Astrue Written Statement to Appropriations Committee

Mr. Chairman and Members of the Subcommittee, before I begin I want to express my sincere
appreciation for your efforts in securing funding for the Social Security Administration (SSA) in
Fiscal Year (FY) 2008. FY 2008 could be a watershed year for SSA. For the first time in 15
years, Congress has appropriated not only the President’s budget request, but an additional
$148 million to address SSA’s disability hearings backlog. On behalf of the American public, I
am deeply grateful for the Committee’s support of the Social Security programs and want to
assure you that your decision to support the Agency and its backlog plan will truly make a
difference in people’s lives. Today, I will discuss SSA’s FY 2009 budget request, as well as our
plans to improve the disability workloads.

As you know, SSA is now at a critical juncture. Due to the aging of the baby boomers, SSA is
facing an avalanche of retirement and disability claims at the same time that it must address
large backlogs due to years of increasing workloads and limited resources. Over the last few
years as SSA offices lost staff, waiting times increased, lines grew longer, and busy rates in our
field offices deteriorated. Without sustained, adequate funding, this situation will only worsen.
Furthermore, we must attack the disability backlogs, which have dramatically and unacceptably
damaged many applicants’ lives.

It is a moral imperative to reduce the disability backlogs, which have caused an incredible
hardship for disabled workers and their families as they cope with the loss of income and often
medical insurance as well due to a severe disability. With the additional funding provided by
Congress, SSA will be able to implement all of the key features of our Hearings Backlog
Reduction Plan. We will build a firm foundation for the future with automation improvements,
fast-track reviews, Administrative Law Judge (ALJ) hiring, and other initiatives, so that we can
significantly reduce waiting times while also improving accuracy.

While FY 2008 will allow us to make significant inroads, sustained, adequate funding is critical
so that we can continue to make progress. Over the next 10 years, SSA’s traditional workloads
will increase substantially – retirement claims by over 40 percent and initial disability claims by
nearly 10 percent. The first of over 80 million baby boomers has already applied for retirement
benefits. Baby boomers are also applying for disability benefits in greater numbers than
previous generations. At the same time as SSA faces increasing workloads, the Agency must
attack the disability backlogs and address new non-traditional workloads, such as the Medicare
Prescription Drug Program and immigration reform.

From FY 2001 through FY 2007, SSA achieved a cumulative productivity improvement of
15.5 percent. However, although we continue to be a can-do Agency and are implementing
efficiencies both large and small, productivity alone cannot fully offset the increase in our
workloads. Furthermore, inflationary growth in costs such as rent, guards, and employee
salaries and benefits have more than offset increases in SSA’s budget in recent years, leaving
SSA with even fewer resources to address these growing workloads. SSA currently requires
over a $400 million increase each year simply to keep up with increases in fixed costs. As a
result, staffing levels have declined significantly, which has affected service to the public.
The 2009 President’s Budget will enable SSA to build upon planned accomplishments in
FY 2008 and make significant progress. At $10.460 billion for SSA’s administrative expenses,
the President’s Budget provides a nearly $600 million or 6 percent increase over FY 2008.
SSA’s administrative budget includes $10.327 billion for the Limitation on Administrative
Expenses account, $98 million for the Office of the Inspector General, and $35 million for
Research. At this funding level, we expect to make substantial progress with our Hearings
Backlog Reduction Plan by processing 85,000 more hearings in FY 2009 compared to FY 2008,
ultimately reducing the number of hearings pending from over 750,000 to 683,000 in one year.
We will be able to reduce the initial disability claims backlogs to the lowest level in 10 years; the
number of initial disability claims pending will drop below 500,000 for the first time since 1999.
Finally, the FY 2009 budget will put us in a better position to handle the onslaught of work we
are confronting due to the aging of the baby boomers. We plan to process over 400,000
additional retirement claims in FY 2009 as compared to FY 2007, enabling SSA to keep up with
the influx of baby boomer claims.

SSA’s budget provides the necessary resources to begin to halt the decline in customer service
by preventing further staffing losses and investing in needed technology. The budget is a
fiscally reasonable and responsible approach. A multi-year effort is needed to eliminate the
disability backlogs. In addition, SSA will not be able to handle some of its less visible work,
generally work that is done after an individual is approved for benefits.

Overview of SSA’s Programs and Responsibilities

SSA administers the Nation’s social security programs, including Old-Age and Survivors
Insurance and Disability Insurance (OASDI), commonly referred to as Social Security, and
Supplemental Security Income (SSI). Through these programs, SSA affects nearly all
Americans at some point in their lives.

In FY 2009, SSA will pay $683 billion in Federal benefits to nearly 56 million people. While
Social Security trust fund benefit payments are permanently appropriated, and therefore not part of the budget requests before this Committee, the administrative resources that SSA needs in order to pay these benefits are part of the appropriations requests that I am asking you to
support. SSA has four appropriations requests before this Committee, totaling $56.3 billion:
Limitation on Administrative Expenses, Office of the Inspector General, Supplemental Security
Income, and Payments to the Social Security Trust Funds.

In FY 2009, some of the tasks SSA employees will perform with the administrative resources
requested in the President's budget include: processing over 6.8 million claims for benefits;
making decisions on 644,000 hearings; issuing 20 million new and replacement Social Security
cards; processing 274 million earnings items for crediting to workers’ earnings records; handling
approximately 67 million transactions through SSA’s 800-number; issuing 150 million Social
Security Statements; processing millions of actions to keep beneficiary and recipient records
current and accurate; and conducting 329,000 medical continuing disability reviews (CDRs) and
nearly 1.5 million non-disability SSI redeterminations.

In addition to our core workloads described above, SSA has complex responsibilities related to
the Medicare program, immigration, homeland security and data exchange programs.
I would now like to discuss our Limitation on Administrative Expenses appropriations request.

President’s Request for SSA’s Limitation on Administrative Expenses

The President’s Budget includes $10.327 billion for SSA’s Limitation on Administrative
Expenses (LAE), providing SSA with the resources necessary to administer the Nation’s social
security programs. This is less than 1.5 percent of SSA's total estimated outlays of
approximately $697 billion under current law, and an increase of $582 million in discretionary
budget authority from the FY 2008 appropriation.

The requested increase is needed to provide the salaries and benefits, facilities, computer and
telecommunications equipment, training, and other expenses required to deliver service to the
American public. Approximately 70 percent of our administrative resources are used for
personnel costs. The remainder is used to support these personnel and the workloads they
process. Due to fixed cost increases, such as annual increases to Federal employee salaries,
benefits, rent, and guard services, the total requested increase is essential to avoid disruptions
to the service SSA provides and to help provide better service to the millions of Americans who
count on us each and every day.

There are three overarching themes of SSA’s FY 2009 LAE budget:

• Improving the Disability Programs - Eliminating the hearings backlog is a moral imperative
for the Agency. This effort will take several years, but by the end of FY 2009, SSA will have
laid the groundwork of regulatory and process changes needed and will be driving waiting
times down. We already have made significant progress, which will be discussed later in the
statement. SSA also will process more initial disability claims, resulting in the lowest
pending level for these claims since 1999, and will make changes to the disability process to
improve timeliness, accuracy and efficiency.
• Enhancing Service to the American Public - SSA will continue to improve its retirement and
enumeration processes, safeguard personally identifiable information, and reach out to all
Americans through financial literacy efforts. Furthermore, with the FY 2008 enacted
appropriation and the FY 2009 budget, SSA will end a trend of staffing declines that has
damaged service to the public.
• Innovating, Automating and Investing in the Future - The FY 2009 budget, if it receives the
full support of Congress, will allow SSA to make automation and business process changes
which will improve service to the public. The budget also provides more support for program
integrity to ensure that the public’s money is spent in an appropriate fashion.

I would now like to address these three key areas of SSA’s FY 2009 budget in more detail.
Improving the Disability Programs

Eliminating the Hearings Backlog – SSA’s Recent Accomplishments and Future Plans

SSA will be implementing the Hearings Backlog Reduction Plan over the next 5 years to
eliminate the hearings backlog as efficiently and expeditiously as possible. These new
initiatives will increase the Agency’s capacity to hold hearings and implement necessary
modernizations to the hearing process. Crucial to the plan’s success is full funding of SSA’s
FY 2009 budget, which would ensure that hearing offices have enough staff to handle more
cases and allow critical improvements to Agency infrastructure.

There are four key elements of the Hearings Backlog Reduction Plan that I believe hold the
most promise to eliminate the hearings backlog:

• Accelerating Review of Cases Likely or Certain to be Approved;
• Improving hearings procedures;
• Increasing adjudicatory capacity; and
• Increasing efficiency through automation and improved business processes.

I am pleased that we have already made progress in many of these areas. For example,
national rollout of the Quick Disability Determination (QDD) process, designed to identify and
expedite claims that are likely to be allowed, began in October 2007. An electronic screening
tool/predictive model is used to identify claims where there is a high probability that the claimant is disabled and where medical evidence can be easily and quickly obtained. QDD claims are electronically routed to the state Disability Determination Services where experienced disability examiners and other staff review and adjudicate them on an expedited basis, many times in less than two weeks. As of January 2008, 1 percent of all cases nationally are being reviewed within 8 days under the new QDD process, and we expect that percentage to increase in the next
year.
We also are making progress on Compassionate Allowances, which is a way of quickly
identifying diseases and other medical conditions that invariably qualify under SSA’s medical
listings based on minimal medical information. Many of these claims can be allowed based on
confirmation of a medical diagnosis supported by medical evidence. For example, allowances
for cases such as catastrophic congenital anomalies (such as anencephaly, a form of
Tay-Sachs disease, and the most common form of Down syndrome), acute leukemia,
amyotrophic lateral sclerosis (ALS), and pancreatic cancer can be made as soon as the medical
diagnosis and onset data is confirmed.

In recent months SSA has continued to significantly reduce the number of hearing requests that
have been pending the longest. At the beginning of FY 2007, there were over 63,000 hearing
requests that would have been 1,000 or more days old on September 30, 2007. By September
30, SSA reduced that number to 108 and, since then, the remaining cases have been
processed. For FY 2008, SSA raised the bar for its own performance and set a goal to resolve
over 135,000 cases that are or would be 900 days old or older by the end of the fiscal year. As
of the end of January, SSA has reduced that number to 76,099. As the number of aged cases
is reduced, SSA will create new targets to ensure we provide decisions to those waiting the
longest.

As another key part of the plan, SSA established a National Hearing Center in Falls Church,
Virginia so that a centralized cadre of ALJs can use video hearing technology to hear cases
from the most backlogged parts of the country. As we review data from the pilot, we will
consider opening additional National Hearing Centers to conduct more video hearings and to
more effectively balance workloads at hearing offices nationwide.

SSA also is currently implementing a Service Area Realignment Plan to balance hearings
backlogs on a national basis. The Service Area Realignment Plan is designed to shift
workloads to offices with lower pendings. New requests for hearings may be processed in other
offices by means of video hearings.

Another way SSA is expediting hearings is through the Senior Attorney Adjudicator program,
which allows Senior Attorneys to issue decisions in cases that are fully favorable without the
involvement of an ALJ. Allowing non-ALJs to issue fully favorable on-the-record decisions
improves processing times for those hearings and conserves ALJ resources for the more
complex cases and cases that require a hearing.

In addition to new rules and processes, a number of electronic initiatives are being developed
which would reduce the lengthy procedure to simply prepare cases for the ALJs. For example,
the electronic folder has the potential to significantly decrease the time it takes hearing office
staff to prepare and exhibit files, associate correspondence, prepare and send notices, and
transfer workloads.

Even with all of these improvements, adequate staff is still a critical component of the Hearings
Backlog Reduction Plan. Our hearing offices will be able to replace all of their staff losses this
year including hiring approximately 150 ALJs this spring, for which we are deeply grateful to
Congress. Our goal is to reach a level of 1,250 ALJs in FY 2009. Sufficient funding in FY 2009
and beyond is essential to ensuring that we can maintain an adequate number of ALJs as we
continue our efforts to reduce the hearings backlog.

We are pleased to report that hearings processing times and ALJ productivity are already better
than we anticipated, resulting in quicker decisions for the American public. While we still have a
long way to go to provide the level of service the American public deserves, the progress we
have made so far gives me confidence that we are making the right changes in the right places.

Processing More Disability Claims

In FY 2007, SSA was able to stem the tide and slow the growth in the claims backlog. With the
FY 2009 budget, the DDSs will process significantly more disability claims, reducing claims
backlogs to the lowest level since 1999. This is critical since nearly 70 percent of disability
allowances are allowed at the initial claims level. Efforts such as the successful electronic
disability process and our new Quick Disability Determination and Compassionate Allowance
processes will improve service to the public, helping claimants to receive decisions earlier at this
critical juncture in their lives.

I am pleased to report that we have already made significant progress in providing better
service to the men and women who serve our country. U.S. military personnel are now
receiving expedited processing of disability claims from SSA. We are onsite every week at
Walter Reed, Bethesda, Brooke and numerous other treatment facilities throughout the U.S. to
take disability cases and ensure expeditious handling of those cases. We also have an
agreement with the Department of Veterans Affairs (VA) for the VA to electronically provide SSA with the medical records of veterans applying for disability benefits, which enables SSA to get medical records more quickly and efficiently.

Modernizing the Disability Process

Until just recently, many of SSA’s medical regulations—generally known as our “listings”—went
decades without review and revision. The Agency is now on a schedule that will review all
listings every 5 years, and with this budget SSA plans to review them every 3 years. Moreover,
we have an ambitious effort underway to expand the listings to include, for the first time, many
rare diseases and conditions. In the past, lack of guidance to adjudicators has resulted in errors
in these cases.

Enhancing Service to the American Public

With millions of Americans becoming eligible for Social Security retirement benefits at the rate of
10,000 a day for the next two decades, SSA must continue its development of a wide range of
online and automated services and seek to transform its service model. Maximizing the use of
modern technology and changing the service delivery model will enable SSA to continue to
provide critical services to all future beneficiaries.

In addition, in order to reverse a trend of deteriorating service, SSA also requires an adequate
staffing level. The 2009 President’s Budget will help SSA begin to turn around the staffing crisis
by enabling SSA to replace those employees who leave the Agency, whether for retirement or
other reasons. While the stable staffing levels will help SSA improve service on a national level,
it will have an even more profound effect on local offices because hiring freezes have caused
staffing imbalances and critical staffing shortages.

In addition to preparing for the nation’s imminent retirement wave, we have several other
priorities. SSA has already opened five Social Security Card Centers, in cities across the
country, which have succeeded in issuing cards more efficiently and accurately. To ensure the
continued security of the Social Security card and prepare for anticipated growth in card
applications if immigration-related legislation is passed by Congress, SSA is planning to open a
total of 7 more Card Centers in FYs 2008 and 2009. Our Pasadena, Texas, and Orlando,
Florida, Card Centers are expected to open in the spring.

With the prevalence of identity theft in the world today and increased exposure as more
transactions are completed across the Internet, our efforts to protect the personal information
entrusted to us are more important than ever. SSA’s security program includes comprehensive
policies and controls to protect the confidentiality, integrity, and availability of data and systems,
including personally identifiable information. We closely follow Federal guidelines including
security standards and guidelines issued by the National Institute of Standards and Technology
(NIST) and the Office of Management and Budget. We have constant monitoring of SSA
systems for potential attacks and problems. We limit SSA systems access to a “need-to-know”
basis. We have encryption of all data lines across SSA. We also have secure electronic mail
solutions between SSA and other Federal agencies where personal information is regularly
exchanged.

Finally, SSA must continue to explore new ways to have a greater impact on educating the
public about the importance of financial retirement planning. Research indicates that many
Americans lack comprehensive financial literacy and often make poor savings and retirement
decisions. Improving the public’s financial literacy, particularly its understanding about the need
for retirement planning and the role of Social Security’s retirement benefits as a supplement to
other sources of income, could boost personal savings and foster better retirement decisions.
Our annual Social Security Statements, online presence, and contacts with the public provide a
unique opportunity to participate in educational efforts.

We continue to explore new ways to have a greater impact on educating the public. For
example, future plans include a streamlined online claims process and enhanced Internet
benefit calculators that will provide real-time estimates of retirement benefits based on the
user’s earnings record. These tools will facilitate financial planning by allowing multiple “what if”
scenarios based on different user-entered retirement dates and earnings amounts.

Innovating, Automating and Investing in the Future Leveraging Technology

The 2009 President’s Budget will allow SSA to continue to invest in the Agency’s information
technology infrastructure. We are seeking new ways to automate workloads to increase
productivity and reduce the impact of the ongoing growth to our workloads. SSA will offer
additional services on our website, improve the automated services we offer by telephone,
provide more efficient and compassionate service to our disabled clients, and ensure that the
sensitive information entrusted to us is protected and can be restored in the case of a disaster.
In FY 2009, some of the new services we will be offering are a much improved claims
application package that will help ensure that claimants file for all benefits to which they are
entitled, and a more integrated disability application that will streamline the filing process and
improve the quality of the data we receive. In addition, we will offer the capability for third
parties, such as personnel offices, to help individuals file for retirement benefits.
Improving telephone services also will be a major focus in FY 2009. We will replace our
10 year-old call center network systems, which manage and route our 800-number calls, with a
system providing the Agency with 21st century features. In addition, we will continue the
replacement of our outdated field office telephone systems with a state-of-the-art phone system
that saves the Agency money and provides the capability to review e-mail messages over the
phone.

SSA is working with the 54 State DDSs on plans to pursue the replacement, beginning in
FY 2009, of the outdated systems that the States use to process disability claims with a modern,
web-based case processing system. As soon as we resolve the remaining technical issues of
the State DDSs, we plan to proceed.

We will take advantage of the progress that the medical community is making in automating
services through Electronic Health Records and Personal Health Records. Using automated
exchanges in standardized data formats, medical providers will send us requested evidence
electronically, allowing us to compare this information to our updated medical listings and use
business intelligence tools to make more accurate, consistent, and timely decisions.
Most importantly, we will continue with the automation of our hearing offices, expanding video
conferencing technology to offer attorneys the ability to participate in video hearings from their
own offices. Additional functionality that will be provided to the hearing offices includes
scheduling software that automates the complex process of scheduling a hearing and casepulling
software that allows us to identify, classify and extract data from document images.

Technology and business process improvements will both play an instrumental role in helping
SSA continue to make incremental productivity improvements. From FY 2001 through FY 2007, SSA achieved a cumulative 15.5 percent productivity increase. With the FY 2008 appropriation and the FY 2009 President’s Budget, we plan to achieve an additional 2 percent productivity increase in each of these years.

Investing in Program Integrity

The budget includes a special funding mechanism that will provide $240 million for SSA’s
program integrity efforts, in addition to the $264 million already included in the base request, for
a total of $504 million. These efforts protect taxpayers’ money by reviewing factors that could
affect eligibility for benefits or the payment amount. The two most cost-effective efforts are
CDRs and SSI redeterminations.

CDRs are periodic reevaluations of medical eligibility factors for Disability Insurance (DI) and
SSI disability recipients and are estimated to yield $10 in lifetime program savings for every $1
spent. The additional funding requested for SSI redeterminations, which are periodic reviews of
non-medical factors of SSI eligibility such as income and resources, are estimated to yield $7 in
lifetime program savings for every $1 spent. SSA plans to process 329,000 medical CDRs and
nearly 1.5 million SSI redeterminations in FY 2009.

If found to be as cost effective as redeterminations, up to $40 million may be used for initiatives
to improve the disability process and up to $34 million may be used to expand the Access to
Financial Information project, which automates verification of SSI recipients’ assets held in
banks. In total, SSA estimates this program integrity funding in FY 2009 will result in over
$4 billion in savings over 10 years.

Other FY 2009 Appropriation Requests

I would like to turn now to a brief summary of the other appropriation requests for FY 2009.
Office of the Inspector General (OIG)

$98.1 million for the OIG – The request for FY 2009 represents a $6.2 million increase in
resources from the FY 2008 appropriation and provides resources needed to restore some of
the staffing losses that occurred in FY 2008 due to budget constraints. The OIG will continue
efforts to improve the Agency’s integrity, efficiency and effectiveness. To that end, the OIG
provides invaluable service by directing, conducting and supervising a comprehensive program
of audits, evaluations and investigations relating to SSA’s programs and operations. The focal
point of this effort is protecting the integrity of the Social Security Number (SSN) and the
enumeration process. The OIG has also been an invaluable source of advice and data on the
Hearings Backlog Reduction Plan.

Supplemental Security Income

$45.8 billion for the SSI Program – The SSI program ensures a minimum monthly level of
income to eligible aged, blind, and disabled individuals. An individual’s income, resources, and
living arrangements are evaluated to determine the monthly SSI payment. The President’s
budget reflects $42.0 billion for Federal benefit payments to approximately 7.3 million aged,
blind, and disabled beneficiaries, $3.149 billion to reimburse the Social Security trust funds for
SSI administrative expenses, $3 million for beneficiary services, and $35 million to fund
extramural research and demonstration projects for FY 2009. The budget also includes
$15.4 billion for Federal benefit payments for the first quarter of FY 2010.

Estimates of current benefits are driven by the number of recipients eligible for monthly
payments and the amount of the monthly payments. The FY 2009 request represents almost a
$1.5 billion increase over the FY 2008 enacted level. The majority of this increase results from
mandatory increases in Federal benefit payments due to annual cost-of-living adjustments and
an increase in SSI recipients.

Payments to the Social Security Trust Funds

$20.4 million for Payments to the Social Security Trust Funds – This request will reimburse the
Social Security trust funds for the costs of certain benefits and administrative expenses which
are initially paid from the trust funds but are chargeable to general revenues. The purpose of
this account is to put the trust funds in the same financial position in which they would have
been had they not borne the cost of these expenses.

Conclusion

With sustained, adequate funding in FY 2009 and beyond, SSA can significantly reduce
disability waiting times and backlogs while investing in the infrastructure needed to serve the
baby boomers. It is critical that we begin to stabilize staffing levels and make the necessary
automation and business process improvements now more than ever. America’s retirement
wave has officially begun.

SSA has shown that it makes excellent use of the resources it receives. Our accomplishments,
in particular our cumulative 15.5 percent increase in productivity from FY 2001 through
FY 2007, demonstrate that SSA is an excellent steward of taxpayer dollars. We plan to build
upon our recent successes, such as the electronic disability process, by continuing to automate
wherever possible. Investments in technology and new business processes will allow SSA to
continue achieving incremental productivity improvements.

However, with 1,400 field and hearing offices in cities and towns across the nation, productivity
alone is not enough. Service is certain to deteriorate further without an adequate and timely
budget for SSA. SSA programs not only have a huge impact on the national economy, infusing
billions of dollars into the economy, but a huge impact on millions of individual people’s lives:
people striving to build economic security, people who overcome tremendous odds to return to
the workplace, people who are able to hold their families together with the help of Social
Security.

The funding Congress provided to SSA for FY 2008 has made a difference in people’s lives.
We already have made progress with our Hearings Backlog Reduction Plan. We are reducing
backlogs of our oldest cases first because it is simply unacceptable that Americans have to wait
so long for a hearing decision. We have created a National Hearing Center and a Service Area
Realignment Plan to distribute work more evenly across the nation. We are allowing Senior
Attorneys to issue decisions in cases that are fully favorable without the involvement of an ALJ,
and we are pursuing a number of electronic initiatives which will reduce the lengthy procedure to
prepare cases for the ALJs. New technology and rules, such as QDD and Compassionate
Allowances, are helping SSA to allow cases quicker and earlier in the process. Processing
times are better than we anticipated, and the ALJs we will be able to hire this spring will place
SSA in an even better position next year.

Mr. Chairman, thank you for the opportunity to present SSA's budget. I understand the many
difficult choices the Committee will have to make in the near future as you appropriate funding
to numerous worthwhile programs, and I appreciate how much you and the Committee did for
SSA and the American people last year. Critical to our future success is adequate funding in
FY 2009. People in need are counting on us now more than ever. I look forward to continuing
to work with you to ensure that SSA receives a timely and adequate budget so that we can
provide the level of service they deserve.

SOCIAL SECURITY ADMINISTRATION
Statement by the Commissioner of Social Security On Payments to Social Security Trust Funds

The fiscal year (FY) 2009 appropriation request for Payments to Social Security Trust Funds
totals $20,406,000 and covers three general fund payments to the Social Security trust funds.
Reimbursement for Pension Reform Administrative Costs

Included in this request is $6,400,000 to reimburse the Old-Age and Survivors Insurance (OASI) trust fund for the cost of administering pension reform responsibilities assigned to the Social Security Administration under Public Law 93-406, the Pension Reform Act. The reimbursement is for the cost of furnishing information on deferred vested pension rights to pension plan participants or their survivors.

The request for FY 2009 is the same as the FY 2008 funding level and reflects the ongoing level
of effort associated with this work, which flows from reports received from the Internal Revenue
Service regarding individuals who have earned vested pension rights. In the event that actual
expenses needed to process this workload exceed the amount available for reimbursement
through this account in any fiscal year, the trust fund is made whole in the subsequent fiscal
year upon enactment of the Payments to Social Security Trust Funds appropriation for that year.

Unnegotiated Checks

Also included in this request is $14,000,000 to reimburse the OASI and Disability Insurance (DI) trust funds for the value of interest on benefit checks that remain uncashed after 6 months. This payment is authorized by Section 201(m) of the Social Security Act and Section 152 of the
Social Security Amendments of 1983 (P.L. 98-21). The request for FY 2009 is the same as the
FY 2008 funding level. It supports the expected level of uncashed check activity and represents
the estimated interest for unnegotiated OASDI checks.

Social Security checks are negotiable for only 12 months from their date of issue under the
provisions of the Competitive Equality Banking Act of 1987 (P.L. 100-86). The face value of
these checks is credited directly to the trust funds from the general funds when the checks are
canceled. This account reimburses the trust funds for interest lost through the date of crediting
at the following points in the check negotiation process: (1) checks that remain uncashed after
6 months; (2) checks that are cashed after 6 months; and (3) checks that are administratively
canceled after 12 months.

Special Payments for Certain Uninsured Persons

The request before this Committee includes $6,000 to reimburse the OASI trust fund for the cost of special benefits paid to certain uninsured persons aged 72 years and over. The benefits are paid mainly to individuals who attained age 72 before 1968 and did not have a chance to work long enough under Social Security to become insured. This payment covers benefits paid in
FY 2007. The amount requested also includes reimbursement for related administrative
expenses and interest lost to the trust fund.

The population receiving special payments is a closed group of very aged persons, and their
number decreases annually. As of September 30, 2007, there was 1 person receiving benefits
under this program, as compared to 2 on September 30, 2006.

Coal Industry Retiree Health Benefits

The request before this Committee does not include additional funds to reimburse the OASI
trust fund for work carried out under Section 19141 of the Energy Policy Act of 1992
(P.L. 102-486), which established the “Coal Industry Retiree Health Benefit Act of 1992”
(CIRHBA). CIRHBA requires the Social Security Administration to search earnings records of
certain retired coal miners to determine which mine operators are responsible for payment of
their health benefit premiums under the law. The Social Security Administration computes the
premiums due based on a formula established in the Act, notifies the affected mine operators,
processes appeals from operators who believe that assignments have been made incorrectly,
and responds to and participates in litigation resulting from these agency determinations.
Additional funds are not requested for FY 2009 because amounts remaining from the
$10,000,000 per year appropriated in FY 1996 and in FY 1997 will continue to be available until
expended to reimburse the OASI trust fund.

The Social Security Administration (SSA) has made initial decisions on all of the retired miners
covered under these provisions of the 1992 CIRHBA (the Coal Act) and continues to provide
requested earnings records and review the appeals made by the assigned coal operators. In
addition, SSA has implemented the Coal Act provisions of The Tax Relief and Health Care Act
of 2006 (P.L. 109-432) which significantly impacted and restructured the Coal Act. After
carefully reviewing the legislation, obtaining legal advice, and assessing how P.L. 109-432
affected existing policies and procedures, SSA complied with the provision that specifically
directed the Commissioner to “revoke all assignments to persons other than 1988 agreement
operators for purposes of assessing premiums for plan years beginning on or after
October 1, 2007.”

While SSA has devoted considerable Agency time and resources to comply with P.L. 109-432, it
also remains active in one Coal Act case which is pending adjudication in the Federal Court.

The case is as follows:
Nicewonder Group, LLC v. Astrue is pending in the United States District Court for the
Western District of Virginia. Plaintiffs filed a complaint alleging that they are not related
to a former United Mine Workers of America signatory operator and therefore they are
not responsible for the premiums of the eight miners that have been assigned to them.
SSA has recently responded to this complaint.

SOCIAL SECURITY ADMINISTRATION
Statement by the Commissioner of Social Security on Supplemental Security Income

The Supplemental Security Income program (SSI) guarantees a minimum level of income to
financially needy individuals who are aged, blind or disabled. The appropriation request for
fiscal year (FY) 2009 is $30,414,000,000, in addition to the $14,800,000,000 appropriated for
the first quarter of FY 2009 in the FY 2008 appropriation, bringing the total to $45,214,000,000.

This includes $42,027,000,000 for Federal benefits to aged, blind and disabled recipients,
$3,149,000,000 for administrative expenses, $3,000,000 for beneficiary services, and
$35,000,000 for research and demonstration projects.

In addition to the appropriation request, in FY 2009 SSA is also planning to use $1,211,000,000
in carryover of unobligated balances for federal benefit payments, $54,000,000 in carryover for
beneficiary services, and $8,554,000 for research and demonstration projects.

We are also requesting an advance appropriation of $15,400,000,000 for the first quarter of
FY 2010 to ensure that benefits will continue without interruption into the next fiscal year.

Federal Benefit Payments

The SSI appropriation provides funds for direct cash assistance to eligible aged and blind or
disabled recipients to help finance their basic needs. An individual’s income, resources and
living arrangements are evaluated to compute the monthly SSI payment. The maximum
monthly Federal Benefit Rate (FBR) is expected to increase from $637 for an individual and
$956 for a couple in calendar year 2008 to $653 and $980 respectively in 2009. The average
monthly benefit is expected to increase from $473 in FY 2008 to $486 in FY 2009.
The total FY 2009 request for Federal benefit payments is $42.0 billion. This is an increase of
$1.35 billion from the amount appropriated for Federal benefits in FY 2008. This increase is
primarily the result of annual cost-of-living adjustments (COLA) and a projected increase in SSI
recipients. The maximum monthly Federal Benefit Rate is increased each January based on
increases in the cost-of-living. A COLA of 2.3 percent was effective January 2008 and a
2.5 percent increase is projected for January 2009. The average number of Federal SSI
recipients is expected to increase from 7,155,000 in FY 2008 to 7,314,000 in FY 2009, an
increase of about 2.2 percent.

These increases are partially offset by the effect of OASDI COLAs on concurrent SSI/OASDI
recipients and the use of more carryover prior-year unobligated balances in FY 2009. Because
Social Security benefits are counted as income for concurrent recipients (about 36% of SSI
recipients) the higher income reduces the SSI benefit payment. SSA expects to use $1.2 billion
in carryover of prior-year unobligated balances for Federal benefit payments in FY 2009,
compared to an estimated $550 million in FY 2008.

Administrative Expenses

The SSI and Social Security programs are administered on an integrated basis for purposes of
economy and efficiency. The Social Security Act authorizes SSA to pay for SSI administrative
expenses from the Social Security trust funds through the Limitation on Administrative
Expenses (LAE) account. This appropriation funds the SSI program’s share of administrative
expenses incurred through the LAE account. In the event that actual SSI administrative
expenses exceed the amount available for reimbursement through this account in any fiscal
year, the trust funds are made whole in the subsequent fiscal year upon enactment of the SSI
appropriation for that year.

The FY 2009 request for SSI administrative expenses is $3,149,000,000. This includes
$217 million in cap adjustment funding specifically for program integrity activities such as
continuing disability reviews, SSI redeterminations, and asset verification initiatives. This
additional funding will allow SSA to process an additional 112,000 continuing disability reviews
and 636,000 redeterminations.

These amounts exclude funding made available in the LAE account from State supplementation
user fees. State supplementation is mandatory for certain recipients who were on State rolls
just prior to the creation of the Federal program in 1974. Otherwise, States are encouraged to
supplement the Federal benefit and may elect to have SSA administer their program. States
that choose to have SSA administer their program reimburse SSA for the costs of administering
the program based on a user fee schedule established by the Social Security Act. The LAE
account assumes funding of $145,000,000 from State supplementation user fees in FY 2009.

Beneficiary Services

This activity funds reimbursements to Vocational Rehabilitation (VR) agencies for rehabilitation
services provided to SSI recipients. It also funds payments to Employment Networks authorized
under the “Ticket to Work and Work Incentives Improvement Act of 1999” (P.L. 106-170). SSA
plans to obligate $57 million for beneficiary services in FY 2009, mostly funded from prior-year
unobligated balances.

The Ticket legislation allows SSI disabled recipients more flexibility in obtaining “return to work” services by providing them with a Ticket to offer an Employment Network of their choice in exchange for VR services, employment services, and other support services. The regulation to
implement the Ticket to Work Program was effective January 28, 2002. The Ticket program has been rolled out to all States and U.S. territories since September 2004. In August 2007, SSA
published a Notice of Proposed Rule Making to simplify and improve the Ticket to Work
program. SSA expects to publish the final regulation in 2008.

Research

Sections 1110 and 1115 of the Social Security Act provide funding authority, including waiver
authority for the SSI program where appropriate, for research and demonstration projects.
Authority is provided for conducting both broad-based cross-program projects in the Social
Security and SSI programs and projects dealing with specific SSI program issues.
Section 1144 of the Social Security Act requires SSA to conduct outreach efforts to identify
individuals who may be eligible for payment of the cost of Medicare under the Medicare Savings
Program. The passage of the Medicare Prescription Drug, Modernization, and Improvement Act
of 2003 (P.L. 108-173), expanded the existing cost-sharing outreach requirements of
section 1144 to include outreach to beneficiaries who may potentially be eligible for Medicare
prescription drug subsidies under Medicare Part D.

The $35 million request for the FY 2009 extramural research program, along with $13.4 million
in funds carried over from FY 2008, will fund a range of activities, including projects to develop
effective rehabilitation and return-to-work strategies, analyze reform proposals to ensure
sustainable solvency, maintain and improve basic data about the Social Security and SSI
programs and beneficiaries, and provide outreach to potential beneficiaries of the Medicare
Savings Program and prescription drug subsidies. Some of the major research efforts are as
follows:

Youth Transition Demonstration (YTD)—assists young people with disabilities to transition to
the workforce.

The projects focus on youth between the ages of 14 and 25 who receive (or could receive)
disability benefits. In addition, five pilot sites have been funded for a year beginning in 2007. In
November, 2007, on the basis of a systematic assessment of the pilot operation and
advancement of the SSA research agenda, three of these sites were selected to fully implement
their YTD projects beginning in 2008. The overarching goal of the YTD is to find ways to enable
young people with disabilities to maximize their potential for self-sufficiency. The projects also
are testing whether modified SSI rules will encourage YTD participants to work and save for
their future. Throughout implementation of YTD, project staff receives technical assistance and
training. The YTD project has joint funding with section 234, as appropriate, based on the
participation of Title II and Title XVI beneficiaries.

Evaluation of the Ticket to Work—the evaluation will examine participation by both
beneficiaries and the new Employment Networks (EN) created by the program. It will also
provide feedback to policymakers through periodic reports detailing data collection, findings and
recommendations for program modifications.

The findings thus far indicate that the Ticket program has significant potential but that
improvements in beneficiary awareness and EN incentives are needed. Survey findings show
that many more beneficiaries are interested in employment and working their way off disability
benefits than is reflected in Ticket to Work program participation. Most beneficiaries remain
unaware of the Ticket to Work program despite various efforts by SSA to publicize the program.
Among those who are aware, a small, but significant number, have tried to use their Ticket but
have been unable to find an EN to accept it. Participation by ENs has been disappointing and
the evaluation indicates that the current payment rules are not providing enough revenue by
ENs to cover their costs. SSA initiatives to reduce EN costs have helped but have not
significantly affected EN profitability. The proposed changes to the Ticket to Work program
regulations are designed to address this cost/revenue imbalance and hold promise for reinvigorating the program.

Compassionate Allowance—a new initiative designed to expedite disability determinations for
individuals who, often at the time of application, meet SSA’s medical criteria for disability. The
project intends to reduce SSA’s disability hearings backlog by ensuring that such claims are
allowed early in the claims process.

Funding of this initiative supports the following activities:

• Interagency Agreements with the National Institutes of Health, including agreements with
its individual institutes and grantees.
• Development of an up-to-date, disease-specific medical information data-base
specifically designed to be applicable to SSA’s disability criteria.
• Investigation of how advances in medical and information systems technologies can be
applied to expedite SSA’s processing of compassionate allowances.
• Obtaining expert advice from organizations such as the Institute of Medicine or the
National Academy of Social Insurance on discrete medical issues pertaining to SSA’s
medical criteria for determining disability.
• Development of user-friendly tools designed to aid claimants’ interactions with SSA’s
disability claims processes.
• Field testing and implementation of tools designed to improve disability processes.

The Compassionate Allowances initiative is designed to quickly identify diseases and other
medical conditions that invariably qualify under the Listing of Impairments based on minimal
objective medical information.

Section 1144/1110 Outreach Requirements:

Medicare Buy-in—cost-sharing under the Medicaid program; Medicare Buy-in Outreach,
required by section 1144 of the Social Security Act, requires SSA to provide notification to those
potentially eligible for the Medicare Savings Program and help with prescription drug expenses
under Medicare Part D. In addition, SSA is required to share lists of those potentially eligible
with State Medicaid agencies.

Medicare Part D Prescription Drug Outreach—The major objective of these projects is to
increase enrollment of eligible low-income individuals into programs which assist Medicare
beneficiaries with their out-of-pocket medical expenses, including prescription drugs.
Homeless Outreach—this initiative will help SSA to demonstrate the effectiveness of using
skilled medical and social service providers to identify and engage homeless individuals with
disabilities as well as assist them with the application process. The service providers began
enrolling project participants in September 2004. As of October 2007, Homeless Outreach
Project & Evaluation (HOPE) grantees enrolled 9,054 homeless individuals in to the HOPE
project. Of those, 2,976 have been awarded benefits based on disability.

The HOPE initiative is focused on assisting eligible, homeless individuals in applying for SSI
and DI benefits. The HOPE projects will help SSA to demonstrate the effectiveness of using
skilled medical and social service providers to identify and engage homeless individuals with
disabilities as well as assist them with the application process.

In September 2004, SSA awarded an evaluation contract to Westat Inc. The evaluation report
was completed in October 2007.

Solvency Research

The research budget supports efforts to assess the economic and distributional effect of
proposals for reforming Social Security and keeping it financially sustainable now and in the
future. Two key projects are:

• Retirement Income Modeling, which uses econometric and simulation models to provide
policymakers with detailed information on the effects of changes in Social Security on
individuals and the economy, with projections for years into the future.

• The Retirement Research Consortium, which consists of three multi-disciplinary centers
that perform research and evaluation of retirement policies, disseminate results, train
young scholars and practitioners, and facilitate the use of SSA administrative data for
policy research purposes.

SOCIAL SECURITY ADMINISTRATION
Statement by the Commissioner of Social Security on Limitation on Administrative Expenses

The President’s fiscal year (FY) 2009 request for the Limitation on Administrative Expenses
(LAE) account is $10.327 billion, an increase of 6 percent or $582 million over FY 2008. The
LAE request, including funding derived from user fees, provides administrative resources for the
Old-Age and Survivors Insurance, Disability Insurance (DI), Supplemental Security Income
(SSI) programs, Special Benefits for Certain World War II Veterans, the Medicare prescription
drug program, and certain other Medicare support functions.

At this funding level, we expect to make significant progress with our Hearings Backlog
Reduction Plan by processing 85,000 more hearings in FY 2009 compared to FY 2008,
ultimately reducing the number of hearings pending from over 750,000 to 683,000 in one year.
We will be able to reduce the initial disability claims backlog to the lowest level in 10 years; the
pending level for these claims will drop below 500,000 for the first time since 1999. Finally, the
FY 2009 budget will put us in a better position to handle the onslaught of work we are
confronting due to the aging of the baby boomers. We plan to process over 400,000 additional
retirement claims in FY 2009 as compared to FY 2007, enabling SSA to keep up with the influx
of baby boomer claims.

Salaries and Operating Expenses

The LAE budget request includes $7.844 billion for Federal salaries and operating expenses,
including Federal pay raises and benefit increases and rent for SSA offices across the nation.
Approximately 70 percent of our administrative resources are used for personnel costs. The
remainder is used to support these personnel and the workloads they process. Due to fixed
cost increases, such as annual increases to Federal employee salaries, benefits, rent, and
guard services, the total requested increase is essential to avoid disruptions to the service SSA
provides and to help provide better service to the millions of Americans who count on us each
and every day.

SSA relies on a mix of full time equivalents and overtime to achieve its total workyears. This
budget supports 62,538 workyears for SSA proper, essentially providing stable staffing and
stopping a trend in recent years of declining staffing levels which has affected service to the
public. With 1,400 offices in cities and towns across America, it is important that SSA has
adequate staffing now and in the future to provide service to a growing number of beneficiaries.

State Disability Determination Services

The LAE budget request includes $1.946 billion for operating expenses for the State DDSs.
This represents a net increase of $102 million over the FY 2008 level, primarily to fund State
pay raises and higher costs for medical evidence. SSA estimates that almost 2.6 million initial
disability claims will be processed by the DDSs in FY 2009, nearly 20,000 more cases than in
FY 2008 and 70,000 more cases than in FY 2007. Efforts such as the successful electronic
disability process and SSA’s new Quick Disability Determination and Compassionate Allowance
processes will improve service to the public, helping claimants to receive decisions earlier at
this critical juncture in their lives.

In addition, SSA will continue its focus on program integrity by conducting periodic continuing
disability reviews (CDR). The FY 2009 President’s budget includes a proposal to dedicate
funding for increasing the number of CDRs conducted.

Information Technology Systems

The LAE budget request includes $504 million for Information Technology Systems (ITS) in
FY 2009. With this funding, SSA will be able to continue to invest in the Agency’s information
technology infrastructure. We are seeking new ways to automate workloads to increase
productivity and reduce the impact of the ongoing growth to our workloads. SSA will offer
additional services on our website, improve the automated services we offer by telephone,
provide more efficient and compassionate service to our disabled clients, and ensure that the
sensitive information entrusted to us is protected and can be restored in the case of a disaster.
Technology and business process improvements will both play an instrumental role in helping
SSA continue to make incremental productivity improvements. From FY 2001 through FY 2007, SSA achieved a cumulative 15.5 percent productivity increase. With the FY 2008 appropriation and the FY 2009 President’s Budget, we plan to achieve an additional 2 percent productivity increase in each of these years.

Program Integrity Activities

The President has proposed to set caps on net discretionary budget authority and outlays in
FY 2009. The FY 2009 President’s Budget would allow adjustments to these caps for spending
above a base level of funding for several Government-wide program integrity activities, including SSA’s CDRs and SSI redeterminations.

In FY 2009, the LAE base request includes a total of $264 million dedicated for CDRs and SSI
non-disability redeterminations. The request specifies that upon enactment of discretionary
spending caps, $240 million of SSA’s budget request would not count towards the overall cap
on discretionary budget authority. CDRs are the most effective mechanism SSA has for
determining whether DI and SSI disability beneficiaries have medically improved or continue to
meet the statutory definition of disability. CDRs are a proven, sound investment – yielding $10
in lifetime program savings for every $1 spent. SSI redeterminations are periodic reviews of
non-medical factors of SSI eligibility. The additional funding requested for redeterminations are
estimated to yield $7 in lifetime program savings for every $1 spent. SSA plans to process
329,000 medical CDRs and nearly 1.5 million SSI redeterminations in FY 2009. If found to be
cost effective as redeterminations, up to $40 million may be used for initiatives to improve the
disability process and up to $34 million may be used to expand the Access to Financial
Information project, which automates verification of SSI recipients assets held in banks. In total,
SSA estimates this program integrity funding in FY 2009 will result in over $4 billion in savings
over 10 years.

User Fees

The FY 2009 LAE request includes up to $145 million in funding from user fees that are paid by
States for Federal administration of SSI State supplementation payments. This is $12 million
higher than the FY 2008 level. Funding derived from the user fees helps cover the costs of
administering State supplementation payments. The FY 2009 LAE request also includes up to
$1 million in fees for certification of non-attorney representatives, as provided in section 303(c)
of the Social Security Protection Act.

Conclusion

SSA’s LAE budget provides the necessary resources to begin to halt the decline in customer
service by preventing further staffing losses and investing in needed technology. SSA will be
able to process substantially more retirement claims, keeping up with an onslaught of work as
baby boomers begin to retire, while significantly reducing the disability backlogs.
It is important to note that at less than 1.5 percent of SSA’s total outlays, the LAE budget is a
fiscally reasonable and responsible approach. A multi-year effort is needed to eliminate the
disability backlogs. In addition, SSA will not be able to handle some of its less visible work,
generally work that is done after an individual is approved for benefits.

SOCIAL SECURITY ADMINISTRATION
Statement by the Commissioner of Social Security on Office of the Inspector General
Background

As part of the Social Security Independence and Program Improvements Act of 1994, SSA was
provided with its own statutory Inspector General. As mandated by the Inspector General Act
of 1978, as amended, the Office of the Inspector General’s (OIG) mission is to protect the
integrity of SSA’s programs. The OIG is directly responsible for promoting economy, efficiency
and effectiveness in SSA programs and detecting and preventing fraud, waste and abuse. This
mission is carried out through a nationwide network of audits and investigations. In conducting
audits and investigations, the Inspector General works closely with both the Congress and SSA
to improve program management.

Budget Request

The fiscal year (FY) 2009 appropriation request for the OIG totals $98,127,000. This includes
$28,000,000 to be appropriated from general funds and $70,127,000 to be transferred from the
Social Security trust funds. OIG’s FY 2009 budget request provides funds for the current
operating expenses of its programs, including:
• Almost $86.8 million for salaries and benefits; and
• Almost $11.3 million for other operating expenses such as rent, travel, service agreements,
investigative equipment, and supplies.

This request is an increase of approximately $6 million (6.8 percent) compared to the FY 2008
enacted level. This increase covers the costs of payroll increases including Federal pay raises,
within-grade increases, benefit rate increases for health benefits, and higher costs for newer
employees hired under the Federal Employees’ Retirement System (FERS).
The budget request is driven primarily by costs (including salaries, benefits, rent and core
services) associated with supporting the staffing levels needed to conduct audits and
investigations. The FY 2009 request supports a staffing level of 604 workyears. With the
resources included in this request, OIG will continue to support ongoing major initiatives that
focus on key areas such as the protection of personally identifiable information, including the
protection and integrity of the Social Security number. OIG will also continue to aggressively
pursue anti-fraud activities on a variety of fronts. The Cooperative Disability Investigation
Program will continue to investigate disability program fraud while other personnel will combat
improper OASDI and SSI payments.

Conclusion

FY 2009 will bring new opportunities for the OIG to fulfill its mission, as well as to confront the
continuing challenges of assuring integrity in the nation’s largest benefit-paying programs. This
budget request provides funding to enable the OIG to carry out that mission and to support
SSA’s efforts to seek efficiencies, avoid erroneous payments, and combat fraud.

Coalition For Citizens With Disabilities Testimony

Testimony of Marty Ford
Co-Chair, Social Security Task Force
Consortium for Citizens with Disabilities

On Behalf of:

American Council of the Blind
American Network of Community Options and Resources
Association of University Centers on Disabilities
Council of State Administrators of Vocational Rehabilitation
Easter Seals, Inc.
Epilepsy Foundation
Goodwill Industries International
National Alliance on Mental Illness
National Association of Disability Representatives
National Disability Rights Network
National Industries for the Blind
National Multiple Sclerosis Society
National Organization of Social Security Claimants’ Representatives
Paralyzed Veterans of America
Research Institute for Independent Living
The Arc of the United States
Title II Community AIDS National Network
United Cerebral Palsy
United Spinal Association

Chairman Obey, Ranking Member Walsh, and Members of the House Appropriations Subcommittee on Labor, HHS, Education and Related Agencies, thank you for inviting me to testify at today's hearing on Reducing the Disability Backlog at the Social Security Administration/FY 2009 Budget Overview.

I am a member of the public policy team for The Arc and UCP Disability Policy Collaboration, which is a joint effort of The Arc of the United States and United Cerebral Palsy. I serve as the current Chair of the Consortium for Citizens with Disabilities (CCD), and also serve as a Co-Chair of the CCD Social Security Task Force. CCD is a working coalition of national consumer, advocacy, provider, and professional organizations working together with and on behalf of the 54 million children and adults with disabilities and their families living in the United States. The CCD Social Security Task Force focuses on disability policy issues in the Title II disability programs and the Title XVI Supplemental Security Income (SSI) program.

The focus of this hearing is extremely important to people with disabilities. Title II and SSI cash benefits, along with the related Medicaid and Medicare benefits, are the means of survival for millions of individuals with severe disabilities. They rely on the Social Security Administration (SSA) to promptly and fairly adjudicate their applications for disability benefits. They also rely on the agency to handle many other actions critical to their well-being including: timely payment of their monthly Title II and SSI benefits to which they are entitled; accurate withholding of Medicare Parts B and D premiums; and timely determinations on post-entitlement issues that may arise (e.g., overpayments, income issues, prompt recording of earnings).

We appreciate SSA’s attention to improving services for people with disabilities within its limited resources and the agency’s efforts to improve its technological capacity in ways that will help to accomplish its work. However, under the current budget situation, people with severe disabilities have experienced increasingly long delays and decreased service in accessing these critical benefits. Processing times have grown, especially at the hearing level where delays have reached intolerable levels. In some hearing offices, claimant representatives report that claimants wait more than two years to receive a hearing and decision. There are thousands of cases that have been pending 900 days or longer.

We believe that the main reason for the increase in the disability claims backlogs is that SSA has not received adequate funds to provide its mandated services. Commissioner Astrue has made reduction – and elimination – of the disability claims backlog one of his top priorities. While the current situation is dire, without adequate appropriations to fund SSA, the situation will deteriorate even more.

We are encouraged by recent Congressional efforts to provide SSA with adequate funding for its administrative budget. The Fiscal Year 2008 appropriation for SSA’s Limitation on Administrative Expenses (LAE) was $9,746,953,000. This amount was $148 million above the President’s request and was the first time in years that the agency has received at least the President’s request.

While the FY 2008 appropriation will allow the agency to hire some new staff and to reduce processing times, it will not be adequate to fully restore the agency’s ability to carry out its mandated services. Between FY 2000 and 2007, Congress appropriated less than both the Commissioner of Social Security and the President requested, resulting in a total administrative budget shortfall of more than $4 billion. The dramatic increase in the disability claims backlog coincides with this period of under-funding the agency, leaving people with severe disabilities to wait years to receive the benefits to which they are entitled.

People with severe disabilities have been bearing the brunt of the backlog crisis. Behind the numbers are individuals with disabilities whose lives have unraveled while waiting for decisions – families are torn apart; homes are lost; medical conditions deteriorate; once stable financial security crumbles; and many individuals die. Numerous recent media reports across the country have documented the suffering experienced by these individuals. Access to other key services, such as reporting that a check has not been received or promptly recording earnings, also has been diminished. Local SSA field offices have been threatened with closing or having their hours open to the public reduced. Despite dramatically increased workloads, staffing levels throughout the agency are at the lowest level since 1974 when SSI payments began.

The President’s request for the SSA FY 2009 LAE is encouraging, but does not go far enough to put the agency on a clear path to provide its mandated services at a level expected by the American public. In order for SSA to meet its responsibilities, we estimate that the agency needs a minimum of $11.0 billion for its FY 2009 administrative budget. This amount will allow the agency to not only significantly reduce the backlog, but also keep local offices open, provide adequate telephone services to the public, and maintain the integrity of its programs by performing more continuing disability reviews and SSI redeterminations. We also recommend that SSA’s LAE budget authority be removed from the Section 302(a) and (b) allocations for discretionary spending.

In my testimony today, I will discuss (1) the impact on people with disabilities of insufficient funding for SSA’s administrative budget and (2) ways that SSA can reduce the backlog of disability claims and improve the disability claims process.


I. The Impact on People with Disabilities of Insufficient Funding
for SSA’s Administrative Budget

Other witnesses today will address the current state of SSA’s inadequate level of resources. However, we must recognize the real-life impact of the backlog and the ensuing delays for individuals with disabilities who must file claims for disability benefits and wait for a decision. Over the past year, there have been numerous media stories both national and local in newspapers, on the radio, and on television, which have documented the suffering experienced by these individuals. For example, a December 2007 New York Times front-page article told several compelling stories:

· A North Carolina woman had a hearing three years after her initial application was denied. She used an oxygen tank 24 hours a day because of emphysema and sleep apnea. She had lost her apartment and slept on her daughter’s sofa or at a friend’s house.
· A North Carolina man’s application was denied in 2003 despite severe diabetes and numerous hospital records and doctors’ opinions. His parents went into debt because of his medical bills and nearly lost their home. They obtained a lawyer to represent their son who still had to wait two years for a hearing. The parents were notified that their son, fearing another rejection, committed suicide, just two hours after his attorney called to say that the administrative law judge had approved the claim without the need for a hearing.

There are many other similar stories across the country. Testimony presented in Congress last year by a CCD-member organization described circumstances facing a sampling of claimants and demonstrates in human terms the terrible impact of the delays and the crises facing claimants every day:

An Alabama man, a former welder, had a stroke when he was only 48 years old. While waiting 18 months for his hearing, he cashed in all of his savings bonds and his health deteriorated. He had to move in with his elderly mother who had lung cancer. He had no means of support after she died and his brother lost his job after he had to move to Alabama to help out.
An Arizona father of six, a former construction worker, watched his wife develop a substance abuse problem because of their financial problems. This family had a history with delays – the claimant’s father died after suffering a heart attack caused in part by delays in processing his own disability claim.
A former cook and professional musician in Idaho with cancer pawned his belongings to survive while waiting for his hearing. Without health insurance, he was not able to receive consistent medical care for his cancer.
To survive while waiting for a hearing decision, an Iowa woman cashed out her work pension plan, paying early withdrawal penalties. She borrowed money and took out a lien on her car. She received inadequate medical care because she had no medical insurance.
A veteran in Kansas has been unable to pay the rent for his VA transitional program and became homeless.
In Kentucky, a single father of five (his wife committed suicide) with heart problems and other conditions had to give up a promising heart treatment when he lost his medical insurance while waiting for a hearing.
A Maine father became homeless with his wife and two children while waiting for a hearing. After eviction, the family could not stay in a shelter because of the children and they lived in his car.
A Massachusetts mother of two young daughters lived in a shelter after leaving an abusive domestic situation. Her hearing request, filed in January 2006, was lost and logged in 15 months later in April 2007 when she obtained an attorney.
A woman in Montana lived in an 8 foot by 20 foot building, with no plumbing. She previously lived in a mold-infested trailer without running water, a bathroom, or cooking facilities. She had no insurance and was unable to pay her doctor for four years.
A New Mexico father of four with leukemia, who is a former pipeline inspector, filed for bankruptcy because his wife’s income could not support the family.
A New York mother, a former State employee, was evicted and lost custody of her children when she could not provide a home for them. She lived in a homeless shelter for four months. Her depression, which worsened due to stress, resulted in a hospitalization.
A former tugboat captain in North Carolina had no insurance and could not obtain surgery for his back. A request to expedite his hearing to avoid foreclosure was denied. He lost his home, forcing him to move in with his elderly and ailing mother.
Even though a man in North Dakota had a rare form of a brain tumor and failing kidneys, his claim was denied and he filed an appeal. He and his wife had financial problems paying for his medications and medical bills and they applied for heating assistance.
An Ohio man with diabetes requires multiple surgeries because of an open stomach wound. He lost his apartment and moved in with a friend, which was detrimental to his wound because he required a very clean environment.
An Oregon man died in June 2005 at age 41 because of heart disease. He was homeless and moved frequently. His hearing, requested in 2004, was held in 2007, long after his death.
A Pennsylvania woman spent all of her savings and had to apply for welfare. Her house went to foreclosure but was saved by her fiancé. He had cancer and a poor prognosis and she worried that without him, she would lose her house and become homeless.
The file of a Rhode Island resident sat in the SSA district office for more than two years after a hearing was requested in 2004. The hearing office returned the request to the SSA district office because it did not have a claims folder attached. The hearing request and folder were finally sent to the hearing office in January 2007, after an attorney became involved.
A Texas woman, a former broker who has a Master’s Degree, lost her income and health insurance after filing for benefits. She also lost her home and has exhausted her savings to pay for medical care. After living with friends, she went to live with her elderly parents.
While his hearing was pending, a Washington veteran became homeless and lived at a local mission. Before becoming disabled, he successfully sold cars. Upon leaving his hearing, his attorney drove him to the mission to pick up a paper bag with all of his possessions and then drove him to the local VA hospital for in-patient medical treatment.
A long-time municipal government employee in West Virginia was having serious financial problems. He has received eviction notices, which had been forwarded to the hearing office but no response had been received.

If we were to ask claimant representatives to provide up-to-date information on their current caseloads, we would see similar heart-wrenching stories of people’s lives in financial ruin and chaos. What do these real-life stories about individuals caught in the process tell us about the current situation at SSA?

1. Processing times have reached intolerable levels.

The average processing time for cases at the hearing level has increased dramatically since 2000, when the average time was 274 days. In the current fiscal year, SSA estimates that the average processing time for disability claims at the hearing level will be 535 days, nearly twice as long as in 2000. It is important to keep in mind that this is an “average” and that many claimants will wait longer. In addition, the average processing times at the initial and reconsideration levels have grown over the last ten years by about 20 days at each level, with some cases taking much longer.

The current processing times in some hearing offices are striking, and much longer than the 535 days targeted by SSA in FY 2008. SSA statistics from December 2007 for its 144 hearing offices indicate that the average processing time at 43 hearing offices is above the projected average processing time. There is wide fluctuation, with some offices over 700 days. And even in those hearing offices below the average processing time, it is important to keep in mind that there will be many cases above the average and each of those cases represents an individual with disabilities who must wait for critical cash and medical insurance benefits.

SSA has worked hard over the last year to reduce the number of “aged cases” at the hearing level. During FY 2007, there were more than 60,000 cases that would have been pending 1,000 days or longer by the end of FY 2007. The SSA Office of Disability Adjudication and Review (ODAR) dramatically reduced this number to 108 cases at the end of FY 2007 and is now focusing on cases that have been pending 900 days or longer. There is still much work to be done since there were more than 135,000 cases pending 900 days or longer – nearly two and one-half years – at the beginning of FY 2008.

The impact of the budget and staffing cuts in district offices also affect the processing times at the hearing levels. Representatives have reported that cases are sitting longer in district offices after requests for hearings are filed, often adding months – or years – to the processing time. In a case described above from Providence, RI, a claimant was still waiting in 2007 for an ALJ hearing where the request for hearing was filed by the claimant pro se in 2004. The request was timely sent to the hearing office but without the claims folder. The hearing office returned the file to the SSA district office, where the case sat for more than two years. The hearing request and folder were finally sent to the hearing office in January 2007 after an attorney became involved in the case and started to track what happened. The hearing office scheduled the case for an expedited hearing in view of the more than two year delay.

2. The number of pending cases continues to increase.

In a recent report, the Government Accountability Office (GAO) noted that the hearing level backlog was “almost eliminated” from FY 1997 to FY 1999, but then grew “unabated” by FY 2006. The number of pending cases at the hearing level reached a low in FY 1999 at 311,958 cases. The numbers have increased dramatically since 1999, reaching 752,000 in FY 2008.

However, even for hearing offices with a lower number of pending cases, the numbers do not tell the whole story. Because of the disparities between hearing offices, many claimant representatives have reported that SSA has been transferring cases from offices with high numbers of pending cases to offices with lower numbers where the hearings are held by video conference, if the claimant agrees. While this is understandable in a national program, it nevertheless means that claimants who live near hearing offices with lower numbers of pending cases will end up waiting longer.

3. Staffing levels have decreased which means a decrease in service.

Representatives have noted the loss of Administrative Law Judges (ALJs) and support staff in hearing offices around the country. Former Commissioner Barnhart had planned to hire an additional 100 ALJs in FY 2006 but due to cuts in the President’s budget request, she was able to hire only 43. The real impact of the burden on the current ALJ corps can be seen by comparing statistics from 1998 and 2006. In FY 1998, there were 1,087 ALJs available to conduct hearings. This number dropped to 1,018 in FY 2006, while the number of pending cases more than doubled.

Whether there are an adequate number of ALJs may not even be the primary staffing issue in hearing offices. According to the GAO: “By the close of fiscal year 2006, SSA saw the highest level of backlogged claims and the lowest ratio of support staff over this period [FY 1997 to FY 2006].” Productivity is not related solely to the number of ALJs, but also to the number of support staff. In 2006, the actual ratio of support staff to ALJs was 4.12. SSA senior managers and ALJs recommend a staffing ratio of 5.25. The actual ratio represented a significant decrease, about 25 percent, from the recommended level, at a time when the number of pending cases had increased dramatically. It is also important to note that the number of pending cases older than 270 days was much lower when the support staff to ALJ ratio was higher (FY 1999 to FY 2001).

The SSA LAE appropriation for FY 2008 will allow the Commissioner to hire 150 new ALJs and some additional staff. We are encouraged that his goal is to reach a level of 1250 ALJs by early FY 2009. However, sufficient funding to maintain an adequate number of ALJs and support staff is necessary in FY 2009 and future years to continue reducing the backlog.

4. Impact on service provided in SSA field offices.

Under the current budget situation, people with severe disabilities have experienced long delays and decreased services provided in SSA field offices, which do not have adequate resources to meet all of their current responsibilities. “Over the past decade, the growth in the disability claims backlogs has coincided with a period of staff turnover and losses throughout the disability claims process.” SSA staffing levels are at the lowest level since the SSI program began making payments in 1974.

· Impact on disability claims. Under the current SSA budget situation, we are concerned that delays will grow not only at the hearing level but also at the initial and reconsideration levels. A recent action taken by SSA demonstrates the scope of the problem. In June 2006, SSA was forced to direct all available resources to the processing of initial applications, and away from processing reconsideration level cases, when the initial application backlog became too high. The decision to redirect resources was caused primarily by the cut in the President’s request for fiscal year 2006. In some states, this meant that reconsideration cases were not processed or were temporarily stopped, unless the claimant knew to notify the state agency of “dire circumstances.”

· Impact on post-entitlement work. The accumulated staffing reductions have already translated into SSA’s inability to perform post-entitlement work. Not surprisingly, with millions of new applications filed each year, SSA emphasizes the importance of processing applications, determining eligibility, and providing benefits. Once a person begins to receive monthly benefits, there are many reasons why SSA may need to respond to contacts from the person or to initiate a contact, known as “post-entitlement work.” Generally, this workload does not receive the priority it should. Frequently, when SSA is short on staff and local offices are overwhelmed by incoming applications and inquiries, agency workers are necessarily less attentive to post-entitlement issues. For people with disabilities, this can discourage efforts to return to work, undermining an important national goal of assisting people with disabilities to secure and maintain employment.

One key example of post-entitlement work that has fallen by the wayside in the past is the processing of earnings reports filed by people with disabilities. Typically, the individual calls SSA and reports work and earnings or brings the information into an SSA field office, but SSA fails to input the information into its computer system and does not make the needed adjustments in the person’s benefits. Years later, after a computer match with earnings records, SSA notices the person was overpaid, sometimes tens of thousands of dollars, and sends an overpayment notice to this effect to the beneficiary. These are situations where the individual is clearly not at fault. However, all too often, after receiving the overpayment notice, the beneficiary will tell SSA that he or she reported the income as required and SSA will reply that it has no record of the reports.

When this occurs, it may result in complete loss of cash benefits (Title II benefits) or a reduction in cash assistance (SSI). It also can affect the person’s health care coverage. To collect the overpayment, SSA may decide to withhold all or a portion of any current benefits owed, or SSA may demand repayment from the beneficiary if the person is not currently eligible for benefits. Not surprisingly, many individuals with disabilities are wary of attempting to return to work, out of fear that this may give rise to the overpayment scenario and result in a loss of economic stability and potentially of health care coverage upon which they rely. As a result of this long-term administrative problem, anecdotal evidence indicates that there is a widespread belief among people with disabilities that it is too risky to even attempt a return to work, because the beneficiary may end up in a frightening bureaucratic morass of overpayment notices, demands for repayment, and benefit termination.

· Impact on performing continuing disability reviews (CDRs) and SSI redeterminations. The processing of CDRs and SSI redeterminations is necessary to protect program integrity and avert improper payments. Failure to conduct the full complement of CDRs would have adverse consequences for the federal budget and the deficit. According to SSA, CDRs result in $10 of program savings and SSI redeterminations result in $7 of program savings for each $1 spent in administrative costs for the reviews. However, the number of reviews actually conducted is directly related to whether SSA receives the necessary funds. For example, the number of CDR reviews in 2006 was reduced by more than 50%, due to the lower level of appropriations. Even though the great majority of CDRs result in continuation of benefits, the savings from those CDRs that result in terminations are substantial because of the size of the program and the value of the benefits provided.

· New caseloads are added without providing the funds to implement these provisions. Over the past decade, Congress has passed legislation that added to SSA’s workload, but did not necessarily provide additional funds to implement these provisions. Recent examples include:

▪ Conducting pre-effectuation reviews on increasing numbers of initial SSI disability allowances. SSA must review these cases for accuracy prior to issuing the decision.

▪ Changing how SSI retroactive benefits are to be paid. SSA must issue these benefits in installments if the amount is equal to or more than three months of benefits. The first two installments can be no more than three months of benefits each, unless the beneficiary shows a hardship due to certain debts. Many more cases need to be addressed because under prior law, the provision was triggered only if the past due benefits equaled 12 months or more. With the trigger at three months, it is likely that many more beneficiaries ask SSA to make a special determination to issue a larger first or second installment.

▪ New SSA Medicare workloads. SSA has new workloads related to the Medicare Part D prescription drug program, including determining eligibility for low-income subsidies, processing subsidy changing events for current beneficiaries, conducting eligibility redeterminations, and performing premium withholding. And beginning in FY 2007, SSA must make annual income-related premium adjustment amount determinations for all current Medicare beneficiaries for the Medicare Part B premium for higher income beneficiaries. SSA also makes the determinations for new Part B applicants.

We were encouraged that in the recent Economic Stimulus Act of 2008, Congress recognized the added work that SSA will incur as a result of the legislation and appropriated an additional $31 million to the agency for FY 2008.

Our recommendations regarding SSA funding. SSA must be given enough funding to make disability decisions in a timely manner and to carry out other critical workloads. Due to the serious consequences of continued funding of SSA’s administrative expenses at inadequate levels, we strongly recommend that SSA receive $11 billion for its FY 2009 LAE. This amount will allow the agency to make significant strides in reducing the disability claims backlog, improving other services to the public, and conducting adequate numbers of CDRs and SSI redeterminations.

In addition, we also urge you to separate SSA’s LAE budget authority from the Section 302(a) and (b) allocations for discretionary spending. The size of SSA’s LAE is driven by the number of administrative functions it conducts to serve beneficiaries and applicants. The funds for Title II LAE are ultimately paid out of the Social Security Trust Funds and general revenues reimburse the Trust Funds for LAE costs associated with the Supplemental Security Income (SSI) program. There is a simple solution to SSA’s escalating funding crisis. Congress can remove SSA’s administrative functions from the discretionary budget that supports other important programs. SSA’s LAE would still be subject to the annual appropriations process and Congressional oversight.


II. OTHER RECOMMENDATIONS FOR IMPROVING THE DISABILITY CLAIMS PROCESS

In addition to SSA’s budget needs, the CCD Social Security Task Force has additional suggestions for improving the disability claims process for people with disabilities. Many of these recommendations have already been initiated by SSA. We believe that these recommendations and agency initiatives, which overall are not controversial and which we support, can go a long way towards reducing and eventually eliminating the disability claims backlog.


1. Improve development of evidence earlier in the process.

For many years, CCD has supported full development of the record at the beginning of the claim so that the correct decision can be made at the earliest point possible and unnecessary appeals can be avoided. Changes at the front end of the process can have a significant beneficial impact on preventing the backlog and delays later in the appeals process. Emphasis on improving the front end of the process is appropriate and warranted, since the vast majority of all claims allowed are approved at the initial levels. Such changes also will benefit the significant percentage of claimants denied at the initial level who would meet the SSA disability criteria if their cases were properly developed but who abandon their claims and do not appeal.

Developing the record so that relevant evidence from all sources can be considered is fundamental to full and fair adjudication of claims. The adjudicator needs to review a wide variety of evidence in a typical case, including: medical records of treatment; opinions from medical sources and other treating sources, such as social workers and therapists; records of prescribed medications; statements from former employers; and vocational assessments. The adjudicator needs these types of information to make the necessary findings and determinations under the SSA disability criteria.

The key to a successful disability determination process is having an adequate documentation base and properly evaluating the documentation that is obtained. Often, claimants are denied not because the evidence establishes that the person is not disabled, but because the limited evidence gathered cannot establish that the person is disabled. Unless claims are better developed at earlier levels, proposed procedural changes will not improve the disability determination process. Unfortunately, very often the files that denied claimants bring to claimant representatives show that inadequate development was done at the initial and reconsideration levels by the state agencies. Until this lack of evidentiary development is addressed, the correct decision on the claim cannot be made.

Claimants should be encouraged to submit evidence as early as possible. However, the fact that early submission of evidence does not occur more frequently is usually due to many legitimate reasons beyond the claimant’s control, including:

State agency disability examiners who fail to request and obtain necessary and relevant evidence, including the failure to request specific information tailored to the SSA disability criteria;
The failure of SSA and state agency disability examiners to explain to claimants or providers what evidence is important, necessary, and relevant for adjudication of the claim;
Cost or access restrictions, including confusion over Health Insurance Portability and Accountability Act (HIPAA) requirements, prevent claimants from obtaining records;
Medical providers who delay or refuse to submit evidence;
Inadequate reimbursement rates for providers; and
Evidence which is submitted but then misplaced.

A properly developed file is usually before the ALJ at the hearing level because the claimant’s representative has obtained evidence or because the ALJ has developed the claim. Not surprisingly, different evidentiary records at different levels can easily produce different results on the issue of disability. To address this, the agency needs to emphasize the full development of the record at the beginning of the claim.

We have a number of recommendations that we believe will improve the development process:

· Provide more assistance to claimants at the application level. At the beginning of the process, SSA should explain to the claimant what evidence is important and necessary. SSA should also provide applicants with more help completing application paperwork so that all impairments and sources of information are identified, including non-physician and other professional sources, in addition to physicians.

· DDSs need to obtain necessary and relevant evidence. Representatives often are able to obtain better medical information because they use letters and forms that ask questions relevant to the disability determination process. DDS forms usually ask for general medical information (diagnoses, findings, etc.) without tailoring questions to the Social Security disability standard. DDSs should update and improve their forms to specifically request necessary information. This should include collecting functional capacity information, which is generally obtained at the ALJ hearing level but less so at the initial levels. In addition, SSA has created some national forms to collect evidence, but they vary in quality. The situation is further complicated because some DDSs use their own forms, which also vary in quality. SSA should review its own national forms and DDS forms that are used to collect evidence, and set standards for state-specific forms to ensure higher quality.

The same effort should be made with non-physician sources (therapists, social workers) who see the claimant more frequently than the treating doctor and have a more thorough knowledge of the individual’s limitations.

It also should be emphasized that all of these sources should be contacted for clarification to ensure that information is not misconstrued and that decisions are not made on apparent inconsistencies, when in fact, none exist.

· Increase reimbursement rates for providers. To improve provider response rates to requests for records, appropriate reimbursement rates for medical records and reports need to be implemented. This also will help to improve the medical expertise available to adjudicators for consultative examinations and for medical experts.

· Provide better explanations to medical providers. SSA and DDSs should provide better explanations to all providers, in particular to physician and non-physician treating sources, about the disability standard and ask for evidence relevant to the standard.

· Provide more training and guidance to adjudicators. Many cases that reach the appeals levels are reversed due to erroneous application of existing SSA policy. Additional training should be provided on important evaluation rules such as the rules for: weighing medical evidence, including treating source opinions; the role of non-physician evidence; the evaluation of mental impairments, pain, and other subjective symptoms; the evaluation of childhood disability; and the use of the Social Security Rulings, which provide very useful guidance in many areas of disability evaluation and are to be followed by all disability adjudicators.

· Improve use of the existing methods of expediting disability determinations. SSA already has in place a number of methods, often under-utilized, which can expedite a favorable disability decision if the appropriate criteria are met. These include: “Quick Disability Determinations,” Presumptive Disability in SSI cases, and terminal illness (“TERI”) cases.

· Improve the quality of consultative examinations. In addition to increasing reimbursement rates, steps should be taken to improve the quality of the consultative examination (CE) process. There are far too many stories about inappropriate referrals, short perfunctory examinations, and examinations conducted in languages other than the applicant’s. This is wasted money for SSA and unhelpful to individuals, especially those who with low incomes, who do not have complete medical records documenting their conditions and who need a high quality CE report to help establish their eligibility. The regulations allow SSA to pay treating physicians to provide CEs, but they are rarely used in that capacity. SSA should explore ways to expand use of treating physicians to provide this information. Also, to ensure that its funds are being used as effectively and appropriately as possible, SSA should provide more oversight of the CE process, which is conducted by the state agencies.

Is there a “culture of denial” at the early levels of the process? Recent media reports have raised the issue of whether a “culture of denial” exists at the initial and reconsideration levels of the disability claims process because of the high denial rate at those levels, while a majority of cases appealed to the ALJ hearing level are allowed. We do not know of any specific written documents that encourage denials at the earlier levels, but there are several reasons, in addition to the high denial rate, why there is a perception that a “culture of denial” exists.

By law, SSA must review at least 50 percent of all favorable disability determinations made by the state agencies. However, there is no similar requirement for the review of denials. As a result, state agency disability examiners know that they will receive more review – and possible feedback – if they allow a claim, but not if it is denied. A key question is whether this process influences or makes it easier for a disability examiner to deny – rather than allow – a claim.

In addition, the state agencies are held to “standards of performance,” by which SSA measures their compliance with SSA regulations and policy. The “standards of performance” include processing time standards. Because of the processing time levels, we believe that the state agencies are under pressure to cut short efforts to obtain medical information and to make decisions on cases with incomplete records.

Finally, there is great variation in allowance/denial levels among the state agencies. There are a number of legitimate factors for this variation, but it is possible that the “culture” in certain state agencies could lead to a higher level of denials. This is an area that should be more closely examined.

The above factors, alone or in combination, should be examined to determine whether they produce a leaning toward denial of cases at this initial stage in the review process.

In the Commissioner’s May 2007 backlog elimination initiatives, there are two efforts that relate to the issue of reconsideration denials. SSA’s Office of Quality Performance is reviewing 14,000 reconsideration denials, drawn at random over a one-year period from 15 state agencies that have low accuracy rates. The review began in September 2007 and will continue during FY 2008. The purpose of the initiative is to detect and correct erroneous reconsideration decisions, to make recommendations for addressing identified problems, and to eventually reduce the number of hearing-level appeals. The results of this initiative will be informative.

Under another initiative, cases have been informally remanded to DDSs based on “scoring profiles” from the Office of Quality Performance. DDSs agreed to review about 20,000 paper cases and SSA estimated that approximately 20% of the cases would be allowed. The allowance rate has actually been much higher – about 54%. In FY 2008, SSA plans to send a total of 51,000 cases to the DDSs, with an estimated 10% allowance rate. If the DDS does not issue a favorable decision, the cases return to ODAR with more development and move to the front of the queue for scheduling.


2. Expand technological improvements.

Commissioner Astrue has made a strong commitment to improve and expand the technology used in the disability determination process. CCD generally supports SSA’s technological initiatives to improve the disability claims process, so long as they do not infringe on claimants’ rights. Many of these improvements will not only reduce delays, but also provide better service to the public, and do not require fundamental changes to the process. The initiative to process disability claims electronically has the prospect of significantly reducing delays by eliminating lost files, reducing the time that files spend in transit, and preventing misfiled evidence. Some of the technological improvements that we believe can help reduce the backlog include the following:

· The electronic disability folder: “eDIB.” The Commissioner is moving forward with development of the electronic disability folder, “eDIB.” The electronic folder should reduce delays caused by the moving and handing-off of folders, allowing for immediate access by whichever component of SSA or DDS is working on the claim.

· Electronic Records Express (ERE). ERE is an initiative to increase the use of electronic options for submitting records related to disability claims that have electronic folders. Currently, registered claimant representatives are able to submit evidence electronically through the SSA secure website or to a dedicated fax number. The representative is given a barcode for the claim and the information in the barcode directs the information submitted to the claimant’s unique electronic disability folder.

SSA plans to expand use of ERE to allow representatives the ability to view the electronic folder online and to receive notices electronically. A pilot is targeted to begin in June 2008. Claimant representatives are very supportive of this expansion, as it will allow them to view the folder as soon as representation is obtained and will allow them to determine what additional evidence is needed in the claim or if submitted evidence is missing. Currently, claimant representatives receive CDs of files at different stages while cases are pending at the hearing level or they can request a CD from the SSA field office. However, requesting CDs causes more work for SSA workers and can lead to delays until they are received. Direct access to the secure website will eliminate both of these issues.

SSA also is working to allow the filing of appeals over the Internet.

· Findings Integrated Templates (“FIT”). FIT is used for ALJ decisions and integrates the ALJ’s findings of fact into the body of the decision. It is a “smart” decision-writing process, i.e., while it does not dictate the ultimate decision, it requires the ALJ to follow a series of templates to support the ultimate decision. The vast majority of ALJs are now using FIT to write their decisions. FIT is available to the public on SSA’s website and claimant representatives can use FIT to draft favorable decisions for ALJs. SSA is encouraging ALJs to accept draft decisions from representatives. Claimant representatives have reported problems with downloading FIT from the public website. These concerns have been relayed to SSA and we are hopeful that they will be resolved in the near future.

· Use of video hearings. The Commissioner is expanding the use of video hearings at the ALJ level. This allows ALJs to conduct hearings without being at the same geographical site as the claimant and representative and has the potential to reduce processing times and increase productivity. Claimant representatives have participated in hearings around the country and have reported a mixed experience, depending on the benefit for claimants, the quality of the equipment used, and the hearing room set-up.

We support the use of video teleconference hearings so long as the right to a full and fair hearing is adequately protected; the quality of video teleconference hearings is assured; and the claimant retains the absolute right to have an in-person hearing as provided under current regulations.


3. New screening initiatives.

We support efforts by SSA to accelerate the receipt of benefits for individuals with disabilities and support the agency’s desire to develop new mechanisms to expand the population of claimants who may qualify for expedited eligibility throughout the application and review process. Ideally, adjudicators should use SSA screening criteria as early as possible in the process. However, we also encourage the use of ongoing screening as claimants obtain more documentation to support their applications.

Although we support expedited screening mechanisms, we urge caution so that any new eligibility criteria do not create unintended consequences for individuals who may qualify later in the process. In other words, we do not support any expedited screening process that may eliminate the ability of applicants to continue through the full sequential evaluation. For some claimants, a medical diagnosis may provide the objective evidence of their impairment. However, we express concern about any approach that may either inadvertently diminish the significance of functional evidence or overlook the substantial obstacles that a very large number of individuals face to obtain medical evidence to support their claims. In addition, SSA must work to ensure that there is no negative inference when a claim is not selected by the screening tool or allowed at that initial evaluation.

There are two initiatives that hold promise:

· Quick Disability Determinations. We have supported the Quick Disability Determination (QDD) process since it first began in SSA Region I states in August 2006 and was expanded nationwide by Commissioner Astrue in September 2007. Under QDD, a computer screening tool identifies initial claims with a high likelihood of a favorable disability determination. The QDD process has the potential of providing a prompt disability decision to those claimants who are the most severely disabled. Since the QDD process’s August 2006 implementation in Region I states, the initial QDD results have been very positive. In particular, we are impressed that the vast majority of QDD cases have been decided favorably in less than 20 days. Currently, the majority of cases referred for QDD processing involve cancer. However, Commissioner Astrue intends to expand the number and types of cases referred to the QDD process and we support this expansion.

· “Compassionate allowances.” In July 2007, SSA published an Advance Notice of Proposed Rulemaking (ANPRM) on a proposed new screening mechanism for disability determinations to be known as “Compassionate Allowances.” According to the ANPRM, SSA is “investigating methods of making ‘compassionate allowances’ by quickly identifying individuals with obvious disabilities.” While there is no definition of disabilities that are considered “obvious,” there is emphasis on creating “an extensive list of impairments that we [SSA] can allow quickly with minimal objective medical evidence that is based on clinical signs or laboratory findings or a combination of both….” Like the QDD process, SSA is looking at the use of computer software to screen cases by searching claims for key words in the electronic folder. An outreach hearing was held on December 4 and 5, 2007, regarding this initiative. We understand that additional hearings will be held.

The CCD Social Security Task Force submitted comments to the ANPRM and we are generally supportive of this initiative so long as it does not eliminate the ability of applicants to continue through the full disability evaluation process. While recognizing that it is a laudable goal to expedite eligibility for individuals with terminal illnesses or other very serious conditions, we do not support a screening method that may create unintended consequences for individuals who do not meet the objective screening criteria and must collect documentation of their functional limitations.

In our comments to the ANPRM, we also made a number of specific recommendations for screening mechanisms including:

▪ A broader screening mechanism that goes beyond the existing “terminal illness” (TERI) process to include a wider range of claimants and publish criteria in the regulations;
▪ A preliminary, nonexhaustive list of impairments – affecting both children and adults –
to consider for the new screening process;
▪ Strengthening SSA rules regarding the evaluation and weighing of VA disability ratings for veterans who apply for Title II or SSI disability benefits; and
▪ Applying the new expedited screening mechanism throughout the application and review process when file evidence indicates the claimant meets the criteria.


4. Other hearing level improvements.

· The Senior Attorney Program. In the 1990s, as an initiative to reduce the backlog of cases at hearing offices, senior staff attorneys were given the authority to issue fully favorable decisions in cases that could be decided without a hearing (i.e. “on the record”). This program was well received by claimants’ representatives because it presented an opportunity to present a case and obtain a favorable result efficiently and promptly. And, of most importance, thousands of claimants benefited. While the Senior Attorney Program existed, it helped to reduce the backlog by issuing approximately 200,000 decisions. The initiative was phased out in 2000, just about the same time that the backlog began to increase.

We are pleased that Commissioner Astrue has decided to reinstate the program for at least the next two years and has proceeded with its implementation. We believe that this initiative will help to reduce the backlog of cases at the hearing level as the prior program did during the 1990’s.
· Increasing the time for providing notice of hearings. Current regulations in most of the country provide only a 20-day advance notice for ALJ hearings. This time period is not adequate for requesting, receiving, and submitting the most recent and up-to-date medical evidence prior to the hearing. Some hearing offices, but not on a nationwide basis, do provide much longer advance notice, some as long as 90 days. In SSA Region I states under the “Disability Service Improvement (DSI)” process, the time has been increased to 75 days, with the goal of providing adequate time to obtain new evidence (although, there is no requirement that providers, such as medical offices and hospitals, submit evidence within that time period).
SSA has proposed to expand the 75-day hearing notice requirement nationwide. We strongly support this proposed change. This increased time period will mean that many more cases would be fully developed prior to the hearing and lead to more on the record decisions, avoiding the need for a hearing.
Caution regarding the search for efficiencies. While we generally support the goal of achieving increased efficiency throughout the adjudicatory process, we caution that limits must be placed on the goal of administrative efficiency for efficiency’s sake. The purpose of the Social Security and SSI programs are to provide cash benefits to those who need them and have earned them and who meet the eligibility criteria. While there may be ways to improve the decision-making process from the perspective of the adjudicators, the bottom line evaluation must be how the process affects the very claimants and beneficiaries for whom the system exists.
People who find they cannot work at a sustained and substantial level are faced with a myriad of personal, family, and financial circumstances that will have an impact on how well or efficiently they can maneuver the complex system for determining eligibility. Many will not be successful in addressing all of SSA’s requirements for proving eligibility until they reach a point where they request the assistance of an experienced representative. Many face educational barriers and/or significant barriers inherent in the disability itself that prevent them from understanding their role in the adjudicatory process and from efficiently and effectively assisting in gathering evidence. Still others are faced with having no “medical home” to call upon for assistance in submitting evidence, given their lack of health insurance over the course of many years. Many are experiencing extreme hardship from the loss of earned income, often living through the break-up of their family and/or becoming homeless, with few resources - financial, emotional, or otherwise - to rely upon. Still others experience all of the above limits on their abilities to participate effectively in the process.
We believe that the critical measure for assessing any new initiatives for achieving administrative efficiencies must be the potential impact on claimants and beneficiaries. Proposals for increasing administrative efficiencies must bend to the realities of claimants’ lives and accept that people face innumerable obstacles at the time they apply for disability benefits and beyond. SSA must continue and improve its established role in ensuring that an individual’s claim is fully developed before a decision is made and must ensure that its rules reflect this administrative responsibility.
On October 29, 2007, SSA published a Notice of Proposed Rulemaking (NPRM), which would make major changes to the appeals process. The disability community and others registered significant concerns and opposition to major sections of the NPRM because of the impact the proposals would have on claimants and beneficiaries. As a result, Commissioner Astrue has announced that he is withdrawing the controversial sections of the proposal and we believe that he and his staff are working in good faith to find alternative approaches which will not have negative impacts on claimants. We applaud Commissioner Astrue’s efforts and have pledged to work with SSA to find such alternative approaches.

CONCLUSION

Thank you for the opportunity to testify today. For people with disabilities, it is critical that SSA be given enough funding to make disability decisions in a timely manner and to carry out its other mandated workloads.

We also support changes to improve the disability claims process so long as those changes do not affect the fairness of the procedures used to determine disability. For people with disabilities, it is critical that SSA receive adequate funding to carry out its mandated services and improve its process for making disability determinations.

On Behalf of:

American Council of the Blind
American Network of Community Options and Resources
Association of University Centers on Disabilities
Council of State Administrators of Vocational Rehabilitation
Easter Seals, Inc.
Epilepsy Foundation
Goodwill Industries International
National Alliance on Mental Illness
National Association of Disability Representatives
National Disability Rights Network
National Industries for the Blind
National Multiple Sclerosis Society
National Organization of Social Security Claimants’ Representatives
Paralyzed Veterans of America
Research Institute for Independent Living
The Arc of the United States
Title II Community AIDS National Network
United Cerebral Palsy
United Spinal Association