The Congress made the eligibility criteria for children to receive SSI more restrictive in order to help ensure that only needy children with severe disabilities are eligible for benefits. From the end of 1989 through 1996, the number of children younger than 18 receiving SSI had more than tripled, from 265,000 to 955,000. This growth occurred after SSA initiated outreach efforts and issued two sets of regulations that made the eligibility criteria for children less restrictive, particularly for children with mental impairments. One regulatory change, issued in December 1990, revised and expanded SSA’s medical listings for childhood mental impairments by adding such impairments as attention deficit hyperactivity disorder and incorporating functional criteria into the listings. Examples of such functional criteria include standards for assessing a child’s social skills; cognition and communication skills; and the ability to concentrate, keep pace, and persist at tasks at hand. The medical listings are regulations containing examples of medical conditions, including both physical and mental impairments, that are so severe that disability can be presumed for anyone who is not performing substantial gainful activity and who has an impairment that “meets” the criteria—medical signs and symptoms and laboratory findings—of the listing. Since the listings cannot include every possible impairment or combination of impairments a person can have, SSA’s rules also provide that an impairment or combination of impairments can “equal” or be “equivalent to” the severity of a listing. There are separate listings for adults and children. The childhood listings are used first in evaluating childhood claims. If the child’s impairment does not meet or equal the severity of a childhood listing, the adult listings are considered. The second regulatory change, issued in February 1991 in response to the Sullivan v. Zebley Supreme Court decision, added two new bases for finding children eligible for benefits, both of which required an assessment of a child’s ability to function: functional equivalence, which was set at “listing level” severity, and an individualized functional assessment (IFA), which was set at a lower threshold of severity. Functional equivalence is based on the principle that it is the functional limitations resulting from an impairment that make the child disabled, regardless of the particular medical cause. It was added as a basis for eligibility in response to the Supreme Court’s determination in the Zebley case that SSA’s medical listing of impairments—which had been the only basis for eligibility—was incomplete. Under functional equivalence, a child could be found eligible for benefits if the child’s impairment limited his or her functional ability to the same degree as described in a listed impairment. Functional equivalence is particularly appropriate for assessing children with combinations of physical and mental impairments. The IFA allowed children whose impairments were less severe than listing level to be found eligible if their impairments were severe enough to substantially limit their ability to act and behave in age-appropriate ways. A child was generally found eligible under the IFA if his or her impairment resulted in moderate functional limitations in three areas of functioning or a marked limitation in one area and a moderate limitation in another area. In 1995, we reported that the subjectivity of the IFA called into question SSA’s ability to ensure reasonable consistency in administering the SSI program, particularly for children with behavioral and learning disorders. We suggested that the Congress consider eliminating the IFA and directing SSA to revise its medical listings. Several welfare reform provisions enacted in August 1996 made the eligibility criteria for disabled children more restrictive: (1) childhood disability was redefined from an impairment comparable to one that would prevent an adult from working to an impairment that results in “marked and severe functional limitations,” (2) the IFA was eliminated as a basis for determining eligibility for children, and (3) maladaptive behavior was removed from consideration when assessing a child’s personal or behavioral functioning. Thus, such behavior would be considered only once—in the assessment of that child’s social functioning—when determining whether the child had a mental impairment severe enough to meet or equal the medical listings. The law also required SSA to redetermine the eligibility of children on the rolls who might not meet the new eligibility criteria because they received benefits on the basis of the IFA or maladaptive behavior. Earlier legislative proposals under consideration in 1995 might have removed from the rolls as few as 45,000 to as many as 190,000 children, according to Congressional Budget Office (CBO) estimates. After the welfare reform legislation was enacted in August 1996 but before SSA issued its regulations, CBO estimated that about 170,000 children on the rolls would no longer be eligible for benefits. After SSA issued its regulations in February 1997, CBO and SSA estimates of children who would be removed from the rolls were very close—131,000 and 135,000, respectively. SSA identified 288,000 children as potentially affected by the changes in the eligibility criteria because they had been awarded benefits on the basis of the IFA or maladaptive behavior. Through January 31, 1998, SSA reviewed the eligibility of 271,489 of the 288,000 children. Of these, 137,090 (50.5 percent) were found eligible to continue to receive benefits and 134,399 (49.5 percent) were found ineligible. Because the number of children deemed ineligible does not yet reflect the results of all appeals, we do not yet know the final outcome on all these cases. Children initially deemed by a disability determination service to be ineligible have 60 days to request reconsideration of their case. If they continue to receive an unfavorable result, they can appeal to an SSA administrative law judge and, finally, to federal court. Recipients can elect to continue receiving benefit payments during the appeal process. Factoring in appeals and experience in conducting redeterminations so far, SSA now estimates that 100,000 children will be removed from the rolls as a result of the redeterminations. In December 1997, SSA issued a report on its “top-to-bottom” review of the implementation of the new regulations to address concerns that children may have had their benefits terminated unfairly. SSA found problems with the adjudication of claims for which mental retardation was the primary impairment as well as potential procedural weaknesses relating to notification of appeal rights and termination of benefits for failure to cooperate with SSA requests for information needed to redetermine eligibility. To remedy these problems, SSA intends to rereview all children whose benefits were terminated or denied on the basis of mental retardation. SSA conducted training in March 1998 to clarify how these claims should be adjudicated. Also, all cases terminated because families did not cooperate with SSA in processing the claim, such as by failing to provide requested medical information or to take the child for a consultative examination, will be rereviewed. SSA found that in two-thirds of these terminations, all the required contacts had not been made or had not been documented in the file. Finally, families of children whose benefits were terminated but did not appeal are being given an additional 60-day period in which to appeal their terminations. Notices of this right as well as the right to continue to receive benefits while the appeal is pending were sent out in February 1998. To implement the new law, SSA issued interim final regulations establishing a new severity standard in February 1997, which we found to be consistent with the law. The regulations define an impairment that results in “marked and severe functional limitations” as one that meets or medically or functionally equals one of SSA’s medical listings. For a child to be determined eligible for benefits under this new and stricter standard of severity, the child’s impairment must generally result in marked functional limitations in two areas of functioning or an extreme limitation in one area. SSA also eliminated the IFA and removed the duplicate consideration of maladaptive behavior from the mental disorders listings. In developing its regulations, SSA concluded that the Congress meant to establish a stricter standard of severity than “one marked, one moderate” limitation, for several reasons. The Congress eliminated the “comparable severity” standard of disability and the IFA, which was created for evaluating impairments less severe than those in the medical listings. A “one marked, one moderate” standard of severity would have retained one of the standards under which children were found eligible under the IFA, which SSA stated would violate the law. Finally, SSA interpreted the conference report to mean that the Congress intended the listings to be the last step in the disability determination process for children. Although SSA articulated the “two marked or one extreme” severity standard in its regulations, it did not modify its existing listings to specifically incorporate functional criteria that would reflect both the new definition of childhood disability and advances in medicine and science. For example, because of advances in treatment, some impairments no longer have as severe an effect on a child’s ability to function as they once did. As a result, some listings are set below the “two marked or one extreme” threshold of severity, and cases are being adjudicated at this less severe level as well as at the “two marked or one extreme” severity level. SSA has identified 28 listings that are most likely to enable children whose impairments result in fewer than two marked functional limitations or one extreme functional limitation to be awarded benefits. Our review shows that such less severe listings can serve as the basis for awards even though SSA rejected the “one marked, one moderate” level of severity in interpreting the “marked and severe” functional limitations required by the welfare reform law. Children who meet or medically equal these less severe listings qualify for benefits under the regulations. At the same time, SSA told us that the regulations prohibit the less severe listings from being used to determine functional equivalence. In March 1997, SSA stated that it planned to issue a Social Security ruling to clarify that only listings at the “two marked or one extreme” level were to be used in determining functional equivalence, but SSA has not yet issued such a ruling. In the absence of such clarification, some adjudicators may be using less severe listings in making functional equivalence determinations.