Testimony Of Deputy Commissioner Lockhart Before The Ways And Means Subcommittee On Human Resources,
On Stewardship Of The SSI Program
July 25, 2002
Mr. Chairman and Members of the Subcommittee:
I appreciate this opportunity to appear before the Subcommittee to discuss the Social Security Administration's (SSA) ongoing efforts for strengthening the integrity of the Supplemental Security Income (SSI) program stewardship goal. Reducing erroneous payments is a key part of the President's Management Agenda. To meet the President's call, SSA is firmly committed to effective management of the SSI program, and we look forward to working with the Subcommittee to ensure that individuals who are eligible for SSI receive the correct amount of assistance and to reduce the possibility that individuals erroneously receive benefits erroneously.
Today, I will discuss the improvements we have made in administering the program and our action plan for strengthening SSI to meet the goals of the President's Management Agenda and get it removed from the General Accounting Office's (GAO) "high-risk" program designation. The Corrective Action Plan--which I am responsible for--has Commissioner Barnhart's full commitment to ensuring executive accountability for achieving the plan's projected outcomes. As some members may recall, I ran the Pension Benefit Guarantey Corporation, which was one of the first programs on GAO's high-risk list and one of the first programs off the list. As Commissioner Barnhart and I told Comptroller General David Walker, we are committed to fixing the SSI program and getting it off GAO's high-risk list.
My testimony will also describe the progress that we have made in administering the SSI/OASDI prisoner and SSI fugitive felon programs. Much of that progress in these and other SSI program integrity areas are directly attributable to the actions of this Subcommittee. I thank the Subcommittee for providing SSA with tools for strengthening SSI, and want to assure you that we will continue to work with the Subcommittee to further improve the program. The Administration is very concerned about issues affecting aged, blind, and disabled Americans.
Interagency Council on Homelessness and Americans with Disabilities Act
Before I begin my testimony on specific SSI program issues, I'd like to mention just two examples of the Administration's activities currently underway to improve the lives of this country's citizens with disabilities.
A week ago today, I attended the first meeting of the 21st century of the United States Interagency Council on Homelessness at the White House. SSA is one of 18 Federal agencies that are members of the Council. The Council is an independent agency that was established by the McKinney-Vento Homeless Assistance Act to coordinate Federal activities related to homelessness. It was quite active in the early and mid 1990's, but had not met since 1996. The President is committed to revitalizing the Council's work. SSA has had a long history of providing service to homeless individuals, and I look forward to working with other Federal agencies, States, and community organizations to help homeless people access SSI and Social Security benefits. Second, the President directed the Federal government to take a leadership role in providing greater access for Americans with disabilities. The cornerstone of this commitment is the Americans with Disabilities Act (ADA). Because of that law, millions of Americans can now compete for jobs once denied them and have gained greater access to public places. They have more options in choosing their homes, using public transportation, traveling and staying in hotels. As the President has said, when people with disabilities find more opportunities to use their gifts and talents, we also become a stronger, more productive nation. Tomorrow, July 26th, we will celebrate the twelfth anniversary of the ADA with a ceremony at the White House. The ADA has made our country a fairer society, more considerate and welcoming to all citizens, and the President is committed to removing more barriers for individuals with disabilities through his New Freedom Initiative.
Current SSI Recipients
It may be helpful at this point to give a brief description of the scope of the SSI program.
On average during calendar year 2001, 6.7 million aged, blind, and disabled individuals received SSI benefits. For these recipients, SSI is a vital lifeline that enables them to meet their needs for basic necessities of food, clothing, and shelter. In 2001, these individuals received more than $30.5 billion in Federal SSI benefits and an additional $3.5 billion in State supplementary payments.
Nearly 2 million of the individuals receiving SSI are 65 or older. Of these, roughly half are 75 or older. Nearly 70 percent of those over 65 are female and many, if not most, are widowed or never married. It is the safety net under Social Security and, in fact, about 2.4 million total SSI recipients also receive Social Security benefits.
At the other end of the age spectrum, nearly 890,000 severely disabled children under age 18 receive benefits.
The 2002 Federal SSI benefit rate is $545 a month, which is about 74 percent of the poverty level. Eligible couples--both of whom are either aged, blind, or disabled receive the Federal benefit rate of $817, which is about 82 percent of the poverty level. There are nearly 260,000 eligible couples receiving SSI.
By any measure, SSI recipients are among the poorest of the poor. For them, SSI is truly the program of last resort and is the safety net that protects them from complete impoverishment. We must be extremely careful that efforts to improve the program and increase administrative efficiency do not harm these most vulnerable members of our society. However, it is our obligation to the American taxpayer to ensure that payments made under the program are consistent with the program's requirements.
Pursuant to the requirements of the President's Management Agenda, we have set a goal of achieving a payment accuracy rate of 94.7 percent for fiscal year 2003. This goal is approximately a one-percent increase over the expected fiscal year 2001 actual.
In 1972, when the SSI program was established, Congress moved the responsibility for administering programs for needy aged, blind, and disabled individuals from the States to the Federal Government. SSA was given the job of administering SSI because Congress wanted to provide a standard floor of income to needy aged, blind, and disabled individuals based on nationally uniform criteria. SSA was designated because of its existing infrastructure and reputation for accurate, efficient, humane and dignified administration of the Social Security social insurance programs. Efficiencies and consistencies have been achieved because we use the same disability standards for adults in both the SSI and Social Security programs.
The SSI program has become increasingly complex over the years. Numerous changes have been enacted in response to concerns about program policies that address the multiplicity of events and situations that occur in the everyday lives of the SSI eligible population.
Much of the program's complexities stem from the way SSI payments are calculated. Two factors used to determine an individual's monthly benefit are income and living arrangements. Income can be in cash or in kind, and is anything that a person receives that can be used to obtain food, clothing, or shelter. It includes cash income such as wages, Social Security and other pensions, and unemployment compensation. In-kind income is food, clothing, and shelter or something someone can use to obtain those items. Generally, the amount of the cash income or the value of the in-kind income is deducted from the Federal benefit rate, which is currently $545 a month. Generally, after the first $65 of earnings is disregarded, $1 is deducted for each $2 of earnings, while other income--for example, Social Security--causes the benefit to be reduced dollar for dollar after the first $20 is disregarded. Thus, as its name implies, SSI is designed to supplement the individual's other income up to a minimum monthly floor of income.
Individuals' SSI benefit amounts also may change if they move into a different living arrangement--whether a person lives alone or with others, or resides in a medical facility or other institution. For instance, when individuals move into nursing homes, their benefits may be reduced to not more than $30 per month. If they move from their own household into the household of another person, and that person provides food, clothing, or shelter, their benefits also may be reduced. If their income or resources in a month exceed the limits specified in the law, they may be ineligible. The design of the SSI program requires SSA to take into account the many changes in an individual's financial and personal life and make adjustments in benefit payments to reflect those changes.
Because it is a practical impossibility for SSA to obtain information from all recipients about every change in their income, resources, or living arrangements in a timely fashion, there will inevitably be some overpayments and underpayments that will be made each month.
Additionally, even if individuals report timely, requirements to notify individuals of how a specific change affects their benefit amounts can create a lag in adjusting the benefit, also causing overpayments and underpayments. Thus, to some extent, program features sometimes can get in the way of eliminating erroneous payments. Another example of this situation is that SSI benefits generally are paid on the first day of the month. Even if the payment is correct on the first, changes during the month can make the already paid benefit an overpayment or underpayment.
Progress in Addressing Program Integrity
SSA's administration of the SSI program came under criticism in 1997, when the GAO designated SSI as a high-risk program. At the time, GAO said that SSA lacked an effective plan to address the level of debt created by overpayments. Further, GAO said that SSA had difficulty determining initial medical and non-medical eligibility for the program, as well as continuing eligibility of program participants. GAO also criticized SSA for what it perceived as an emphasis on production and service over program integrity.
SSA developed a comprehensive plan to improve payment accuracy and management of the SSI program titled Management of the Supplemental Security Income Program: Today and in the Future dated October 1998. As part of that plan, SSA sought and obtained legislation in the Foster Care Independence Act of 1999 (Public Law 106-169) that strengthened our ability to obtain applicant income and resource information from financial institutions, access State databases for essential eligibility information, and use credit bureaus, private collection agencies, interest levies, and other tools to recover delinquent debt.
The initiatives undertaken since 1998 to improve SSA's management of the SSI program have yielded measurable successes. SSA now does a better job of identifying and collecting SSI debt. For example, SSI overpayment collections increased by almost 50 percent from fiscal year1998 to fiscal year 2001. In fiscal year 2001 alone, SSA identified $477 million more overpaid dollars and collected $205 million more debt than we would have had the initiatives not been implemented.
The President has brought renewed attention to efforts to reduce erroneous payments government-wide. Since Commissioner Barnhart arrived, SSA has reinvigorated its program to deter, detect, investigate, and prosecute fraud. SSA's leadership has supported efforts to expand the capabilities of the Office of the Inspector General (OIG) to improve the accuracy and integrity of the agency's work. SSA has taken numerous actions to strengthen its research and policy development role. We have increased the number of redeterminations to verify nonmedical eligibility factors and the number of continuing disability reviews (CDRs) to assure continuing eligibility for disability.
Experience has shown that the most powerful tool SSA has to prevent and detect improper payments in the SSI program is to perform more redeterminations. Redeterminations look at SSI recipients' incomes, resources, living arrangements, and all other factors of SSI eligibility, except for their disability or blindness status.1 Since fiscal year 1998, SSA has taken action to both increase the number of redeterminations processed and to improve the profiles that are used to select cases for this review. These increases and improvements resulted in $900 million in overpayments collected and prevented in fiscal year 2001 compared to fiscal year 1998.
The CDR process is also a major component in SSA's effort to ensure the integrity of the SSI program. It is the primary process used to monitor the disability status of recipients. Since the CDR process applies also to OASDI disabled recipients, the funding and administration of the CDR process is carried out jointly for both programs administered by SSA. Some recipients receive OASDI disability benefits that are less than the SSI benefit level and, therefore, may also be eligible for SSI benefits.
A major deterrent to program fraud has been the establishment of Cooperative Disability Investigative (CDI) units. CDI units combine the skills and specialized knowledge of SSA technicians, investigators from the OIG, examiners from the Disability Determination Services (DDS) and State and Local law enforcement personnel to provide investigative support in the disability decision-making process. CDI units assist the DDSs by investigating individual claims that DDS adjudicators find suspicious, as well as doctors, lawyers, interpreters and others who facilitate and promote disability fraud.
Currently, there are 13 CDI units in operation, with plans to add four more sites in 2002. The total number of confirmed cases of fraud or similar fault processed by the units since their inception was 2,768 as of June 2002. As of June 2002, the CDI project accounted for nearly $160 million in savings for OASDI and SSI since the inception of the units in 1998. Savings to non-SSA programs (e.g. Medicaid, Workers' compensation, State SSI supplements and State or local public assistance) total nearly $80 million over the same period.
Corrective Action Plan
Notwithstanding the recent progress of these various efforts, SSA recognizes that we must do more, and is committed to better managing the SSI program. SSA is focusing on four areas: commitment to timely processing of CDRs, improved prevention of overpayments, increased overpayment detection, and increased collection of debt. To this end, SSA has developed a new SSI Corrective Action Plan directed at the issues raised by GAO in its designation of SSI as a high-risk program.
This new Corrective Action Plan identifies the root causes of the SSI problems, provides solutions and provides for substantial additional near-term measures building upon the substantial progress of the last 5 years. In addition, we are expanding our already significant monitoring capabilities. The primary measure of the success of this effort will be improved program administration and higher payment accuracy.
Commitment to Timely Processing of CDRs
Over the period 1996-2002, SSA's ability to reduce the backlog of CDRs and to conduct all reviews in a timely manner has been facilitated by special administrative expense funding that was provided by Congress. Using that special funding, SSA will become current in our processing of SSI CDRs by this September. Furthermore, even after the expiration of the special CDR funding authority, our fiscal year 2003 budget submission anticipates that we will continue to process all CDRs coming due in a timely fashion. This fiscal year 2003 budget plan provides tangible assurance of SSA's commitment to maintaining the integrity of the SSI disability rolls. The CDRs being conducted in 2002 together with those anticipated in the fiscal year 2003 budget are estimated to result in lifetime savings to the SSI program of over $4 billion.
I would also like to mention a proposal in the President's fiscal year 2003 budget that would prevent erroneous payments in the SSI program by requiring reviews of SSI disability allowances before benefits are awarded. The proposal for conducting SSI pre-effectuation reviews in 50 percent of disability allowances of adult cases in order to correct erroneous SSI disability determinations would yield SSI and Medicaid savings over 10 years of nearly $1.5 billion at an additional cost of $118 million. By the tenth year after enactment, the pre-effectuation review would have identified and prevented erroneous payments in an estimated 24,000 incorrect SSI disability determinations. This proposal would result in our doing the same percentage of reviews of disability allowances in the SSI program, as we are required to do in the Social Security disability insurance program.
We are pleased that the Subcommittee included the President's proposal in the welfare reform reauthorization legislation that passed the House.
Prevention and Detection of Overpayments
The top two reasons for SSI overpayment errors are unreported wages and unreported bank accounts with substantial assets. To prevent overpayments before they occur, SSA will test various cost-effective wage-reporting methods for workers at higher risk for wage-related
overpayments, and will implement those methods that work best. SSA also plans to electronically access the records of financial institutions to determine if an applicant or recipient has unreported income or assets, and will use credit bureaus and public databases to detect unreported income or resources.
As I mentioned earlier, redeterminations are the best way to detect and prevent overpayments. SSA has received funding to perform 2.25 million redeterminations in fiscal year 2002 with of an expected rate of return of $7 for every $1 spent. Commissioner Barnhart recently decided to provide an additional $21 million to increase the number of redeterminations of more complicated, error-prone cases conducted this year with an expected savings of $300 million. And SSA is committed to conducting 2.45 million redeterminations in fiscal year 2003. This means that approximately one of every three SSI recipients will have their eligibility reviewed this year.
To better prevent and detect overpayments, electronic access to data will be increased to improve SSA's ability to perform verification of documents and claimant allegations. Electronic access to such data will detect and prevent overpayments better than traditional methods, will reduce administrative costs associated with current paper bound processes and will improve service by decreasing processing time when verifications are required. We will continue to work to increase the number of States with which we have electronic access to human services and unemployment information. Our goal for the end of the year is to have agreements with at least two-thirds of the States. We also will test the feasibility and effectiveness of implementing large scale monthly wage reporting for working SSI recipients and parents of disabled children who are SSI recipients using touch-tone telephone technology.
We also plan to test two other methods for getting access to income and resources data electronically. Using authority granted by Section 213 of the Foster Care Independence Act of 1999, we will test access to the records of financial institutions. This tool will tell SSA if a SSI applicant or recipient owns unreported income or assets. We also will conduct a test using credit bureaus and other public databases to detect unreported income or resources. We will check to see if a recipient is making regular payments on a debt or is the registered owner of real property or multiple vehicles. This information may be an indicator of possible undisclosed income or property ownership.
In addition to the operational and management improvements, SSA will continue to assess potential changes in SSI policies in order to reduce error. In particular, SSA will focus on simplification of the program as a way of preventing payment errors. Legislative proposals for simplifying the SSI program are under development, and additional analysis will be done in order to assess the impact of other policy changes on program costs and on recipients.
Increased Collection of Debt
SSA also will increase its emphasis on collecting the debt created by overpayments. A new debt collection measurement tool has been developed for fiscal year 2003 and beyond. The new measure will enable SSA to characterize those portions of our debt portfolio that are subject to being collected and those that are not set up in a repayment agreement, with the goal being to obtain repayment agreements from more debtors.
Mandatory cross-program recovery of SSI debt from Social Security benefits was implemented in February along with administrative offset via the Treasury offset program and credit bureau reporting for delinquent SSI debt. SSA is currently developing regulations to institute administrative wage garnishment to collect SSI debt from the wages of former SSI beneficiaries.
SSA anticipates that successful implementation of the Corrective Action Plan will put into place policies, tools, and incentives to improve the administration of this complex program, detect and recover overpayments, and greatly reduce fraud, waste and abuse. SSA is continuing to make improvements by looking at new, innovative ways to make its administration accurate, efficient, humane, and dignified. By its nature, this effort is an ongoing challenge.
I would like to turn now to two SSI integrity programs in which we have had a great deal of success. These are the prisoner and fugitive felon programs.
The Prisoner Program
Since its inception, the SSI program has prohibited the payment of benefits to individuals who reside in public institutions--including prisons, jails, detention centers, and other types of correctional institutions. Social Security recipients in correctional institutions also generally are not eligible for benefits In order to identify SSI and Social Security recipients, who were confined, SSA conducted matching programs with correctional institutions to prevent the payment of benefits to inmates of correctional institutions.
Under Chairman Herger's guidance and leadership, legislation was developed to encourage correctional institutions to report inmate confinements to SSA. The Personal Responsibility and Work Opportunity Reconciliation Act (Public Law 104-193) enacted in 1996, provided for the incentive payments to state and local correctional institutions that furnish information resulting in the suspension of SSI payments. Under the provision, SSA pays up to $400 to state and local correctional institutions for each report that results in the suspension of an individual's benefits.
SSA currently has agreements to provide the Agency with lists of inmates to match against our recipient records with institutions that house 99% of all prisoners in the country. Since the incentive payment program began in 1997, SSA has paid 5,556 penal institutions over $50 million in incentive payments. Suspension of benefits to prisoners is saving the Social Security Administration approximately $500 million annually. For fiscal year 2001, there were over 80,000 prisoner suspensions.
These provisions not only increased the integrity of the SSI and Social Security programs, but they also help identify prisoners for other Federal and federally assisted programs. SSA shares prisoner information with other agencies administering Federal or federally assisted cash, food or medical assistance programs for purposes of determining eligibility. Those agencies include the Department of Veterans Affairs, the Department of Education, and the 50 State agencies administering the Food Stamp program.
In addition to the prohibition on SSI eligibility to prisoners, another provision in SSI law addresses the issue of what happens to individuals when they are released from prisons. SSA may enter into agreements with prisons and other public institutions under which SSI applications are taken for individuals shortly before their release. This allows us to process the application and, if the individual is eligible, have benefits paid to him or her soon after they get out of the institution. The benefits help the individual avoid homelessness and provide access to needed medications in most States through the Medicaid program.
Fugitive Felon Program
Another very important SSI program integrity provision prohibits fugitive felons from receiving benefits. A provision in the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 prohibits SSI payments for any months in which the individual is fleeing to avoid prosecution for a felony, fleeing to avoid custody after conviction of a felony, or violating a condition of probation or parole imposed under Federal or State law.
The current fugitive felon process is partially automated, but there is still a substantial part that requires manual processing. We are actively pursuing matching agreements to facilitate electronic matching of warrant information with Federal, state and local law enforcement agencies to obtain warrant information.
SSA and OIG have matching agreements for obtaining fugitive warrants in place with the FBI; the FBI's National Crime Information Center, the U.S. Marshal's Service, State agencies, and metropolitan police departments, thereby providing us with warrant records from 44 States. When we obtain warrant information from any of these sources, we first verify the social security numbers in the records by matching them against our Enumeration and Verification System. A second match is then conducted against our SSI recipient files to determine if any of the fugitives are receiving SSI payments. Results of the second match are forwarded to the Inspector General for action.
OIG works with both the FBI Information Technology Center the (ITC) and with the US Marshals Service to verify that the felony probation or parole violation warrant is active. The ITC and US Marshals Service provide the address information about each SSI recipient to the appropriate law enforcement personnel so that they can apprehend the individual.
OIG estimates that the projected savings from the Fugitive Felon Program have been significant--more than $250 million since the program began in 1996.
We are committed to administering the SSI program as efficiently and accurately as possible. The President has demanded it, and this responsibility was reiterated in Commissioner Barnhart's May 30th statement to the President and congressional leadership transmitting the 2002 SSI Annual Report--"In my commitment to SSA's mission of managing America's social security programs, two of my top goals are: (1) delivering quality citizen-centered service in a timely and efficient manner, and (2) providing accountable stewardship to taxpayers by ensuring superior financial, performance, and budget management in all payments records and processes. Emphasizing these two goals is particularly important for the SSI program."
We thank the Subcommittee for its thorough and thoughtful work on the SSI program over the years. We look forward to working with the Subcommittee to further improve the program. It is important to the individuals that the program serves that the nation's public confidence in the program remains strong.
I will be glad to answer any questions that the Subcommittee members may have. Thank you.
Footnote 1 We also conduct medical "redeterminations" applicable to young adult recipients who received SSI benefits prior to age 18. These medical redeterminations are done to determine if the individual who met the child definition of disability prior to age 18 meets the adult definition of disability after he or she turns age 18. Back to text.