SSA operates the Disability Insurance (DI) and Supplemental Security Income (SSI) programs—the two largest federal programs providing cash benefits to people with disabilities. The law defines disability for both programs as the inability to engage in any substantial gainful activity by reason of a severe physical or mental impairment that is medically determinable and is expected to last at least 12 months or result in death. In fiscal year 2005, the agency made payments of approximately $126 billion to about 12.8 million beneficiaries and their families. We have conducted a number of reviews of SSA’s disability programs over the past decade, and the agency’s management difficulties were a significant reason why we added modernizing federal disability programs to our high- risk list in 2003. In particular, SSA’s challenges include the lengthy time the agency takes to process disability applications and concerns regarding inconsistencies in disability decisions across adjudication levels and locations that raise questions about the fairness, integrity, and cost of these programs. The process SSA uses to determine that a claimant meets eligibility criteria—the disability determination process—is complex, involving more than one office and often more than one decision maker. Under the current structure—that is, DSI notwithstanding—the process begins at an SSA field office, where an SSA representative determines whether a claimant meets the programs’ nonmedical eligibility criteria. Claims meeting these criteria are forwarded to a DDS to determine if a claimant meets the medical eligibility criteria. At the DDS, the disability examiner and the medical or psychological consultants work as a team to analyze a claimant’s documentation, gather additional evidence as appropriate, and approve or deny the claim. A denied claimant may ask the DDS to review the claim again—a step in the process known as reconsideration. If the denied claim is upheld, a claimant may pursue an appeal with an ALJ, who will review the case. At this step, the ALJ usually conducts a hearing in which the claimant and others may testify and present new evidence. In making the disability decision, the ALJ considers information from the hearing and from the DDS, including the findings of the DDS’s medical consultant. If the claimant is not satisfied with the ALJ decision, the claimant may request a review by SSA’s Appeals Council, which is the final administrative appeal within SSA. If denied again, the claimant may file suit in federal court. In March 2006, SSA published a final rule to establish DSI, which is intended to improve the accuracy, consistency, and fairness of decision making and to make correct decisions as early in the process as possible. While DDSs will continue to make the initial determination, claims with a high potential for a fully favorable decision will be referred to a new Quick Disability Determination (QDD) process. If the claimant is dissatisfied with the DDS’s initial determination or QDD, the claimant may now request a review by a federal reviewing official—a new position to be staffed by centrally managed attorneys. The federal reviewing official replaces the reconsideration step at the DDS level, and creates a new level of federal review earlier in the process. The claimant’s right to request a hearing before an ALJ remains unchanged. However, the Appeals Council is eliminated under the new process, and as a result the ALJ’s decision becomes the final agency decision except in cases where the claim is referred to the new Decision Review Board. Claims with a high likelihood of error, or involving new areas of policy, rules, or procedures, are candidates for board review. If the board issues a new decision, it becomes the final agency decision. As before, claimants dissatisfied with the final agency decision may seek judicial review in federal court. DSI also includes the introduction of new decision-writing tools that will be used at each adjudication level, and are intended to streamline decision making and facilitate training and feedback to staff. In addition, SSA is creating a Medical and Vocational Expert System, staffed by a unit of nurse case managers who will oversee a national network of medical, psychological, and vocational experts, which are together responsible for assisting adjudicators in identifying and obtaining needed expertise. In its final rule, SSA indicated that DSI will further be supported by improvements, such as a new electronic disability system and an integrated, more comprehensive quality system. As noted, the changes introduced by DSI were codified in SSA’s final rule on the subject. Table 1 highlights these new features and associated elements. Implementation of DSI will begin on August 1, 2006, in the Boston region, which includes the states of Connecticut, Massachusetts, Maine, New Hampshire, Rhode Island, and Vermont. Therefore, only those claims filed with SSA in the Boston region on or after August 1 will be subject to the new process. All claims currently in process in the Boston region, and claims filed elsewhere, will continue to be handled under current procedural regulations until SSA takes further action. In addition, for cases filed in the Boston region during the first year of DSI implementation, all ALJ decisions—both allowances and disallowances— will be reviewed by a new Decision Review Board with authority to affirm, modify, reverse, or remand decisions to the ALJ. Since DSI will only affect new claims initiated in the Boston region, claimants whose cases were already in process before August—as well as those filing outside the Boston region—will still have access to the Appeals Council. In their written comments to SSA and discussions with us, public and stakeholder groups, such as claimant representatives and disability advocacy groups, expressed two broad areas of concern regarding the replacement of the Appeals Council with the Decision Review Board: (1) potential for increasing the workload of the federal courts and (2) anticipated hardship for claimants in terms of loss of an administrative appeal level and difficulties associated with pursuing their claims in federal court. SSA’s response to concerns regarding the federal court workload is that all changes associated with new DSI process—taken together—should reduce the need for appeal to the federal courts. At the same time, SSA plans to implement this final step gradually and with additional safeguards to minimize the impact on the courts. In response to concerns about the loss of appeal rights, SSA contends that under the new DSI process, claimants will have a new level of federal review earlier in the process, and should experience a decline in the amount of time it takes to receive a final agency decision without being overly burdened by the Decision Review Board under the new process. Concerns expressed in comment letters to SSA and in our interviews revolved largely around the possibility that the replacement of the Appeals Council with the Decision Review Board would result in rising appeals to the federal courts. Specifically, more than half of the 252 comment letters we reviewed indicated that the Appeals Council provides an important screening function for the federal courts, and that its replacement with the Decision Review Board could result in rising caseloads at the federal court level. Stakeholder groups with whom we spoke reiterated this concern. With the imminent rollout in the Boston region, several stakeholders suggested that SSA closely monitor the effectiveness of the board and the impact of this change on the federal courts. Data from SSA suggest that the Appeals Council is both screening out a number of cases that might otherwise have been pursued in the federal courts and identifying many claims that require additional agency analysis. Between 2001 and 2005, the number of disability cases appealed to SSA’s Appeals Council rose 13 percent. At the same time, the number of disability cases filed with the federal courts (both DI and SSI) declined 9 percent. Figure 1 illustrates the volume of receipts at both the federal court and the Appeals Council levels during this period. Further, the Appeals Council consistently remanded about 25 percent of the claims it reviewed between 2001 and 2005 for further adjudication by the administrative law judge—see figure 2—providing more evidence that the Appeals Council is identifying a significant number of claims that require additional agency review and modification. SSA believes that the implementation of DSI as an entire process will help it make the correct disability determination at the earliest adjudication stage possible and thereby reduce the need for appeal. According to SSA, several elements of the DSI process will contribute to improved decision making. These include the federal reviewing official position, which presents an enhanced opportunity for the agency to thoroughly review case records—with the assistance of medical and vocational experts—- early in the process, as well as new online policy guidance and new tools to aid decision writing, which will be used at each adjudication level to facilitate consistency and help the agency identify and correct errors more quickly. Last, SSA believes that the number of requests for voluntary remands that SSA makes to the federal courts is an indicator that the Appeals Council is not fully addressing errors in the case or otherwise reviewing the case effectively so as to prevent the federal courts from reviewing appeals that should have been handled administratively. SSA believes the Decision Review Board will more effectively screen cases from federal court review by focusing on error-prone claims identified through a predictive model. SSA acknowledges that the agency cannot predict the likely impact on the federal courts’ workload and cannot prevent denied claimants from filing suit with the federal courts. To reduce the likelihood of too many appeals reaching the federal court level, SSA stated in its final rule that it is pursuing a gradual rollout by implementing the DSI process in one small region—the Boston region—and plans to have the board initially review all of the ALJ decisions in that region. According to SSA officials, the board’s review of all ALJ decisions will allow them to test the efficacy of the new predictive model, to help ensure that the model is identifying the most- error prone cases that might otherwise find their way to federal court. Further, SSA officials told us that they are working with the federal court system to develop a way to gauge changes in the court’s caseload.