GAO reviewed state disability determination services' (DDS) procurement of consultative medical examinations (CE) of claimants seeking benefits under the Social Security Administration's (SSA) disability programs.

GAO found that: (1) New York's DDS expects to save $8.6 million over the 3-year life of its contracts; (2) Oregon's DDS expects to save about $1.6 million through 1993; (3) for the 3-year period ending September 30, 1989, cost savings for Oregon and New York were 14 and 15 percent, respectively, of their CE expenditures; (4) DDS said that savings from competitive contracting were realized with minimal administrative costs; (5) New York contracted because it was faced with an increasing number of volume providers on its CE panel; (6) Oregon contracted because of its need to gain control over escalating medical costs; (7) Oregon and New York DDS officials said that the use of competitively awarded contracts resulted in improved overall CE quality; and (8) to decide whether to contract competitively for CE, DDS needs to evaluate their individual circumstances.