Disability Insurance: SSA Can Improve Efforts to Detect, Prevent, and Recover Overpayments
Released: 2011-07-27T00:00:00

Letter

Background

The DI program was established in 1956 to provide monthly cash benefits to individuals unable to work because of severe long-term disability. In fiscal year 2010, the program’s average monthly benefit was about $922. To be eligible for benefits, workers with disabilities must have a specified number of recent work credits under Social Security when they acquired a disability. Individuals may also be able to qualify based on the work record of a deceased or retired parent with a disability or a deceased spouse. Benefits are financed by payroll taxes paid into the DI Trust Fund by covered workers and their employers and are based on a 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 SGA. Individuals are engaged in SGA if they have earnings that average more than $1,000 per month in calendar year 2010, after applying any work incentives. Program guidelines direct DI beneficiaries to report their earnings to SSA in a timely manner to ensure they are still eligible for benefits and do not incur an overpayment.

SSA has several programs that are designed to assist beneficiaries in returning to work. For example, the Ticket to Work and Work Incentives Improvement Act of 1999 provided for the establishment of the Ticket to Work and Self-Sufficiency Program to provide eligible DI and Supplemental Security Income (SSI) beneficiaries with employment services, vocational rehabilitation services, or other support services to help them obtain and retain employment and reduce their dependency on benefits. SSA provides each eligible beneficiary with a ticket to obtain services from SSA-approved public or private providers, referred to as employment networks, or from traditional state vocational rehabilitation agencies.

SSA conducts work CDRs to determine if beneficiaries are still eligible or are working above the SGA level. Work CDRs are event-driven and initiated when there is an indication of work activity. While work CDRs can be prompted by several events, most are generated by SSA’s enforcement operation. This process involves periodic data matches between SSA’s MBR database and IRS earnings data. The enforcement operation generates alerts for cases that exceed specified earnings thresholds, which are then forwarded to one of eight processing centers for additional development by staff. In fiscal year 2010, the enforcement operation identified approximately 2 million records of which more than 531,000 were sent to SSA’s processing centers and field offices for review. Appendix I provides detailed information on the results of the enforcement operation for fiscal years 2008 to 2010, which used IRS earnings data from 2007 to 2009 (enforcement matches are typically conducted using the prior year’s earnings data).

Work CDRs can also be triggered by other events, such as beneficiaries reporting their earnings to SSA. For example, SSA requires beneficiaries to undergo periodic medical reviews called medical continuing disability reviews, or medical CDRs, to assess whether they continue to have a disabling impairment. During such reviews, the disability examiner sometimes discovers evidence that a beneficiary is working and forwards the case to an SSA field office or processing center for earnings or work development. Third-party reports from state vocational rehabilitation agencies, federal agencies, or anonymous individuals may also trigger a work CDR. Finally, some DI beneficiaries report their earnings to SSA as directed under program guidelines by visiting an SSA field office or calling the agency’s 800 number.

While most work CDRs are initially sent to processing centers as a result of action by SSA’s enforcement operation, some of these cases are later referred to one of SSA’s more than 1,300 field offices. Field offices can be asked to assist processing centers in the development of cases when obtaining local information about beneficiaries or their employers would expedite case processing. Field offices also tend to be the focal points for work CDRs generated by medical CDRs, third-party reporting, and beneficiary self-reporting. Work CDRs entail processes that can be both labor-intensive and time-consuming. For each case, SSA staff must review electronic case files in SSA’s eWork and associated data systems, conduct interviews, and contact beneficiaries and their employers to verify earnings and any applicable work incentives, such as subsidies or impairment-related work expenses. After the initial review of cases indicating a cessation of benefits, a “disability processing specialist” or “disability examiner” determines whether benefits should be discontinued and an overpayment assessed. (Fig. 1 provides an overview of the work CDR process.)

When a DI work-related overpayment is identified, the beneficiary is notified of the overpayment and may request reconsideration or waiver of that overpayment. SSA may grant a waiver request if the agency finds the beneficiary was not at fault and recovery or adjustment would either defeat the purpose of the program or be against equity and good conscience, as defined by SSA. If SSA denies a reconsideration or waiver request, full repayment is requested. If the beneficiary is receiving DI or certain other SSA benefits, SSA may withhold partial payment of these benefits to recover the debt. However, if no SSA benefits are being received, or if the beneficiary asserts that the proposed withholding amount is too large, the agency generally requests repayment over 12 to 36 months. SSA policy requires a minimum monthly payment of $10 dollars. SSA may also attempt to recover payments due from the individual’s estate or subsequent survivor’s benefits. (Fig. 2 provides an overview of SSA’s debt recovery system.) The agency uses the ROAR system to track DI overpayments and collections.

When a debtor is no longer receiving benefits, SSA can also recover debt through several external collection tools. When a beneficiary is not repaying as agreed in the repayment plan, SSA terminates its collection activity and, after a due process period, the debt is referred for external collection.

External debt collection tools include tax refund offset, which withholds or reduces federal tax refunds; federal salary offset, which withholds or reduces wages and payments to a federal employee;  administrative offset (against other than SSA benefits), which withholds or reduces federal payments other than tax refunds or salary;  administrative wage garnishment, which garnishes wages and payments paid by private employers or state and local governments; and credit bureau referral, which refers delinquent accounts to credit bureaus.

Once a debt is referred to external collection, the debtor remains subject to offsets until the debt is repaid in full or other resolution of the case.

Most DI Overpayments Are Work-Related, and Their Recovery Can Take Decades

Nearly Three-Quarters of All DI Overpayments Are to Beneficiaries Who Have Returned to Work

Medical and work-related overpayments in the DI program detected by SSA grew from about $860 million in fiscal year 2001 to about $1.4 billion in fiscal year 2010, and though the true extent of overpayments due to earnings is currently unknown, our review suggests that most of them are related to beneficiaries who work above SGA while receiving benefits. (Fig. 3 shows the increase in overpayments detected by SSA in recent years.) SSA officials estimate that from fiscal years 2005 through 2009, about 72 percent of all projected DI overpayments were work-related, meaning the overpayments were to beneficiaries who returned to work and were no longer eligible. This figure is higher than cited in past years by SSA. SSA officials attribute the increase in the percentage of overpayments that are work-related during this period to improved detection by its enforcement operation, and to changes in how the agency estimates the overpayment numbers. Agency officials also explained that approximately half of the increase in overpayment dollars during this period may be due to the increase in DI program benefit levels.

We found that detected overpayments could be even larger than SSA’s data reflect because some overpayments have been accidentally removed from SSA records due to manual processing errors. In our review of 60 work CDR cases, we found two manual processing errors which resulted in overpayments totaling $53,097 being removed from agency records. In one case, staff entered a code to correct an overpayment amount but instead deleted the overpayment entirely. As a result of our detection, SSA officials reentered the overpayment debts into the system and indicated they would proceed with debtor notification and recovery. Because the results of our case review are not generalizable, the incidence of such occurrences is currently unknown and thus the potential impact on total DI overpayments owed by ineligible beneficiaries is not clear. SSA officials said that they do not have a mechanism for detecting, or a process of supervisory review to catch, such processing errors.

In the 60 cases we reviewed, we also found that individual overpayment amounts varied widely, ranging from $1,126 to $53,436, with a median of $16,917 per individual. The size of individual overpayments can also be affected by SSA’s Automated Earnings Reappraisal Operations (AERO), which is a computer program that periodically screens a beneficiary’s earnings record for changes, and uses that information to adjust, as needed, the monthly benefit amount. Of the 60 cases, we found 54 in which AERO increases in benefit amount occurred even while SSA conducted a work CDR to determine if the beneficiary was still eligible for benefits at all. In addition, an individual overpayment can result in additional overpayments to dependents (family members who receive benefits). In 8 of the 60 cases, additional overpayments occurred because the primary beneficiary had dependents. For example, in one case, the overpayments to two dependent children added $6,580 to the primary beneficiary’s existing overpayment debt of $17,102, for a total of $23,682 owed.

A beneficiary’s total DI overpayment debt can also increase because of multiple periods of employment. DI beneficiaries may reenter and leave the workforce based on their ability to perform SGA. As a result, a beneficiary could be subject to multiple periods of DI overpayments if he or she does not report increased earnings to SSA in a timely manner, as regulations instruct. In 49 of the 60 cases we randomly selected for review, there was no indication in the file that the individual had reported his or her earnings to SSA, and in 15 of the 60, SSA had detected two or more separate periods of earnings which resulted in overpayments. In one of these cases, the ineligible beneficiary owed SSA for multiple overpayments totaling $69,976.

SSA Lacks Agencywide Performance Goals for DI Debt Recovery and Debt Continues to Accrue

SSA does not currently have formal, agencywide performance goals for debt recovery. Specifically, the agency does not have goals for the percentage of DI overpayment debt recovered within the 36-month time frame as required by its own policy. Under the Government Performance Results Act of 1993, federal agencies are required to establish performance goals to define level of performance and establish performance indicators to be used in measuring relevant outputs, service levels, and outcomes for each program activity. Although SSA’s policy manual, the Program Operations Manual System (POMS), requires staff to ask for full repayment within 36 months, the agency has not made this time frame a performance goal. SSA officials said they are currently working to develop debt recovery goals. In the meantime, without agencywide performance goals for debt recovery, SSA cannot adequately assess its performance or fully leverage and target its resources to recover overpayments from ineligible beneficiaries and reduce the total owed to SSA. Despite an increase in DI debt collections—$340 million to $839 million from fiscal year 2001 through fiscal year 2010—outstanding DI debt grew from $2.5 billion to $5.4 billion during this time, including a $225 million increase in fiscal year 2010. (Fig. 4 shows the growth in cumulative overpayment debt in recent years.)

Cumulative overpayment debt is comprised of existing debt carried forward from prior years, new debt, and reestablished debts (debts reactivated for collection due to re-entitlement or other event). Write-offs, including waivers and terminated collections, are not included in cumulative overpayment debt. Write-offs generally represent money the agency will never recover because it has either waived an overpayment or has terminated collection activities on the overpayment. Write-offs in the DI program totaled about $4 billion over the 10-year period, including about $460 million in fiscal year 2010. (See app. II for more specific information on overpayment debt in fiscal years 2001 to 2010.) In the 60 cases we reviewed, 20 contained a waiver request from the beneficiary. SSA approved 2 of these requests for a total of $36,413 waived, and denied 14 requests. Four other waiver requests were pending a decision at the time of our review. SSA may waive an overpayment if the agency determines that an individual is not at fault for the overpayment and recovery would defeat the purpose of the program or be against equity and good conscience.

Most overpayment debt is collected by SSA through partial benefit withholding or the withholding of future DI benefits for which a beneficiary is still eligible. SSA attributes 77 percent of the approximately $839 million of debt collected in fiscal year 2010 to withholding of DI benefits. The amount withheld from benefits to recoup previous overpayments may be negotiated with the debtor and based on a monthly amount the debtor can afford. The remainder of overpayment debt is collected in a variety of ways, including payments by the debtor and return of uncashed DI benefit checks; withholding of other SSA benefits, such as SSI; or through external collection including federal salary offset, administrative offset (other than against SSA benefits), tax refund offset, and administrative wage garnishment. SSA estimates that only about 11 percent of collections is through external means. In our 60 cases, 5 were referred for external collection at the time of our review, for a total owed of $79,950, but just $2,478 had been recovered through these methods.

SSA Policy Does Not Require Supervisory Review of Repayment Plans, although Some Last Decades

SSA does not require supervisory review of repayment plans prior to approval, including those in which repayment periods exceed the recommended 36 months. The agency reported that in fiscal year 2010, the average time to collect a DI overpayment debt in full was 48 months. However, in our review of 60 cases, we found that SSA agreed to some initial repayment plans which will take many decades. We analyzed the initial repayment plans established for individuals in these cases and found 42 of the 60 had a repayment plan in place, with a median repayment time for all 42 of approximately 34 months. While SSA’s POMS require that staff should seek full repayment within 36 months, SSA officials reported that no supervisory approval is needed to exceed the 36 months. Of the 42 cases with a repayment plan, 19 had initial plans requiring more than 36 months for repayment in full and 7 of these required 20 years or more. Repayment time frames for the 42 cases ranged from less than 1 year to nearly 223 years for a case with a 60- year-old debtor who was paying $10 a month on $26,715 owed. (Fig. 5 shows the years that it would take SSA to recover each overpayment based on the initial repayment plan established.) SSA officials told us they are often unable to increase monthly repayment amounts and thus shorten repayment time frames because of a debtor’s limited income. For instance, in a case we reviewed with an initial repayment plan of 148 years for $44,465 in overpayments owed to SSA, SSA records show the individual earned less than $100 in 2010. As this case illustrates, SSA’s policy allowing for extended repayment plans means that some of these plans will likely extend beyond the beneficiary’s anticipated retirement age and total lifespan, thereby reducing the prospect of ultimate collection.

In the course of analyzing repayment plans, we also identified a system limitation that could further impede SSA’s ability to collect overpayment debt in future years. More specifically, we found that the ROAR system cannot capture and track overpayment debt scheduled to be collected beyond the year 2049. This ROAR system limitation stems from a program modification used to address the change of the century (Y2K) computer issue, and which extended the debt recovery date in the ROAR system from “1999” to “2049.” Under existing SSA policies and procedures, SSA staff manually remove from the ROAR system the portion of any debt that cannot be collected before the year 2050, and create a reminder in the system to recover that balance beginning in the year 2050. However, because this is a manual process, the intended recovery action could be potentially missed by staff responsible for processing the cases in the future. As a result, the overpayment debt on the agency’s books, and reported to the Department of the Treasury (Treasury) for the federal government’s consolidated financial statements, is likely understated to an unknown extent. Equally important, we found that unless this problem is corrected, more overpayments will likely continue to be underreported as the years progress, and the impact on the DI Trust Fund may become more pronounced as time goes on. Overall, we found that 3 of the 60 cases reviewed had a total of $43,285 in overpayments removed from ROAR system records because collection of these payments will occur after the year 2049. However, because the results of our case review are not generalizable, we could not determine how many additional disability overpayment cases detected by SSA fell into this category. Since bringing this issue to their attention, SSA officials told us that the agency has begun to study this ROAR system limitation and an agency working group will recommend a course of action to correct the problem.

SSA Initiatives Target the Recovery of Delinquent Debt

SSA officials reported that the agency is planning certain initiatives that could improve the recovery of overpayment debt. First, SSA officials told us that the agency is in the process of amending administrative offset and tax refund offset regulations to change the existing requirement regarding referrals of delinquent debt to Treasury. This change would allow SSA to refer debts that are delinquent for 10 years or more to Treasury for collection—something that it does not currently do. Second, Treasury has launched a pilot program providing for reciprocal offset of federal and state payments to individuals who are in debt to either federal or state programs. This program would allow a federal agency such as SSA to, for example, offset a beneficiary’s state income tax refund to collect certain delinquent federal debts (such as DI program overpayments), while allowing for a reciprocal agreement with individual states. Four states— Kentucky, Maryland, New Jersey, and New York—are currently participating in the Treasury pilot program, and Treasury reports that it plans to expand the program to all states. On March 2, 2011, SSA officials published proposed amendments to regulations that would allow SSA to utilize these collection tools.

Lack of Timely Earnings Data and Inconsistent Processing of Work CDRs Allow Overpayments to Accrue

Dated IRS Earnings Data and Failure of Beneficiaries to Report Earnings Increase Work- Related Overpayments

SSA conducts periodic computer matches with wage data from the IRS to independently verify beneficiaries’ earnings. However, earnings data provided through the IRS match are often more than a year old when SSA staff begin the work CDR prompted by the match. Managers and staff at the four processing centers we visited cited this delay as a major obstacle to limiting the occurrence and size of overpayments. Our work shows that this has delayed processing of work CDRs. In the 60 cases we reviewed, the earnings data were already between 6 and 26 months old by the time they were available to SSA staff for performing work CDRs. (Fig. 6 shows how old earnings data were for the 60 cases.)

While DI beneficiaries are responsible for notifying SSA when they return to work as a condition of receiving benefits, they sometimes fail to make such notifications. Our review of 60 cases found no indication in 49 that the individual had reported their work and earnings to SSA as instructed by regulation. In the other 11 cases, beneficiaries had reported returning to work, including the name of their employer and the amount of their wages, at some point. Yet 6 of these cases resulted in about $78,000 in total overpayments, even though these beneficiaries reported returning to work more than a year prior to initiation of the work CDR. In the remaining 5 cases, the beneficiary reported working only after the CDR was initiated.

Earnings data from IRS or from beneficiaries may age further once received by SSA because no specific program guidelines exist that require immediate action on results of the IRS match, and consequently staff do not always begin a work CDR immediately. From the date of the initial IRS alert to the date staff begin work on the CDR, cases that have been identified by the IRS match and selected for a work CDR (but for which no action has yet been taken to process the work CDR) are categorized by SSA as “pending development.” In the 60 cases we reviewed, the median time cases were pending development was 205 days, or about 7 months, and ranged from 2 to 466 days, or more than 15 months. For example, in the 466-day case, the IRS alert came to SSA in September 2007, when earnings (for 2006) were already 15 months old, then aged an additional 15 months until SSA staff began developing the work CDR. SSA officials could not explain what caused the delay in initiating development of this case or of several others we reviewed. (Fig. 7 shows the number of days that the 60 cases were pending development.)

The delays that occur when staff do not act promptly to begin a work CDR, in combination with the initial delays in receiving beneficiary earnings data (either from the IRS enforcement operation or beneficiaries’ failure to self-report earnings), can result in multiple DI overpayments which may continue to accrue for extended periods of time before they are addressed. For example, in the 60 cases we reviewed, delays which occurred after IRS alerts were delivered to SSA resulted in individual beneficiaries being overpaid for up to 38 months. Most received fewer than 12 months of overpayments, but 19 of the cases received 18 or more months of overpayments. According to an SSA official, staff shortages and the need to focus resources on competing workloads, such as initial DI claims and medical CDRs, are among the factors delaying development of work CDRs once earnings information is received. (Fig. 8 shows the amount of time that overpayments accrued pending development.)

In 2004, we recommended that SSA seek to use large scale batch matches with an alternative database of earnings, the National Directory of New Hires (NDNH), which was originally established to help states locate noncustodial parents for child support payments. The NDNH could provide SSA with quarterly wage information on employees within 4 months of the end of a calendar quarter. Several federal programs and agencies currently use the NDNH to verify program eligibility, detect and prevent potential fraud or abuse, and collect overpayments. In 2009, SSA conducted a cost-effectiveness study on use of the NDNH, which concluded that a match would generate a large number of alerts needing development that were not of high quality. They also said the study found a return on investment of only about $1.40 in savings for each $1 spent. However, based on the information provided, we believe that some of the assumptions used in the analysis were overly pessimistic. For example, though SSA initially estimated savings of nearly $8 for every dollar spent by using the NDNH, the agency subsequently reduced this estimate by concluding that much of the anticipated savings from this match would ultimately be captured by the current enforcement operation. This assumption does not appear to fully take into account the fact that initial use of the NDNH would likely identify many potential overpayments earlier in the process, thus reducing the duration and size of those overpayments compared with the current enforcement operation. Thus, it is likely that the actual savings that result could in fact be higher. The agency’s actual experience with the NDNH in its SSI program suggests its application in the DI program may be more cost-effective than indicated by SSA’s analysis. According to SSA officials, the NDNH match with the SSI program has resulted in an estimated $200 million in savings per year for the program. Furthermore, even if the savings resulting from use of the NDNH for identifying DI beneficiaries’ earnings is only $1.40 for every $1 spent, as estimated by SSA, this still represents a 40 percent rate of return.

In a 2010 report, we also recommended that SSA evaluate the feasibility of incorporating the twice-annual AERO process in the agency’s work CDR process. SSA does not use AERO to identify beneficiaries who work. SSA officials told us they are in the early stages of evaluating this use and, as part of this effort, they said they may include an AERO alert as one of several screening factors to identify cases at high risk for DI overpayments. Agency officials also told us that they plan to match cases that have both an AERO alert and an IRS alert and delay any AERO- awarded changes to benefit amounts until the CDR has been completed to potentially reduce overpayments.

SSA Lacks Agencywide Performance Goals and a Consistent Approach for Processing Work CDRs

Similar to our findings about the lack of agencywide performance goals for overpayment debt recovery, we also found that SSA does not have agencywide performance goals or a consistent approach for processing work CDRs across its processing centers. Specifically, the agency does not have performance goals for the number of days taken to completely process a work CDR. While SSA has established an agencywide goal for processing a certain number of medical CDRs in a fiscal year, and includes this goal in the agency’s annual performance plan, SSA officials told us they have not established similar goals for work CDRs. Instead, they have established “targets” for the processing centers. For example, in fiscal year 2011, SSA set targets for the completion of 95 percent of IRS alerts on earnings generated in 2008 or earlier by September 24, 2010, and for processing centers to complete development of at least 99 percent of cases within 270 days by September 30, 2011. Overall, we found that while SSA’s policies establish steps for work CDR processing to be followed across all processing centers, processing times across the four centers we visited varied widely once development was initiated. More specifically, we found that processing times for the 60 cases we reviewed ranged from 82 to 992 days (with a median of 396 days) and resulted in combined overpayments totaling more than $1 million. We also found the median processing time for the cases we reviewed from three centers ranged from 307 to 397 days, and the median processing time at the fourth center, which processes about 50 percent of all work CDRs, was 626 days. (Fig. 9 shows the variance in processing time across the four processing centers.)

Within the last year, SSA has started work on several new initiatives to identify work CDR enforcement alerts from its IRS match that correspond to those cases which are more likely to result in large overpayments. First, the agency has started prioritizing IRS alerts with reported earnings that are greater than or equal to 12 times the current SGA level ($1,000 per month in calendar year 2011). Second, in response to a prior GAO recommendation, SSA is testing a “predictive model” intended to identify those cases with the highest probability of having large overpayments and prioritizing them for review by processing center staff. Using existing screening criteria, the model will assign cases a numeric score based on the beneficiary’s age, type of disability, benefit amount, earnings, time on disability rolls, and number of denials for eligibility, among others. The highest-scoring alerts would be processed first because SSA believes they are most likely to result in cessation of DI benefit payments and thus be incurring overpayments. This initiative is currently being piloted in three processing centers.

In a third initiative, SSA is piloting a comprehensive review of how all types of work CDRs are conducted using a sample of 1,000 recently completed CDRs. This review is intended to identify any aspects in the initial process that did not appear to be completed correctly. Because work CDRs are the most common type of CDR the agency encounters, SSA anticipates they will be a majority of the sample. Agency officials shared some of the review’s early findings with us, including inadequate documentation of case development, inconsistencies and vague language in SSA’s operating procedures, and errors in calculating SGA, which may contribute to overpayments. SSA’s Office of Quality and Performance expects to issue its study results in fall 2011. Fourth, SSA staff are working to update and streamline work issue procedures regarding the initiation, follow-up time frames, and overall completion of work CDRs for processing center personnel. The agency anticipates releasing the updated POMS that will incorporate these new procedures in October 2011.

Finally, SSA has revised the forms filed by beneficiaries to document work activity and to make SGA determinations by SSA staff. According to agency officials, the forms should be easier for beneficiaries to understand and complete, and should improve compliance with beneficiary reporting requirements. As part of this initiative, SSA officials told us that they have also reduced the number of follow-up requests for these forms before staff are allowed to make a decision concerning a beneficiary’s continued eligibility for DI benefits. According to agency officials, the Office of Management and Budget approved both of the revised work activity reports. In addition, SSA staff are hopeful that the revised form will result in more timely work CDR processing and reduced overpayments. While these initiatives represent promising steps, it is too early to assess what impact they may have on the prevalence and size of DI overpayments.

Conclusions

Our review shows that while SSA has some initiatives to improve how it performs work CDRs, existing policies and processes impede its ability to more effectively detect, prevent, and recover overpayments. In particular, the existence of repayment plans that extend out past a debtor’s full retirement age or projected lifespan means that it is unlikely those debts will be repaid in full. In addition, the lack of both agencywide performance goals that specify debt collection time frames and policies that specify the review of individual debt repayment plans to ensure that they are meeting these goals hinder the agency’s debt collection efforts. Compounding this problem, the inability of the ROAR system to process debt recovery actions past the year 2049 jeopardizes the agency’s ability to accurately track and report on the recovery of all overpayments. In addition, SSA’s continued reliance on outdated earnings information to identify beneficiaries who may no longer be eligible for benefits means that overpayments, including some large overpayments, are probably inevitable. SSA’s dependence on such data also means that staff responsible for performing work CDRs are often dealing with cases that are already aged when they receive them, and thus more difficult and time-consuming to develop. As a result, SSA is often in a “pay and chase” mode that further stretches limited staff and budgetary resources. Absent more timely sources of earnings data to inform the work CDR process, this problem is likely to persist. Additionally, other weaknesses such as the lack of agencywide performance goals for processing centers and staff likely contribute to delays in processing this workload. These delays, in turn, can become a factor in the large size of some overpayments. Without performance goals specifying the time that cases should be pending development, or the number of days to completely process a work CDR, improvements to the agency’s operations in this area are made less likely. We recognize that ensuring the integrity of the DI program while also performing other work, such as processing medical CDRs and helping beneficiaries return to work, is a challenge for SSA. However, the continuing weaknesses we identified in SSA’s existing work CDR processes and policies, as well as the mounting overpayment debt and its impact on the financial health of the DI Trust Fund, require sustained management attention and a more proactive stance by the agency.

Recommendations

To enhance SSA’s ability to recover debt and to improve the detection and, where possible, prevention of overpayments in the DI program, we recommend that the Commissioner of Social Security 1. develop and adopt agencywide performance goals, for the recovery of DI overpayment debt, such as the percent of outstanding debt collected annually. 2. require supervisory review and approval of repayment plans which exceed SSA’s target of 36 months. 3. correct the ROAR 2049 system limitation so that debt scheduled for collection after 2049 is included in the system and available for SSA management, analysis, and reporting. 4. explore options for obtaining more timely earnings information for DI program beneficiaries who may be working, and thus are more likely to incur overpayments. This would include developing data sharing agreements to access pertinent earnings-related databases, such as the NDNH. 5. develop and adopt additional formal agencywide performance goals for work CDRs to measure the time that cases are pending development, and the number of days taken to process a work CDR.

Agency Comments and Our Evaluation

We obtained written comments on a draft of this report from the Commissioner of the Social Security Administration. The comments are reproduced in appendix III. SSA also provided additional technical comments, which have been incorporated in the report as appropriate. SSA agreed with four of five recommendations we made to the Commissioner to strengthen SSA’s processes and management controls over the detection, prevention, and recovery of DI overpayments.

SSA agreed with our first recommendation to develop and adopt additional agencywide performance goals for the recovery of DI overpayments, such as the percent of outstanding debt collected annually. The agency noted that the Office of Management and Budget (OMB) guidance for the Improper Payments Elimination and Reduction Act of 2010 requires agencies to establish targets that drive annual performance based on percentage of recovery (i.e., proportion of overpayment dollars identified which are recovered in a fiscal year). The agency said it is working with OMB to develop appropriate debt recovery goals. We agree this is a positive step, as would be including that targeted percentage in its annual agencywide performance goals.

SSA disagreed with our second recommendation to require supervisory review and approval of DI repayment plans which exceed SSA’s targeted 36 months. In particular, the agency noted that it negotiates these plans based on a beneficiary’s income, ability to pay, and personal circumstances. SSA said this recommendation would not improve collection rates, and an additional approval step is unnecessary. However, the agency said it will issue guidance to its employees reminding them to make every effort to recover debts within 36 months. We agree that issuing guidance to staff to remind them about repayment time frames is a positive step, but based on recent experiences, we continue to believe supervisory review and approval of plans that exceed 36 months is needed to strengthen SSA’s controls over the process and decrease the incidence of repayment plans that extend past a debtor’s full retirement age or projected lifespan.

SSA agreed with our third recommendation that SSA correct the ROAR 2049 system limitation so debt scheduled for collection after 2049 is included in the system and available for current SSA management, analysis, and reporting. SSA noted the agency is considering solutions for this limitation.

SSA agreed with our fourth recommendation to explore options for obtaining more timely earnings information for DI program beneficiaries who may be working, and thus more likely to incur overpayments. These options include data sharing agreements to access pertinent earnings- related databases such as the NDNH. The agency noted it has plans in this area. Specifically, SSA said while it had previously determined it would not be cost-effective to use the NDNH for this purpose, it will reevaluate that decision. SSA also said it will continue to explore other options for obtaining timely earnings information from other sources. In addition, the agency said it has developed, based on a previous GAO recommendation, a computer match of Social Security employee payroll records and DI and SSI benefit rolls. We agree this internal SSA computer match should help to obtain more timely earnings information on DI beneficiaries who may be working. We also encourage SSA to develop data-sharing agreements to leverage other databases such as NDNH which allow for regular batch-file matches to verify beneficiaries’ earnings.

SSA agreed with our fifth recommendation to develop and adopt additional formal, agencywide performance goals for the time work CDR cases are pending development and the number of days taken to process them. The agency commented that it already has internal targets for overall work CDR processing times. SSA said it will consider GAO’s recommendation as it works on its agency performance goals. We agree the agency’s internal targets for work CDR processing are a positive step. However, we continue to believe that formal, agencywide work CDR performance goals are needed to assist SSA in assessing its performance and fully leveraging its resources in this area. The agency should consider measuring the time cases are pending development, and the number of days taken to process a work CDR, against agencywide annual performance goals it develops.

We are sending copies of this report to the Commissioner of Social Security, appropriate congressional committees, and other interested parties. The report is also available at no charge on GAO’s Web site at http://www.gao.gov.

If you or your staffs have any questions about this report, please contact me at (202) 512-7215 or bertonid@gao.gov. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. Key contributors to this report are listed in appendix IV.

Appendix I: Enforcement Cumulative Totals and Distribution for IRS Enforcement Matches Conducted in 2008-2010 (Data for Earnings Years 2007 through 2009)

Appendix I: Enforcement Cumulative Totals and Distribution for IRS Enforcement Matches Conducted in 2008-2010 (Data for Earnings Years 2007 through 2009)

Alerted to field offices Not alertedTotal Processing center 1 2 3 4 5 6 7 8 Total

Alerted to processing centers 1-8 Alerted to field offices Not alertedTotal Processing center 1 2 3 4 5 6 7 8 Total

Alerted to processing centers 1-8 Alerted to field offices Not alerted Total Processing center 1 2 3 4 5 6 7 8 Total

Appendix II: Financial Data on DI Overpayments and Overpayment Debt

Fiscal year 2001

Appendix III: Comments from the Social Security Administration

Appendix IV: GAO Contact and Staff Acknowledgments

GAO Contact

Staff Acknowledgments

Jeremy Cox (Assistant Director) and Arthur T. Merriam Jr. (Analyst-in- Charge) managed all aspects of the assignment. Angela Jacobs, Joel Marus, and Katharine Kairys made significant contributions to this report, in all aspects of the work. In addition, Vanessa Taylor and Walter Vance provided technical support; Craig Winslow and Sheila McCoy provided legal support; Susan Aschoff assisted with the development of the message and report; David Forgosh, Monika Gomez, Cady Panetta, and Nyree Ryder Tee contributed to quality assurance for this product, and James Bennett provided graphics support.

Related GAO Products

Status of Fiscal Year 2010 Federal Improper Payments Reporting. GAO-11-443R. Washington, D.C.: March 25, 2011.

Social Security Disability: Ticket to Work Participation Has Improved, but Additional Oversight Needed. GAO-11-324. Washington, D.C.: May 2011.

High-Risk Series: An Update. GAO-11-278. Washington, D.C.: February 16, 2011.

Social Security Administration: Cases of Federal Employees and Transportation Drivers and Owners Who Fraudulently and/or Improperly Received SSA Benefits. GAO-10-444. Washington, D.C.: June 2010.

Social Security Administration: Cases of Federal Employees and Transportation Drivers and Owners Who Fraudulently and/or Improperly Received SSA Benefits. GAO-10-949T. Washington, D.C.: August 4, 2010.

Disability Insurance: SSA Should Strengthen Its Efforts to Detect and Prevent Overpayments. GAO-04-929. Washington, D.C.: September 10, 2004.