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 1954 and provides monthly cash benefits to severely disabled workers. SSI was enacted in 1972 as an income assistance program for aged, blind, or disabled individuals whose income and resources fall below a certain threshold. For both programs, disability for adults is defined as an inability to engage in any substantial gainful activity because of a severe physical or mental impairment. Both programs also use the same procedures for determining whether the severity of an applicant’s impairment qualifies him or her for disability benefits. In 1998, almost 11 million people received a total of over $73 billion in disability benefits from these programs. SSA’s complex process for determining whether an individual qualifies for a disability benefit—the disability claims process—has been plagued by a number of long-standing problems. For example, claimants who have been dissatisfied with the initial determination and have filed an appeal frequently have had to wait more than 1-1/2 years for a final decision. Moreover, as many as two-thirds of these determinations were subsequently allowed by an administrative law judge (ALJ). In the early 1990s, SSA had difficulty keeping up with a rapidly growing workload, and backlogs of appealed cases waiting for a hearing grew. In response to these problems, SSA concluded that minor improvements to the disability claims process would be insufficient and embarked on an effort to fundamentally reengineer, or redesign, its process. In 1994, the agency issued an ambitious plan for redesigning the process within 6 years. However, 2 years into implementing the redesign plan, SSA had not made much progress, and we and SSA concluded that the scope of the plan was too large. The agency reevaluated its approach and, in February 1997, issued a scaled-back plan with revised milestones. SSA’s disability claims process has long been recognized as complex and fragmented. The decision about whether an individual is disabled is based on standards set forth in the Social Security Act and extensive SSA regulations and rulings. Moreover, disability decisions involve a multilevel process that spans many diverse components, including SSA’s 1,298 field offices, 54 state agencies, and 140 hearing offices. This organizationally complex structure has contributed to a number of problems. For example, through the years a high percentage of claimants who were dissatisfied with their initial determinations received favorable decisions on appeal. Claimants have also waited a long time for final decisions on their eligibility. In the early 1990s, these problems were aggravated by mounting workloads, as applications for disability benefits escalated at the same time that SSA was experiencing a decline in its workforce. This, in turn, caused workloads to back up and increased the time it took claimants to receive decisions on their claims. SSA’s disability claims process, which has not changed fundamentally in over 40 years, is inherently complex and fragmented. The process contains several opportunities for appeal, and the organizational unit involved, professional background of the adjudicator, and procedures for making a decision on appeal are all different from those of the initial determination. Each organizational unit has separate lines of authority and goals without responsibility for the overall outcome of the process. The claims process starts when an individual contacts one of SSA’s 1,298 field offices across the country to apply for benefits. Field office personnel help claimants complete their applications; obtain a detailed medical and work history; and identify other, nonmedical eligibility factors. Field office personnel then forward the claims to one of 54 disability determination service (DDS) agencies that are administered by the 50 states and the District of Columbia, Guam, Puerto Rico, and the Virgin Islands. Under a unique federal-state arrangement, SSA pays state DDSs to determine whether claimants are disabled. At the DDS, a team consisting of a specially trained disability examiner and an agency physician or psychologist reviews the available medical evidence and gathers additional medical evidence, if necessary. In making the disability determination, the team follows official guidance found in SSA’s Program Operations Manual System (POMS), which is based on applicable laws and SSA’s regulations and rulings and also includes detailed instructions for processing cases. If the claimant is dissatisfied with the initial determination, the claimant may request a reconsideration review within 60 days of receiving the determination. Reconsideration is also performed by the DDSs and is based on the same guidance as the initial determination but is carried out by a new adjudicative team. If the claimant is dissatisfied with the determination, he or she has 60 days to appeal and request a hearing before an ALJ. ALJs are hearing officers located at 140 hearing offices around the country that are administered by SSA’s Office of Hearings and Appeals (OHA). ALJs review the file to determine if additional medical evidence is needed, conduct a hearing, and render a decision. ALJs conduct de novo hearings; that is, ALJs may consider or develop new evidence and are not bound by DDS determinations. These hearings often present the first opportunity for face-to-face contact between claimants and the individuals deciding their eligibility. In rendering a decision, ALJs do not follow the POMS but rely directly on applicable laws and SSA regulations and rulings. ALJs are subject to the Administrative Procedure Act, which affords them some independence in making a disability decision. Finally, if the ALJ denies the claim, the claimant has 60 days to request a review by the Appeals Council, an independent review group attached to the OHA and composed of administrative appeals judges. The Appeals Council may decide to dismiss the request for review, grant the request and issue its own decision, or remand the case back to the ALJ. The Appeals Council is the claimant’s fourth and final level of administrative review. Upon exhausting these administrative remedies, the claimant may file a complaint with a federal court. Figure 1.1 shows the four decision points in SSA’s current disability claims process. SSA’s approach to reviewing the quality of the disability decision reflects the complex and fragmented nature of the process. As we have previously reported, current quality assurance reviews focus on DDS determinations and ALJ decisions in isolation from one another, and the approach for reviewing DDS determinations differs from the approach for reviewing ALJ decisions. Reviews of DDS determinations are conducted by staff from SSA’s Office of Quality Assurance (OQA). These reviews focus heavily on DI claims that have been allowed. In conducting their quality review, OQA staff use the same approach, policy, and procedures that the DDSs use in reaching a determination; that is, they rely on the POMS. In contrast, only a small number of ALJ allowance decisions are selected for review by SSA’s Appeals Council. For the most part, reviews of ALJ decisions predominantly consist of reviews of claims denied by ALJs and appealed by claimants to the Appeals Council. In reviewing ALJ decisions, the Appeals Council relies on the same laws and SSA regulations and rulings as those used by ALJs. SSA’s disability claims process has long suffered from problems associated with its complexity and fragmentation. Among these problems are the high allowance rates by ALJs of appealed DDS determinations. In fiscal year 1993, before SSA issued its redesign plan, 68 percent of determinations that were appealed received favorable decisions at the hearing level. High ALJ allowance rates have been attributed to a number of factors. According to SSA, an ALJ might arrive at a different decision than a DDS because the claimant’s condition has worsened, or because ALJs are more likely than DDS decisionmakers to meet with claimants face-to-face, and thus have access to more or different information. However, SSA studies have also found that DDS and ALJ adjudicators often arrive at different conclusions even when presented with the same evidence. Disability decisions require difficult judgments, and adjudicators sometimes reach different conclusions. Further, DDS and ALJ adjudicators use medical expertise differently and rely on different documents for guidance when making decisions. Finally, training has not been delivered consistently or simultaneously to all groups of decisionmakers. This high rate of allowances at the hearing level has raised questions about the fairness, integrity, and cost of SSA’s disability program. In fiscal year 1998, the cost of making a determination at the DDS level was $547 per case, while the cost of an ALJ decision was an additional $1,385. In general, the costs of administering these disability programs reflect the demanding nature of the process: in fiscal year 1998, SSA spent about $4.3 billion, or almost 66 percent of its administrative budget, on the disability programs, even though disability beneficiaries are only 21 percent of the agency’s total number of beneficiaries. Another long-recognized problem with SSA’s claims process is that many claimants must wait a long time for their final decisions. Because of the multiple levels and decision points in the process, a great deal of time passes while a claimant’s file is passed from one employee or office to another. Delays are also caused by the need to obtain extensive medical evidence from health care providers to document the basis for disability.One SSA study conducted in 1993 showed that an average claimant waited up to 155 days from initial contact with SSA until receiving an initial determination notice, during which time 16 to 26 employees might have handled the claim. Only 13 hours of these 155 days were spent on “task time”—that is, time spent working directly on the case. Further, the study found that it could take up to 550 days from initial contact to receipt of a hearing decision, with only 32 hours of this time spent on task time. As a result of these multiple handoffs and the general complexity of the process, SSA believes claimants do not understand the process and have had difficulty obtaining meaningful information about the status of their claims.