Disability Insurance: SSA Should Strengthen Its Efforts to Detect and Prevent Overpayments
Published: 2004-09-10T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: The Social Security Administration's (SSA) Disability Insurance (DI) program is one of the nation's largest cash assistance programs for disabled workers. In fiscal year 2003, the DI program provided about $70 billion in financial assistance to approximately 7.5 million disabled workers, their spouses, and dependent children. This program has grown in recent years and is poised to grow further as the baby boom generation ages. The Senate Committee on Finance asked GAO to (1) determine the amount of overpayments in the DI program, particularly those attributable to earnings or work activity, and (2) identify any vulnerabilities in SSA's processes and policies for verifying earnings that may contribute to work-related overpayments.
section_title: What GAO Found
paragraphs: Overpayment detections in the DI program increased from $772 million in fiscal year 1999 to about $990 million in 2003. The true extent of overpayments resulting from earnings that exceed agency guidelines is currently unknown. Based on available data from SSA, GAO found that about 31 percent of all DI overpayments are attributable to DI beneficiaries who worked and earned more than allowed. Moreover, GAO found that these overpayments contributed to mounting financial losses in the program. From 1999 to 2003, total overpayment debt increased from about $1.9 billion to nearly $3 billion. Three basic weaknesses impede SSA's ability to prevent and detect earnings-related overpayments. First, the agency lacks timely data on beneficiaries' earnings and work activity. Second, SSA uses inefficient processes to perform work continuing disability reviews (work CDRs). Third, the agency relies on potentially inaccurate management information to effectively monitor and oversee some parts of this workload. These weaknesses contributed to some work CDR cases GAO identified that were as much as 7 years old, resulting in potential and established overpayments as large as $105,000 per beneficiary. In addition, GAO found that SSA relies on potentially inaccurate management information to administer its work CDR workload. SSA is developing new automated systems that may potentially address some of these problems and could help the agency balance the important goals of encouraging individuals with disabilities return to work, while also ensuring program integrity. However, it is too early to determine how effective such systems will be.

section_title: Letter
paragraphs: The Social Security Administration’s (SSA) Disability Insurance (DI)  program is one of the nation’s largest cash assistance programs for  disabled workers. In fiscal year 2003, the DI program provided about $70  billion in financial assistance to approximately 7.5 million disabled  workers, their spouses, and dependent children. This program has grown  in recent years and is poised to grow further as the baby boom generation  ages. Given the concerns about the long-term solvency of the DI trust fund,  it is important for SSA to ensure that only truly eligible individuals receive  benefits.
SSA guidelines state that DI beneficiaries are permitted to earn up to $810  per month in calendar year 2004—a level of earnings referred to as  substantial gainful activity (SGA)—for a limited period of time without  losing eligibility for benefits. After completing a 9-month “trial work  period,” beneficiaries who earn more than SGA are generally ineligible for  future DI payments, and may be overpaid if SSA does not stop their  benefits in a timely manner. The potential of having to repay a large  overpayment may discourage some beneficiaries from continuing to work,  thus running contrary to SSA’s goal of helping such individuals become  self-sufficient. SSA conducts continuing disability reviews (CDR) of  beneficiaries’ earnings and work activity to determine whether a claimant  remains financially eligible for DI benefits. The agency refers to these  reviews as “work CDRs.” These reviews generally require SSA staff to  perform several steps to assess beneficiaries’ continuing eligibility for  benefits, including mailing notices to beneficiaries requesting information  about their work activity, contacting the beneficiaries’ employer(s) to  verify their monthly earnings, and assessing several variables that can  affect eligibility, including employer subsidies and work-related expenses.
Given the importance of verifying DI beneficiaries’ earnings to ensure they  receive the correct amount of benefits, the Senate Committee on Finance  asked us to (1) determine the amount of overpayments in the DI program,  particularly those attributable to earnings or work activity, and (2) identify  any vulnerabilities in SSA’s processes and policies for verifying earnings  that may contribute to work-related overpayments. To answer these  questions, we used an approach similar to the methodology in our prior  reviews of SSA’s Supplemental Security Income (SSI) program. In  particular, we reviewed DI performance data, prior reports by SSA and its  Office of Inspector General (OIG), external research studies, and our prior  reviews on the program. We analyzed DI payment data over a 5-year  period from 1999 to 2003 and examined between 5 and 7 work CDR cases  from each of the SSA field offices and program service centers we visited.  In addition, we randomly selected and reviewed 71 work CDR cases from  one of SSA’s program service centers to determine if they were processed  in accordance with program guidelines. Finally, we conducted in-depth  interviews with 230 management and line staff from SSA’s headquarters;  its regional offices in New York and San Francisco; 18 field offices in 6  states—California, Florida, Maryland, Massachusetts, New York, and  Virginia; and 3 out of 8 regional program service centers. During our  meetings, we (1) examined existing work CDR procedures; (2)  documented management and staff views on the effectiveness of SSA’s  work CDR processes for detecting and preventing earnings-related  overpayments; and (3) discussed potential improvements to existing  program processes, systems, and policies. We assessed the reliability of all  databases used in our review, and found them to be sufficiently reliable for  the purposes of this report. See appendix I for details on the scope and  methodology of our review. We performed our work from September 2003  through June 2004 in accordance with generally accepted government  auditing standards.
subsections: section_title: Background
paragraphs: The DI program was established in 1956 to provide monthly cash benefits  to individuals who were unable to work because of severe long-term  disability. In fiscal year 2003, SSA paid about $70 billion to 7.5 million  disabled workers, their spouses, and dependents, with average monthly  cash benefits of about $723 per beneficiary. To be eligible for benefits,  individuals with disabilities must have a specified number of recent work  credits under Social Security when they first became disabled. Individuals  may also be able to qualify based on the work record of a deceased,  retired, or disabled parent, or a deceased spouse. Benefits are financed by  payroll taxes paid into the Federal Disability Insurance Trust Fund by  covered workers and their employers, based on the worker’s earnings  history. To meet the definition of disability under the DI program, 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 engaged in SGA if they have earnings  above $810 per month in calendar year 2004. Program guidelines require  DI beneficiaries to report their earnings to SSA in a timely manner in order  to ensure that they remain eligible for benefits.
SSA conducts work issue CDRs to determine if beneficiaries are working  above the SGA level. SSA initiates a work CDR only after the beneficiary  has completed a 9-month trial work period, during which the beneficiary is  allowed to earn more than the SGA level without affecting their eligibility  for benefits. The trial work period is one of several provisions in the DI  program intended to encourage beneficiaries to return to work. The trial  work period begins with the first month a beneficiary is eligible for DI  benefits. Once the trial work period is completed, beneficiaries are  generally ineligible for future DI benefits unless their earnings fall below  the SGA level.
Work CDRs are triggered by several types of events, although most are  generated by SSA’s Continuing Disability Review Enforcement Operation  (enforcement operation). This process involves periodic computer  matches between SSA’s administrative data and IRS wage data. The  enforcement operation generates notices for cases that exceed specified  earnings thresholds, which are forwarded to 1 of 8 program service  centers for additional examination. The cases at each program service  center are then temporarily housed in a central repository (called the  computer output section) and are released to “earnings reviewers” for  development of work activities. Cases are generally released for  development on a first-in-first-out basis, based on how long they have been  in the central repository, and according to staff workloads. After initial  review, cases for which individuals may require cessation of benefits are  generally forwarded to a “disability processing specialist” for additional  development.
Work CDRs can also be triggered by other events. For example, SSA  requires beneficiaries to undergo periodic medical examinations to assess  whether they continue to be physically disabled. During such reviews,  Disability Determination Service staff sometimes discover evidence that  indicates the beneficiary may be working and usually forwards the case to  an SSA field office or program service center for earnings/work  development. Additional events that may trigger a work CDR include  reports from state vocational rehabilitation agencies, other federal  agencies, and anonymous tips. Finally, DI beneficiaries may voluntarily  report their earnings to SSA by visiting an SSA field office, or calling the  agency’s toll free “800” number.
Several SSA components are involved in processing work CDRs. While  most are initially sent to SSA’s program service centers as a result of the  enforcement operation, some cases are referred to any one of SSA’s more  than 1,300 field offices for more in-depth development. Field offices also  tend to be the focal points for work CDRs generated by events other than  the enforcement operation. Work CDRs can entail labor-intensive, time- consuming procedures such as reviewing folders, performing in-person  interviews, and contacting beneficiaries and their employers to verify their  monthly earnings. Staff are also required to take into consideration several  complex work incentive provisions when calculating whether earnings  exceed SGA. In addition, staff—particularly in SSA field offices—are also  required to balance numerous competing workloads, including processing  initial claims, serving individuals who walk into the field office without an  appointment, meeting with beneficiaries who have requested an  appointment, and processing a “special disability workload.”
section_title: Overpayments in the DI Program Are Substantial and Have Increased in Recent Years
paragraphs: DI overpayment detections increased from about $772 million to about  $990 million between fiscal years 1999 and 2003. These overpayments  included a substantial amount due to beneficiaries who worked and  earned more than SGA. Our analysis of available overpayment data shows  that, on average, beneficiaries with earnings over program guidelines  constitute about 31 percent of all DI overpayments. These overpayments  also contributed to mounting financial losses in the DI program. Total  overpayment debt increased from about $1.9 billion to nearly $3 billion  from fiscal years 1999 to 2003. SSA overpayment collections increased  from about $269 million to about $431 million during the same period.  However, our analysis shows that waivers and write-offs also increased  during this period.
subsections: section_title: Overpayments Due to Beneficiary Earnings above SGA May Be More Prevalent than SSA Currently Detects
paragraphs: Total DI overpayment detections increased from about $772 million to  about $990 million between fiscal year 1999 to 2003 (see fig. 1) including a  substantial proportion due to beneficiary earnings. On the basis of data in  a recent study from SSA, we calculated that overpayments attributable to  work and earnings averaged about 31 percent of all DI overpayments  annually between 1999 and 2002. We consulted SSA officials about our  calculations to determine if they were accurate. These officials agreed that  the estimate is generally accurate based on limited available data, but  likely understates the true extent of the problem. In particular, SSA  officials acknowledged that their study only examined beneficiaries who  had their benefits suspended or terminated following a work CDR; it did  not consider individuals who may have been overpaid but continued to  receive benefits. A beneficiary may be overpaid, but not placed in  suspended or terminated status because (1) SSA waived the overpayment,  (2) the case was still being processed, or (3) the individual became  unemployed and returned to the DI rolls. Our review identified several  such cases in numerous field offices. For example, one case we examined  involved a beneficiary who was selected for review by the enforcement  operation every year from 1998 to 2001. Other than notations on the  individual’s account that the case was selected for review, there was no  evidence that a work CDR was ever conducted. In February 2003, program  service center staff transferred the case to a field office to have the  recipient’s earnings reviewed. However, field office staff were unable to  contact the recipient and the case was transferred back to the program  service center in August 2003. As of March 2004, the case was still being  reviewed and waiting final SSA action. SSA officials told us that this  individual should have had an overpayment listed for the time between  December 1999 and September 2001. However, at the time of our review,  no overpayment had yet been established and, therefore did not appear in  SSA’s overpayment detection data for those years. Ultimately, we estimate  that this case will likely result in a $64,000 overpayment once it is fully  developed and completed.
section_title: Although SSA Has Improved Its Collection Efforts, Financial Losses Are Mounting
paragraphs: The increase in DI overpayments from 1999 to 2003 has contributed to  mounting financial losses in the program. Total DI overpayment debt  increased from about $1.9 billion in 1999 to nearly $3 billion in 2003.  During this same period, SSA’s overpayment collections increased from  about $269 million to about $431 million. Agency officials attributed the  increase in collections in part to new initiatives they have made use of. For  example, SSA has conducted debt management workshops to (1) develop  new ideas on collecting the agency’s mounting outstanding debt and (2)  identify and prioritize debt that the agency should concentrate on  collecting. In addition, SSA is in the process of developing new collection  tools, such as wage garnishment to recoup overpayments, and has  published final regulations to implement this tool. However, these  improvements notwithstanding, the total overpayment debt is increasing.  (See fig. 2.)
Increases in waivers and write-offs during this period have also  contributed, in part, to the DI program’s growing overpayment debt. SSA  must waive collection of an overpayment if SSA determines that the  beneficiary was not at fault in causing the overpayment and either the  beneficiary would be financially unable to repay the overpayment or  recovery would be against equity and good conscience. The agency may  also write-off overpayments for various reasons, including when the  agency is unable to locate an individual for a prolonged period of time.  Waivers and write-offs increased from about $222 million in 1999 to about  $325 million in 2003.  The increase in waivers and write-offs is attributable,  in part, to increases in total program outlays during this period.  Ultimately, our review suggests that overpayments not only contribute to  increasing overpayment debt, but also may be a disincentive for  individuals with disabilities to return to work. In particular, the potential  of having to repay a large overpayment may discourage some beneficiaries  from continuing to work, thus running contrary to SSA’s goal of helping  such individuals become self-sufficient.
section_title: Lack of Timely Data on Beneficiary Earnings and Other Vulnerabilities Impede SSA’s Ability to Detect and Prevent DI Overpayments
paragraphs: SSA’s ability to detect and prevent earnings-related overpayments is  hindered by a lack of timely wage data, inefficient processes for  conducting work CDRs, and potentially inaccurate management  information. First, the earnings data produced by the enforcement  operation are typically 12-18 months old when SSA first receives it, thus  making some overpayments inevitable. Second, SSA lacks the means to  systematically screen and identify beneficiaries most likely to incur large  overpayments. Moreover, even if such a screen existed, SSA currently  lacks an automated alert mechanism for notifying its field office and  program service center staff about such cases. Third, SSA relies on  management information data that may not accurately reflect the age of  work CDR cases—the time it actually takes to review and complete them.  Inaccurate management data can impede the agency’s ability to effectively  monitor program activities and make corrections, when necessary. These  weaknesses may contribute to some cases becoming old and resulting in  large overpayments. We identified several cases in which as much as  7 years had passed between the point at which the case was initially  selected for development and the time it was completed.
subsections: section_title: SSA Lacks Timely Data to Detect Overpayments
paragraphs: SSA currently relies on outdated information to verify DI beneficiaries’  eligibility for benefits. The agency conducts periodic matches between its  earnings records and IRS wage data to determine if beneficiaries have  earnings above the SGA level. The Continuing Disability Review  Enforcement Operation (enforcement operation) is generally conducted  three times annually—a principal match in May, and two supplemental  matches in August, and February of the following year. According to some  SSA officials, earnings data from the enforcement operation are generally  about 12-18 months old by the time the cases are selected for review and  arrive in the program service center. SSA officials told us that the age of  the earnings data impedes the agency’s ability to effectively detect  potential overpayments in a timely manner. Moreover, because a  substantial proportion of all work CDRs in any given year are generated by  these enforcement matches, a large proportion of this workload is  dependent on outdated earnings information. Thus, some cases with  potentially large overpayments may not be detected for extended periods  of time.
SSA lacks access to more timely sources of wage data for verifying DI  beneficiaries’ earnings, such as the Office of Child Support Enforcement’s  National Directory of New Hires (NDNH). This database contains quarterly  state wage and new hires data that could be used to help evaluate  beneficiaries’ continuing eligibility for benefits more quickly than the  enforcement operation. While SSA currently uses this database to  periodically monitor the earnings of SSI recipients, it lacks similar  authority for the DI program. In particular, SSA currently lacks the  authority to conduct “batch file” computer matches with the NDNH—- similar to the types of matches it routinely uses to verify SSI recipients’  continuing eligibility for benefits. Although the agency recently obtained  “online access” to the NDNH for the DI program, this type of access only  allows SSA to obtain wage data on case-by-case basis; it does not permit  the agency to systematically match all DI beneficiaries against the NDNH  to identify those with high levels of earnings—a potentially valuable, cost- effective means of identifying beneficiaries who may be at risk for large  overpayments.
section_title: SSA Lacks an Effective Screening Mechanism to Identify Cases Most Likely to Incur Large Overpayments
paragraphs: The agency lacks the means to identify beneficiaries who are most likely  to incur large overpayments. SSA currently uses the enforcement  operation to select individuals with more than $4,860 in annual earnings  for a work CDR. While periodic computer matches with the NDNH would  help provide more timely, comprehensive earnings data to SSA, some SSA  officials told us that the agency would still need the ability to  systematically screen the cases to identify those at high-risk for large  overpayments. The agency currently uses a screen for its medical CDR  reviews, which helps the agency identify beneficiaries who are most (or  least) likely to have medically improved. This screen helps SSA prioritize  the use of limited staff resources by scheduling beneficiaries who are  identified as least likely to improve for less frequent medical CDRs, and  using forms that are periodically mailed to them requesting information on  their medical condition. While our prior work has identified some  problems with this screening mechanism, in general SSA believes that, in  many instances, it helps the agency mitigate the need for costly, time- consuming medical examinations that may not be necessary. However, the  agency does not currently have a similar tool for its work CDRs to identify  beneficiaries with high levels of earnings or other characteristics that may  contribute to large overpayments.
One program service center we visited is considering the use of a screen  that would give higher priority to developing cases for beneficiaries with  higher earnings, and thus the potential for larger overpayments. Some  SSA officials we interviewed told us that such a screen would help the  agency prioritize this workload and make better use of limited resources,  particularly in field offices where staff are often constrained by several  competing workloads, such as processing initial claims. Further, one  official in this program service center told us some of the other program  centers were considering implementing this screen.
Even if a screen existed that would allow SSA to identify cases with the  greatest potential for large overpayments, the agency still lacks a timely  alert mechanism to notify field offices and program service centers about  such cases. According to some SSA officials, such a mechanism, if  created, could allow the agency to quickly notify field offices and program  service centers about cases that have been identified as high-priority for  work CDRs. SSA currently uses an alert mechanism in its SSI program to  rapidly notify field offices about recipients with high levels of earnings or  other factors that may affect their eligibility for benefits. These alerts are  generated centrally from SSA’s match with the NDNH and sent  electronically to field office staff, telling them which recipients should  have their cases reviewed. However, a similar alert system does not  currently exist in the DI program. Instead, SSA field offices rely on daily  workload management listings of potential work CDR cases that are  relayed via existing agency systems. These lists summarize the cases that  are awaiting review, including the “age” of the case. On the basis of such  lists obtained from several field offices, we found that half of the cases  were at least 117 days old. Moreover, cases that were transferred from  program service centers were generally older—some were listed as being  999 days old. In addition, because the data field for measuring the age of  cases on the workload management lists only holds a maximum of 3  characters, SSA officials told us that these cases were likely older than  indicated on the lists. In addition, we found that these lists do not allow  managers to identify cases with the greatest potential for overpayments.  As a result, staff generally review cases as they are released by managers  to be developed. While some managers and staff we interviewed told us  that they make a concerted effort to review the oldest cases first, others  told us that they generally process the cases on a “first-in-first-out” basis,  which is not necessarily related to the age of the case.
section_title: Weaknesses in SSA’s Management Information Hinder Its Ability to Effectively Monitor Work CDR’s
paragraphs: Our review suggests that SSA relies on potentially inaccurate data to  manage its work CDR workload. In particular, our work shows that high- level management information data on the age of work CDR cases may not  accurately reflect the true age of cases (i.e. the actual time it took to  complete these cases) and may result in cases being counted more than  once, thus distorting the information that SSA relies on to measure the  number of cases that are reviewed and completed. To test the accuracy of  high-level management data for this workload, we conducted an in-depth  examination of 71 randomly selected cases that were “cleared” from  SSA’s Processing Center Action Control System (the system) during a 1- week period in April 2004. On the basis of our sample we estimate that,  overall, 49 percent of these cases were improperly cleared from this  system. This means that the cases were listed as having been fully  reviewed and completed, when in fact they still required additional  development. Improperly cleared cases can have several negative impacts  according to SSA officials, including the potential for contributing to large  overpayments. For example, on the basis of our sample, we estimate that  13 percent of the cases were improperly cleared from the system because  they were not fully developed and did not have a “diary” attached to  them—an automated notice that reminds staff to review the case after a  specified period of time. Such cases might not be selected for review again  until the next enforcement match—which could be as much as 1 year— and result in overpayments if the beneficiary had earnings that exceeded  the SGA level. Most importantly, because they did not have a diary, SSA  did not have any way of monitoring these cases or ensuring that they were  properly completed. This weakness may partially explain the type of old  cases with large overpayments we identified in several SSA field offices.
In addition to the cases without any diary, an estimated 37 percent of the  cases were incorrectly shown as cleared while still being developed in  various locations such as field offices. Although these cases had a diary— thus giving SSA some level of internal control over them—our analysis  shows they could still result in management information that does not  show the true age of work CDR cases. More specifically, these types of  cases would likely result in management information that understates the  true age of such cases, and would distort the overall measurement of  progress in handling work CDR workloads. Such cases could also result in  the double counting of work CDRs. For example, if a single case was  cleared in the program center and subsequently developed and cleared in a  field office, it could be incorrectly listed as two separate work CDRs. SSA  officials also acknowledged that some of the cases we reviewed which  showed indications of being cleared multiple times could result in their  being counted as numerous separate work CDRs. Thus, existing high-level  management data may not accurately capture how many work CDRs have  actually been completed.
We also found that SSA does not currently have the capability to track the  disposition of work CDR cases. For example, the agency is unable to  systematically track how many work CDR cases involve overpayments.  Because it lacks sufficient management information data on this workload,  the agency also does not have performance goals for work CDRs similar to  measures it maintains for its medical CDR workloads, such as the number  of work CDRs that should be completed each year. Moreover, given the  problems we identified with potential double or multiple counting of work  CDR cases, it is unclear whether SSA could establish meaningful  performance goals at this time.
section_title: Identified Vulnerabilities Contribute to Some Large Overpayments
paragraphs: The vulnerabilities we identified have likely contributed to old work CDR  cases and large earnings-related overpayments in the DI program. We  identified several examples of cases that took years to develop and  complete. Some of these cases were as much as 7 years old and involved  large overpayments. The following are examples of some of these cases:    One case we observed was initially selected for review in 1997 by the  enforcement operation. Although the recipient’s benefits should have  been discontinued in 1997 according to SSA officials, payments  continued until March 2000. Agency officials could not explain why no  action was taken on this case between 1997 and 2000. As a result, this  beneficiary incurred a $28,000 overpayment.
Another case was selected for review each year from 1997 to 2001 by  the enforcement operation. However, there was no evidence in the file  that a work CDR was conducted until February 2004, and SSA officials  were unable to explain why no action was taken after several  consecutive enforcement matches. This beneficiary incurred an  estimated $105,000 overpayment between April 1997 and  December 2003.
Another case involved a beneficiary who had earnings well above SGA  in 1998 when they first became eligible for DI benefits. However, the  case only arrived in the field office for action in March 2003. SSA  discontinued the recipient’s benefits in 2003, but SSA officials could  not explain why the case took 5 years to arrive at the field office for  action. As a result, the recipient incurred a $32,000 overpayment.
An additional case we identified involved a beneficiary with earnings  well above SGA for several years and who incurred a prior earnings- related overpayment. SSA subsequently waived the overpayment.  However, the recipient continued to work without reporting the  earnings to SSA. The agency eventually discontinued the individual’s  benefits in September 2003. At the time of our review, SSA officials  estimated that the beneficiary had incurred a $102,000 overpayment.
Further compounding the vulnerabilities that contribute to aged cases and  large overpayments, our review suggests that SSA has difficulty balancing  competing workloads. In particular, SSA field office staff are required to  perform numerous duties, including processing initial claims, serving  individuals who walk into the field office without an appointment, meeting  with beneficiaries who have requested an appointment, and processing the  “special disability workload.” Many managers and staff we interviewed  told us that work CDRs generally receive lower priority than some of these  other activities, such as processing initial claims. In several offices we  visited, we observed lists of pending work CDRs, sometimes stored in file  cabinets for extended periods of time.
SSA is currently implementing a new automated system that may address  some of the vulnerabilities we identified. This system, called “eWork,” is  intended to simplify how SSA manages and processes its disability cases.  In particular, according to documentation provided by SSA, this system  will establish program controls for all work CDR cases and help the  agency identify higher priority cases. Once fully implemented, eWork will  combine data from several different SSA databases and will automate the  processing of numerous forms commonly used in developing and  documenting disability cases, according to SSA. One field office we visited  was piloting this system. Management and staff in this office generally  reported that the system was an improvement over existing systems. In  particular, officials reported that the system was useful in helping them  track the age of work CDR cases, especially older cases that should  potentially receive higher priority. Overall, SSA management and line staff  expressed confidence that this new system will improve the agency’s  ability manage its disability cases, including work CDRs. However,  because the system is new and is not yet fully implemented nationwide,  we were unable to evaluate how effective it may be for addressing some of  the weaknesses we identified.
section_title: Conclusions
paragraphs: We recognize that ensuring program integrity while focusing on the  important goal of returning individuals with disabilities to work presents  challenges for SSA. However, the weaknesses we identified in SSA’s  existing work CDR processes continue to expose the program to  overpayments and abuse. In particular, SSA’s reliance on outdated  earnings information has contributed to overpayments and forced staff to  investigate cases that are old and thus difficult and time-consuming to  process. Without the ability to conduct batch file computer matches with  the National Directory of New Hires, the agency will remain vulnerable to  large earnings-related overpayments. Similarly, the lack of a screen to  systematically identify beneficiaries more likely to incur overpayments  means that SSA cannot target cases that should receive higher priority.  Even if such a screen existed, SSA would not be able to make the best use  of it given the lack of an automated alert system to notify field offices and  program service centers about which cases should be reviewed. Moreover,  without accurate, reliable management data on the age and status of work  CDR cases, SSA will find it difficult to effectively monitor this workload,  identify areas that require continued improvement, and develop  meaningful work performance measures.
In an environment of limited budgetary and staff resources, federal  agencies such as SSA will be required to take a more strategic approach to  servicing ever-increasing workloads. The magnitude of earnings-related  overpayments indicates that SSA should take additional steps to  strengthen DI program integrity. Moreover, the potential of having to repay  a large overpayment may discourage some beneficiaries from continuing  to work, thus working contrary to SSA’s goal of helping individuals  become self-sufficient. Ultimately, without a concerted effort to increase  management focus on this key workload and to reengineer existing  processes, SSA’s ability to ensure that trust fund dollars are protected and  reserved for those who are truly eligible will continue to be compromised.  The new automated system that SSA is developing may help the agency  address some of the weaknesses we identified, but it is too early to  determine how effective it will be. A conscious management decision to  use this system to improve DI program integrity in conjunction with more  accurate management information will be required to help detect and  prevent large overpayments.
section_title: Recommendations
paragraphs: To enhance SSA’s ability to detect and prevent overpayments in the DI  program, we recommend that the Commissioner of Social Security take  the following actions to improve the agency’s work CDR processes:  1.  Initiate action to develop a data sharing agreement with the Office of  Child Support Enforcement to conduct batch-file periodic computer  matches with the National Directory of New Hires (NDNH). Such  matches would provide SSA with more timely data to help the agency  systematically identify DI beneficiaries who are most likely to incur  overpayments. Such a tool could also allow SSA to perform a one-time,  comprehensive match against all DI beneficiary records to identify  individuals who may be overpaid but have not yet been detected.  2.  Consider developing an enhanced screening mechanism that would  enable the agency to more effectively identify DI beneficiaries who are  most likely to incur earnings-related overpayments. This would help  the agency make more efficient use of limited staff and budgetary  resources.  3.  Study the potential for creating an alert system similar to that used in  the SSI program for alerting field offices about recipients at high risk  for earnings-related overpayments. Such a system would allow SSA to  notify field offices and program service centers about beneficiaries the  agency identifies as most likely to incur large overpayments.  4.  Consider ways to improve the accuracy and usefulness of existing  management information data. Improvements may include modifying  how the agency measures the age of work CDR cases to more  accurately reflect how long they are in process.  5.  Once the eWork system is fully implemented, SSA should consider  how it could be used to help the agency create performance goals for  its work CDR workload.
section_title: Agency Comments and Our Evaluation
paragraphs: We provided a draft of this report to SSA for review and comment.  SSA  agreed with our recommendations and, in some instances, outlined initial  plans for their implementation.
SSA agreed with our first recommendation to develop a data-sharing  agreement with the Office of Child Support Enforcement to conduct  batch-file computer matches with the NDNH. The agency noted that it  pursued online access to the NDNH first because it was more cost  effective and expeditious. The agency also indicated that it is developing a  new computer matching agreement that supports SSA’s use of the NDNH  in the DI program for purposes of identifying potential overpayments.  We  encourage SSA to ensure that any new agreement will provide for  periodic, batch-file matches to verify beneficiaries’ earnings at regular,  specified intervals.
SSA also agreed with our second recommendation to consider developing  an enhanced screening mechanism to help the agency more effectively  identify DI beneficiaries most likely to incur earnings-related  overpayments.  In particular, SSA agreed that it should pursue a screening  system similar to that currently used for medical CDRs to determine if  there is an increased likelihood of earnings-related overpayments based on  particular diagnosis codes.  It also noted that it should study ways to  improve the effectiveness of existing systems (such as the Continuing  Disability Review Enforcement Operation and the Disability Control File)  to help the agency focus on beneficiaries with the greatest potential for  overpayments. We agree that these are positive steps and that the agency  should consider how improvements to such systems might be  incorporated to emerging systems such as “eWork”.
With respect to our third recommendation that SSA develop an alert  system similar to that currently used in the SSI program for alerting staff  to cases at risk for earnings-related overpayments, SSA agreed and noted  that an alert system such as the “S2” alert used for SSI wage discrepancies  could provide a useful model. The agency noted that such an alert could  reduce the amount of time in which a claimant would continue to receive  payments while work development is initiated. Moreover, since these  reports include the employer’s name, address, and a quarterly breakdown  of the beneficiary’s earnings, this detailed information would provide SSA  staff with more specific information than is currently available.  SSA also  said that an alert system could also be generated from the NDNH match  proposed in our first recommendation. We agree that an alert system  would help identify potential overpayments more quickly, particularly if it  were generated from data produced by periodic computer matches with  the NDNH.
SSA agreed with our fourth recommendation to improve the accuracy and  usefulness of existing management information data.  SSA said that it is  working on a plan to unify the manner in which it identifies and counts  work and medical CDRs. The agency believes that it will be able to more  accurately capture workload counts and employee time consistently,  regardless of where the work is performed. While we agree that efforts to  improve existing processes and systems are necessary, it is too early to  determine if the proposed modifications will address the problems we  identified with high level management information, such as potential  double-counting of work CDRs.
SSA also agreed with our fifth recommendation to consider how it could  use the eWork system to create performance goals for work CDRs once it  is fully implemented. The agency commented that such a measure would  give field offices and program service centers a better indication of what is  expected of them regarding processing this workload and would help  them balance the time needed to process competing workloads.
SSA’s formal comments appear in appendix II. SSA also provided  additional technical comments that we have incorporated in the report as  appropriate.
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section_title: Appendix I: Scope and Methodology
paragraphs: This appendix provides additional details about our analysis of the  Disability Insurance (DI) program’s work continuing disability review  (work CDR) process, including potential weaknesses in the Social Security  Administration’s (SSA) existing procedures and policies. To meet the  objectives of the review, we examined DI performance data, prior reports  by SSA and its Office of Inspector General (OIG), external research  studies, and our prior reviews of the program. We analyzed DI payment  data over a 5-year period from 1999 to 2003, and examined cases from 14  out of 18 SSA field offices we visited and 3 program service centers. In  addition, we randomly selected and reviewed 71 cases with earnings to  determine if they were reviewed and processed in accordance with  program guidelines. Finally, we conducted in-depth interviews with 230  management and line staff from SSA’s headquarters; its regional offices in  New York and San Francisco; 18 field offices in 6 states; and 3 out of 8  regional program service centers. During our meetings, we (1) examined  existing work CDR procedures; (2) documented management and staff  views on the effectiveness of SSA’s work CDR processes for detecting and  preventing earnings-related overpayments; and (3) discussed potential  improvements to existing program processes, systems, and policies.
We conducted independent audit work in six states (California, Florida,  Maryland, Massachusetts, New York, and Virginia) to examine SSA’s  policies and procedures for conducting work CDRs, and to identify any  common weaknesses in SSA’s work CDR processes. We selected locations  for field visits based on several criteria, including geographic dispersion,  states with an SSA program service center, states with large numbers of DI  beneficiaries, and states with large DI expenditures. In total, we visited 18  field offices and interviewed 161 SSA field office managers and line staff  responsible for the DI program. We visited a mix of large offices in  metropolitan areas as well as smaller offices located in the suburbs. In  addition, we visited three program service centers in Richmond,  California; Queens, New York; and Baltimore, Maryland. These program  centers were responsible for the majority of all work CDRs identified by  the enforcement operation. Where appropriate, we also visited field offices  or program centers that were conducting special initiatives or piloting  emerging computer systems that could impact how SSA conducts work  CDRs (such as the “eWork” system).
During our meetings with SSA and OIG officials, we documented  management and staff views on the effectiveness of work CDR policies  and procedures and potential improvements to existing processes,  policies, and systems. In particular, we documented management and staff  views on (1) the timeliness of existing data sources to verify beneficiary  earnings, (2) the effectiveness of existing processes for identifying  individuals at high-risk for large overpayments, (3) the effectiveness of  existing computer systems for notifying staff responsible for conducting  work CDRs about cases that should be reviewed, and (4) the accuracy of  management information data used to monitor work CDRs in one large  program service center. To further assess existing program processes and  systems, at 10 offices and 3 service centers, we judgmentally selected  between 5 and 7 pending or completed work CDR cases. We generally  looked at older cases in order to understand where existing procedures  may have weaknesses. We then conducted in-depth reviews of these case  files to identify potential vulnerabilities in existing work CDR processes,  policies, and systems.
As part of our study, we worked with SSA to draw a 1 percent sample of  all work CDR cases that were “cleared” from the agency’s Processing  Center Action and Control System over a 1-week period in April 2004 (the  “study population”). Our objective was to determine whether work CDR  cases were cleared in accordance with agency guidelines and to assess the  accuracy of high-level management data produced by this system. This  sample resulted in a total of 151 cleared cases. We then randomly selected  71 of these 151 cases for review. As part of our review, we discovered that  there was a potential for cleared work CDR cases to appear multiple times  in SSA’s Processing Center Action Control System. On the basis of our  discussion with knowledgeable SSA officials, we determined it would be  highly unlikely for cases to be listed as “cleared” multiple times in a 1- week time period. Therefore, we assumed that cases did not appear more  than once in the 1-week time period from which we drew our sample.
Because we followed a probability procedure based on random selections,  our sample is only one of a large number of samples that could have been  drawn. Since each sample could have provided different estimates, we  express our confidence in the precision of our particular sample’s results  using 95 percent confidence intervals. A confidence interval is an interval  that would contain the actual population value for 95 percent of the  samples we could have drawn. As a result, we are 95 percent confident  that each of the confidence intervals in this report will include the true  values in the study population. For this file review, the margin of error for  each percentage estimate does not exceed plus or minus 10 percentage  points, unless otherwise noted. The margin of error is the distance from  each estimate to the upper or lower boundaries of its 95 percent  confidence interval.
To assess the reliability of the databases we used, reviewed reports  provided by SSA and its Office of Inspector General, which contained  recent assessments of these databases. We also interviewed  knowledgeable agency officials to further document the reliability of these  systems. In addition, we checked the data for internal logic, consistency,  and reasonableness. We determined that all the databases were  sufficiently reliable for purposes of our review.
section_title: Appendix II: Comments from the Social Security Administration
section_title: Appendix III: GAO Contacts and Staff Acknowledgments
subsections: section_title: GAO Contacts
section_title: Staff Acknowledgments
paragraphs: In addition to those named above, Jeff Bernstein, Sue Bernstein,  Dan Schwimer, Salvatore F. Sorbello, Sidney Schwartz, and Shana Wallace  made important contributions to this report.
section_title: Related GAO Products
paragraphs: Social Security Disability: Reviews of Beneficiaries’ Disability Status  Require Continued Attention to Achieve Timeliness and Cost- Effectiveness. GAO-03-662. Washington, D.C.: July 24, 2003.
High-Risk Series: An Update. GAO-03-119. Washington, D.C.:  January 2003.
SSA Disability: Enhanced Procedures and Guidance Could Improve  Service and Reduce Overpayments to Concurrent Beneficiaries. GAO-02- 802. Washington, D.C.: September 5, 2002.
Social Security Administration: Agency Must Position Itself Now to Meet  Profound Challenges. GAO-02-289T. Washington, D.C.: May 2, 2002.
Social Security Disability: Disappointing Results from SSA’s Efforts to  Improve the Disability Claims Process Warrant Immediate Attention.  GAO-02-322. Washington, D.C.: February 27, 2002.
Social Security Administration: Status of Achieving Key Outcomes and  Addressing Major Management Challenges. GAO-01-778.  Washington, D.C.: June 15, 2001.
High-Risk Series: An Update. GAO-01-263. Washington, D.C.:  January 2001.
Major Management Challenges and Program Risks: Social Security  Administration. GAO-01-261. Washington, D.C.: January 2001.
Social Security: Review of Disability Representatives. GAO/HEHS-99- 50R. Washington, D.C.: March 4, 1999.
Major Management Challenges and Program Risks: Social Security  Administration. GAO/OCG-99-20. Washington, D.C.: January 1999.
High-Risk Program: Information on Selected High-Risk Areas. GAO/HR- 97-30. Washington, D.C.: May 16, 1997.
High-Risk Series: An Overview. GAO/HR-97-1. Washington, D.C.:  February 1997.