To be considered eligible for benefits for either SSI or DI as an adult, a person must be unable to perform any substantial gainful activity by reason of a medically determinable physical or mental impairment that is expected to result in death or that has lasted or can be expected to last for a continuous period of at least 12 months. Work activity is generally considered to be substantial and gainful if the person’s earnings exceed a particular level established by statute and regulations. The process of determining eligibility for SSA disability benefits is complex, fragmented, and expensive. The current decision-making process involves an initial decision and up to three levels of administrative appeals if the claimant is dissatisfied with the decision. The claimant starts the process by filing an application either online, by phone or mail, or in person at any of SSA’s 1,300 field offices. If the claimant meets the non- medical eligibility criteria, the field office staff forwards the claim to one of the 54 federally-funded, but primarily state-run Disability Determination Service (DDS) offices. DDS staff—generally a team composed of disability examiners and medical consultants—obtains and reviews medical and other evidence as needed to assess whether the claimant satisfies program requirements, and makes the initial disability determination. If the claimant is not satisfied with the decision, the claimant may ask the DDS to reconsider its finding. If the claimant is dissatisfied with the reconsideration, the claimant may request a hearing before one of SSA’s federal administrative law judges in an SSA hearing office. If the claimant is still dissatisfied with the decision, the claimant may request a review by SSA’s Appeals Council. The complex and demanding nature of this process is reflected in the relatively high cost of administering the DI and SSI programs. Although SSI and DI program benefits account for less than 20 percent of the total benefit payments made by SSA, they consume nearly 55 percent of the annual administrative resources. SSA has experienced difficulty managing its complex disability determination process, and consequently faces problems in ensuring the timeliness, accuracy, and consistency of its disability decisions. Although SSA has made some gains in the short term in improving the timeliness of its decisions, the Commissioner has noted that it still has “a long way to go.” Over the past 5 years, SSA has slightly reduced the average time it takes to obtain a decision on an initial claim from 105 days in fiscal year 1999 to 97 days in fiscal year 2003, and significantly reduced the average time it takes the Appeals Council to consider an appeal of a hearing decision from 458 to 294 days over the same period. However, the average time it takes to receive a decision at the hearings level has increased by almost a month over the same period, from 316 days to 344 days. According to SSA’s strategic plan, these delays place a significant burden on applicants and their families and an enormous drain on agency resources. Lengthy processing times have contributed to a large number of pending claims at both the initial and hearings levels. While the number of initial disability claims pending has risen more than 25 percent over the last 5 years, from about 458,000 in fiscal year 1999 to about 582,000 in fiscal year 2003, the number of pending hearings has increased almost 90 percent over the same time period, from about 312,000 to over 591,000. Some cases that are in the queue for a decision have been pending for a long time. For example, of the 499,000 cases pending in June 2002 at the hearings level, about 346,000 (69 percent) were over 120 days old, 167,000 (33 percent) were over 270 days old, and 88,500 (18 percent) were over 365 days old. In addition to the timely processing of claims, SSA has also had difficulty ensuring that decisions regarding a claimant’s eligibility for disability benefits are accurate and consistent across all levels of the decision- making process. For example, the Social Security Advisory Board has reported wide variances in rates of allowances and denials among DDSs, which may indicate that DDSs may be applying SSA standards and guidelines differently. In fiscal year 2000, the percentage of DI applicants whose claims were allowed by a DDS ranged from a high of 65 percent in New Hampshire to a low of 31 percent in Texas, with a national average of 45 percent. In addition, the high percentage of claimants awarded benefits upon appeal may indicate that adjudicators at the hearings level may be arriving at different decisions on similar cases compared to the DDSs. In fiscal year 2000, about 40 percent of the applicants whose cases were denied at the initial level appealed, and about two-thirds of those who appealed were awarded benefits. Awards granted on appeal happen in part because decision-makers at the initial level use a different approach to evaluate claims and make decisions than those at the appellate level. In addition, the decision-makers at the appeals level may reach a different decision because the evidence in the case differs from that reviewed by the DDS. We are currently reviewing SSA’s efforts to assess consistency of decision-making between the initial and the hearings levels. Moreover, in 2003, we reported on possible racial disparities in SSA’s disability decision-making at the hearings level from 1997 to 2000 between white and African-American claimants not represented by attorneys. Specifically, among claimants without attorneys, African-American claimants were significantly less likely to be awarded benefits than white claimants. We also found that other factors—including the claimant’s sex and income and the presence of a translator at a hearing—had a statistically significant influence on the likelihood of benefits being allowed. In addition to difficulties with the timeliness, accuracy, and consistency of its decision-making process, SSA’s disability programs face the more fundamental challenge of being mired in concepts from the past. SSA’s disability programs remain grounded in an approach that equates impairment with an inability to work despite medical advances and economic and social changes that have redefined the relationship between impairment and the ability to work. Unlike some private sector disability insurers and social insurance systems in other countries, SSA does not incorporate into its initial or continuing eligibility assessment process an evaluation of what is needed for an individual to return to work. In addition, employment assistance that could allow claimants to stay in the workforce or return to work—and thus potentially to remain off the disability rolls—is not offered through DI or SSI until after a claimant has gone through a lengthy determination process and has proven his or her inability to work. Because applicants are either unemployed or only marginally connected to the labor force when they apply for benefits, and remain so during the eligibility determination process, their skills, work habits, and motivation to work are likely to deteriorate during this long wait. In SSA’s most recent attempt to improve its determination process, the Commissioner, in September 2003, set forth a strategy to improve the timeliness and accuracy of disability decisions and foster return to work at all stages of the decision-making process. SSA’s Commissioner has acknowledged that the time it now takes to process disability claims is unacceptable. The Commissioner has also recognized that going through such a lengthy process to receive benefits would discourage individuals from attempting to work. To speed decisions for some claimants, the Commissioner plans to initiate an expedited decision for claimants with more easily identifiable disabilities, such as aggressive cancers. Under this new approach, expedited claims would be handled by special units located primarily in SSA’s regional offices. Disability examiners employed by the DDSs to help decide eligibility for disability benefits would be responsible for evaluating the more complex claims. To increase decisional accuracy, among other approaches, the strategy will require DDS examiners to develop more complete documentation of their disability determinations, including explaining the basis for their decisions. The strategy also envisions replacing the current SSA quality control system with a quality review that is intended to provide greater opportunity for identifying problem areas and implementing corrective actions and related training. The Commissioner has predicated the success of her claims process improvement strategy on enhanced automation. In 2000, SSA issued a plan to develop an electronic disability folder and automated case processing systems. According to SSA, the technological investments will result in more complete case files and the associated reduction of many hours in processing claims. SSA also projects that the new electronic process will result in significantly reduced costs related to locating, mailing, and storing paper files. SSA is accelerating the transition to its automated claims process, known as AeDib, which will link together the DDSs, SSA’s field offices, and its Office of Hearings and Appeals. According to the Commissioner, the successful implementation of the automated system is essential for improving the disability process. Beyond steps to improve the accuracy and timeliness of disability determinations, the Commissioner’s strategy is also consistent with our 1996 recommendations to develop a comprehensive plan that fosters return to work at all stages of the disability process and integrates as appropriate: 1) earlier intervention in returning workers with disabilities to the workplace, 2) identifying and providing return-to-work services tailored to individual circumstances, and 3) structuring cash and medical benefits to encourage return to work. The Commissioner has proposed a series of demonstrations that would provide assistance to applicants to enhance their productive capacities, thus potentially reducing the need for long-term benefits for some. The demonstrations include early interventions to provide benefits and employment supports to some DI applicants, and temporary allowances to provide immediate, but short- term, cash and medical benefits to applicants who are highly likely to benefit from aggressive medical care. In addition, demonstrations will provide health insurance coverage to certain applicants throughout the disability determination process. While the Commissioner’s proposed approaches for improving the disability determination process appear promising, challenges, including automation, human capital, and workload growth, have the potential to hinder its success. Automation. We have expressed concerns about AeDib, which could affect successful implementation of the Commissioner’s strategy.