The Social Security Administration (SSA) administers two disability programs that provide monthly cash benefits to eligible individuals: Disability Insurance (DI) and Supplemental Security Income (SSI). DI provides benefits to individuals (and their dependents) who have paid into the Disability Insurance Trust Fund. SSI provides assistance to low-income individuals. To be eligible for DI or SSI benefits based on a disability, an individual must have a severe long-term disability. In December 2015, SSA made payments to 8.1 million individuals receiving only DI benefits, 4.6 million individuals receiving only SSI benefits, and 1.5 million individuals receiving both DI and SSI benefits.
To help ensure that only eligible individuals continue to receive benefits, SSA is generally required to conduct periodic continuing disability reviews (CDR). These reviews assess individuals’ continued eligibility for benefits based on several criteria, including whether they demonstrate medical improvement. For cases with a low likelihood of medical improvement, SSA sends individuals a low-cost questionnaire, called a mailer. Other cases receive more in-depth full medical reviews. When an individual’s benefits are ceased as the result of a CDR, the forgone benefits represent savings to the federal government. In fiscal year 2013, the most recent year for which data are available, SSA conducted more than 1.5 million CDRs, including over 400,000 full medical reviews, which saved the federal government an estimated $7.1 billion in forgone lifetime program benefits. When CDRs are not conducted as scheduled, some recipients may receive benefits for which they are no longer eligible, potentially costing taxpayers billions of dollars. As GAO reported in February 2016, SSA has had difficulty completing timely reviews since 2003 and, as a result, amassed a backlog of more than 900,000 pending CDRs by the end of fiscal year 2014. SSA officials cited resource limitations and competing priorities as driving factors for the CDR backlog.
In a June 2012 report—which was featured in GAO’s 2015 annual report on fragmentation, overlap, and duplication—GAO identified conducting additional reviews of children receiving SSI benefits as a potential source of cost savings, estimating that SSA could save the federal government $3.1 billion over 5 years by becoming and remaining current on reviews of SSI children with mental impairments who are likely to improve. By contrast, this report section, which is based on a report GAO issued in February 2016, more broadly considers reviews of individuals receiving benefits in either of SSA’s disability programs and focuses on how cases are prioritized for review.
The Disability Insurance Trust Fund is generally funded by revenues from payroll taxes, interest on the trust fund, and income tax on benefits.
For DI, the legal requirements to conduct CDRs can be found at 42 U.S.C. § 421(i). For SSI, the legal authority and requirements to conduct CDRs can be found at 42 U.S.C. § 1382c(a)(3)(H).
In February 2016, GAO found that because SSA does not complete all CDRs as scheduled, it uses a range of inputs to prioritize the order in which it conducts CDRs. SSA selects cases to receive a CDR first using a set of priorities based on legal requirements and agency policies and then statistical models that score each case for the likelihood of medical improvement. Certain types of beneficiaries are designated as high priority using a range of considerations. For example, reviews of SSI children at age 18 and reviews of SSI children up to 1 year old who are receiving benefits due in part to low birth weight are legally required, and therefore these reviews are prioritized above all other groups of CDRs. Cases not included in a high-priority group are prioritized first by benefit program (DI, SSI Other Children, and SSI Adults) and then within benefit program by statistical scores developed by SSA to identify cases with the highest likelihood of medical improvement. CDRs for the lower-priority groups are initiated as resources permit. Any cases that do not receive a mailer or full medical review are backlogged for future review.
GAO reported that although SSA considers cost savings to some degree when prioritizing CDR cases, it does not do so in a manner that maximizes potential savings. GAO found that the order in which SSA prioritizes beneficiary groups for CDRs does not fully align with the average savings per full medical review for those groups. Specifically, although the SSI Other Children group has higher average savings in forgone disability benefits than DI beneficiaries, SSI Other Children are prioritized after DI beneficiaries for CDRs. According to SSA, DI cases have been given priority over SSI Other Children partly to protect the Disability Insurance Trust Fund, which is the source of benefit payments to most DI recipients. However, recent action to address the solvency of the Disability Insurance Trust Fund somewhat mitigates this rationale. In addition, GAO found that SSA does not fully capture differences in average savings among beneficiary subgroups in its prioritization process. For example, the average lifetime savings per full medical review among four DI subgroups (i.e., workers receiving only DI, survivors receiving only DI, workers receiving DI and SSI, and survivors receiving DI and SSI) differed by as much as approximately $3,000 in fiscal years 2012 and 2013, but SSA does not distinguish between these subgroups when selecting cases for review.
Furthermore, GAO reported that SSA does not take into account differences in savings across individual cases when selecting cases for review. The amount of potential savings associated with an individual case depends on various factors that affect how much SSA would have paid if the individual continued to receive disability benefits over time, including the individual’s age, life expectancy, and monthly benefit payment. For example, two individuals who are different ages but are otherwise similar (e.g., live in the same state, have the same benefit amount, and have the same likelihood of medical improvement as determined by SSA’s statistical models) would generate different expected savings from a CDR because the younger individual would likely receive benefits for a longer period of time. Similarly, two individuals who have different benefit amounts but are otherwise similar would generate different expected savings from a CDR because the individual with higher monthly benefits would likely receive greater total benefits over time. Prioritizing the CDR for the younger individual or the individual with a higher benefit amount could result in greater savings for SSA. However, SSA lacks a mechanism for factoring expected savings from benefit cessation into its CDR prioritization process on a case-specific basis, despite the fact that federal internal control standards instruct federal agencies to ensure effective stewardship of public resources.
SSI Other Children refers to children receiving SSI benefits who are not currently eligible for reviews at age 18 or for low birth weight. SSI Adults refers to adults receiving SSI benefits because of disability.
According to the Congressional Budget Office, the Bipartisan Budget Act of 2015 is expected to delay the exhaustion of the Disability Insurance Trust Fund until fiscal year 2021. Previously, the fund was projected to be able to pay DI benefits in full on a timely basis until the fourth quarter of 2016.
In DI, workers are those beneficiaries who paid into the Disability Insurance Trust Fund through payroll taxes. Survivors are workers’ dependents and surviving family members who are eligible to receive DI benefits.
To promote more efficient use of SSA’s resources, GAO recommended in February 2016 that the Acting Commissioner of Social Security direct the Deputy Commissioner of Operations to take the following action:
If SSA further incorporates cost savings into its process for selecting which CDRs to conduct, the agency could realize greater savings for the federal government by targeting cases with the highest potential savings among those with the highest likelihood of benefit cessation. GAO was unable to quantify the potential financial benefits of incorporating case-specific indicators of potential cost savings because it lacked information to inform the range of actuarial assumptions necessary to make such a calculation.
The information contained in this analysis is based on findings from the reports in the related GAO products section. GAO reviewed legal requirements for conducting certain types of CDRs and analyzed data on the number and type of CDRs conducted for fiscal years 2003 through 2013 (the most recent year for which complete data were available). GAO reviewed documentation about how SSA prioritizes which CDRs to conduct each year and about the statistical models that SSA uses to help prioritize CDRs, and interviewed SSA officials about these practices.
Table 20 in appendix V lists the programs GAO identified that might have opportunities for cost savings or revenue enhancement.
In commenting on the February 2016 report on which this analysis is based, SSA partially agreed with GAO’s recommendation to further consider cost savings when prioritizing full medical reviews. SSA stated that although it could do more to increase the return on its CDRs, the agency’s statistical models and prioritization already do much of what was recommended. GAO noted that the models predict medical improvement and are not designed to take expected cost savings into account. Therefore, GAO maintains that to maximize expected cost savings, SSA could refine its prioritization process by factoring in actuarial considerations apart from its existing statistical models.
GAO provided a draft of this report section to SSA for its review. SSA did not provide comments on this issue.
For additional information about this area, contact Daniel Bertoni at (202) 512-7215 or firstname.lastname@example.org.
The Social Security Administration (SSA) selects cases for continuing disability reviews (CDR) using several inputs, but it does not do so in a manner that maximizes potential savings. SSA first prioritizes CDRs required by law or agency policy such as those for children under 1 year old who are receiving benefits due in part to low birth weight. Then SSA uses statistical models to identify the re...
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