The DI and SSI programs are the two largest federal programs providing cash assistance to people with disabilities. Established in 1956, DI is an insurance program that provides monthly cash benefits to workers who are unable to work because of severe long-term disability. Workers who have worked long enough and recently enough are insured for coverage under the DI program. In addition to cash assistance, DI beneficiaries receive Medicare coverage after they have received cash benefits for 24 months. In 2002, SSA paid about $60 billion to 5.5 million disabled workers, with average monthly cash benefits amounting to $834 per person. DI cash benefits are paid from the Federal Disability Insurance Trust Fund. SSI, created in 1972, is a means-tested income assistance program that provides a financial safety net for disabled, blind, or aged individuals who have low income and limited resources. Unlike the DI program, SSI has no prior work requirement and no waiting period for cash or medical benefits. Eligible SSI applicants generally begin receiving cash benefits immediately upon entitlement and, in most cases, receipt of cash benefits makes them eligible for Medicaid benefits. In 2002, about 5.5 million people with disabilities received SSI benefits. In the same year, federal SSI cash benefits paid to SSI beneficiaries with disabilities equaled $26 billion, and average monthly federal SSI cash benefits amounted to about $398 per person. SSI cash benefits are paid from general tax revenues. The DI and SSI programs use the same statutory definition of disability. To meet the definition of disability under these programs, an individual must have a medically determinable physical or mental impairment that (1) has lasted or is expected to last at least 1 year or to result in death and (2) prevents the individual from engaging in substantial gainful activity (SGA). Individuals are considered to be engaged in SGA if they have countable earnings above a certain dollar level. Moreover, for a person to be determined to be disabled, the impairment must be of such severity that the person not only is unable to do his or her previous work but, considering his or her age, education, and work experience, is unable to do any other kind of substantial work that exists in the national economy. SSA contracts with state DDS agencies to determine whether applicants are disabled. To help ensure that only eligible beneficiaries remain on the rolls, SSA is required by law to conduct CDRs for all DI beneficiaries and some SSI disability recipients to determine whether they continue to meet the disability requirements of the law. In 1980, because of concerns about the effectiveness of the CDR process and growing disability rolls, the Congress enacted a law requiring that CDRs be conducted at least once every 3 years for all DI beneficiaries whose disabilities are not considered permanent and at intervals determined appropriate by SSA for DI beneficiaries whose impairments are considered permanent. SSA issued regulations in 1986 stating its policy of conducting CDRs for SSI disability beneficiaries with the same frequency as it conducts CDRs for DI beneficiaries. In 1994, the Congress established the first statutory requirement for SSI CDRs, requiring that CDRs be conducted for a relatively small proportion of SSI beneficiaries. Welfare reform legislation enacted in August 1996 focused on CDRs for SSI children. This legislation required that SSA (1) conduct CDRs at least once every 3 years for SSI children under age 18 if their impairments are not considered permanent and for infants during their first year of life if they are receiving SSI benefits due to low birth weight and (2) review the cases of all SSI children beginning on their 18th birthdays to determine whether they are eligible for disability benefits under adult disability criteria. The redeterminations for 18-year-olds are considered part of the CDR workload. At the time beneficiaries enter the DI or SSI programs, DDSs determine when beneficiaries will be due for CDRs on the basis of their potential for medical improvement. Based on SSA regulations, DDSs classify individuals into one of three medical improvement categories, called “diary categories”: “medical improvement expected” (MIE), “medical improvement possible” (MIP), or “medical improvement not expected” (MINE). Based on the diary categories, DDSs select a “diary date” for each beneficiary, which is the date that the beneficiary is scheduled to have a CDR. The diary date is generally within 6 to 18 months if the beneficiary is classified as MIE; once every 3 years if classified as MIP; and once every 5 to 7 years if classified as MINE. Upon completion of a CDR, DDSs reassess the medical improvement potential of beneficiaries who remain eligible for benefits to determine the most appropriate medical improvement category and time frame for conducting the next CDR. Beneficiaries classified as MIE are not eligible to receive Ticket to Work services until either the completion of their first CDR, or until they have received benefits for 3 years. While SSA uses diary categories to determine the timing of CDRs, it has developed another method, called profiling, to determine the most cost- effective method of conducting a CDR. Profiling involves the application of statistical formulas that use data on beneficiary characteristics contained in SSA’s computerized records—such as age, impairment type, length of time on disability rolls, previous CDR activity, and reported earnings—to predict the likelihood of medical improvement and, therefore, of benefit cessation. For example, SSA found that the longer an individual is on the disability rolls, the less likely he or she is to have benefits terminated. In addition, once an individual undergoes a CDR, the chance that a new CDR will result in benefit termination is reduced substantially. Reported earnings, on the other hand, greatly increase the likelihood of termination. Through its profiling formulas, SSA assigns a “score” to beneficiaries indicating whether there is a high, medium, or low likelihood of medical improvement. In general, beneficiaries with a high score are referred for full medical reviews—an in-depth assessment of a beneficiaries’ medical and vocational status—while beneficiaries with lower scores are, at least initially, sent a questionnaire, known as a “mailer.” The mailer consists of a short list of questions asking beneficiaries to report information on their medical conditions, treatments, and work activities. If beneficiaries’ responses to a mailer indicate possible improvement in medical condition or vocational status, SSA may refer these individuals for a full medical review. However, in most cases, SSA decides that a full medical review is not warranted and that benefits should be continued. In contrast to mailers, full medical reviews are labor intensive and expensive. These reviews generally involve the following steps: (1) SSA headquarters personnel determine that a CDR is due and notify the SSA processing center; (2) personnel at the processing center locate the beneficiary’s file and send it to the appropriate SSA field office; (3) field office personnel contact the beneficiary, conduct a lengthy interview, and send the file to the appropriate DDS; (4) the DDS requests medical records from the beneficiary’s physicians and other medical sources and, if these sources cannot provide sufficient evidence, schedules medical or psychological examinations with consulting physicians outside the DDS; and (5) a DDS team, consisting of a disability examiner and a physician or psychologist, determines whether the beneficiary continues to meet SSA disability criteria. As of fiscal year 1996, about 4.3 million CDRs were due or overdue. In response, SSA and the Congress focused on providing funding to conduct overdue CDRs and new CDRs as they became due. SSA developed a plan for a 7-year initiative to conduct about 8.2 million CDRs during fiscal years 1996 through 2002. In the Contract with America Advancement Act of 1996 (Pub. L. No. 104-121), the Congress authorized a total of about $4.1 billion to fund the 7-year CDR plan. In addition, The Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (Pub. L. No. 104-193) required SSA to conduct CDRs on several beneficiary groups, such as low birth weight babies and authorized an additional $250 million for CDRs in fiscal years 1997 and 1998. The actual amount appropriated during the 7-year period, about $3.68 billion, was less than the amount authorized in 1996. SSA reported to the Congress in its fiscal year 2000 CDR report that in that year, the agency became current with the backlog of CDRs for all DI beneficiaries. SSA officials indicated to us that although they are in the midst of preparing the final statistics for its fiscal year 2002 CDR report, it became current with the backlog of CDRs for all SSI beneficiaries by the end of fiscal year 2002. Since first implementing the profiling and mailer processes in the early 1990s, SSA has continued its efforts to improve the cost-effectiveness of the CDR process. Most notably, SSA has refined the statistical formulas used in profiling to identify which method—mailer or full medical review—should be used to conduct the CDR. According to SSA officials and studies of the profiling process, these improvements have led to some beneficiaries receiving a mailer who otherwise would have received a full medical review, thereby allowing SSA to reduce the overall cost of the CDR process. Conversely, by improving SSA’s ability to identify beneficiaries who are likely to medically improve, these refinements have also helped the agency better ensure that it is conducting full medical reviews—and ceasing benefits—when appropriate. In addition to improvements in its profiling process, SSA has also implemented other CDR process improvements such as introducing an automated review of mailers. In the midst of its first year following the cessation of CDR-targeted funds, SSA appears to be developing another CDR backlog; the agency estimates it will cost several billion dollars in total over the next 5 years to keep its workload current.