Testimony given by Ken Nibali, Associate Commissioner for Disability, from the 9/12/00 Hearing on the "Inspector General Report on the Implementation of the Drug Addiction and Alcoholism Provisions of the P.L. 104-121".

This hearing was held before the House Committee on the Budget, Task Force on Welfare

Mr. Chairman and Members of the Task Force:

I am pleased to be here today to discuss issues relating to the Social Security Administration's (SSA's) implementation of the drug addiction and/or alcoholism (DAA) provisions of Public Law 104-121. While SSA worked aggressively to successfully implement this legislation, we are appreciative of the work by the Inspector General to identify potential concerns with our implementation and give us the opportunity to address those concerns. I will discuss the history of these provisions, the steps we took to implement the legislation, the recent review and report by the Inspector General of implementation, and our actions and results pursuant to his recommendations. Again, I want to thank the Inspector General and his office for helping us implement this legislation.


The original legislation passed by Congress in 1972 to create the Supplemental Security Income (SSI) program required that disabled individuals whose DAA condition was material to their disability accept treatment if available and have their benefits paid to a representative payee. These two special requirements did not apply to SSI recipients who were determined to be disabled independently of their substance addictions (e.g., recipients who were disabled due to heart disease). Nor did they apply to Social Security Disability Insurance (SSDI) beneficiaries. All SSI cases in which alcohol and/or drug addiction was material to the finding of disability were flagged with special DAA codes.

P.L. 103-296

The Social Security Independence and Program Improvements Act of 1994, P.L. 103-296 enacted August 15, 1994, placed additional stringent requirements on individuals disabled due to DAA. Among other things, it extended the treatment participation requirements to SSDI beneficiaries whose substance abuse was material to their disability, required suspension of benefits for non-compliance with treatment, and limited payment of benefits to SSI recipients disabled due to DAA to 36 months. For DI beneficiaries disabled due to DAA benefits were limited to 36 months during which treatment was available. Our efforts to identify and code all DAA cases intensified. Special DAA codes were also applied to SSDI cases to indicate DAA materiality.

P.L. 104-121

All benefits for individuals disabled solely due to DAA were eliminated in Public Law 104-121, the Contract with America Advancement Act of 1996 which became law on March 29, 1996. Among other things, for individuals whose DAA is a contributing factor material to the finding of disability, this law prohibited DI and SSI eligibility effective with all claims filed or finally adjudicated on or after March 29, 1996. This prohibition was effective January 1, 1997, for individuals already receiving benefits based on DAA. SSA was required to notify current beneficiaries of the new provisions by June 27, 1996, and complete new medical determinations by January 1, 1997 for affected current beneficiaries who requested such a determination by July 29, 1996. Benefits (including Medicare and Medicaid) would stop unless the new determination showed that DAA was not material to the finding of disability (i.e., beneficiaries had to be disabled regardless of any DAA condition). Additionally, beneficiaries who have a DAA condition and are incapable of managing their benefits are required to have a representative payee and to be referred to the appropriate State agency for treatment.

SSA took immediate steps to implement the legislation. We immediately instructed our disability adjudicators on how to process DAA cases under the new law, including the prohibition against allowing benefits in any case where DAA was material to the finding of disability. We were able within days of enactment to mail information across the country to several hundred organizations within the disability community-including legal aid and advocacy groups, payees, and county and state welfare agencies-informing them of the new law and what they could do to help their clients navigate the appeals process.

In June 1996, over 209,000 beneficiaries with special DAA codes were notified that their disability benefits would terminate effective January 1, 1997, due to the change in the law and that they could request a new medical determination.

  • We received about 141,000 responses to the over 209,000 initial notices. Of these, about 131,000 cases required a medical decision. Of the remaining 10,000 cases: about half had benefits terminated for some non-DAA reason before a DAA medical decision was made; about 4,000 had been incorrectly coded as DAA on SSA's systems; and almost 900 were found eligible for other benefits based on age. For the 68,000 individuals who did not respond to the initial notice, eligibility to disability benefits was terminated effective January 1, 1997.
  • SSA made medical decisions in about 131,000 cases. After appeals, benefits were continued based on another disability in about 81,000 cases and 50,000 were ceased.
  • Out of all the 209,000 identified DAA beneficiaries, SSA ceased benefits for about 123,000 beneficiaries and continued benefits based on another disability (or based on age) for about 86,000 beneficiaries.

Benefit payments continued past January 1997 for beneficiaries whose timely filed appeals were still pending, but the vast majority of terminations were effectuated by January 1, 1997.

By the end of 1998, with the exception of a few appeals, the 209,000 identified DAA beneficiaries had either established that DAA was not material to their disability or had their benefits stopped.

OIG Review and Report and SSA's Actions

In November 1998, SSA's Office of the Inspector General (OIG) questioned whether some individuals were being paid disability benefits on the basis of DAA. OIG found that almost 20,000 beneficiaries with a diagnosis of DAA or a DAA code were still receiving benefits and asked SSA to respond.

In response to the OIG inquiry, SSA immediately started a review process through a combination of expedited continuing disability reviews (CDRs) and other expedited folder reviews.

Subsequent to the OIG review, on May 12, 2000, the Inspector General issued the report Implementation of Drug Addiction and Alcoholism Provisions of Public Law 104-121. The report noted that SSA had not identified every beneficiary for whom DAA was a contributing factor material to the finding of disability, identified the almost 20,000 cases OIG had questioned, and projected that an estimated 3,190 individuals may be being paid benefits who should have been terminated for DAA materiality.

OIG made a number of recommendations to SSA involving reviewing cases and modifying our systems so that DAA diagnosis codes would not be accepted. We agreed with all of the recommendations. Because we had begun action as soon as OIG had questioned us about beneficiaries with DAA coding, I am happy to report that we had already corrected many of the problems by the time the report was issued, and since then have corrected the rest. We released cases for priority review and accelerated continuing disability reviews for others. The results are that a total of 339 of the almost 20,000 individuals identified by the Inspector General were found to be improperly receiving benefits because of DAA materiality and thus benefits have been ceased. Additionally, in August 1999, we completed modifying our systems to preclude a DAA diagnosis in all cases except denials.

The Inspector General did SSA a good service by identifying this group of cases involving DAA that were not reviewed and suggesting that we implement system edits to ensure that no DAA cases can be paid benefits. In retrospect we can see that we should have initially reviewed even those cases where our systems coding showed that a determination had already been made that DAA was not material. We took action as soon as the Inspector General brought this to our attention. The bottom line is that SSA implemented the DAA legislation timely and terminated benefits to more than 123,000 out of the over 209,000 individuals originally coded as DAA.


We at SSA are proud of the actions we have taken to implement the DAA legislation. While regretting that we did not locate the final few hundred individuals until the Inspector General brought this to our attention, I cannot say enough about the dedicated employees in SSA and the State DDSs who handle our disability program.

Again, I would like to thank the Inspector General and his office for their help in our implementation of this legislation. By identifying cases that were incorrectly coded and needed review, they provided us a valuable service. That concludes my statement. I would be happy to answer any questions you might have.