDRs only if responses to the mail questionnaire and information used in the formulas to estimate the likelihood of benefit termination warrant a more comprehensive review.
section_title: SSA Plans to Conduct Required SSI CDRs and Test the Use of the Mailer CDR
paragraphs: For fiscal year 1996, SSA planned to conduct full medical CDRs for the legally required SSI CDRs and to test the mailer CDR process on over 100,000 additional SSI recipients. Table 1 presents, for fiscal year 1996, the number of CDRs SSA specified in planning documents and the number SSA had initiated and DDSs had completed as of June 1996. As of June, DDSs had completed about 60 percent of the required reviews in each category.
SSA is currently modifying its CDR plan for fiscal years 1997 through 2002, which were developed before the enactment of new SSI CDR requirements under the Personal Responsibility and Work Opportunity Reconciliation Act of 1996. Under the new requirements, SSA must conduct at least 150,000 SSI CDRs in each of fiscal years 1997 and 1998, which includes disability eligibility redeterminations on 18-year-olds. Prior to the new requirements, SSA’s CDR plan specified more SSI CDRs in fiscal year 1997, but fewer than 150,000 SSI CDRs in fiscal year 1998. Estimates of the minimum number of SSI CDRs that will be required in later years were not available at the time our fieldwork was completed. However, SSA’s plan called for dramatic increases in the number of SSI CDRs in fiscal years 1999 through 2002, ranging from 367,000 to 625,000 per year.
section_title: Resources Appear Sufficient for Required SSI CDRs, but Competing Priorities Pose Challenges
paragraphs: SSA plans to use CDR funds to conduct the legally required SSI CDRs and disability eligibility redeterminations in fiscal years 1996 through 2002. In fiscal year 1996, SSA for the first time set aside regular administrative funds for CDRs, and the Congress took steps to increase funding for CDRs. SSA set aside $200 million for both SSI and DI CDRs and plans to continue that level of funding at least through fiscal year 2002. In addition, the Contract With America Advancement Act of 1996 established a new funding mechanismfor CDRs and authorized up to an additional $2.7 billion for SSI and DI CDRs through fiscal year 2002. This was about $1 billion less than the amount SSA had requested from the Congress and believed would be sufficient, along with regular administrative funds, to conduct CDRs on all SSI recipients who were due or overdue for review and all required DI CDRs through fiscal year 2002. The 1996 amendments to the Social Security Act subsequently authorized an additional $250 million for SSI CDRs and disability eligibility redeterminations in fiscal years 1997 and 1998. Combined, regular administrative funding for CDRs and the new budget authority could total over $4 billion in fiscal years 1996 through 2002.
Competing priorities, such as conducting legally required DI CDRs, which include an enormous backlog of reviews, may pose challenges to conducting all required SSI CDRs in fiscal years 1997 through 2002. Furthermore, the same DDS staff who conduct SSI CDRs also conduct DI CDRs and process initial applications and other reviews of disability eligibility required by law. Although SSA has estimated that funds are sufficient to conduct all required SSI and DI CDRs in fiscal years 1996 through 2002, in our companion reports we question whether CDR funds are sufficient to meet those CDR goals. To the extent that CDR funds are not sufficient to conduct all required SSI and DI reviews, SSI CDRs may be scaled back, since SSA generally considers them to be less cost-effective than DI CDRs. Only SSI CDRs were scaled back when SSA received less CDR funding for fiscal years 1996 through 2002 than it had requested from the Congress.
Also, according to SSA, the ability to conduct CDRs is always vulnerable to unexpected increases in initial applications and disability eligibility redeterminations. In fact, both of the 1996 laws require work in these areas that may compete with CDRs for DDS staff. First, SSA currently estimates that, because the Contract With America Advancement Act eliminated drug and alcohol abuse as a basis for receiving disability benefits, benefits will be terminated for some of the 196,000 SSI recipients and DI beneficiaries whose primary impairments were drug abuse and/or alcoholism. SSA expects many of those terminated to reapply on the basis of other impairments. Second, in fiscal years 1997 and 1998, the 1996 amendments to the Social Security Act require SSA to redetermine the disability eligibility of between 300,000 and 400,000 children currently receiving SSI benefits. Although these disability eligibility redeterminations can count toward the required 100,000 SSI CDRs in those years, the law gives them precedence over required CDRs on other children. SSA is currently evaluating the impact of this and other required work on its ability to conduct CDRs.
section_title: SSA Uses Different Approaches to Select Adult, Child, and 18-Year-Old Recipients for SSI CDRs
paragraphs: In fiscal year 1996, SSA only conducted SSI CDRs on a portion of recipients it considered to be cost-effective to review. In general, these included MIEs or MIPs, who make up about one-half of all SSI recipients due or overdue for CDRs. For SSI adult recipients, SSA selected from among those who were classified as MIE or MIP and under the age of 59 in that year. SSA’s 1996 fiscal year plan called for conducting about 100,000 full medical CDRs and 107,900 mailer CDRs of adult MIE and MIP SSI recipients. For children, SSA limited its selection to low-birth-weight babies, who totaled about 7,200. According to SSA, it did not select other children in anticipation of the requirement to conduct disability eligibility redeterminations on between 300,000 and 400,000 children receiving SSI. Among 18-year-old SSI recipients, SSA selected 18,000 MIE and MIP recipients, which is about one-third of SSI recipients attaining age 18.
For adult and 18-year-old recipients, SSA used different approaches to select recipients for CDRs. To select adult recipients, SSA used formulas developed for DI beneficiaries to estimate the likelihood of benefits being terminated as a result of a CDR. As is currently done under the DI program, SSA then selected a portion of those with the highest and lowest estimated likelihood of benefit termination for full medical and mailer CDRs, respectively. SSA did not select recipients in the middle range, which contains the majority of recipients included in the estimation process, because in this range, the formulas are less helpful in identifying recipients who are more likely to have their benefits terminated as a result of a CDR and, therefore, to warrant a full medical CDR. SSA has only developed formulas for use in selecting adult recipients. Among 18-year-old recipients, SSA selected a judgmental sample of those it believed would be most likely to have their benefits terminated as a result of a CDR based on some of the characteristics used to select adult cases for CDRs, such as impairment type and length of time receiving SSI.
SSA tested the validity of using the DI formulas to estimate the likelihood of benefit termination for adult SSI recipients in its 1995 study of SSI CDRs and its analysis of SSI and DI population characteristics. The SSI and DI programs are subject to the same eligibility requirements, and SSA’s 1995 study of 5,000 adult SSI CDRs found that the formulas differentiated between cases most and least likely to result in benefit terminations about equally well for both disability populations. Since relatively few SSI recipients have ever undergone a CDR, SSA did not use length of time since the last CDR and the number of previous CDRs, which are variables normally included in the DI formulas, when estimating the likelihood of benefit termination for SSI recipients.
In fiscal years 1997 and 1998, required disability eligibility redeterminations on children will count toward the requirement to conduct at least 100,000 SSI CDRs in each year. In addition, SSA will be required to conduct CDRs annually on (1) low-birth-weight babies and (2) other children under age 18 at least once every 3 years starting on the date of enactment of the 1996 amendments. In fiscal years 1997 and 1998, therefore, CDRs on children could dominate SSI CDRs. SSA plans to continue to develop and modify the formulas and SSI selection process as it learns more about conducting CDRs on this population. SSA’s current plans for broad CDR process improvements include expanding the use of the formulas to children and certain recipients classified as MINEs in order to select individuals for full medical and mailer CDRs from these recipient categories on the basis of their estimated likelihood of benefit termination. SSA also plans to (1) develop a new type of mailer CDR for gathering information on recipients’ medical conditions directly from their physicians and other treating sources and (2) obtain Medicaid data and integrate the data into the statistical formulas to increase the validity of the estimated likelihood of benefit termination. These latter improvements would allow SSA to better predict which recipients in the middle range of estimated likelihood of benefit termination are more likely to have their benefits terminated as a result of a CDR and, therefore, to warrant full medical CDRs. (We discuss these plans further in app. III.)
section_title: SSI CDRs Are Cost-Effective for Certain Categories of Recipients
paragraphs: Reviewing recipients’ disability status, especially those most likely to improve, is one component of a well-managed program. Few recipients voluntarily report medical improvement and leave the rolls. SSA currently estimates that CDRs will remove only about 5 percent of SSI recipients from the rolls in the long run. However, if the CDR process was not in place, recipients’ continuing disability eligibility would be uncertain and the number of ineligible recipients would likely increase over time. On the basis of SSA’s estimate that 5 percent of SSI recipients would have their benefits terminated as a result of CDRs, we estimate that about 95,000 of the approximately 1.9 million SSI recipients currently due or overdue for CDRs are no longer medically eligible for benefits. In fiscal year 1996 alone, these recipients would have received about $481 million in federal SSI benefits and about $418 million in federal and state Medicaid benefits.
SSI CDRs on some categories of recipients appear to be cost-effective. Benefit terminations result in SSI and Medicaid savings at both the federal and state levels (see app. IV for information on savings). SSA calculates cost-effectiveness for various recipient categories by comparing (1) the estimated present value of benefit savings due to benefit terminations resulting from CDRs on a category with (2) the estimated total costs of conducting CDRs for that category. Because SSA has little experience conducting SSI CDRs, SSA cautions that estimates of savings resulting from SSI terminations are somewhat tentative.
SSA estimates that CDRs on adults SSA has classified as MIE or MIP save about $3 in federal SSI and Medicaid benefits for every $1 spent conducting CDRs on those categories. State savings increase this ratio to $4 saved for every $1 spent. SSI CDRs on low-birth-weight babies are more cost-effective than CDRs on adults—saving about $14 in program benefits for every $1 spent conducting CDRs; however, these children constitute less than 1 percent of the SSI disabled population. SSA estimates that, in general, CDRs on recipients classified as MINE are not cost-effective, and, at best, break even.
section_title: Options Exist for Making CDRs More Cost-Effective and Using CDRs to Help Recipients Move Off Disability
paragraphs: Increased SSI CDR activity comes at a time when both the Congress and SSA have sought a CDR strategy that is more cost-effective. In the Contract With America Advancement Act, the Congress emphasized maximizing the combined savings from CDRs under the SSI and DI programs. SSA has been working to improve its ability to identify recipients for whom conducting CDRs is cost-effective.
Options exist for making SSI CDRs more cost-effective and helping SSA meet the challenge of conducting all required CDRs. In companion reports, we identified two options for improving the CDR process—one that could make CDRs more cost-effective and one that would strengthen return-to-work efforts. In addition to these options, to increase service to the public and more efficiently use resources, SSA is exploring coordinating CDRs with redeterminations of recipients’ financial eligibility.
subsections: section_title: Revising Requirements Can Improve CDRs’ Cost-Effectiveness
paragraphs: In our companion reports, one option we proposed for improving the CDR process was for SSA to adopt less rigid requirements for scheduling CDRs in order to shift the emphasis from periodic reviews to a system that is more cost-effective. The current system, in which periodic CDRs are scheduled for all SSI recipients, including those with virtually no potential for medical improvement, is a costly approach to identifying the approximately 5 percent of recipients who are likely to have improved to the point of being found ineligible for benefits. Furthermore, the frequency of CDRs is currently based on medical improvement classifications that do little to identify those most likely to have their benefits terminated as a result of a CDR. We found that the estimated likelihood of benefit termination was very similar for recipients classified as MIE and MIP. In addition, although millions of dollars are spent annually to conduct periodic CDRs, some individuals, especially DI beneficiaries for whom SSA is not conducting CDRs, have received benefits for years without having any contact with SSA regarding their disability or their ability to return to work despite continuing disability.
We recommended in these reports a three-pronged approach to increasing the cost-effectiveness of CDRs while maintaining program integrity. Specifically, we recommended that SSA replace the routine scheduling of CDRs with a new process that, if extended by the Congress to all recipients, would (1) be cost-effective by selecting for review individuals with the greatest potential for medical improvement and subsequent benefit termination, (2) correct a weakness in SSA’s current CDR process by reviewing a random sample of all other recipients, and (3) improve program integrity by instituting contact with those not selected for CDRs or financial eligibility redeterminations. As part of this effort, we also recommended that the Commissioner of Social Security develop a legislative package to obtain the authority the agency needs to enact this new process for those portions of the SSI and DI populations that are subject to routinely scheduled CDRs.
Less rigid requirements regarding the frequency of CDRs are necessary if CDRs are to be conducted primarily on those recipients whose cases are most cost-effective to review—that is, those recipients with the greatest potential for medical improvement. But to maintain program integrity, SSA must keep abreast of the potential for medical improvement of all recipients. Currently, SSA excludes MINE recipients and those aged 59 and older from the selection process altogether. We believe this weakness in the current process could be addressed by conducting CDRs on a random sample of recipients in these or other categories that SSA decides in the future are less cost-effective to review.
Instituting periodic contact with recipients who are not chosen for CDRs or financial eligibility redeterminations can help protect program integrity by reminding recipients that their medical conditions are being monitored and serving as a deterrent to abuse by those no longer medically eligible for benefits. More specifically, we believe that a new type of brief mailed contact would, at a minimum, allow SSA to contact a majority of recipients with overdue CDRs in the year it is implemented to remind them of their responsibility to report medical improvements. SSA could also use such contact to gather information to support ongoing or planned initiatives, such as SSA’s return-to-work initiatives or planned improvements to the CDR process.
Some SSA officials expressed concern about the cost of this new type of mailed contact with recipients. Although some administrative funds would be used for the contact that might have been used for CDRs or other activities, the contact should result in significant program savings because of the considerable number of recipients who, on the basis of SSA’s experience, can be expected to refuse repeatedly to provide the requested information and, as a result, have their benefits terminated after a prescribed due-process procedure is followed. On the basis of SSA’s experience with CDRs and financial eligibility redeterminations, we assume that about 1 percent of the SSI recipients who were contacted would have their benefits terminated for noncooperation. This benefit termination rate represents a onetime net federal savings of about $230 million from contacting SSI recipients due or overdue for CDRs in fiscal year 1996. (See app. II for a further discussion of estimated savings.)
section_title: SSA Could Better Utilize the CDR Process to Encourage Recipients to Work
paragraphs: Another option we proposed for improving the use of CDR-related resources was to support return-to-work efforts by better using the CDR process to assess recipients’ work potential, even if there is no medical improvement, and encouraging recipients to obtain vocational rehabilitation (VR) services. With medical advances and new technologies creating more opportunities for disabled people to work, some recipients who do not medically improve may nonetheless be able to engage in substantial gainful activity. In an April 1996 report, we recommended that the Commissioner of Social Security take immediate action to place greater priority on return to work, including designing a more effective means to identify and expand recipients’ work capacities and better implementing existing return-to-work mechanisms.
In our companion reports, we recommended that SSA use CDR contacts to identify recipients’ productive capacities, inform them about VR services, and encourage them to work. Currently, through contacts during the CDR process, SSA generally provides little support and assistance to help recipients become self-sufficient. When conducting full medical CDRs, SSA obtains information on VR services received since the initial application or last CDR. However, SSA and DDS staff are neither required nor instructed to assess recipients’ work potential, make recipients aware of rehabilitation services, or encourage them to seek VR services. SSA provides limited encouragement through mailer CDRs by asking respondents to indicate whether they are interested in rehabilitation or other services that could help them obtain work. Those respondents who indicate an interest and appear to be reasonable candidates for rehabilitation are to be referred to state VR agencies. However, on average, only about 8 percent of all SSI recipients and DI beneficiaries are referred for VR services.
section_title: SSA Is Exploring More Coordination Between CDRs and Financial Eligibility Redeterminations
paragraphs: SSA is exploring the potential for better coordinating SSI CDRs with redeterminations of recipients’ financial eligibility. Each year, SSA reviews the income, resources, and living arrangements of about 2 million SSI recipients to ensure that they still meet SSI’s financial eligibility requirements. Because staff involved in conducting CDRs and financial eligibility redeterminations either are located in the same place or are the same, SSA is hoping to expand coordination to conserve its resources and provide better service to the public. Currently, the only coordination that takes place is on the part of SSA’s field office staff, who are instructed when conducting a CDR to gather financial eligibility redetermination information if the recipient is also due for such a redetermination.
In exploring opportunities for coordination, SSA will have to resolve procedural issues that, in the past, served as obstacles to pursuing greater coordination. Over the past 10 years, interest in coordinating the two activities has been thwarted by (1) different schedules for conducting CDRs and financial eligibility redeterminations throughout the year and (2) the lack of compatible databases for SSA field office staff to determine who is scheduled for both CDRs and financial eligibility redeterminations. SSA believes that increased numbers of SSI CDRs and large demands on staff resources will serve as added incentives to overcoming these and other potential obstacles.
section_title: Conclusions
paragraphs: Congressional action in 1994 prompted an increase in SSI CDR activity that should help SSA identify and remove more ineligible recipients from the program. In 1996, the Congress further increased the number of required CDRs and disability eligibility redeterminations and also increased funding that SSA can use to conduct SSI CDRs in the future. However, SSA will likely face challenges from competing priorities for staff resources, including required DI CDRs.
Because of increases in the required number of SSI CDRs; the large backlog of required DI CDRs; and the Contract With America Advancement Act, which emphasizes cost-effectiveness, we identified in companion reports two options that could make the CDR process more cost-effective. We recommended that a more cost-effective approach for determining who receives CDRs may be to (1) review recipients with the greatest potential for medical improvement and subsequent benefit termination, (2) correct a weakness in SSA’s CDR process by reviewing a random sample of all other recipients, and (3) ensure program integrity by instituting contact with recipients not selected for CDRs or financial eligibility reviews. However, for this approach to be cost-effective, SSA needs to be able to accurately estimate the likelihood of benefit termination for all recipients, which it can now only do for portions of those recipients classified as MIE or MIP. Furthermore, using CDR contacts to assess recipients’ potential for and promote VR services and coordinating CDRs with financial eligibility redeterminations could increase the efficient use of CDR resources.
section_title: Agency Comments and Our Evaluation
paragraphs: In commenting on our draft report, SSA generally agreed with our conclusions regarding its progress in conducting SSI CDRs and stated that this report, along with the companion reports, provided valuable information that would be helpful to the agency in achieving its CDR goals in the future. The agency agreed that SSA should continually seek ways to maintain stewardship of the disability program in the most cost-effective manner and begin to consider which legislative changes, if any, will produce such a result. The agency also stated that it would (1) test using CDR contacts to assess recipients’ potential for and promote VR services and (2) continue to explore options for coordinating CDRs with financial eligibility redeterminations. We also received technical comments from SSA, which we incorporated where appropriate. SSA’s comments are reprinted in appendix V.
As agreed with your office, we will send copies of this report to the Commissioner of Social Security. We will also make copies available to others on request.
Please contact me at (202) 512-7215 if you or your staff have any questions about this report. Other GAO contacts and staff acknowledgments are listed in appendix VI.
section_title: Scope and Methodology
paragraphs: This appendix provides additional details concerning our methodology. This information includes the databases and sample used in analyzing characteristics of SSI recipients due or overdue for CDRs in fiscal year 1996. Also included is information on our estimates of (1) savings resulting from benefit terminations after CDRs and (2) onetime savings from our proposed new type of mailed contact. We used Supplemental Security Income Record Description (SSIRD) data as provided and did not evaluate the data’s accuracy. We did our work between September 1995 and August 1996 in accordance with generally accepted government auditing standards.
subsections: section_title: Database and Sample Used to Analyze Characteristics of SSI Recipients Due or Overdue for CDRs
paragraphs: To determine the number of SSI recipients currently due or overdue for CDRs, we used the SSA Office of Disability’s (OD) CDR database. This database contained records on all recipients SSA had determined were due or overdue for a CDR in fiscal year 1996. For purposes of our analyses, we took a random sample of 15 percent of those recipients stratified by whether the (1) recipient was an adult or a child and (2) DDSs had classified as medical improvement expected (MIE), possible (MIP), or not expected (MINE). We eliminated from our sample recipients whose CDR due dates were after fiscal year 1996 or who were over age 65. On the basis of our sample data, we estimated the size of the population with these exclusions. Table I.1 contains initial population and sample sizes and final sizes after adjustments.
For the final sample, we obtained information on characteristics from SSA’s SSIRD and OD’s CDR database. From the SSIRD, we obtained information on age, gender, race, impairment, length of time receiving benefits, and length of time overdue for a CDR. Because information obtained from OD did not always differentiate between adult MIE and MIP recipients, we used SSIRD data to classify adults into the two categories. From OD’s CDR database, we obtained information on (1) medical improvement classifications for all children and for adults classified as MINE and (2) estimates of the likelihood of benefit termination for adult MIE and MIP recipients, the only recipient categories for whom likelihood of benefit termination estimates were available.
Because we used a sample to estimate characteristics of the universe of recipients due or overdue for CDRs in fiscal year 1996, the reported estimates in tables II.2 through II.4 have sampling errors associated with them. Sampling error is variation that occurs by chance because a sample was used rather than the entire population. The size of the sampling error reflects the precision of the estimate—the smaller the sampling error, the more precise the estimate. In appendix II, the tables in which we report recipients’ characteristics contain sampling errors for reported estimates calculated at the 95-percent confidence level. This means that the chances are about 95 out of 100 that the range defined by the estimate, plus or minus the sampling error, contains the true percentage. With few exceptions, the sampling errors were less than 1 percentage point. This means that for most percentages, there is a 95-percent chance that the actual percentage falls within plus or minus 1 of the estimated percentage.
section_title: Estimates of Savings Resulting From Benefits Being Terminated After CDRs
paragraphs: We obtained information from a variety of sources to estimate the present value of savings to federal and state governments resulting from benefits being terminated after CDRs. The present value of savings is the current value, in constant 1996 dollars, of benefits that would have been paid over a recipient’s lifetime had benefits not been terminated. Appendix IV contains our estimates of the present value of savings resulting from SSI CDRs.
To calculate savings, we (1) obtained estimates of federal and state SSI and Medicaid savings and (2) calculated increased benefits that would be paid by other programs after SSI benefits had been terminated. From SSA, we obtained an estimate of the present value of federal SSI savings and a formula for estimating the present value of state SSI supplement savings. From the Health Care Financing Administration we obtained estimates of the present value of federal and state Medicaid savings.
To calculate offsetting costs from benefits paid by other programs, we used assumptions provided by the Congressional Budget Office regarding increased benefits under the Food Stamp and Aid to Families With Dependent Children (AFDC) programs that former SSI recipients would receive once they no longer qualified for SSI benefits. In calculating increases in Food Stamp program benefits, we assumed that (1) about 50 percent of SSI recipients terminated as a result of a CDR would be receiving food stamps and (2) without SSI benefits, which count as income when determining Food Stamp benefit levels, Food Stamp benefits would increase by about one-third of recipients’ former SSI benefit levels. In calculating offsetting AFDC costs, we assumed that about 50 percent of children who were terminated from the SSI program would be eligible for AFDC and that, on average, families’ AFDC benefits would increase by $70 per month, the marginal per-child AFDC cost.
section_title: Savings Estimate for Proposed Contact With Recipients Due or Overdue for CDRs
paragraphs: The new type of brief mailed contact proposed in the companion reports would result in program savings because we expect a considerable number of recipients to repeatedly refuse to provide requested information and, as a result, have their benefits terminated. As a condition of receiving benefits, recipients are required to respond to reasonable requests for information. When recipients do not respond, SSA first attempts to contact recipients to determine their reasons for nonresponse. If a recipient refuses to cooperate, SSA then follows procedures to ensure due process in terminating benefits.
In calculating savings, we estimated the (1) number of recipients who would be contacted and the percentage who would fail to cooperate, (2) savings per termination, and (3) cost per contact. Table I.2 presents these estimates and summarizes assumptions used in making the estimations. As the table shows, of the approximately 1.9 million recipients who are currently due or overdue for a CDR, we propose that SSA contact the approximately 1,121,000 recipients who we estimate would not be scheduled for either a CDR or a financial eligibility redetermination in that year. We estimated that the number of recipients scheduled for a CDR would be about 236,000 recipients, the number planned for fiscal year 1996. According to SSA, about one-third of SSI recipients receive financial eligibility redeterminations annually, and we estimated that about 552,200 disabled SSI recipients would be scheduled for such redeterminations in fiscal year 1996.
Estimated number of recipients terminated as a result of mailed contact Recipients due or overdue for CDR in FY 1996 Recipients not receiving a CDR or financial eligibility redetermination and who would receive mailed contact Recipients receiving mailed contact who would fail to cooperate (at a noncooperation rate of .01)
Food Stamp benefits increase that would offset savings Net savings per beneficiary terminated Estimated total savings to the federal government Total cost for initial mailed contact (at $25 per contact)
On the basis of SSA’s experience with mailer CDRs and financial eligibility redeterminations, about 1 percent of the recipients who received the mailed contact would have their benefits terminated for continual noncooperation. We estimated that the mailed contact would be responsible for only the first 5 years of savings resulting from terminating SSI recipients’ benefits because of failure to cooperate. We used 5 years for our period of savings because, given SSA’s system for scheduling financial eligibility redeterminations, all SSI recipients would have been contacted at least once within 5 years of the mailed contact. To estimate savings, we used SSA and Health Care Financing Administration estimates of the present value of SSI and Medicaid savings, respectively, that would be realized each year after benefits were terminated as a result of a CDR (see app. IV).
We assigned a cost for the initial mailed contact of $25, the lower range of SSA’s estimate for the cost of the current mailer CDR. Because this figure overestimates the costs of the scannable mailed contact, it provides a conservative estimate, including some administrative and developmental costs.
section_title: Additional Data on SSI CDRs
paragraphs: Largest sampling error in column at the 95-percent confidence level Average age (mean)
Average age (median)
Endocrine, nutritional, and metabolic diseases Disorders of blood and blood-forming organs (continued)
Mental disorders, excluding mental retardation Skin and subcutaneous tissue disorders Estimated likelihood of benefit termination Average likelihood (mean)
Average likelihood (median)
Number of years receiving benefits Average years (mean)
Average years (median) (continued)
Due over 10 years ago Average years (mean)
Average years (median)
SSA does not estimate the likelihood of benefit termination for children.
Largest sampling error in column at the 95-percent confidence level Average age (mean)
Average age (median)
Endocrine, nutritional, and metabolic diseases Disorders of blood and blood-forming organs Mental disorders, excluding mental retardation Skin and subcutaneous tissue disorders 0 (continued)
Estimated likelihood of benefit termination Average likelihood (mean)
Average likelihood (median)
Number of years receiving benefits Average years (mean)
Average years (median)
Due over 10 years ago Average years (mean)
Average years (median)
Includes 18-year-olds.
SSA does not estimate the likelihood of benefit termination for children.
subsections: section_title: Table II.4: Characteristics of Selected SSI Adults Due or Overdue for CDRs in FY 1996, by Estimated Likelihood of Benefit Termination, in Percentages
paragraphs: Largest sampling error in row at the 95-percent confidence level (continued)
Largest sampling error in row at the 95-percent confidence level (continued)
Data in this table include recipients 1 year older than the current cutoff SSA uses when selecting recipients for CDRs because SSA provided estimates of the likelihood of benefit termination for MIEs and MIPs aged 59 and under. SSA currently limits its CDR selection to recipients under 59. Furthermore, SSA does not estimate the likelihood of benefit termination for children or MINEs.
section_title: SSA Plans for CDR Process Improvements
paragraphs: SSA plans to expand and enhance its procedures for selecting SSI recipients and DI beneficiaries for CDRs and conducting the reviews. More specifically, SSA plans to (1) expand the use of formulas for estimating the likelihood of benefit termination to children and certain recipients classified as MINE and (2) obtain medical treatment information about recipients and integrate the data into the process for selecting recipients for CDRs.
SSA plans to expand the use of statistical formulas for estimating the likelihood of benefit termination to children and a portion of both the SSI recipients and DI beneficiaries classified as MINE. To develop the formulas to estimate the likelihood of benefit terminations for child SSI recipients, SSA plans to conduct reviews of children by selecting cases from across the range of impairments. According to SSA, this process expansion is not expected to begin until about fiscal year 1998 because of new legislation eliminating the individualized functional assessment (IFA) component of disability eligibility criteria for child recipients. An SSA official explained that the agency is close to validating the use of the formulas for MINEs and plans to begin conducting CDRs on this group in fiscal year 1997. Included in this process expansion will be MINEs who are classified as such because they are older rather than because of their impairment. SSA believes that these age-classified MINEs may be cost-effective to review because some of them may have improved medically to the extent that they are no longer disabled. At this time, SSA does not have any plans to include the MINEs who are classified as such because they are believed to have permanent disabilities.
SSA also plans to pursue two approaches for the collection of medical treatment information about recipients. First, SSA has plans to develop a new type of low-cost mailer CDR to be sent to recipients’ physicians and other treating sources. At this time, SSA only selects individuals for CDRs from among the groups with the highest and lowest estimated likelihood of benefit termination for full medical and mailer CDRs, respectively. SSA officials explained that they do not conduct CDRs on SSI recipients or DI beneficiaries with likelihood of benefit termination estimates in the middle range because they believe the formulas do not adequately distinguish between these individuals for purposes of determining who in this group should receive full medical CDRs. According to SSA, if it conducted mailer CDRs on the middle group, this would likely result in more beneficiaries being subsequently referred for full medical CDRs than would be cost-effective. Similarly, if it conducted full medical CDRs on the middle group, it would be using a higher-cost process than SSA believes is necessary for some in this group. SSA believes the new mailer CDR to physicians and other treating sources would provide information about medical conditions and treatments received that would help SSA to determine who in the middle group has a likelihood of benefit termination warranting a full medical CDR.
Second, SSA plans to obtain Medicaid data and integrate the data into the statistical formulas to increase the validity of the estimated likelihood of benefit termination. SSA expects that the additional information will also allow it to better identify the appropriateness of a mailer or full medical CDR for recipients with estimates of the likelihood of benefit termination in the middle range. Given that the majority of SSI recipients and DI beneficiaries for whom likelihood of benefit termination is estimated fall into the middle range of estimates, these CDR process enhancements are particularly critical to SSA’s ability to meet its CDR goals over the next 7 years.
section_title: Federal and State Savings Resulting From SSI CDRs
paragraphs: Our calculations of present value savings are based on estimates provided by SSA and the Health Care Financing Administration and assumptions provided by the Congressional Budget Office on offsetting Food Stamp and AFDC costs. For SSI CDRs, savings result from SSI and Medicaid benefits being terminated for recipients who no longer meet the program’s definition of disability. Table IV.1 contains the present value of federal savings per CDR termination. As the table indicates, the present value of savings to the federal government per CDR termination is, for adults, $42,000 and for children, $33,000. This means, for example, that for every adult for whom a CDR results in a termination, the federal government could expect to save, on average, $42,000 (in constant 1996 dollars) that it would have paid over the recipient’s lifetime had benefits not been terminated.
The savings for children are less than those for adults, primarily because, even after being terminated from the SSI program, a majority of children would continue to qualify for Medicaid benefits on the basis of their families’ economic status or their participation in AFDC. As the table shows, these estimates also take into account offsetting costs resulting from increases in AFDC and Food Stamp benefits that some former SSI recipients would receive once they no longer qualified for SSI.
Not applicable.
Because many states pay SSI state supplements and all states share in Medicaid, SSI CDRs also result in states realizing SSI and Medicaid savings.
Because benefit levels vary across states, the present value of savings also varies. Table IV.2 shows, for the five states with the largest total state supplement payments in fiscal year 1994, a range of over $10,000 in the present value of SSI supplement savings. States’ savings also vary because the size of their recipient populations differ. Table IV.2 shows the wide variation in potential state savings based on (1) the number of disabled individuals currently receiving state SSI supplements and due and overdue for CDRs and (2) SSA’s current estimates of a 5-percent benefit termination rate. The present value of state Medicaid savings would average about $11,100 for adults and $4,800 for children.
Fiscal year 1994 total supplements paid (in millions)
section_title: Comments From the Social Security Administration
section_title: GAO Contacts and Staff Acknowledgments
subsections: section_title: GAO Contacts
section_title: Staff Acknowledgments
paragraphs: In addition to those named above, the following persons made important contributions to this report: Chris C. Crissman, Assistant Director; Kerry Gail Dunn, Senior Evaluator; Julian M. Fogle, Senior Evaluator; Ann Lee, Senior Evaluator; Elizabeth A. Olivarez, Evaluator; Susan K. Riggio, Evaluator; and Ann T. Walker, Evaluator (Database Manager).
section_title: Related GAO Products
paragraphs: Social Security Disability: Alternatives Would Boost Cost-Effectiveness of Continuing Disability Reviews (GAO/HEHS-97-2, Oct. 16, 1996).
Social Security Disability: Improvements Needed to Continuing Disability Review Process (GAO/HEHS-97-1, Oct. 16, 1996).
Supplemental Security Income: Some Recipients Transfer Valuable Resources to Qualify for Benefits (GAO/HEHS-96-79, Apr. 30, 1996).
SSA Disability: Program Redesign Necessary to Encourage Return to Work (GAO/HEHS 96-62, Apr. 24, 1996).
PASS Program: SSA Work Incentives for Disabled Beneficiaries Poorly Managed (GAO/HEHS-96-51, Feb. 28, 1996).
SSA Rehabilitation Programs (GAO/HEHS-95-253R, Sept. 7, 1995).
Supplemental Security Income: Disability Program Vulnerable to Fraud When Middlemen Are Used (GAO/HEHS-95-116, Aug. 31, 1995).
Social Security Disability: Management Action and Program Redesign Needed to Address Long-Standing Problems (GAO/HEHS-95-233, Aug. 3, 1995).
Supplemental Security Income: Growth and Changes in Recipient Population Call for Reexamining Program (GAO/HEHS-95-137, July 7, 1995).
Disability Insurance: Broader Management Focus Needed to Better Control Caseload (GAO/T-HEHS-95-164, May 23, 1995).
Supplemental Security Income: Recipient Population Has Changed as Caseloads Have Burgeoned (GAO/T-HEHS-95-120, Mar. 27, 1995).
Social Security: Federal Disability Programs Face Major Issues (GAO/T-HEHS-95-97, Mar. 2, 1995).
Social Security: Rapid Rise in Children on SSI Disability Rolls Follows New Regulations (GAO/HEHS-94-225, Sept. 9, 1994).
Social Security: New Continuing Disability Review Process Could Be Enhanced (GAO/HEHS-94-118, June 27, 1994).
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