The Social Security Administration (SSA) manages two major federal disability programs that provide cash benefits to people with long-term disabilities—the Disability Insurance (DI) and Supplemental Security Income (SSI) programs. The DI program was enacted in 1956 and provides monthly cash benefits to severely disabled workers. SSI was enacted in 1972 as an income assistance program for aged, blind, or disabled people. Disability is defined in the Social Security Act as an inability to engage in substantial gainful activity (SGA) because of a severe physical or mental impairment. Both programs use the same criteria and procedures for determining whether the severity of an applicant’s impairment qualifies him or her for disability benefits. In 1995, 5.7 million disabled workers and their dependents received about $40.2 billion in DI benefits; 4.7 million disabled or blind SSI claimants received about $21.1 billion in SSI benefits. From the 6.8 million recipients in 1988, overall program enrollment has increased by more than 50 percent. In fiscal year 1995, SSA spent $3 billion on these two programs, more than half of the agency’s total administrative expenses for the year. Nevertheless, the agency has acknowledged that it has had difficulty providing a satisfactory level of service to its disability claimants. The process is slow, labor-intensive, and paper-reliant. Despite efforts to manage this workload with shrinking resources, SSA has not been able to keep pace with program growth. Initial claim levels remain high, appealed case backlogs are growing, and decisions are not being made in a timely manner. In fiscal year 1995, about 2.5 million initial disability claims were forwarded to state offices for disability determinations, an increase of 43 percent over fiscal year 1990. During the same period, of the applicants requesting an administrative law judge (ALJ) to reconsider a decision denied at the initial claim level, the number escalated from about 311,000 to about 589,000, an increase of 89 percent. Furthermore, SSA is concerned with the amount of time required to process claims—in many cases a claimant waits more than a year for a final disability decision. As of June 1996, processing an initial disability claim averaged 78 days for DI claims and 94 days for SSI claims; the processing time for an ALJ decision averaged 373 days. Under the current eligibility determination process, DI and SSI disability claims can pass through from one to five decision points, at which eligibility is determined. The initial claim, initial state Disability Determination Service (DDS) decision, reconsideration, ALJ hearing, Appeals Council, and federal court review all involve procedures for evidence collection, review, and decision-making. The decision points within the current disability claims process are shown in figure 1.1. To be considered eligible for either program, claimants must meet SSA’s definition of disability. Claimants must also meet work requirements for DI claims and financial eligibility requirements for SSI claims. Under both programs, applications for disability benefits can be initiated at one of SSA’s over 1,300 field offices or through SSA’s toll-free telephone system. SSA field office personnel assist with completing the application; obtaining medical, financial, and work history information; and determining whether applicants meet the nonmedical criteria for eligibility. Field offices forward claimant information, along with supporting medical evidence, to a state DDS, of which there are 54. At the DDS, medical evidence is further developed and a final decision is made as to the existence of a medically determinable impairment that meets SSA’s definition of disability. SSA funds the state DDS agencies, provides them with guidance for making disability decisions, and reviews the accuracy and consistency of their decisions. Claimants who are dissatisfied with an initial determination may request reconsideration by the DDS. A reconsideration is conducted by different staff from the original staff, but the criteria and process for determining disability are the same. Claimants who disagree with a reconsideration denial have the right to a hearing before 1 of SSA’s 1,035 ALJs in the Office of Hearings and Appeals. At these hearings, claimants and medical or vocational experts may submit additional evidence; attorneys usually represent the claimants. If denied by the ALJ, the claimant may then request a review by SSA’s Appeals Council. The Appeals Council may affirm, modify, or reverse the decision of the ALJ; the Council may also remand the case to the ALJ for further consideration or development. Finally, the claimant may appeal the Council’s decision to federal court. SSA faces increasing responsibilities in the future and must manage its growing workload with fewer resources. SSA has estimated that if it conducts business as usual, it would need the equivalent of about 76,400 workers to handle its workload by the end of the century. Instead, SSA expects to handle this work with about 62,000 workers—2,000 fewer than it has today. To successfully manage its growing workload, SSA knows that it must (1) increasingly rely on technology and (2) build a workforce with the flexibility and skills to operate in a changing environment. Concerned about managing its workload while reducing administrative costs, saving time, and improving the quality of service, SSA’s leadership decided it needed to redesign its disability claims process. To improve the process, SSA’s leadership turned to business process reengineering. SSA concluded that redesigning its process for deciding disability claims was critical to its goal of providing world-class customer service with fewer resources. In April 1994, we testified that the redesign proposal for the disability process is SSA’s first valid attempt to address major fundamental changes needed to realistically cope with the disability determination workload. We cautioned SSA, however, that many difficult implementation issues would need to be addressed. These include new staffing and training demands, development and installation of technology enhancements, and confrontation with the entrenched cultural barriers to change. Reengineering is risky by definition, but if done well it can net positive benefits for the organization. As envisioned, SSA expects the redesigned process will produce tangible savings. However, the bulk of these savings will come from more efficient use of federal and state employees to process disability claims. Greater efficiency will (1) allow the agency to use its current workforce to accomplish other pressing activities and (2) avoid hiring to replace all those who retire or otherwise leave the agency. In addition, SSA expects the redesign will result in intangibles, such as improved customer service, an empowered and better-trained workforce, and increased public confidence in SSA. When SSA proposed its redesign, it estimated that it would cost $148 million to administer, with the largest portion of these costs allocated to training activities. However, SSA estimated net savings of $704 million through fiscal year 2001—the year for which full implementation is anticipated. SSA also estimated recurring annual savings of $305 million, once the redesign is fully implemented. While success cannot be guaranteed, leading private organizations have used business process reengineering to identify and quickly put in place dramatic improvements in their operations. The objective of reengineering is to fundamentally rethink and redesign a business process from start to finish, so that it becomes more efficient and, as a result, significantly improves service to customers. There is, however, no “right” way to reengineer and no step-by-step sequence of prescribed activities. Reengineering is highly situational and should be tailored to meet the needs of each organization, according to reengineering experts. Nevertheless, today’s leaders in business process reengineering advocate certain critical success features, or best practices, to help organizations increase the likelihood of success. Case studies show that reengineering has failed to achieve the desired change, in part, because managers have not followed best practices. These practices include concentrating on a small number of initiatives at any given time for broad-scoped comprehensive projects; developing and implementing the initiatives quickly; identifying, securing, and maintaining stakeholder support; and having the organizational commitment to initiate and sustain the redesign. Concentrating on a small number of initiatives at any given time is essential. According to the experts, reengineering should remain focused to achieve rapid results. Without such focus, an organization risks becoming overwhelmed. Further, once started, the scope of the redesign should not be expanded. Trying to work on too much forces managers to choose among projects, which further dilutes the time and attention required to quickly move the redesign forward. Developing and implementing initiatives quickly is also essential. According to some reengineering experts, the time from concept formulation to realizing the first release of a reengineered process should take no more than 12 months. Other reengineering experts note that while the full value of a redesigned process may take 2 to 5 years, individual initiatives should be accomplished in a year or less. Identifying, securing, and maintaining stakeholder support is also an essential element of redesign. Stakeholders consist of individuals who are both internal and external to an organization, as well as groups that can influence the organization in some way. For SSA, internal stakeholders include the staff within the organization that will need to adapt to changes in business processes; external stakeholders include the Congress, state employees, labor unions, oversight bodies, key interest groups, customers, and others who oversee, fund, or are affected by SSA’s activities. Managers of redesign should strive to secure and maintain support of all stakeholders. Without such support throughout redesign, the chances of success can be jeopardized. Finally, having the organizational commitment to initiate and sustain redesign is another essential element. It is paramount to the success of the redesign. As a top-down process, reengineering requires strong, continuous, and committed senior executives from the beginning of the redesign. The Chairman of the House Subcommittee on Social Security, House Ways and Means Committee, asked us to provide information on the implementation challenges facing SSA as it redesigns its disability claims process.