The SSI program provides financial assistance to disabled people whose income and resources are below specified amounts. As of January 1996, about 2.6 million adults and 1.1 million children were receiving SSI disability benefits and an additional 1.1 million adults were receiving both SSI and DI benefits. Most SSI recipients qualify for Medicaid coverage, and 48 states and the District of Columbia also supplement federal SSI payments with state SSI benefits. In 1995, SSI disability recipients received a total of about $21 billion in federal SSI benefits and $2.6 billion in SSI state supplements. Reviewing recipients’ disability status, especially those most likely to improve, is an important component of good program management. Even though the SSI program was created to provide benefits to people who are severely disabled or terminally ill, some people do improve through treatment, surgery, or the passing of time. Amidst concerns about fraud, waste, and abuse in the SSI program, the Congress passed the Social Security Independence and Program Improvements Act of 1994, which required SSA to conduct CDRs on one-third of SSI recipients attaining age 18 and another 100,000 recipients in each of fiscal years 1996 through 1998. The 1996 amendments to the Social Security Act required that SSA conduct CDRs on all low-birth-weight babies within their first year of life and at least once every 3 years on all children under age 18 whose conditions are likely to improve. The amendments single out low-birth-weight babies because historically a relatively high percentage of these babies, about 40 percent, have had their benefits terminated after CDRs. The 1996 amendments replaced the requirement that SSA conduct CDRs on one-third of recipients attaining age 18 with the requirement that SSA redetermine disability eligibility using adult criteria for all recipients attaining age 18.These redeterminations differ from CDRs in that SSA bases decisions for disability eligibility redeterminations on whether recipients meet eligibility requirements; for CDRs, SSA bases eligibility decisions on whether recipients’ impairments have improved since the last determination. Since these disability eligibility redeterminations can be counted as CDRs on SSI recipients, this report examines SSA’s plans to conduct both of these types of reviews. In addition, this report focuses on CDRs of SSI-only recipients because provisions in the 1994 and 1996 laws apply only to recipients who are receiving disability benefits solely under the SSI program, and not under both the SSI and DI programs. Legislation has required CDRs of DI beneficiaries, including those also receiving SSI benefits, since 1980. The number of SSI CDRs required by the 1994 and 1996 legislation represent large increases over the number conducted in previous years. In fact, the number of CDRs required in fiscal year 1996 alone exceeds the total of all SSI CDRs conducted in fiscal years 1991 through 1995 (see table II.1). According to SSA, it conducted few CDRs of SSI recipients in those years because the agency had limited resources and no legal requirement existed. However, because SSA had the authority to conduct SSI CDRs, SSA continued to schedule SSI recipients for CDRs and, as a result, about 1.9 million SSI adults and children are now due or overdue for CDRs. Tables II.2 through II.4 present selected characteristics, including age, impairment, and length of time receiving benefits, for the SSI population who were due or overdue for CDRs in fiscal year 1996. SSA administers the SSI program with the help of state agencies, called disability determination services (DDS). DDSs make disability determinations for SSA, process initial applications, assess recipients’ potential for medical improvement, and set due dates for and conduct CDRs. DDSs determine when recipients will be due for CDRs on the basis of their potential for medical improvement. On the basis of recipients’ impairments and ages, DDS officials classify individuals into one of three categories: medical improvement expected (MIE), medical improvement possible (MIP), or medical improvement not expected (MINE). Individuals are then scheduled for CDRs at 6- to 18-month intervals if classified as MIE, at least once every 3 years if classified as MIP, and once every 5 to 7 years if classified as MINE. In recent years, given limited resources for conducting CDRs and the large backlog of 2.4 million DI CDRs due or overdue, SSA developed new processes in an effort to conduct CDRs in a more cost-effective manner. SSA developed a mailer CDR process to obtain self-reported information on current medical conditions, treatments received, and work activities as a low-cost alternative to full medical CDRs. The full medical CDR process is labor-intensive and generally involves (1) 1 of 1,300 SSA field offices that determines whether disabled recipients continue to meet the financial eligibility requirement regarding income and resources and (2) 1 of 54 state DDSs that determines whether recipients continue to be disabled, which frequently involves medical exams by at least one doctor. The average cost of a full medical CDR is about $1,000, while the average cost of the mailer CDR is between about $25 and $50. In addition, on the basis of the outcomes of previously conducted CDRs on DI beneficiaries, SSA developed statistical formulas to estimate the likelihood of benefit termination as a result of CDRs using recipient characteristics, such as age, impairment, length of time on disability rolls, and previous CDR activity. SSA sends mailer CDRs to a portion of individuals who it estimates, on the basis of its formulas, have the lowest likelihood of benefit termination. Cases selected for mailer CDRs are later sent to DDSs for full medical CDRs only if responses to the mail questionnaire and information used in the formulas to estimate the likelihood of benefit termination warrant a more comprehensive review. For fiscal year 1996, SSA planned to conduct full medical CDRs for the legally required SSI CDRs and to test the mailer CDR process on over 100,000 additional SSI recipients. Table 1 presents, for fiscal year 1996, the number of CDRs SSA specified in planning documents and the number SSA had initiated and DDSs had completed as of June 1996. As of June, DDSs had completed about 60 percent of the required reviews in each category. SSA is currently modifying its CDR plan for fiscal years 1997 through 2002, which were developed before the enactment of new SSI CDR requirements under the Personal Responsibility and Work Opportunity Reconciliation Act of 1996. Under the new requirements, SSA must conduct at least 150,000 SSI CDRs in each of fiscal years 1997 and 1998, which includes disability eligibility redeterminations on 18-year-olds. Prior to the new requirements, SSA’s CDR plan specified more SSI CDRs in fiscal year 1997, but fewer than 150,000 SSI CDRs in fiscal year 1998. Estimates of the minimum number of SSI CDRs that will be required in later years were not available at the time our fieldwork was completed. However, SSA’s plan called for dramatic increases in the number of SSI CDRs in fiscal years 1999 through 2002, ranging from 367,000 to 625,000 per year. SSA plans to use CDR funds to conduct the legally required SSI CDRs and disability eligibility redeterminations in fiscal years 1996 through 2002. In fiscal year 1996, SSA for the first time set aside regular administrative funds for CDRs, and the Congress took steps to increase funding for CDRs. SSA set aside $200 million for both SSI and DI CDRs and plans to continue that level of funding at least through fiscal year 2002. In addition, the Contract With America Advancement Act of 1996 established a new funding mechanismfor CDRs and authorized up to an additional $2.7 billion for SSI and DI CDRs through fiscal year 2002. This was about $1 billion less than the amount SSA had requested from the Congress and believed would be sufficient, along with regular administrative funds, to conduct CDRs on all SSI recipients who were due or overdue for review and all required DI CDRs through fiscal year 2002. The 1996 amendments to the Social Security Act subsequently authorized an additional $250 million for SSI CDRs and disability eligibility redeterminations in fiscal years 1997 and 1998. Combined, regular administrative funding for CDRs and the new budget authority could total over $4 billion in fiscal years 1996 through 2002. Competing priorities, such as conducting legally required DI CDRs, which include an enormous backlog of reviews, may pose challenges to conducting all required SSI CDRs in fiscal years 1997 through 2002. Furthermore, the same DDS staff who conduct SSI CDRs also conduct DI CDRs and process initial applications and other reviews of disability eligibility required by law. Although SSA has estimated that funds are sufficient to conduct all required SSI and DI CDRs in fiscal years 1996 through 2002, in our companion reports we question whether CDR funds are sufficient to meet those CDR goals. To the extent that CDR funds are not sufficient to conduct all required SSI and DI reviews, SSI CDRs may be scaled back, since SSA generally considers them to be less cost-effective than DI CDRs. Only SSI CDRs were scaled back when SSA received less CDR funding for fiscal years 1996 through 2002 than it had requested from the Congress. Also, according to SSA, the ability to conduct CDRs is always vulnerable to unexpected increases in initial applications and disability eligibility redeterminations. In fact, both of the 1996 laws require work in these areas that may compete with CDRs for DDS staff.