Statement by John Dyer,
Acting Principal Deputy Commissioner, Social Security Administration
before the House Committee on Ways and Means
Subcommittee on Human Resources
April 21, 1998
Mr. Chairman and Members of the Subcommittee:
I am pleased to be here today on behalf of the Social Security Administration (SSA) to discuss our administrative initiatives and legislative proposals for protecting the integrity of the Supplemental Security Income (SSI) program. Before I begin, however, I would like to reiterate what Commissioner Apfel said before this Subcomminee last month-SSA is commined to improving the management of the SSI program now and in the future.
SSI is a vitally important program that provides nearly 6.5 million aged, blind, and disabled individuals the means to provide themselves with basic necessities of food, clothing, and shelter. These individuals are among the most vulnerable Americans. These individuals have little in the way of personal savings or other income. For them, SSI is truly the program of last resort and is the safety net that protects them from complete impoverishment.
I want to give you some idea of who gets SSI benefits. More than 2.3 million individuals receiving SSI are aged 65 or older. Of the 2.3 million, nearly half (47 percent) are aged 75 or older. Seventy-three percent of those over 65 are female and many, if not most, are widowed. At the other end of the age spectrum, nearly 880,000 severely disabled children under age 18 receive benefits. These children generally live in households below the poverty line. Even adult beneficiaries who live in their own households live in poverty. The 1998 Federal SSI benefit rate is 5494 a month. This amount represents 74 percent of the 1998 Federal poverty guideline for an individual. Eligible couples-both of whom are either aged, blind, or disabled-fare only slightly better. The couple's Federal benefit rate represents 82 percent of the poverty guidelines for two persons. There are nearly 260,000 eligible couples receiving SSI. By any measure, SSI recipients are among the poorest of the poor.
We need to keep these individuals in mind as we seek to improve the administration of the SSI program. We must be sure that any changes we make do not adversely impact this very vulnerable part of our population.
It should be noted that although the SSI program experienced substantial growth between 1985 and 1994, in the 4 years since then the program has essentially reached a plateau and experienced little or no growth in the number of beneficiaries. One reason for this is that with funding support from Congress, we have substantially increased continuing disability reviews (CDRs). Also there have been several changes enacted recently concerning eligibility for SSI. Another factor is the improved economy. But the important point is that the number of beneficiaries in the SSI program has stabilized and SSA can focus more closely on the continuing eligibility of, and accuracy of payments to, those who are on the rolls.
Let me assure you that we have always been committed to administering the SSI program as efficiently and accurately as possible. It is important to our nation and the low-income aged, blind, and disabled individuals that the program serves. We have every intention of strengthening the administration of SSI in order to restore public confidence in this important program.
Reasons for Overpayments
By design, the SSI program is intended to provide vital assistance to individuals who are aged, blind, or disabled and have limited income and resources. It is a means-tested program that requires SSA to investigate, and the beneficiaries to divulge, all-of their income and assets. All sources of an individual's income, including in-kind income, and any assets are explored, considered, and valued. Some individuals forget to report to us about some of these items, others may not understand what we need to know, and may not fully understand that their ownership interests in financial accounts or real property may affect their eligibility for SSI.
Overpayments occur for a variety of reasons. For example, every time the wages of a disabled child's parent fluctuate because of working extra hours. the amount of income deemed to the child changes and the possibility of an overpayment exists. If an individual has slightly more than the allowable resource limit in his or her bank account at the beginning of a month, he or she may be overpaid SSI for the month. An unanticipated living arrangement change in the middle of a month can cause an overpayment.
SSI is a program that requires an individual's need be matched with his or her income, resources, and living arrangements on a monthly basis. Because it is a practical impossibility for SSA to get every bit of information about every change in a timely fashion, there will inevitably be some amount of overpayment or underpayment. This is inherent in the nature of a program such as SSI. Nevertheless, there are several things that can be done to minimize these overpayments. improve program payment accuracy, ensure that only those who are truly eligible are on the rolls, and strengthen the integrity of the program.
Notwithstanding these administrative challenges, in FY 1996, SSA made correct payments in 94.5 percent of SSI cases. We can do berter, and improving SSI payment accuracy is one of SSA's highest priorities. SSA has developed a comprehensive approach that includes strategies for greatly reducing the problems that cause inaccurate payments and measures the success of the actions. At the core of the plan is a focus on the early identification of changes that affect benefit levels and the prevention, detection, and collection of overpayments.
SSA's efforts to reduce and recover overpayments which I describe below respond to the major sources of overpayments.
The areas of wages, financial accounts, and institutionalization account for nearly half of the overpayments made in the SSI program. We believe that matching information with various databases holds great promise in the prevention of overpayments caused by these factors. SSA has already undertaken steps in this area and we will do more.
Information concerning other income and resource factors account for a quarter to a third of overpayments. An indispensable element in identifying these types of overpayments is the periodic redetermination of SSI recipient eligibility conducted by SSA's claims representatives. The President has included in his budget a proposal to authorize a cap adjusnnent for $50 million in FY 1999 for nonmedical redeterminations of SSI recipients. These funds will help in reducing overpayments in these areas by providing additional resources for this important workload.
Questions of residency in the United States also lead to a relatively small number of overpayments nationally, however, these overpayments generally tend to be concentrated in certain geographic areas. As I describe, below, both SSA and the IG have initiatives underway to reduce overpayments cause by misinformation on residency.
SSA's efforts in all of these areas therefore encompass the vast majority of the causes of SSI overpayments. We also have initiatives to address directly fraud and abuse in the program. In addition, SSA will maintain its ongoing efforts, supported by this Subcomminee, to increase the numbers of continuing disability reviews and to improve our debt collection.
Shortly, we expect to submit legislative proposal to address the reduction and collection of SSI overpayments. Let me now describe SSA' s current efforts in these areas.
Measures To Improve Payment Accuracy
Much of the overpayments in the SSI program are the result of payment inaccuracy. Payment inaccuracy, unlike fraud-based error which results from a deliberate act of deception, is caused either by inadvertent failure to report a change or by changes that occur--and are reported--after the monthly benefit has been processed for payment.
Prevention and detection require knowing the causes of overpayments and instituting cost efficient methods of rooting out these causes. Using agency program review data and Inspector General (IG) and Government Accounting Office (GAO) observations, SSA has identified the leading causes of SSI overpayments: these are wages, financial accounts. and institutionalization. These three areas represent a large percentage of the total overpayment dollars. Better detection of these events--which ideally will lead to prevention of overpayments due to these causes--depends on enhancing existing data matching activities and capitalizing on emerging on-line data exchange opportunities.
Computer data matching has proven to be a highly cost-effective means to identify changes that affect SSI eligibility and payment amounts. Data matches that we currently conduct result in a benefit-to-cost ratio of eight to one. We estimate that the planned new matches will yield the same or even better results.
SSA is aggressively pursuing more frequent matches for current exchanges and new matches that will offer more current information than is received presently. New key matches are:
- Wages--Beginning in October 1998, we will match once a quarter with earnings
data from all States through the Office of Child Support Enforcement's (OCSE)
data bases. This replaces twice-a-year matches with wages reported by employers
to the unemployment agencies of the 44 States that have agreed to coopera te with
SSA in making this wage data available for the purpose of SSA's administering the
SSI program. Wages from OCSE's data bases could be available on-line to SSA
field offices by as early as December 1999. We understand that an amendment
was accepted in the Senate to H.R. 3130 that would significantly limit the value of
the data to SSA by requiring the deletion of the data by OCSE after 12 months in
most cases. A retention period of less than 24 months for any report will
significantly erode the value of the directory as a means of strengthening the
adminis tration of the SSI and DI programs. The Administration strongly opposes
this provision and I urge you to oppose the Senate provision in conference.
- Financial accounts--In order to verify amounts of resources in bank accounts, we currently have to get a signed authorization from the applicant or beneficiary and send it to the bank. The bank then searches its files and either provides us with information about the account balances or tells us that the individual does not have an account at the bank.
We have heen looking into the possibilities of electronically obtaining these same data for several years. Doing away with the manual processing of the requests and replies regarding bank account information would save time and money. Additionally, we would be bener able to identify cases in which there are undisclosed bank accounts because we will be able to canvass more banks electronically than we can by paper to determine if and where individuals have undisclosed accounts.
- Institutionalization--Individuals who are in nursing homes for a full calendar month and who will remain in the institution for longer than 3 months may only be eligible for a reduced SSI benefit of $30 (the "personal needs allowance") , or may be ineligible if they have other income. In 1993, a provision was added to the Social Security Act requiring nursing homes to report admissions of SSI beneficiaries. We have undertaken several initiatives at the regional office level to encourage nursing home operators to comply with this requirement, but our not knowing of individuals' admissions to nursing home admissions still is a frequent cause of overpayments.
We currently match once a year with nursing home admissions from 29 States through the Health Care Financing Administration. We are exploring more frequent matches of data with all States.
SSA has long recognized that on-line access to databases offers the possibility of immediate prevention of overpayments. Under the current scenario in most SSAoffices, verification of wages or unemployment compensation, for example, requires contact with the employer or the unemployment compensation agency. Most often this is done by phone or mail, and takes claims representatives' time and the time of the person or agency from whom/which we are requesting the information. In the case of redeterminations, while we are waiting for verification, we continue to pay the individual based on the information in the file that we verified the last time we contacted the beneficiary. If that information has changed, the individual is either overpaid or underpaid. In addition to improving payment accuracy for current beneficiaries, on-line access also would simplify and speed up initial application and payment processing because verification would be received immediately.
With on-line data access, the claims representative will be able to go to a computer terminal while the individual is still in the office, get verification, and correct the SSI record immediately, This is the approach that we have piloted in our Tennessee offices. Under this pilot, employees in SSA field offices have on-line access to the State's human services, vital statistics, and unemployment and workers' compensation records and the State agencies have on-line access to SSI records.
The Tennessee pilot has been very successful and the idea has been expanded to other States. SSA currently has on-line access to State records with 30 agencies in 20 States. In all but two States-California and Texas--the se are not pilot programs; they are real time. on-line programs with the access and conditions for the information's use stated in agreements entered into between SSA and the State. In many of these States we have on-line access to data from only one or two State agencies. but we continue to negotiate with States and their agencies to expand on-line access. This approach holds promise for improving SSI payment accuracy and saving administrative time and money.
Another area that is a key factor in how well overpayments are prevented and detected is the execution of program procedures. SSA is conducting a campaign of quality assurance to focus attention on persistent sources of error to improve claims development skills through program highlights, training, and process reviews and strengthening of key instructional material. Two areas of immediate emphasis will be wages and in-kind support and maintenance.
We project that these and other administrative payment accuracy initiatives will improve the current payment accuracy level of 94.5 percent to better than 96 percent by FY 2002. Such an improvement will save millions of dollars in SSI program fimds.
On March 11, 1998, Commissioner Apfel sent an Administration bill to the Congress, which included a proposal for discretionary cap adjustment authority related to increased fimding in FY 1999 for nonmedical redeterminations of SSI eligibility. Redeterminations are periodic reviews of an individual's income. resources, and other nondisability-related factors that affect an individual's eligibility or benefit amounts. (Determinations of whether individuals remain disabled are done generally through the continuing disability review process, which I will discuss later.) Redeterminations often uncover unreported changes in individuals' incomes or living arrangements and enable us to correct the SSI record to reflect these changes before large overpayments have been made. Having the resources to conduct additional redeterminations of income and resource eligibility will reduce incorrect payments and result in 5-year program savings of nearly 5216 million.
Improving payment accuracy will be a significant achievement, but a robust debt collection system also is an essential element in strengthening the integrity of the SSI program. SSA has a long-standing commitment to debt management and we are continually engaged in projects that improve our performance in this area.
In 1997 alone, SSA collected $1.7 billion in overpayment debts. Of that total, $1.2 billion was returned to the OASDI Trust Fund' while about $437 million in recovered SSI overpayments were returned to the Treasury's general fund.
SSA recovers more than 80 percent of the SSI and OASDI debt that it is owed when an individual remains on the benefit rolls, but is unable to match that performance when an individual leaves the benefit rolls. The President's budget includes a provision that addresses the problem. This provision would authorize SSA to collect 5S1 overpayments from a former SSI beneficiary's current OASDI benefit. Nearly half of all uncollected SSI overpayments were paid to former S51 beneficiaries currently receiving OASDI benefits; however, there is no authority in present law that authorizes SSA to collect SSI overpayments from the current OASDI benefits of an uncooperative debtor. This proposal will significantly strengthen SSA's ability to recover SSI overpayments and is expected to result in $170 million in program savings over 5 years. We urge the Congress to act quickly on this proposal that would give SSA an important tool in debt collection.
As I mentioned, if the overpaid individual has left the benefit rolls, no offset against
SSI or OASDI benefits is currently possible. However, as part of our debt collection
initiatives, we began using the tax refund offset (TRO) beginning in January of this
year to recover SSI overpayments in such cases. Under TRO, an individual's
overpayment is recovered from tax refunds that are owed to the individual. If an
individual meets the TRO criteria, SSA will send a notice advising him or her that any
income tax refund due would be used to recover the overpayment, and providing an
opportunity for the debtor to protest.
TRO for SSI overpayments has been very successful. So far in 1998, we have recovered an estimated $18.4 million in SSI overpayments through TRO. An additional $4.8 million in SS1 overpayments have been repaid by overpaid individuals after they have been notified of the TRO in order to prevent their tax refund from being reduced or withheld. Therefore, in less than 4 months, TRO has resulted in the recoupment of $23.2 million in the SSI program alone.
Continuing Disability Reviews
Another way in which we ensure the integrity of the SSI program, as well as the DI trust fund, is through continuing disability reviews (CDRs). During FY 1996, SSA processed roughly half a million periodic CDRs, with estimated lifetime savings (including Medicare and Medicaid) of nearly $2.5 billion. Under President Clinton 's leadership, SSA has processed more CDRs more cost-effectively than ever before. During FY 1997, we processed over 690,000 periodic CDRs, a 38 percent increase over 1996. In FY 1998, we expect to process over 1.2 million periodic CDRs, more than double the number of CDRs in 1996. Our improved profiling/mailer process provides a high level of confidence in both our ability to achieve our estimated workload targets and in the accuracy and reliability of the decision resulting from our case reviews.
Our achievements in processing CDRs over the last two years demonstrate Congress' and the Administration's commitment to addressing this crucial workload. Discretionary cap adjustments for additional funds have been authorized to enable SSA to become current in the processing of OASDI CDRs by FY 2000 and title XVI CDRs by 2002. We are proud of our recent accomplishments and are confident that our CDR strategy will lead to reliable and cost-effective monitoring of the disability rolls.
We have increased integrity in both the SSI and OASDI programs with our aggressive activities relating to suspending benefits to prisoners. A little background in this area may be helpful to understand where we are now.
Since its inception in 1974, the Supplemental Security Income (SSI) program has prohibited benefit payments-with certain exceptions for medical facilities-etc an individual for any month in which he or she is an inmate of a public institution (including prisons and jails) throughout the calendar month. Provisions enacted in 1980 suspended Disability Insurance benefits to prisoners who were incarcerated as a result of a felony conviction. In 1983, the law was expanded to include Retirement and Survivors Insurance beneficiaries. In 1994, the OASDI nonpayment provisions were expanded to include individuals found not guilty by reason of insanity (or a similar finding or verdict) with respect to an offense punishable by confinement for more than one year (regardless of actual sentence imposed), and those found incompetent to stand trial with respect to such an offense. In addition, the felony incarceration requirement was changed to conviction of an offense punishable by confinement for more than one year (regardless of the actual sentence imposed).
The Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (PRWORA) included several provisions pertaining to reponing of prisoners for SSI program purposes. One of these is a provision which authorizes the Commissioner of Social Security to enter into agreements which provide for incentive payments to certain State and local institutions for furnishing information to SSA which results in ineligibility of an SSI beneficiary. An instirution becomes eligible for a $400 incentive payment for each individual reported within 30 days of confinement and $200 for each individual reported within 31 through 90 days from confinement.
Under the Clinton Administration, SSA has been in the forefront of enforcing the prisoner ineligibility rules. Before Congress enacted the incentive payment provision. we began a major initiative in 1995 to strengthen prisoner reponing. Under this initiative we contacted all correctional facilities and by the end of 1995, we had reporting agreements with over 3,500 jails, prisons, and local facilities, covering over 99 percent of the inmate population in the United States.
SSA established a highly effective process for receiving prisoner admission data. In addition, we have acquired historical data from the Federal Bureau of Prisons and most State prisons to ensure that we have identified and suspended benefits to all ineligible prisoners. SSA estimates that in calendar year 1995. program outlays were lower by $167 million in OASDI and $90 million in SSI due to suspension of payments to prisoners. In the past 3 years, SSA has suspended nearly 200,000 pnsoners.
In May 1996, in order to further encourage prisons to report to us, the Administration proposed its own version of legislation that would provide incentive payments to prisons for each prisoner that had their SSI benefits suspended because of their repons. This provision was similar to the one eventually enacted in PRWORA later in 1996. SSA has paid 9,000 incentive payments under the PRWORA provision.
Measures To Address Vulnerabilities to Fraud
Although the most important elements in strengthening the SSI program are improved payment accuracy and debt collection, fraud is a significant concern. A strong IG, working together with SSA's employees in local offices, is the most effective means we have to control fraud and abuse in the SSI program. To this end, SSA and the IG have cooperated on developing a comprehensive anti-fraud plan, which we call "Zero Tolerance for Fraud." The plan has three goals: (1) to change programs, systems. and operations to reduce instances of fraud; (2) to eliminate wasteful practices that erode public confidence in SSA; and (3) prosecute vigorously, individuals or gruups who challenge the integrity of SSA's programs. The activities in the plan fall generally under the categories of fraud prevention and detection, referral and investigation. and enforcement. There are presently 33 anti-fraud initiatives in the plan.
Commissioner Apfel, in his March 12 testimony before the Subcommittee, described two very successful anti-fraud initiatives involving attempted claims of false U.S. residency and "middlemen" interpreters, so I will not go into a great deal of detail about them.
Under th IG's Border Vigil project, the Southwest Tactical Operations Plan (STOP) identified individuals who were receiving SSI after fraudulently claiming United States residency. As a result of the IG's work, we revised our policies for verifying U.S. residency and identifying potentially problematic cases. We are extending the program to both border areas in the United States.
An SSA project in Chula Vista, California that used contract investigators to identify individuals who were not U.S. residents led us to the institution of similar efforts along other parts of the southern border. The direct costs associated with the Chula Vista project were $11,475, with indirect costs of a similar magnitude. The project revealed about $500,000 in overpayments and prevented about $400,000 in erroneous payments.
The encouraging results of the Chula Vista project led us to expand the pilot to 12 additional sites in California, New Mexico, and Texas in November 1997. Under this pilot, cases involving questionable U.S. residence are re ferred to a contractor to perform an investigation of the residence issue and to provide a report on the investigations for use by SSA in making residency determinations.
Another of our successes involves thwarting "middlemen" acting as interpreters but providing SSA with misleading or incomplete information. We suhstantially increased the number of bilingual employees in local offices to act as interpreters and increased funding to pay for the services of interpreters when bilingual SSA employees are not available. In addition, we developed strong policies to carry out the provision in P.L. 103-296 that allows us to disregard evidence in a claim--including that provided by a third party--if we have rea son to believe that fraud or similar fault was involved in providing the evidence.
In the area of referral and investigation, SSA and IG have two initiatives underway that strengthen the SSI program's integrity and lessen its vulnerabilities.
In 1994, SSA awarded a demonstration grant to the California Disability Determination Service (DDS) for a Fraud Investigation Unit to serve their Los Angeles area branch offices. Now funded from the regular DDS operating budget, this unit's mission is to take referrals of suspected fraud from DDS adjudicators, and to make timely decisions on the suspect aspects of the claims. Through Febrnary, 1998, this small fraud unit has processed 372 referrals and provided the investigative evidence to support a denial in 49 cases.
Last year, based on the success of the California pilot and similar interagency taskforce activity in the Seattle region, SSA and the IG proposed selling up investigative units in five more locations. These units--called "Cooperative Disability Investigation (CDI) teams--will have the same basic mission as in California with regard to early "in-line" fraud prevention. Although the California unit is staffed entirely with DDS investigators, the new CDI teams will consist of an IG special agent, two investigators from a State or local law enforcement agency. and two DDS and/or SSA personnel. The first CDI team began operations in New York City on March 10th. The others (Atlanta, Chicago, Baton Rouge, and Oakland) will follow over the next several months.
We expect this project to produce almost $35 million in prospective program savings (roughly 10 times its costs) over the next 2 years. In addition, we expect to see increases in employee morale and public confidence as SSA and the DDSs have another tool for a more proactive stand against fraud. If these expectations are borne out, we will seek to expand the concept to other DDSs in coming years.
Subcommittee Draft Proposals
Mr. Chairman, in your letter of invitation, you asked for comments on potential Subcommittee draft proposals. SSA has been looking at some similar proposals.
We believe that we can work with the Subcommittee to develop proposals that have bipartisan support.
We do, however, have some concerns about the Subcommittee proposals. Some appear to have effects on beneficiaries that need to be fully analyzed before we can offer a complete evaluation. Others need to be more fully developed. For instance, I have serious reservations about any proposal that includes a rote application of the two "marked" standard to all of the childhood listings. There are listings that currently use wholly medical criteria that do not fit easily into the two "marked" mold, such as the listings for cancer. SSA is committed to updating the listings where appropriate. However, this process requires careful consideration of the latest medical information for each impairment.
We and other affected agencies would like to work with the Subcommittee staff to develop a more complete understanding of these proposals with the goal of achieving a bipartisan approach.
SSA's stewardship of the SSI program has been both compassionate in its concern for the well-being of the people the program serves as well as vigilant in its concern for its responsibilities to the general public whose taxes support the program.
SSA currently operates the SSI program at a 94.5 percent accuracy level. We are not satisfied with that. We want to improve on that percentage. To achieve that, we have taken a range of actions, the most important of which I have mentioned in my statement today. We will be performing more continuing disability reviews and more frequent general eligibility reviews of SSI recipients wbose case characteristic indicate a high potential for error. And, in coordination with our Inspector General, we will continue to develop initiatives to quickly identify and react to circumstances where individuals are anempting to defraud the taxpayers.
In the area of debt collection, SSA's track record is also good. SSA recovers more than 80 percent of the debt it is owed when the individual remains on the SSI or OASDI rolls. Overall, in 1997, SSA collected $1.7 billion in overpayment debt. Of that amount $437 million was returned to the Treasury's general fund. With the help of the legislation in the President's budget, we will improve our collection efforts through recovery of SSI overpayments from OASDI benefits.
Our goal is to strengthen the integrity of the SSI program while maintaining the essential function it serves of providing basic income support for the aged, blind, and disabled. We believe we are on the right track.
Mr. Chairman and members of the Subcomminee, I wish to thank you for the opporrunity to discuss this important subject with you today.