COMMITTEE ON WAYS AND MEANS BILL THOMAS, California, Chairman
PHILIP M. CRANE, Illinois E. CLAY SHAW, Jr., Florida NANCY L. JOHNSON, Connecticut AMO HOUGHTON, New York WALLY HERGER, California JIM MCCRERY, Louisiana DAVE CAMP, Michigan JIM RAMSTAD, Minnesota JIM NUSSLE, Iowa SAM JOHNSON, Texas JENNIFER DUNN, Washington MAC COLLINS, Georgia ROB PORTMAN, Ohio PHIL ENGLISH, Pennsylvania WES WATKINS, Oklahoma J. D. HAYWORTH, Arizona JERRY WELLER, Illinois KENNY C. HULSHOF, Missouri SCOTT MCINNIS, Colorado RON LEWIS, Kentucky MARK FOLEY, Florida KEVIN BRADY, Texas PAUL RYAN, Wisconsin	CHARLES B. RANGEL, New York FORTNEY PETE STARK, California ROBERT T. MATSUI, California WILLIAM J. COYNE, Pennsylvania SANDER M. LEVIN, Michigan BENJAMIN L. CARDIN, Maryland JIM MCDERMOTT, Washington GERALD D. KLECZKA, Wisconsin JOHN LEWIS, Georgia RICHARD E. NEAL, Massachusetts MICHAEL R. MCNULTY, New York WILLIAM J. JEFFERSON, Louisiana JOHN S. TANNER, Tennessee XAVIER BECERRA, California KAREN L. THURMAN, Florida LLOYD DOGGETT, Texas EARL POMEROY, North Dakota
Allison Giles, Chief of Staff Janice Mays, Minority Chief Counsel  SUBCOMMITTEE ON SOCIAL SECURITY E. CLAY SHAW, Florida, Chairman
SAM JOHNSON, Texas MAC COLLINS, Georgia J.D. HAYWORTH, Arizona KENNY C. HULSHOF, Missouri RON LEWIS, Kentucky KEVIN BRADY, Texas PAUL RYAN, Wisconsin	ROBERT T. MATSUI, California LLOYD DOGGETT, Texas BENJAMIN L. CARDIN, Maryland EARL POMEROY, North Dakota XAVIER BECERRA, California
Pursuant to clause 2(e)(4) of Rule XI of the Rules of the House, public hearing records of the Committee on Ways and Means are also published in electronic form. The printed hearing record remains the official version. Because electronic submissions are used to prepare both printed and electronic versions of the hearing record, the process of converting between various electronic formats may introduce unintentional errors or omissions. Such occurrences are inherent in the current publication process and should diminish as the process is further refined.

 Advisory of June 21, 2001, announcing the hearing

Social Security Administration, Larry G. Massanari, Acting Commissioner

Social Security Advisory Board, Stanford G. Ross, Chairman

American Federation of Government Employees, AFL-CIO, Witold Skwierczynski

Association of Administrative Law Judges, and Social Security Administration, Hon. Ronald G. Bernoski

National Association of Disability Examiners, Sue Heflin

National Council of Disability Determinations Directors, Douglas Willman

National Council of Social Security Management Associations, Inc., Steve Korn

National Treasury Employees Union, Chapter 224, and Social Security Administration, James A. Hill

American Federation of State, County and Municipal Employees, AFL-CIO, statement

Association of Attorney Advisors, Greenville, SC, Elizabeth B. Dameron, statement

Cannistraro, Al, Clifton Park, NY, statement

Hitchcock, James R., Knoxville, TN, letter

Independent Life Center, Inc., Craig, CO, Evelyn Tileston, letter and attachment

National Law Center on Homelessness & Poverty, Jeremy Rosen, statement

FIRST IN SERIES ON SOCIAL SECURITY DISABILITY
PROGRAMS' CHALLENGES AND OPPORTUNITIES

House of Representatives,
Committee on Ways and Means,
Subcommittee on Social Security,
Washington, DC.

The Subcommittee met, pursuant to notice, at 2:16 p.m., in room B-318 Rayburn House Office Building, Hon. E. Clay Shaw, Jr., (Chairman of the Subcommittee) presiding.

[The advisory announcing the hearing follows:]

Mr. JOHNSON. [Presiding.] The Subcommittee will come to order.

Thank you. Mr. Shaw is detained, so we will start the hearing without him, and I will yield to Mr. Pomeroy for an opening statement.

Mr. POMEROY. I thank the Chairman for yielding, and I am very pleased that we will spend today's hearing inquiring into the operation of the disability insurance component of the Social Security System.

At the time that Social Security was created, it was really a masterful effort to have the people of this country united in a program where all of us insured each of us against some of the otherwise unavoidable perils that we have. Obviously, the best-known feature is the peril against outliving your assets, the defined benefit retirement income.

But of course, the survivors benefit covering widows and dependent children of decedents is a program that has been extraordinarily successful. It is estimated that 98 percent of the children of this country are covered under the survivors benefits. It is about as universal a coverage as we could possibly design today.

The other is the disability feature, the one that we are talking about today, which is the feature providing disability income for those who become injured and are unable to work. It is estimated that three-quarters of all the people in the workforce today only have the Social Security coverage insuring them against income loss during a period of prolonged or chronic disability.

As of January of this year, that means that some 6.7 million people, or about 15 percent of all beneficiaries, were receiving their benefits under the disability program. It is estimated that 36 percent of these families would be living in poverty but for getting the disability income check through the Social Security program.

This is a very significant feature and obviously is one that 6.7 million people know very, very well, but I think some of the discussion, frankly, on rates of return, that tries to make Social Security look like it is just another retirement plan and how much are you making on that asset accumulation in there really misses the point and does not often count the value of having this disability insurance.

I have people say to me that "Social Security will never give me anything," and I tell them it already is; assuming they are over 18 and working, they have the disability coverage. If I am visiting a junior high or a high school and hear that, I tell them they have the survivors benefit.

The disability benefit has the value of a $200,000 disability insurance policy and translates to an average monthly benefit of $755. This is the amount that people are receiving to hold them out of poverty.

I must tell you that I am a little concerned about some of the language commissioning the ongoing President's Commission on Social Security. It gave them five principles for reform, one of them, creating individual accounts, another preserving Social Security's disability and survivors components. Well, preserving the component does not necessarily mean holding harmless the benefit levels, and at $755 a month average benefit check, you cannot have any erosion of that benefit level and meet the needs of long-term disabled individuals who are depending on this check.

In addition to concerns about where we are going relatively to privatization schemes as they relate to disability, we certainly want to make sure that the system has, now and going forward, the resources to competently discharge its function in terms of getting the coverage out there to those who need it. This is especially true looking forward, because the estimates are that disability insurance beneficiaries are going to rise by nearly 50 percent by the year 2010 and that the Supplemental Security Income (SSI) disability beneficiaries will rise by 15 percent.

What is troubling is that from some of the complaints we get in our congressional office, you get a notion that this is not always working just as well as it might. But those notions are borne out by surveys of the Social Security managers themselves. In fact, responding to a recent survey conducted by the National Council of Social Security Management Associations, managers in the field offices said to the extent of 77 percent that the quality of work produced by their offices has actually declined over the last 5 years. Of the 77 percent that noted a decline in service proficiency, 71 percent suggested the decline was directly attributable to the reduction in supervisory staff and other employees with over 15 years' hands-on experience. One manager noted that, quote: "Quality definitely takes a back seat to quantity. We simply cannot give the attention to all the work load that is needed."

Unfortunately, as you look at these staffing needs, you begin to worry about whether there is a mismatch between the needs and the actual budget request by the Social Security Administration (SSA), or at least the funding levels committed by Congress.

There is a proposal that the former Commission and I spoke about which would once again restore funding for Social Security coming from the Social Security trust fund itself. I think that that self-funding concept would greatly stabilize the long-term management of Social Security against the extraordinary budget pressures that we are going to face relative to funding the management of this program out of the general revenues of this program. I think that that is something we should think about.

I again want to commend Chairman Shaw for convening this hearing, and I certainly look forward to hearing from the Acting Commissioner as we explore these issues.

Thank you.

Mr. JOHNSON. Thank you.

I am going to read a little bit of Chairman Shaw's remarks before we get started, if you do not mind, because he has some good points.

"I would just like to say that today begins the first of several hearings which this Subcommittee will conduct, examining the challenges and opportunities faced by Social Security's two disability programs, the Disability Insurance and Supplemental Security Income. Today, we are happy to have you with us, the Acting Commissioner of Social Security; the chairman of the Social Security Advisory Board, which has completed considerable research on this topic; and several employee groups who are on the front lines every day, serving disability claimants."

"The Disability Insurance program is under significant financial strain. The actuaries project the program to run cash deficits in just 7 years, just as the baby boom retirees reach their peak years for disability claims."

Welcome, Mr. Chairman. I am usurping your statement. Mr. Shaw has arrived.

Chairman SHAW. I would be interested to know what I had to say.

[Laughter.]

Mr. JOHNSON. And, as Mr. Shaw was saying, "Over the next decade, the number of individuals receiving disability benefits will jump by about 50 percent, and SSI recipients will increase by about 15 percent. At the same time, disability workloads are expected to increase as well. More and more seasoned employees who service disability clients are going to begin to retire. Social Security expects to lose about 50 percent of its employees in the next 10 years."

"How the system will be able to provide efficient, comprehensive, and fair service to its customers with disabilities under these conditions is of great concern."

"Given the monumental social, legal, medical, and demographic changes that have altered the disability environment over the last 40 years, it is no wonder navigating the disability claims process takes too long, and it is too complex, and it is stressful on the individuals whom we are trying to serve. The current process, already inadequate in the past decade, will never withstand the mounting needs of the next."

"The law regarding disability has not changed substantially in 30 years, but the world in which we live and the individuals with disabilities live has changed, and I think it is time for policymakers and Social Security management and employees to craft a realistic plan of action for making the disability program a functioning, viable system for the future."

[The opening statement of Chairman Shaw follows:]

Mr. JOHNSON. Now, I recognize Mr. Massanari for your testimony, sir.

STATEMENT OF LARRY G. MASSANARI, ACTING COMMISSIONER, SOCIAL SECURITY ADMINISTRATION

Mr. MASSANARI. Thank you, sir.

Mr. Chairman, Mr. Pomeroy, members of the Subcommittee, thank you for inviting me here this afternoon to discuss the direction that the Social Security Administration is taking to strengthen our disability program.

I would like to begin by acknowledging the important contributions of the Social Security Advisory Board. Their advice and their support have been extremely helpful to us at SSA.

As the Board notes in its January report, our disability programs have grown rapidly in recent years and will continue to grow in the years ahead. That growth will coincide with the anticipated retirement of many SSA employees, increasing the strain on administering our programs. In addition, new workloads such as those associated with the Ticket to Work will require more SSA resources to assist disabled beneficiaries reenter the workforce.

As you know, President Bush has announced his intention to nominate Jo Anne Barnhart as Commissioner of Social Security. She will be a great asset to our agency because of her broad range of experience, including previous service as an SSA executive and as a member of the Social Security Advisory Board.

To help her address the challenges facing the disability program, we are now developing a comprehensive plan that aligns and integrates current process, automation, and operational policy initiatives.

Before discussing improvements, though, I want to note the importance of our disability programs. Social Security disability protection can be invaluable, especially for young families; it can be all that stands between them and poverty. The SSI program services the most economically vulnerable population with disabilities.

Almost 7 million disabled persons and their families receive disability insurance benefits, and more than 5 million blind or disabled individuals receive SSI.

Together, these programs will provide more than $90 billion to beneficiaries and their families this year.

Social Security disability benefits also provide a gateway to Medicare, and SSI provides eligibility for Medicaid.

We know the current process works well for many people, but we also know that we can and must do better. At the heart of all our efforts to improve the disability process is our commitment to ensure that disabled Americans receive fair, accurate, consistent and timely decisions on their claims for benefits.

During my 35 years as a career manager within SSA, I have seen firsthand the hard work and dedication of SSA's employees as well as the employees in our State disability units. They do a remarkably good job of administering this highly complex program.

The solutions to many of the problems the Advisory Board raises in its reports are neither simple nor clear-cut. SSA has addressed many of the problems as part of our ongoing efforts to improve public service.

Perhaps one of the most important successes is reducing the backlog of continuing disability reviews. We became current in the Disability Insurance program last year, and we will be current with the SSI program next year. I would like to thank this Subcommittee for supporting the Continuing Disability Reviews (CDR) funding that made this achievement possible.

Also, we have reduced the processing time for Administrative Law Judge (ALJ) hearings by almost 100 days from the peak of 397 days in 1997. We have also reduced processing times at the Appeals Council by 140 days during the past 15 months. Processing times, though, are still too long, and we must continue to seek solutions.

After evaluating a series of options, we settled on a new initial claims process that we have been rigorously testing in 10 States since October of 1999. Our results so far indicate that accuracy has improved and that we are paying people earlier in the adjudicative process.

Other initiatives during the past year include our Hearings and Appeals Council Process Improvement Plans. The Hearings Improvement Plan involves significant changes to the way in which we process our hearings workload. We have never undertaken a process change of this magnitude, and quite frankly, it has been a struggle. In some offices, we have seen progress, but in others, the progress has been much slower. We are undertaking a broad-scale evaluation of this entire initiative.

One concern cited in the Advisory Board's report is the variation in allowance rates among States. Because socioeconomic and demographic factors influence who applies for benefits, it is reasonable to expect some variation in allowance rates. These differences do not necessarily suggest inconsistent or improper application of policy. Nonetheless, substantial differences are cause for attention, and we are addressing that issue now. Refinements in our quality review process will help achieve greater consistency.

Finally, the Advisory Board recommended that we revise our quality assurance system. We shared the Board's concerns and brought in a consultant to study the current progress and make recommendations for improvement. We are carefully reviewing these recommendations now to assess their merits and to determine which ones we should adopt.

In conclusion, let me emphasize that we are strongly committed to making our disability program more responsive to claimants and more accountable to the nation's taxpayers. As we have done in the past, SSA will rise to the occasion, and we will address the challenges facing us in administering this large and complex program.

But we must have the support of the Congress in doing so. Mr. Chairman, I want to thank you and the members of the Subcommittee who have worked so hard to assure adequate funding for Social Security. We will again be relying upon your support to receive the funding that we have requested in the President's budget. Our written testimony discusses these issues in greater detail, and I would be very pleased to answer any questions that you might have.

Thank you.

[The prepared statement of Mr. Massanari follows:]

Chairman SHAW. [Presiding.] Larry, I want to personally thank you before I call on other members for the service that you have given us. I know that you have been looking forward to returning to Philadelphia, but you have certainly done a wonderful job for us as Acting Commissioner, and we very much appreciate your service to your country.

Mr. MASSANARI. Thank you, Mr. Chairman.

Chairman SHAW. Mr. Johnson?

Mr. JOHNSON. Thank you, Mr. Chairman.

It appears to me that everything is working better than it used to, at least at the higher level, but when you get to the administrative law judge level, it appears that the determinations are still too time-consuming, and it looks like about 59 percent of those cases that are appealed get approved.

Can you speak to that and tell me how we can address that problem?

Mr. MASSANARI. Yes. We have in fact, Mr. Johnson, made some progress over the past several years. As I mentioned in my statement, we have reduced processing times by just about 100 days since 1997. But clearly, we still need to make more improvements, and that is why we undertook last year a major process improvement effort which we refer to as the Hearing Process Improvement plan, or HPI.

We are still not satisfied with where we are. This has been a very difficult undertaking. So we are intending to undertake a major comprehensive evaluation of that entire effort. But I would agree that we need to achieve significant improvement at that level of the process.

Mr. JOHNSON. I guess you didn't tell me how you are going to do that, but that is okay--I presume you are looking at it. I believe you have about a $7.1 billion administrative budget, and about $5 billion of that is spent on disability, as I understand it. Has the cost of disability determination risen or fallen on a per case basis since you have been doing redesign, and what percentage of the cost of benefits paid is the cost of administrative overhead?

Mr. MASSANARI. Let me pick up on your last question first. If I understand your question, the percentage of total benefits that are captured in administrative expenses runs about 0.9 percent in terms of total administration of all of our programs.

Mr. JOHNSON. That is overall in the administration?

Mr. MASSANARI. Yes, that is overall. This program clearly is more expensive. It is a much more complex program than managing our retirement or survivors insurance program because of the nature of the decision that has to be made. These are very complex and very subjective decisions, and that is the reason why the administrative costs are higher.

But at the initial stage, cost per case has declined somewhat on average, but in a dollar amount, it continues to increase because medical costs increase as do employees' salaries.

Mr. JOHNSON. Thank you very much. I yield back the balance of my time.

Chairman SHAW. Mr. Pomeroy?

Mr. POMEROY. Commissioner, I want to join the Chairman in thanking you for that interim assignment. There probably is no tougher assignment that anyone can do; you have problems to solve, but people know you are not going to be there for the long term, and that makes the whole thing more challenging. I commend you for your effort.

Mr. MASSANARI. Thank you, Mr. Pomeroy.

Mr. POMEROY. One of the most shameful things I have ever seen in a Government program occurred in the early eighties when I was practicing law in my home town, Valley City, North Dakota, and noticed that just about everybody applying for disability was summarily rejected and people on disability summarily terminated. It was undoubtedly driven by a concern about where claims costs were going, but clearly, it was not based on what it needed to be based upon, which was factual determinations upon the eligibility criteria given the health condition of the individual involved.

Have steps been taken to make certain that some very inappropriate policy decision can never again so dramatically affect disability claims administration?

Mr. MASSANARI. Yes. In fact, Mr. Pomeroy, the Congress took steps to prevent that from happening by putting in place something called the "medical improvement standard" so that a person, when we go through our continuing disability review process, cannot be taken off the rolls unless it clearly is established that there has been medical improvement.

We have been very aggressive in carrying out our stewardship responsibilities. We are continuing to do continuing disability reviews with the help of this Subcommittee, and we are now very close to being up-to-date even in the SSI program, but there are certainly safeguards in place, and the appeals process I think serves persons well who have been determined to have shown medical improvement where we are taking them off the rolls.

Mr. POMEROY. Are we seeing a growing backlog in the appeals process?

Mr. MASSANARI. It has actually come down some over the past couple of years, but over the past year, with the introduction of the hearing process improvement activity, backlogs are climbing. That is one of the great concerns that we have with the process improvements that we have put in place, and that is why we are undertaking an evaluation, because things are not going in the direction we would like.

Mr. POMEROY. Some have suggested that cancellation of the Senior Attorney program has actually exacerbated the problems, and the backlog is growing in the absence of that program. Can you describe to us briefly what the Senior Attorney program was and why it was cancelled?

Mr. MASSANARI. Back in the mid-nineties, backlogs had risen to unusually high levels, and we undertook a number of short-term measures. That was one where we were using some of our attorneys to do on-the-record decisions, and they were doing pre-hearing conferences, and they were permitted to make fully favorable decisions. If an allowance could be made, they were permitted to make it.

I do not share the perspective that that was a greatly successful effort. Productivity was not what we had hoped, and the quality of the product was marginal--although my perspective is a bit different on that one.

Mr. POMEROY. It is my understanding that there is a review of some cases that were denied by a significant number--130,000 cases denied--and that a review is ongoing as to the appropriateness of those claims denials over a period of many years dating back to 1974. Are you aware of an initiative like that?

Mr. MASSANARI. I think that what you are referring to are not cases that were denied. These are individuals who have been on the rolls, receiving SSI benefits, and as part of an internal quality assurance review, we discovered that there may be as many as 130,000 SSI recipients who may also be eligible for Social Security Disability Insurance benefits, Title II benefits, that they may in fact be insured. So we are undertaking a major effort to determine whether those folks in fact are also eligible for Social Security benefits. We are starting that effort here in the next several weeks.

Mr. POMEROY. My last question relates to the average disability payment level. It is $755 on average. Do you have a sense in terms of whether we can reduce this benefit in any amount as part of a formula relating to solvency or overhaul of Social Security and adequately meet the needs of disabled people depending upon this income?

Mr. MASSANARI. I would certainly think that any reduction in that benefit would make it very difficult for young families with children to make a go of it. I think it is important to underscore the fact that when the President established the President's Commission to strengthen Social Security, he of course outlined six principles to guide the work of the Commission, and as you pointed out, one of those is to preserve the disability program. We think that is important for the folks who are currently receiving benefits.

Mr. POMEROY. Yes, I would agree with you. We need to preserve the program, and we need to preserve the benefit level, if not increase it. Clearly, anything going south of $755 a month would be catastrophic for the individuals involved.

I thank the Chairman.

Chairman SHAW. Mr. Brady?

Mr. BRADY. Thank you, Mr. Chairman.

First, I want to thank you, Mr. Chairman, for holding this series of disability hearings, and not only for your leadership but for being responsive to a request from members like myself to look into this area.

Earlier this year, our local newspaper, The Houston Chronicle, did a very good, in-depth series of articles about the disability claims in our regions, the problems with it, looking at real life examples, identifying the unusually long time it takes to get to a hearing before an administrative law judge, the differences, low approval rate, statewide and in our region, basically looking at problems occurring in our region.

Acting Commissioner, I appreciate three of the associate commissioners meeting with our office in the Houston delegation to talk through these issues. They made a commitment at the time which we all appreciate, Republican and Democratic, in our region to expedite the creation of two more administrative law judges for our area to try to tackle that part of the backlog as well as a review on quality and accuracy to see if we can identify what those problems are. And when we look at the average numbers in our region, we have not seen those 100 days of improvement is my understanding in getting our cases heard. We do have an unusually low approval rate--not that this is a quota system where each one has an average that has to be met exactly; what we want is fairness and timeliness in the process. We want people who are truly needy to be approved quicker and those who need more information to get that as soon as possible to make their case.

I appreciate, too, the leadership of the Chairman in identifying a problem that we do need to take a hard look at reviewing and rewriting our disability laws. Thirty years is a long time. We have had a number of conflicting and contradictory rulings and regulations that I think make it difficult to hit that standard of consistency. I know that the trends of claims is growing. The trend that less claims will be granted based just on obvious physical factors has decreased, while the trend of those cases that are being decided by "You are able to work if and under these conditions and in this type of situation."

We are seeing also from the disability community, not just in Social Security but in other parts of government, in technology and medicine and service, they have really moved past us in their potential to be working, vocationally occupied, and back on the job.

So I have a couple different questions. One, in the bigger picture first, is it time for Congress to rewrite our disability laws to create a more consistent, clear interpretation for our hearing examiners and our judges to follow?

Mr. MASSANARI. Well, at a general level, I would have to say that with a program that has the level of impact that it does in this society, I think it is always appropriate to review a program of this kind on a continuing basis to assure that it remains responsive to contemporary society, although I would not want to see significant change until a broad consensus begins to emerge around the need for change in this program. But I think that that kind of review is probably essential, as the Advisory Board has pointed out.

Mr. BRADY. Do you not see that we have reached that point? I mean, given the variations in the approval rates, in the filings, in the time it takes to get there and the different regional rulings and regulations and precedents, what more would it take to get there?

Mr. MASSANARI. I think it depends on the level that you are talking about. If you are talking about fundamental change in public policy, then, I think there probably needs to be some consensus that needs to emerge. I am suggesting that the kind of exploration that the Subcommittee is undertaking is very appropriate, and I think we need to very thoughtfully and carefully examine the current program.

But when you begin to talk more about the nature of the decisions that are being made, the fact that fewer decisions are being made on the basis of objective medical findings, decisions are becoming more subjective, and some of that has been driven by the courts, those are the kinds of issues that we need to look at immediately. In fact, we are beginning to undertake an assessment of some of the more recent court decisions to make sure that they are consistent with the intent of Congress.

So I am really making a distinction between the policies that drive us in terms of medical determinations as opposed to very basic public policy. Those are two different things.

Mr. BRADY. I understand. I guess my point is that I think the day has come. While we focus on improvement, and everyone appreciates the progress that is being made, striving for consistency and lower variations across the country, timeliness, can be helped if perhaps Congress gives a much clearer--hopefully, clearer; not every rewrite we do is clear, by the way--but it seems to me that the time has arrived for a rewrite of our disability laws.

Secondly--

Chairman SHAW. The gentleman's time has expired.

Mr. BRADY. I was just getting going, too. Thank you very much.

Chairman SHAW. Your statement lasted 3-plus minutes.

Mr. BRADY. Do you have an additional 30 minutes that I can use?

[Laughter.]

Chairman SHAW. Mr. Becerra?

Mr. BECERRA. Thank you, Mr. Chairman.

First, Mr. Massanari, let me also congratulate you on the work that you have done and thank all the people who work for SSA for all they do, because too often, we do not recognize that this has perhaps been the most successful agency that the Federal Government has ever created except perhaps for the Department of Defense, and in many ways, we do defend Americans by providing them with some guarantees about their survival and their retirement and their children.

Let me ask a couple of questions. First, let me try to follow up on something that my colleague Mr. Pomeroy asked, and that is in regard to this whole debate that we are having these days about the Social Security System, the benefits, where we are heading, the reforms.

When you mentioned in response to some of Mr. Pomeroy's questioning that in the whole larger debate on Social Security, the President has a principle to preserve the survivors and disability components of the current program, give me your sense of what we mean by "preserve." Does that mean keep the shell, or keep the heart and the guts of what we know today as the survivors and disability program under Social Security?

Mr. MASSANARI. Mr. Becerra, I really cannot define it beyond what is laid out in the Executive Order. I think the Commission will begin to work with the guidelines as they are written and will move from there. And as you know, the Commission has only held one meeting. They are at the very preliminary stages of their deliberations, and they will be meeting again on the 24th of July, and at that point, I think they hope to issue an interim report talking about the broad challenges facing the program. But I think it would be premature for me to speculate on that issue.

Mr. BECERRA. Would you like to offer your own personal opinion?

Mr. MASSANARI. I would rather not, thank you.

[Laughter.]

Mr. BECERRA. Then, let me use my time in a more valuable way and move on to another question. The Social Security Administration deals with disability under the Social Security Act. We have a definition of disability under the Americans with Disabilities Act (ADA), and there is some contention about what the true definition of disability is under both acts.

Do you have an opinion about whether or not the definition under the Social Security Act is different, and if it is, should it remain different from the definition we find within the ADA?

Mr. MASSANARI. Clearly, the definitions, Mr. Becerra, are different, but the focus of the two programs, of course, is very different. In the case of Social Security, the definition is used to determine whether or not a person meets a medical and work standard that will yield monthly cash benefits, whereas in the case of the Americans with Disabilities Act, the focus is really on providing assistance to people who are working, to provide reasonable accommodations, and to eliminate discrimination in employment.

The Supreme Court has held in the Cleveland case that while the two definitions are different, they are not in conflict with one another. In fact, they are complementary--and that they can comfortably exist side-by-side.

Mr. BECERRA. Thank you. I appreciate the answer, because I know there has been some concern that we may try to redefine disability within the Social Security Act, and I know that that would cause a number of folks some concern.

Let me ask you a question with regard to staffing. As we get closer to this crunch period--I remember talking to folks at the Department of Transportation about the crunch they are going to face with air traffic controllers who are going to be forced to retire because of mandatory age requirements, and all of a sudden, we are going to have the skies filled with planes and the towers filled with inexperienced air traffic controllers.

What are we doing to try to make sure that we can continue to hire the best and the brightest at SSA? We have to be very competitive. Obviously, a lot of folks are finding some very decent salaries out there in the private sector. What are we trying to do to make sure that we are paying our personnel adequate salaries to compete and to make sure that those who are recipients of the program continue to receive decent service?

Mr. MASSANARI. As you point out, this is a critical issue for this agency, because as we look over the coming decade, we may lose as many as 28,000 employees by retirement and another 10,000 by other forms of attrition. So hiring is critical to us.

We think that we are competitive as we go out into the marketplace. We are in fact hiring now, and we have been able to attract very good candidates.

Our concern, of course--and this is where I will make my pitch to the Subcommittee--is that we have an adequate number of new hires, and that is why we need your support--

Mr. BECERRA. And more money--more money, right?

Mr. MASSANARI. Well, in supporting the President's request in our 2001 budget for a 6.3-percent increase. We need that increase in order to be sure that we can achieve our mission. It is particularly important in the disability program.

Mr. BECERRA. Mr. Chairman, my final comment is that I hope that you and your successor will continue to point out the stark reality that we face so that we will continue to give recognition to your needs for additional resources. Otherwise, we will face that brick wall as we come to it.

Mr. MASSANARI. Thank you, Mr. Becerra.

Mr. BECERRA. Thank you.

Chairman SHAW. Mr. Hulshof?

Mr. HULSHOF. Thank you, Mr. Chairman.

Mr. Massanari, welcome. One of the disadvantages of being first in the order to testify is that you perhaps do not have a chance to anticipate or to respond to those who may be coming behind you. So let me paraphrase a little bit what I expect we are going to hear with subsequent panels and see if you have some response.

I am especially taken by the testimony of Judge Bernoski, who is here with us somewhere, and specifically pointing out in his written testimony at page 3 his belief that the Social Security Administration, or the SSA's administration of the Office of Hearings and Appeals has really been a failure. And I am not paraphrasing; that is right there in black and white.

He also talks about "improper implementation of policy" and suggests that an ALJ-administered independent agency should be established. Let me go from those comments and let me think about those for just a second. I know that also, Chairman Ross, who is likely to be next, also thinks that the agency's relationship with the ALJs needs to be fixed, or is broken. And I know the Advisory Board is suggesting perhaps even a Social Security court. So I have given you a couple of hardball questions and will give you a chance to respond. What is your sense of the observations made by those who are going to come after you?

Mr. MASSANARI. Well, I would have to say in response to the initial comment that SSA's management has been--and I am not sure of the term that was used--

Mr. HULSHOF. I think especially regarding the Office of Hearings and Appeals "has failed."

Mr. MASSANARI. I would say first of all that that suggests that the Office of Hearings and Appeals is not a part of the Social Security Administration. It is indeed a part of this agency, and I do not think that that is an accurate characterization at all.

There are certainly challenges facing the Office of Hearings and Appeals (OHA) both at the hearings level as well as at the Appeals Council level. These are significant challenges that face this agency. There are no quick fixes or easy solutions, but the agency has worked to try to wrestle with the public service problems we face within OHA. But to say that it is a failure, I do not think is accurate.

Mr. HULSHOF. What about t his tension or relationship between SSA and the administrative law judges? What do you see as a way to maybe help turn that around?

Mr. MASSANARI. I think that clearly we need to do more to engage the ALJ union. The nature of the relationship, of course, has changed within the past year now that the Administrative Law Judges are now organized and have formed a union, so we have to deal with them as a bargaining unit under Title VI of the Civil Service Reform Act. So there is a little bit different relationship, but I do think we need to be more open and engaging in dealing with them to be sure that we seek their counsel as changes are made. We certainly need to provide appropriate notice and negotiate with them as appropriate as changes are made that affect their working conditions.

While I am not sure I would describe it as a "broken" relationship, it is one that needs to be worked at, and I think we need to improve communications. I think one of the things that has set us on the right track is that very recently, we concluded the negotiation of a master agreement with the ALJ union, and think it is a positive sign that we are able to reach agreement on that set of negotiations.

Mr. HULSHOF. I appreciate that.

Let me shift gears and try to end on a positive note. In your written testimony or longer testimony at page 11, something that I have the opportunity to be a fan of as we have discussions on Ticket to Work and as this Subcommittee let the effort, and this Chairman helped pass into law and make changes regarding work incentives, and that is the benefit-offset demonstration project. I know that my time is drawing short, but specifically, as we talk about and put this demonstration plan together, we are talking about gradually losing $1 for every $2 that a beneficiary earns over a certain level. You note that there is this 5-year cooperative agreement for Disability Research Institute to the University of Illinois.

Could you briefly--again, my time is short--describe how that is working or what you see positive in that regard?

Mr. MASSANARI. We are just in the design stage of the one-for-two demonstration. There is a bit of a challenge that we are trying to work through as we try to sort through the legislative fix that we will need to propose. When that legislation was enacted, it did not provide for continuing appropriation of benefits, and we need to deal with that, because without it, we are not going to be able to attract potential participants in that demonstration.

But we are now working with those folks outside the agency to begin to design that demonstration. We are also working with the University of Illinois as a part of the Disability Research Institute to develop a set of research protocols as a part of early intervention, which is really a different demonstration, of course, but to deal with early intervention to try to get persons who are disabled rehabilitated and back into the workforce rather than getting them on the rolls and then dealing with rehabilitation.

Many believe that this is probably the future and the appropriate future for this program.

We have to have our research protocols sorted out by March of next year, with some conclusions by 2004. So we are not at a point yet where we have settled on which models we are going to pursue, but we are working with the University of Illinois and Rutgers University as well in that regard.

Mr. HULSHOF. Great. Thank you very much. Thank you, Mr. Chairman.

Chairman SHAW. Mr. Ryan?

Mr. RYAN. Thank you, Mr. Chairman.

Thank you, Mr. Commissioner. I wanted to bring your attention to a point made on page 3 of the Social Security Advisory Board's report, and we as Members of Congress also serve as activists and represent our constituents. This is a point that, going through this report, I think really says a lot. "Basically, a primary reason why the disability programs do not share the same level of public confidence as the retirement program is the perception that determinations of eligibility for disability are not being made in a uniform and consistent manner. As long as variations in decision making remain unexplained, the integrity and the fairness of the disability programs are open to question."

These programs are too valuable and too important to the American people to be left with so many questions hanging over them. I think we have all probably experienced that ourselves when we work on behalf of our constituents. I wanted to ask you for your comments. I missed your opening statement, and you may have addressed it already, but I want to ask you if you could respond to that in fairly quick form, and then I have two more questions I would like to ask you.

Mr. MASSANARI. Clearly, variation across State lines is a significant issue for us. I had mentioned in my opening statement that because of socioeconomic and demographic differences among regions of the country and States, you would expect some variation in allowance rates. But when they are as pronounced as they are in some cases, we need to address that and try to figure out why.

We now have underway a detailed regression analysis that our Office of Policy is pursuing so that we can begin to answer the question more effectively as to why does that variation exist so that we can begin to isolate some of the reasons.

We have also built a number of things into our quality review process. We are now piloting a new consistency review activity as a part of our quality assurance activity which is intended to overcome some of those inconsistencies across State lines.

Some variation will always exist, and we can explain some of it by demographic differences, and this has been historically true. For example, those States where we have the highest filing rate tend to have the lower allowance rates, and I think that is predictable. But again, it is those unexplained differences that we are trying to address.

Mr. RYAN. Let me get into that point a little further and allow you to comment on some testimony we may be hearing later. Chairman Ross discusses federalization of the State agencies as an interim step to strengthening regulations to require States to follow the key guidelines. As a former regional commissioner who has worked extensively with the State governments relative to their State agencies, what do you think of those ideas? Do you think this is a feasible point, and what do you think the States' reaction would be to an idea like that?

Mr. MASSANARI. My own judgment is that the States have done an extraordinarily good job of handling this program. I think they perform very well. So I certainly would not urge that we do that. It is something that this body may want to explore, but I have to give the States very high marks for the way in which they make medical determinations in this program. I think the Federal-State partnership has worked well; it has been one of the strengths of this program since the mid-fifties.

Mr. RYAN. So you would want to leave it relatively the same?

Mr. MASSANARI. I think that before such changes are made, they need to be very, very carefully evaluated.

Mr. RYAN. One more point--and I have heard this myself from some of your field personnel, and I think we are going to hear it later today from some of the witnesses who are coming from the field offices, who have spoken very highly of your Disability Claims Manager pilot. I have heard great comments about this program, and I want to get your impression of that program and what is the current status of the pilot on the Disability Claims Manager? Is it fitting the bill? Is it as successful as we are hearing, and are you continuing on with the pilot?

Mr. MASSANARI. I would not judge it a success or a failure at this point. The pilot itself ran through November of last year; that was the end point of the pilot itself, although we kept the folks in place to work off the cases that were in the pipeline. In fact, just this week, we are ending those pilot arrangements.

We are in the process now of putting together a draft report which will go out to the stakeholders within the agency, including the employee organizations, to look at. I would expect that sometime later next month, a briefing will be done for me, and recommendations will be presented to me. But I think it is too early to tell whether it is a success or a failure, although clearly the responses have been very positive from our clients as well as from employees.

Mr. RYAN. I would just like to conclude by saying there is quite a bit of room for improvement on uniformity in the disability claims area, and it is something that we need to improve upon to restore confidence that should exist within this program which I think the heart and soul, to answer my friend from California, ought to be maintained and preserved, and I think we will.

So thank you very much. No further questions, Mr. Chairman.

Chairman SHAW. Thank you.

Thank you, Larry. I want to again express the appreciation of this Committee for the fine work that you have done. If you get real lucky, this may be the last time that you will be before us.

Mr. MASSANARI. It is always a pleasure, Mr. Chairman.

Chairman SHAW. I do think that we have acknowledged your presence with both gratitude and respect, which is well-deserved. Thank you, and Godspeed on your way back to Philadelphia.

Mr. MASSANARI. Thank you, Mr. Chairman. I appreciate it.

[Questions submitted from Chairman Shaw to Mr. Massanari, and his responses follow:]

Social Security Administration
Baltimore, Maryland 21235

1. In 1996, the Congress designated a separate line item of money, outside the appropriations cap, for reducing the number of disability reviews. You refer to your completion of the continuing disability review (CDR) backlogs as one of your greatest successes. How important to your success was that predictable stream of funding? Would you recommend this same type of special line item to your budget for dealing with other needs of the Agency for such items as enhancing of information technology, building human capital or increasing efforts to ensure effective stewardship?

Having a reliable and predictable stream of additional funding was absolutely critical to our success. It enabled us to develop and carry out a long-term plan to eliminate the CDR backlog, and it ensured that this important program integrity work did not have to compete with our other critical work, such as processing initial claims and answering the phones.

Our CDR efforts also have been very cost-effective: Over the entire 7-year period (fiscal years (FY) 1996-2002), we expect to save an average of $10 for every administrative dollar spent. For future years (FY 2003-2011), the return on investment, while more modest, still is projected to be $7 to $1, assuming that sufficient administrative resources will be made available to conduct the required reviews.

In these times of limited resources and competing program initiatives, designated and predictable line items are desirable for any effort that Congress and the Executive Branch see as priority, "must-do" items, especially those programs that can be successful only if they receive dedicated funding for several consecutive FYs.

Within the total funding appropriated by Congress for administration of the Social Security programs, we continuously review resource allocations to ensure that they are directed to the most critical priorities. In FY 2001, we have been able to reprogram funds both to the Disability Determination Services (DDS) budget to deal with disability workloads and to our front-line SSA offices (e.g., additional overtime) to deal with claims and other customer service workloads. In addition, once resources have been allocated at the Agency level, they are often reprogrammed at regional levels (e.g., between States) to deal with specific workload issues.

At this time, the most important resource issue for SSA is congressional enactment of the President’s full budget request for FY 2002. The level of service we are able to provide depends on it. If we receive the President’s full request in FY 2002, which provides a 6.3 percent increase over the FY 2001 level, we will be able to fund 400 more workyears in the DDSs and ensure stable staffing in SSA offices.

I do not believe that there is a manager in Government who could not put additional resources to good use. However, good service also depends on effective management practices. We constantly monitor spending in various cost categories and the relationship between spending and workloads at the national level to ensure that limited resources are distributed effectively among major Agency components, including Operations, Hearings and Appeals and the DDSs.

Similarly, and of equal importance, spending and workloads are monitored throughout the Agency down to the local level where allocations can be adjusted or work shifted among offices based on available staff. Here, because of its portability, overtime is a powerful tool for aligning resources with work.

We believe our efforts to monitor and distribute limited resources effectively strike the best possible balance among public service, program integrity and investments in technology and in our workforce. With the President’s request for FY 2002, we would be able to provide more resources to our front-line operations and employees.

In an environment of limited discretionary resources Government-wide, cap adjustments are useful tools to ensure funding for cost-effective stewardship activities, such as CDRs, or for essential long-range investments, such as in information technology and workforce development. The CDR cap adjustment has certainly been critical for SSA. However, my major concern is that SSA be adequately funded to meet its mission, regardless of the source of the funds or the budget mechanism employed.

SSA has been working on a number of different initiatives designed to address issues in the disability program, including automation, the disability redesign process, updating the medical listings, return to work, etc. The plan pulls together all of the separate initiatives to make sure that all aspects of the disability program are considered as we develop our plans for further action. I have asked the Acting Deputy Commissioner for Disability and Income Security Programs to take the lead on developing the plans for addressing all of these issues. For many of these initiatives, it is a matter of identifying the activity and coordinating the initiative with involved components. For example, the lead for the development of an electronic disability process was moved from the Office of Systems to the Office of Disability. In addition, employee groups are involved in a number of the individual initiatives.

4. You state that the Office of Hearings and Appeals (OHA) management has been engaged in discussions with a number of employee representatives to make adjustments in the Hearing Process Improvement initiative. What adjustments are being made and when?

Efforts to increase the flexibility of the new business process continue to be encouraged. In March 2001, the Associate Commissioner for Hearings and Appeals and the Chief Administrative Law Judge issued guidance to OHA field managers and staff, outlining "good ideas" and "flexibilities" within the new business process that hearing office staff could take advantage of and still maintain the core elements of the process. In May 2001, OHA management and the American Federation of Government Employees (AFGE; i.e., the union) signed a Memorandum of Understanding, adding two new positions to the hearing office structure—the case intake technician and a full-time receptionist—to relieve employees of some of the rotational assignments to hearing office administrative functions that proved to have a negative impact on productivity.

5. You mention that SSA is refining its quality review process. Can you share with us what refinements are being made and what are the timeframes for implementation?

I have established a workgroup comprised of senior executives and headed by the Acting Chief of Staff to provide advice to the new Commissioner on quality assurance (QA) issues. The charge to this workgroup includes, but is not limited to, consideration of the findings and recommendations by an independent consultant, The Lewin Group, Inc., which was brought in to assess the Agency's QA needs and requirements. The workgroup will be developing recommendations for the new Commissioner on a new quality process and quality culture within the Agency. Since the workgroup has only recently begun its deliberations and the specific recommendations are not yet known, target dates for implementation of any changes in the QA process are not available at this time.

To the maximum extent practicable, SSA strives to maintain and apply uniform standards at all levels of determination, review and adjudication. In recent years this commitment has been demonstrated through the Agency’s ongoing process unification efforts, which have been supplemented by events such as the "One-SSA" meeting that was held in June. In that meeting, adjudicators and managers from all administrative levels throughout the country met to discuss the different management and policy issues facing them, including the important role that consistent application of policy plays in meeting SSA’s obligation to provide an equitable disability determination process. Through initiatives such as these, SSA will continue to take every opportunity to ingrain in its disability adjudicators the importance of ensuring that similar cases are decided in a similar manner throughout the country. The result of this program-wide emphasis has been, and will continue to be, more consistent application of Agency policy around the nation. Without reservation, SSA remains committed to providing a fair and consistent disability determination process.

In addition, we are piloting a new consistency review process that may help in narrowing variations in allowance rates among the states. This new process is described in our response to a later question.

Finally, SSA is studying a range of factors associated with variations in allowance rates using 3 years of recent data. Past analyses have shown that a substantial portion of variation in allowance rates across the States is due to differences in the characteristics of State populations. This does not mean that we should not worry about possible decisional inconsistency. Rather, it means that in assessing variation, we must first control for demographic and economic factors that have an independent impact on allowance rates. A simple example of such factors is age. A State with an older population is more likely to have a higher allowance rate because, on average, older individuals who file for disability benefits are more likely to meet the disability criteria.

SSA currently is conducting a study using regression analysis to determine the impact on State allowance rates of factors that are external to the adjudicative process. These are factors that research has shown to be related to the incidence of disability in the population and include:

• economic indicators such as the unemployment rate, the labor force participation rate, the poverty rate and per capita income,
• demographic indicators such as the proportion of the work force in ages most vulnerable to disability (ages 50-64), the percent of the work force that is male and the educational level of the work force and
• health indicators such as the proportion of workers with health insurance, the rate of nonfatal work-related injuries and illnesses and self-reported indicators of health and disability.

We are examining the Supplemental Security Income and Disability Insurance programs separately. The analysis will enable us to assess the difference in allowance rates across States, adjusting for differences in economic and demographic factors. We will report on the results of this study in the fall.

7. You state that the results are promising in the prototype adjudication process, but you have not made a decision to extend it to other States. On what factors will your decision to extend or not to extend be based? On which data will you focus? When will the results be available?

The decision to extend or not to extend the prototype adjudication process to other States will be based on analyses of administrative and program cost impacts. The evaluation will focus on a number of factors including processing time, quality of decisions, appeal rates and overall allowance rates. We will assess all of the available information, both quantitative and qualitative, in deciding our next steps. An interim report on the status of the prototype will be available in the next few weeks. We expect to have a further report based on a more complete set of data by the end of the calendar year.

Our Office of Quality Assurance (OQA) is piloting a new two-part CR process. The first part of this pilot is designed not only to assess the State DDS quality, but also the quality reviews of DDS disability decisions conducted by OQA’s 10 regional disability quality branches (DQB). The purpose of this new assessment is to ensure consistent and uniform application of SSA policies and procedures in reviews throughout the 10 regions. It will also provide case feedback to make corrections and adjustments necessary to achieve consistent quality. This process aims to promote national consistency in the adjudication and review of disability cases. The results of the review will provide a means of monitoring the degree of consistency among the DDSs and the regions. The data from this pilot will help us to identify methods to overcome concerns raised about deviations among the several review components.

State DDSs in two to three regions will participate with the central office review component during a 3-month period. The pilot will be conducted over a 12-month period until all regions and their respective State DDSs have participated. The central review of the first three regions, Dallas, New York and San Francisco, was initiated in April 2001. Disability determinations from the State DDSs in the participating regions will be selected and sent both to the regional review component and to the central office review component (central office receives a photocopy, the regional review component receives the actual case) for a simultaneous preeffectuation review. The results of these independent reviews are compared and any discrepancy resolved prior to payment. The data collected from these reviews will help us assess our consistency, not only within the regional reviews, but throughout the regions.

The second part of this consistency review process is a review of a completed case, involving a complex policy issue, by all DDSs and all regional DQBs. A copy of the claims file, minus the original decision, is sent to all DDSs and DQBs for a separate and independent determination. Results from these separate reviews are compared and discussed by a cadre of State and Federal representatives. Areas of disagreement are identified, discussed and resolved. All participants are provided the outcome of the cadre’s final report. This information is used by the DDSs and regional review components to improve consistency with the national standard and for training and future assessments. This process began in the first week of February 2001, and preliminary results should be available soon.

We are concerned that an ALJ-administered independent agency could hamper uniform and consistent administration of the Social Security program. Over the last few years, the Association of Administrative Law Judges and its union successor have attempted to advance recommendations to split or separate the ALJs off from SSA. We are concerned that such a plan may not be realistic and would not benefit claimants and taxpayers because it would require, for example, the establishment of another administrative structure or layer to manage and support ALJs’ work throughout the government, adding to the cost of administering the disability program.

The Hearings Process Improvement (HPI) initiative is the most recent effort made to improve OHA. Its structure and core elements promote group processing of work and position the Agency for future growth in adjudicative capacity. During the transition to full HPI implementation, OHA has worked closely with the employee unions, managers and staff to: (1) encourage flexibility with the new process; (2) sign a May 2001 Memorandum of Understanding that added two new hearing office positions and reduced the need to rotate staff into administrative functions; and (3) promote HPI continuous improvement and evaluation activity.

We are now undertaking a broad scale evaluation of all aspects of the new process. Overseeing this effort is a Steering Committee, which includes employee representatives and is responsible for leading the evaluation of HPI. In addition, a representative of the Social Security Advisory Board has agreed to serve as an ex officio member of the committee. The Steering Committee has been asked to develop and execute a plan that will fully assess the implementation of the process in the hearing offices, solicit and consider feedback about the process from within and outside the Agency and identify ways to continually improve the OHA hearing process. The Steering Committee’s report of their findings and recommendations is due at the end of October. This report will be used to determine further actions to improve the hearing process and ensure long-term success.

The Advisory Board has made a number of extremely important recommendations that deserve careful consideration by SSA and the Congress. Their recommendations are based on a thorough review of the disability program. The Advisory Board gathered and carefully examined available disability program data. Members of the Advisory Board conducted on-site reviews of field offices, hearings offices, and state Disability Determination Services (DDS) offices. These visits aided the Advisory Board in analyzing disability program data.

We are carefully evaluating the recommendations of the Board and will work with them and the members of this Committee to assure that these recommendations receive full consideration.

The Technical Expert for Disability (TED) proposal contains many of the same functions as the federal Disability Claim Manager (DCM). The concept of a TED as an alternative approach for utilizing DCM-type skills is one of a number of ideas for using DCM-type skills. The draft DCM evaluation report was sent to stakeholders for comment on June 29, 2001 and a final report, expected later this summer, will be the basis for considering next steps.

We do not agree with Mr. Skwierczynski. The principles SSA follows to process this large, important workload are longstanding and well known.

Our employees regularly detect that certain Title XVI recipients have attained insured status for title II eligibility. Employees process such cases routinely throughout the year.

The policies and procedures we are using to process this workload are the same as they have been all along and the impact on any individual employee is minimal. Although SSA developed a special handbook to process these cases, we did that to focus attention on the workload. The handbook simply reiterates existing policies and procedures.

The Senior Attorney program was established in 1995 as an initiative of the Agency’s Short Term Disability Project to rapidly reduce the number of pending disability cases at the hearing level. Under this program, some 200,000 fully favorable decisions were issued without the need for approval by an ALJ, thus saving the ALJ’s time for hearings and decisions on the rest of the hearing workload. In general, the Senior Attorney program had a positive impact on hearing process efficiency and productivity.

However, by the beginning of FY 2000, pending hearing workloads had declined and fewer cases lent themselves to on-the-record fully favorable decisions primarily because of process unification improvements at the initial claim level. Thus, it was decided that an adjudicator in addition to the ALJ would not be a useful element of the workflow and staffing structure and that the signatory authority of the Senior Attorney would be terminated in each office.

At the time the decision was made to terminate the Senior Attorney program, the full implementation of prototype in the DDSs was believed to be imminent. These process changes would further reduce the pool of possible on-the-record decisions at the hearing level by ensuring more allowance decisions made correctly at the DDS level and by sending fully developed and "fresher" cases to the hearing offices for adjudication.

The Senior Attorney program was never a part of HPI. However, the HPI plan institutionalized key positive aspects of the Senior Attorney program, like early screening and analysis of cases and early identification and fast-tracking of potential on-the-record decisions.

Although testimonies described the success of the DCM, the evaluation results contained in the draft report are mixed and indicate that DCM:

• Accuracy was comparable;
• Processing time was faster, but not dramatically so;
• Productivity was within a range roughly comparable to the current process;
• Administrative cost was significantly higher;
• Customer satisfaction was higher especially for denied claimants;
• Employee job satisfaction was higher as compared to their former jobs; and
• Initial allowance rates were comparable. Data through the hearing level is not yet available.

DCM site operations were terminated at the end of June 2001.

• Federal and State agreement and cooperation were needed for the test, which was conducted over a 3½-year period.
• The data collection period ended in November 2000 but sites agreed to continue operation through June to allow for a smooth work transition.
• Many test participants had been in travel status during this timeframe and away from home since the test began in November 1997. It was time for them to return home. Additionally, because of significant staff attrition, additional DCMs would need to be selected and trained to keep current sites operational. This was not deemed as a viable option since it takes more than a year to bring staff up to speed.

It is too early to determine what decisions will be made regarding the DCM process. SSA Executive Staff will consider evaluation results, stakeholder input, the Federal/State relationship and costs associated with next steps as decisions are made regarding the DCM process.

To the maximum extent possible, the Agency’s available funding for FY 2001 is being reprogrammed to maximize case processing capacity. SSA’s ability to manage pending workloads in the upcoming months is dependent on the enactment of the President’s budget, which provides a 6.3 percent increase in the Agency’s administrative budget for FY 2002. This level of funding will enable SSA to process additional disability cases in FY 2002.

The Agency is committed to a review of the implementation of the HPI initiative in OHA. A multi-component Executive-level Steering Committee was established to develop and implement a multi-part plan that examines the performance of the HPI initiative in OHA and includes broad representation from both management and employee groups. The Executive Steering Committee is composed of representatives from:

• Office of Operations
• Office of Disability and Income Security Programs
• Office of Human Resources
• Office of Finance, Assessment and Management
• Disability Determination Services
• OHA Managers Association
• National Treasury Employees Union
• Association of Administrative Law Judges/ IFPTE and
• an ex officio member from the Social Security Advisory Board.

The American Federation of Government Employees was invited to participate but declined to do so.

A workgroup team has been established, which reports to the Steering Committee and has primary responsibility for gathering information. The workgroup team includes two bargaining unit members.

In addition to this formal representation, input is being sought from employees representing all position types through onsite visits, questionnaires and e-mail.

Process unification does have its origins in the redesign plan beginning with the establishment of an executive level Process Unification Team. The focus of the work has been to achieve consistent application of agency disability policy at all levels of adjudication. It is an ongoing process, which is similar to incremental improvements rather than to a finite project with a set number of initiatives. Although the Process Unification Team did identify specific initiatives to move the Agency forward on process unification, we are now trying to ingrain the concept with other activities such as the recent One-SSA Meeting, which focused on the entire disability program rather than just the policy application.

Finally, you asked if there is room for further improvement; and the simple answer is yes. As we have tried to articulate, process unification is an ongoing incremental improvement which probably will never have a completion date because there will always be room for further improvement.

Larry G. Massanari
Acting Commissioner

Chairman SHAW. Our next witness is Mr. Stanford Ross, who is Chairman of the Social Security Advisory Board. Mr. Ross, you know the ropes. We will put your full testimony into the record, and you may proceed or summarize as you see fit.

STATEMENT OF STANFORD G. ROSS, CHAIRMAN, SOCIAL SECURITY ADVISORY BOARD

Mr. ROSS. Thank you, Mr. Chairman.

Mr. Chairman, members of the Subcommittee, on behalf of the Social Security Advisory Board, I want to thank you for undertaking this series of hearings on the challenges and opportunities of the Social Security disability programs. These programs are of immense importance to the American people, and their problems must be effectively addressed.

Serious problems exist today, and if they are to be resolved, fundamental change is needed. This hearing is an important step in the careful review that needs to take place if changes are to move forward in a timely and appropriate way.

Over the past 4 years, the Board has spent a great deal of time studying SSA's disability programs. We have consulted with the agency's leadership, visited with hundreds of managers and other employees in the field, and we have also held public hearings and benefited from the views of many individuals and organizations in individual meetings.

As has been the case with all of our work, the Board's study of disability has been conducted on a nonpartisan basis. All of our reports have been issued by consensus and without dissent.

I am not going to go through the numbers, but the huge size of this program should be remarked on. Unfortunately, despite its huge size, it is almost like a stealth program, because the agency also has the Old Age and Survivors Program, where 82 percent of the dollars are spent. But programs that approach $100 billion in cost and constitute 5 percent of the Federal budget deserve the kind of scrutiny that you are beginning here today.

The $5 billion administrative budget for the disability programs that we site makes up two-thirds of the agency's overall administrative budget. In terms of senior management time, I would guess that it is much more than two-thirds. Most of the problems of SSA as an administrative agency today lie in the disability area. The Old Age and Survivors Programs run relatively effectively and efficiently. The disability programs do not.

Moreover, what is really worrisome is that the disability programs are going to expand rapidly in the coming decade. As the baby boom generation approaches retirement, many of them will be applying for disability benefits, so that long before you have the problem of how to handle the baby boom generation retirement, you are going to have the problems of how to handle their coming onto the disability rolls.

At the same time, SSA faces its own retirement wave, and having adequate people in place to handle this great increase in work is a huge challenge. Part of the reason is because SSA's hiring today is not what it was 20 or 30 years ago. It is more difficult today. The agency has to be more competitive to get good people, and the people who are coming in are often older.  It may be their second or third career--and they cannot be expected to have long-term careers like the present Acting Commissioner, who has maybe 30 years with the agency.  They may only be there 3, 5, or 7 years. So there is going to be a constant need to try to keep up with the work load, and it is going to be a real challenge.

Our study of the disability programs has grown out of our firm belief that they are a vital part of the Nation's social insurance and welfare systems.

There has not been a full-scale review of disability policy and process in over 20 years. The result is a great deal of incoherence and, at times, demonstrable unfairness. If your claim is relatively simple, maybe it will be processed in 3 or 4 months; but if it is complex, a year could go by, and if you need to go for an appeal to the Office of Hearings and Appeals, it can be 3, 4, or 5 years by the time that appeal is heard by the Appeals Council. Moreover, you are not able to appeal your case to a court until the administrative review is complete.

This is not good public service. These problems really need to be addressed.

We capsulize our findings by saying that there is a serious gap between disability policy and the administrative capacity required to carry out that policy. Every part of the process is under stress. Field office employees lack sufficient time to explain program rules and provide the kind of assistance that many applicants need to file a properly documented claim. Backlogs are growing in many State disability agencies, and caseloads are in effect unassigned; they are sitting in stacks somewhere. We have gone out and seen this with our own eyes.

Hearing offices, the Appeals Council, and the Office of General Counsel are all struggling to keep up with the large workloads generated by the magnitude and complexity of the disability cases that are proceeding through the system.

There are strengths to the system. I want to make clear that there are many dedicated and loyal employees, thousands of them, at the Federal and State level who care deeply about the people they are serving and who are working hard to meet the needs of the people they serve under very difficult circumstances. But I would say that this is another case of a lot of very good people trapped in a broken system that needs to be fixed as promptly as possible so their efforts can be productive.

One of the important thing that can come out of this hearing is to begin the process of change, which will not be easy, but it will let people, like the people you are going to have on your next panel, understand that help is on the way, that policy makers are not going to turn back from looking at these issues and trying to make the changes that are necessary to make these programs more responsive to the needs of the present society.

There are a number of important issues, but I think the fundamental issues are three. The first is the issue of consistency and fairness. In our reports, we documented variations in the program across areas and across steps in the process. We had to pull the data together ourselves. What is remarkable is that the agency cannot provide policymakers like yourselves, on a routine and ongoing basis, information about why these differences exist so that you can begin to address them.

I think that one of the things that has to happen is that the agency has to be a better manager and produce information on a timely basis that allows it to better manage the programs and allows you to better exercise oversight.

Second, as I said before, the process can be very slow and cumbersome, and the public deserves better.

Third, the present systems is not sustainable as it is currently being administered. Changes will have to take place to meet this huge bulge that is going to come into the program, which has been predicted by the actuaries and is as sure to happen to the disability programs as it is in the Old Age and Survivors Program. This agency has to get prepared for that.

In terms of the elements of reform, we would point out three major things. The management structure needs to be made more accountable and more coherent. SSA has a weak management infrastructure, and there is just not enough attention being paid to the need for change so that the agency can be on top of this. One of the major challenges facing the new Commissioner will be to determine how to address these shortcomings.

Second, the Federal-State arrangement needs strengthening. I do not disagree that the State agencies are doing a very good job under difficult circumstances. As a Commissioner 20 years ago, I can tell you they have improved; they are very responsive, and they have very many knowledgeable people. But there are huge variations in their ability to discharge their responsibilities depending on which States they are in and what the State laws are.

We do not advocate federalization today, but we do advocate issuing regulations that establish uniform standards so that the disability examiners have the levels of experience, training, background and pay that will enable them to do this job.

Our proposals may sound like we are interested in more Federal control. We are not. We are interested in helping the State agencies, which are often a small part of an umbrella State agency, get what they need to do the necessary work and for which the Federal Government is paying 100 percent of the cost. In many States, for example, there is often a hiring freeze or other kind of restriction that curtails their capacity to do the work that the Federal Government is willing to pay for in the interest of helping people.

Chairman SHAW. Mr. Ross, could I ask you to sum up? We are going to be running over, and there will be some votes called, and that concerns me.

Mr. ROSS. Certainly. I would be happy to do that. I am almost at the end of my statement.

We think that the President has made a good move in stating his intention to name one of our own, Jo Anne Barnhart, as the next Commissioner. She will bring to the job a wealth of relevant experience and a clear understanding of the issues. You will find her to be a knowledgeable, thoughtful, and decisive representative of the agency.

We also commend Acting Commissioner Massanari, who has shown great initiative and leadership in preparing the way for the next Commissioner by establishing working groups to develop recommendations in many of the areas we have addressed.

Finally, I think it is important for me to say that it would be a mistake to underestimate how deep and numerous the problems are. Isolated incremental changes will not be sufficient to address the situation. Nothing less than a comprehensive plan for reform is needed to bring about coherent changes in the many interrelated elements of the disability program. These changes will likely have to be implemented over a long period of time but should be guided by the overall plan to avoid unexpected and unintended consequences. The Hearings Process Improvement Plan is a good example of something that has had many unintended and unexpected consequences and has not worked to improve things, but has actually worked to make things more difficult for both the people working in the Office of Hearings and Appeals and the public who have to deal with that office.

In closing, I want to emphasize that the Board is eager to work with the Congress, the administration, and the agency on the changes that need to be made.

I am very pleased to have this opportunity, and while I have gone way over my allotted time, we have spent so much time on this, you will have to excuse me for wanting to use my opportunity. I would be happy to answer any questions that you may have.

Thank you very much, Mr. Chairman.

[The prepared statement of Mr. Ross follows:]

Chairman SHAW. That is why I have been so lenient with the time. Thank you very much, Mr. Ross. Mr. Brady?

Mr. BRADY. Thank you, Mr. Chairman.

Your basic message to us, Mr. Ross, is that there are three things we should do--restructure the management of the agency to make it more accountable and coherent; strengthen the State-Federal partnership to raise the quality and consistency of it; and undertake a comprehensive plan.

If we were to ask you what are the three most important things we ought to do, would those be it?

Mr. ROSS. Yes. I would also want to be honest with you that I think, despite $5 billion sounding like a lot of money, it may well be that more resources in the short term are required. Some of these changes will take a while to kick in and produce savings, and meanwhile, there is a huge number of claims out there that need to be addressed. The Board has favored, both during the last administration and the present one, a budget for SSA that is greater than the one in the President's budget. We think, to put it bluntly, that the programs are being run on the cheap. There needs to be an adequate number of people in the Federal and State agencies to do this work, and they need to be supported by technology and other modern management tools.

Mr. BRADY. I understand someone else will be asking you how, specifically, we ought to undertake a comprehensive plan and what should be part of that process. But following up on the short-term initiatives, you made a comment that you see HPI as a failure. Mr. Ryan asked the previous witness about the pilot program in New Hampshire and 10 other States, and that pilot program seems to me to be fairly sound in its approach, taking more time to actually meet with the claimant, get more information in their file to present their case, give the examiners in the initial examination more time to review it. I think they combined the initial examination and the reconsideration together to have more time to thoroughly look at it, and there seems to be more accuracy and consistency in that initial denial or approval phase.

Does your Advisory Board see that as a process that should be applied across the other States as well?

Mr. ROSS. I think with both the HPI and the prototype plans, there are some good elements, and there are obviously some elements that are probably going to need to be changed or adjusted.

I did not use the word "failure." But I would say that the word we hear when we go to hearings offices most often are that "It has been a disaster for us."

Now, there are some positive things that have been learned from HPI, and they can be built on, and the same is true with prototype. But one of the challenges for the new Commissioner will be to sort out the things that are worth making generally available across the Nation and those things that should be adjusted or even abandoned.

It is much too early to know how to go on some of this, but it is not too early to say there needs to be more attention given to the interrelationship of these changes, because when you change one part of this puzzle without anticipating what it is going to do to the other parts, you have not improved things.

So I would be very slow to recommend going national, say, with prototype, even though all the things you say are true. There are aspects of it, such as more attentiveness and looking at things earlier, that are valuable.

Mr. BRADY. Thank you. Thank you, Mr. Chairman.

Chairman SHAW. Mr. Becerra?

Mr. BECERRA. Thank you, Mr. Chairman.

Mr. Ross, thank you very much for your testimony--and thank you for your candor, by the way.

Let me ask you a question first with regard to the definition of disability that I asked Acting Commissioner Massanari. I am wondering if you could tell me that the Board has any intention to recommend that we reconsider the definition of disability within the SSA.

Mr. ROSS. The Board's reports actually address that issue. We see important discrepancies between the definition in the ADA and the definition under the Social Security laws. Even more important than the legal definitions is the way these laws work in practice. One law emphasizes trying to keep people who are disabled in the mainstream by accommodating the workplace, ending discrimination. The Social Security law provides an incentive for people to prove total and permanent disability. And while Ticket to Work legislation which this Committee has worked so hard on may help to improve things, we know that the best time to help people is before they are determined to be disabled and try to get them some help up front to stay in the workplace.

So we think there are whole areas of policy where there needs to be a fresh look to see whether more can be done to help people stay in the mainstream and not become dependent on this program.

Mr. BECERRA. Do you see that as a marked departure from the existing definition of disability within the system?

Mr. ROSS. I do not know whether it is so much in the definition as in the application, and it may be that an adjunct program that may be even more comprehensive than Ticket to Work needs to be undertaken; it could be some temporary support to help people who want to work and try to continue to work but need some help during this period so they do not actually get into the Social Security disability system.

Other countries have done some of this; in some areas like worker's compensation, there have been some developments. There is a whole universe of things that you can look at, and the analysis and research to try to figure out how to help people in today's economy really should be looked at. We are dealing with a definition that goes back to a time when most work was physical labor, and it was pretty clear that if you could not work, you could not work, and that was the end of it. In today's world, lots of people who are disabled work because it is a service economy, the technology has changed, and the new directions that we are seeing--and many of them come out of the disability community and their advocates--have not been recognized sufficiently in these laws. And, as a lawyer, I have to say that I do not read the Cleveland case the same way that Acting Commissioner Massanari does. It said there are two separate definitions, and if that is what Congress did, we will let it stand. It pointed out the incongruity of the Social Security rules that say that you are disabled even if the employer can and will accommodate the workplace--you can still be entitled to the benefits. So the two are not meshed.

Mr. BECERRA. I suspect we will be very interested in seeing how you and the rest of the Board continue to develop those thoughts about the definition.

Let me ask one last question since my time is expiring quickly. You made some very frank statements that there is a need for a comprehensive plan for reform and that the program has been run on the cheap. Maybe not in the 30 seconds that remain, but if you could please provide us, I would be very interested in hearing your thoughts and having more particular communications with the Advisory Board members on what you think we need to do, because you are sounding an alarm, and it will not come out just in a report, but I hear the rumbling, and the closer we put our ear to the ground, I think we are going to find out that there is a big stampede. So I hope that you are willing to give us some very frank and direct commentary on what we need to do, because if we are going to have to increase funding, if we are going to have to make some major changes, we should hear it now, because it will not be easy to do.

Mr. ROSS. Thank you. We will try to continue to help, and we will be responsive to you. Thank you.

Mr. BECERRA. Thank you. Thank you, Mr. Chairman.

Chairman SHAW. Mr. Hulshof?

Mr. HULSHOF. Thank you, Mr. Chairman.

Mr. Ross, welcome. I am interested in the part of the report that talks about trying to improve the relationship between the Social Security Administration and the administrative law judges. And I appreciate the recognition, as Mr. Becerra said, the very candid recognition, of the tension between preserving the decisional independence of an ALJ and yet trying to get that prompt determination in maintaining that independence. I know there is that tension available.

You suggest, or the report suggests, having the agency represented at the hearing. And I know that some of the ALJs, as you put it on pages 19 and 20 of your statement, are concerned about maybe a tough cross-examination because the record on appeal is going to see that maybe they piled on against the claimant and that the agency should have someone representing them at the hearing.

Now, I do not have the institutional memory that some of my colleagues here do, but hasn't that been tried before?

Mr. ROSS. Yes. During the reforms that we initiated in the late seventies and early eighties, that was done as an experiment. It was brought to a halt for a variety of reasons including an adverse court decision. But it is 20 years later, and the situation has changed dramatically.

Most claimants are represented today, and represented by people who are quite able, and the State agency decision is not defended. Now, I do not know how many of you are lawyers, but I am a lawyer, and I know that when you are not required to defend your decisions, you make mistakes. The best way to assure the quality of the agency's decisions is if they have to defend them, because a lot of their decisions would not pass the "red face" test. They are not going to get up in front of an ALJ and try to defend bad decisions.

So a number of cases would go away immediately.

Secondly, the ALJs cannot wear so many hats. The ALJ really has to be a judge and cannot start cross-examining and trying to figure out whether the truth is being told by this one or that one. The ALJs' jobs would be a lot better if they could be a judge and have both sides make their arguments, and then they would make a decision.

Now, there are problems that you would have to solve. You would have to make sure that those claimants who are not represented do have representation. There are lots of issues. I am not saying that it would be simple, but I do think you could solve those problems, and the end product would be a better process.

Interestingly, the new Medicare cases that have been assigned to the Office of Hearings and Appeals will be adversarial procedures, so they are going to have a large caseload that is adversarial that will provide some insights into how well this might work in the disability area.

Mr. HULSHOF. I appreciate that.

You also talked about the recommendation of closing the record after the hearing and whether we should review that issue. I am not going to spend time on that, but I wanted to make sure the record was complete that that is part of this recommendation, as well as a third recommendation of new rules for claimant representatives. I probably do not have the time to ask you about it. But one thing that I think was sort of throw in on page 21 that was not one of the main three recommendations was that you suggest that Congress review the issue of payment of attorney fees. We had this, I think, as part and parcel of a previous hearing about attorneys' complaints on statutory limits.

Do you have any suggestions for us? I know that it was not one of the main three components of suggested changes for repairing this relationship, but what would kind of guidance would you provide to us on that?

Mr. ROSS. The attorney fee situation is structured in a way that the ALJs really have to ignore things that are obvious to them, such as whether somebody has done a considerable amount of work or very little work, whether they have done a good job or a poor job. Unlike in most court settings, where the judge would review the allowance of fees in a situation, that does not take place here; it is pretty mechanical.

This is a sensitive area. Certainly attorneys who work hard and do a good job for their claimants should get fees; and certainly if we go to an adversarial situation, it is important that they get fees and provide good representation.

But under the present situation, where it is a non-adversarial proceeding, I think there are more questions raised about the fee issue because their value-added in many cases is subject to question.

Chairman SHAW. Mr. Ryan?

Mr. RYAN. I will yield, Mr. Chairman, so we can get to the next panel.

Chairman SHAW. Thank you.

Mr. Ross, I will just throw one thing in. Back when we had the city courts, I was a municipal judge, and we would bring in a city prosecutor if and only if the defendant was represented himself in order to balance it out. Maybe that is something we should look at. Even though this is not really supported to be an adversarial situation, it would appear that there should be someone in there to defend whatever the--

Mr. ROSS. Mr. Chairman, we have had some ALJs tell us that they will almost invariably go to legal services or others and tell claimants to be represented. They do not want to sit on cases any more where people do not show up with an attorney or other representative, because the program has gotten so complex that they are afraid the courts will reverse them if the case does not show that there has been representation.

So there is a different situation today than when the experiments were run in the early eighties, and your analogy may well be very helpful.

Chairman SHAW. Thank you. Thank you for what you do and for the time that you put in. Obviously, you have been very conscientious.

Mr. ROSS. Thank you very much for having me.

[Questions submitted from Chairman Shaw to Mr. Ross, and his responses follow:]

Social Security Advisory Board
Washington, DC 20024

The Board’s principal concern is that the present Federal-State arrangement is not ensuring high quality, uniform administration throughout the country. There are wide variances among State agencies in areas that have a major impact on the quality of work that is performed, including staff salaries, hiring requirements, training, and quality assurance procedures. In addition, State agencies are sometimes subject to Statewide hiring freezes or other constraints that can severely limit their ability to process claims in a timely way. The Board has urged the Social Security Administration to revise its regulations to require States to follow Federal guidelines in these areas. We have also stated that SSA should be prepared to take over the work of a State agency if, as a result of these new regulations, any State should decide to withdraw from the program.

In addition, the Board believes that the issue of federalizing the disability determination process should be examined by SSA and the Congress in light of anticipated future needs of the disability programs. This will require careful analysis of the administrative, fiscal, and political issues that federalization would entail. We do not know how States would react to being relieved of their responsibilities for making disability determinations, but this would likely depend upon the specifics of any particular federalization proposal that may be made.

The problems that need to be addressed will require changes in policy, administrative arrangements, processes, and resources. To develop a comprehensive plan, SSA will have to bring together the expertise of employees from throughout the agency, including the Office of Hearings and Appeals as well as the State agencies. The plan will have to include not only a description of the changes that need to be made but also a careful timetable for implementing these changes in an integrated way so that there will not be unintended consequences. Implementation of all the changes that are needed will undoubtedly extend over a substantial period of time, so coordination will be important.

Changes should be made with (1) a clear understanding of their likely impact on all parts of the process, including field offices, State agencies, hearing offices, the Appeals Council, the Office of General Council, and the courts, and (2) a measure of assurance that the resources, including systems support, that will be needed to carry them out, will in fact be available. The agency and the Congress need to work together closely to develop changes that can be widely supported and successfully implemented. Initially, the Congress can be particularly helpful by holding hearings that will educate policy makers and the public on the problems that need to be addressed and the changes that are needed.

The 1994 legislation that established SSA as an independent agency gives the Commissioner the authority to organize the agency as the Commissioner considers necessary or appropriate. There are a number of ways the Commissioner could try to bring greater accountability and unified direction to the disability programs. The Board noted in its January 2001 report that one way to do this would be to appoint a high level individual, who would report directly to the Commissioner and have authority to make decisions that cut across functional lines, to manage the programs. Alternatively, the Commissioner may determine that, given the importance of the disability programs, it is the Commissioner who is the most appropriate person to assume direct responsibility for coordinating the many aspects of the operation. If the magnitude of the Commissioner’s other responsibilities is deemed too great to make this feasible, the Commissioner could assign this responsibility to the Deputy Commissioner. Still another option would be to restructure the agency so that disability-related functions could be coordinated more coherently than under the agency’s present organizational arrangements.

The disability programs require sustained public support. This support can only be produced if it is clearly perceived by claimants and the public at large that disability decisions are made consistently and fairly. One reason the disability programs do not share the level of public confidence enjoyed by other programs administered by SSA is because there is a long-standing and widespread perception that the agency is unable to apply the statutory definition of disability in a uniform and consistent manner.

As data assembled by the Board show, there are striking differences in outcomes over time, among State agencies, and between levels of adjudication. Analysts of the disability programs have identified many factors, such as economic and demographic differences among regions of the country, which they believe contribute to these differences. However, the agency has no effective mechanism to provide the kind of information that policy makers and administrators need if they are to understand why differences are occurring and the degree to which they may be the product of the agency’s own policies and procedures. The lack of transparency in how decisions are being made is harmful in two important ways. It contributes to a perception that the program is not administered consistently and fairly, and it prevents policy makers and administrators from knowing what corrective action is needed.

The Board has recommended that SSA develop and implement a new quality management system that will routinely produce the comprehensive program information that policy makers need to guide disability policy and procedures and to ensure accuracy and consistency in decision making. The quality management system should incorporate all parts of the disability determination process. Making the information that it provides available to persons who are concerned with the disability programs both within and outside of the agency should promote more uniform administration and better public understanding of and support for the disability programs.

Individuals who believe their cases have been incorrectly decided should be encouraged to appeal the decisions, as the agency currently does. But it is in the claimant’s interest, as well as the interest of the programs, to have a determination that the claimant considers satisfactory early in the process so that an appeal is not considered necessary.

The Board’s reports point to a number of improvements that need to be made in the disability system that may affect the number of cases that are appealed. For example, at the beginning of the application process claimants need to be given a better understanding of the rules of the program and the information needed to correctly process their claims. Improving the Federal-State arrangement and providing adequate resources at the field office and State agency levels should result in better developed cases and better reasoned and explained decisions. Introducing adversarial hearings at the appeals level may also have an indirect effect over the long term because State agencies may become more rigorous in their decision making if the decision has to be defended at a hearing. More careful articulation of policy, and making policy uniformly applicable at both the State agency and administrative law judge levels, should produce more uniform decision making, which also may affect the number of appeals. The Congress and the agency should also examine the extent to which the changes that have been made in recent years as the result of court decisions and other pressures have produced a degree of subjectivity into the process that encourages continued appeals.

In addition, both the Congress and SSA should carefully review the impact of the agency’s present plan to eliminate the reconsideration step in the appeals process. SSA is currently testing the elimination of reconsideration in 10 prototype States. The agency intends to eliminate reconsideration nationwide as one of a number of changes it plans to make in the disability determination process. It is still unclear what impact the elimination of reconsideration and the other changes that are being tested will have on claimants and on the ALJ process. If the evaluation does not clearly show that the prototype changes will produce the hoped for results, including significantly fewer appeals to the ALJ hearing level, SSA should consider enhancing the current reconsideration step by offering claimants a face-to-face hearing and ensuring that it involves a de novo review that is conducted only by highly trained and experienced individuals.

The Appeals Council performs a "case correction" function by providing a final administrative appeal for individuals whose claims have been denied by an administrative law judge. Congress also gave the Appeals Council the authority to review ALJ decisions on its own motion in order to ensure that the agency’s policy is being uniformly applied and to identify areas where policy needs to be more clearly articulated.

Currently, there are weaknesses in the performance of the case correction function from the standpoint of both individual claimants and the disability programs. For claimants, the Appeals Council step can be unreasonably slow. Although it has improved recently, the average time for processing an appeal was 505 days in fiscal year 2000. From the standpoint of the programs, the Appeals Council step appears to be ineffective in improving consistency in the application of policy or in identifying areas where policy articulation needs to be improved. Although in recent years the number of cases being remanded by the Council to administrative law judges has increased, the Board has been told that the explanations for the remands that are provided to the judges often give them little guidance as to the reasons why the decision needs to be reviewed. The Council has also been reviewing too few cases on its own motion to serve as an effective monitor of consistency and accuracy in the application of policy.

In addition, the current system allows claimants not only to present additional evidence to the Appeals Council but also to present new allegations of disability. Rather than performing an appellate review, the Appeals Council becomes involved in determining, or re-determining, facts. Closing the record after the ALJ decision would give the Appeals Council an appellate function. Claimants would, of course, have the right to file a new claim in order to present new evidence or allegations.

The principal argument for a Social Security court is that it would provide more uniform case law throughout the country and increase the consistency of decisions. It would provide more uniform procedures, resulting in more consistent application of the substantial evidence rule and more uniformity in how remands are made. A separate court system would also provide a bench with greater expertise in disability program rules. Social Security cases are only a small percentage of Federal court cases, and generalist judges cannot be expected to have expertise in this subject. A final important advantage is that there would be less variance throughout the country in how long an appellant has to wait to have his case heard.

The major disadvantage would be the loss of the legal debate that now takes place as issues are discussed in various Federal circuits. Some refer to this as a "percolation" of ideas before review by the Supreme Court is sought. Another point that is raised by opponents of a separate court system is that, even though Social Security court proposals that have been made in the past provided for divisions and field panels to make the court more accessible, these might not be as convenient for claimants as the existing court system. Finally, there is the issue of the number of judges needed and the attendant costs. The issue of additional cost needs to be studied. A separate court would not create additional work but would re-distribute existing work. A study should clarify whether the costs of a separate court would be offset by savings elsewhere.

Stanford G. Ross
Chairman

Chairman SHAW. We now have a panel consisting of Witold Skwierczynski, who is President of the National Council of SSA Field Operations Locals, American Federation of Government Employees, AFL-CIO, Baltimore, Maryland; Steven Korn, who is President of the National Council of Social Security Management Associations, Inc.; Sue Heflin, who is President of the National Association of Disability Examiners, from Jackson, Mississippi; Douglas Willman, who is past President of the National Council of Disability Determinations Directors, from Lincoln, Nebraska; James A. Hill, President of Chapter 224, National Treasury Employees Union, from Cleveland Heights, Ohio; and finally, we welcome the Honorable Ronald G. Bernoski, who is President of the Association of Administrative Law Judges, from Milwaukee, Wisconsin.

We have all of your testimony, and I would request, in that we are getting a little late, and we want to get through all the witnesses on the panel, if you could be as brief as you can so that members will have an opportunity to question you.

We are going to be starting to vote, and when that happens, it is going to make it very difficult for us to continue the hearing, particularly because Congress will be letting out, and people will be catching planes and going home.

Mr. Skwierczynski?

STATEMENT OF WITOLD SKWIERCZYNSKI, PRESIDENT, NATIONAL COUNCIL OF SSA FIELD OPERATIONS LOCALS, CHICAGO, ILLINOIS, AMERICAN FEDERATION OF GOVERNMENT EMPLOYEES, AFL-CIO, BALTIMORE, MARYLAND

Mr. SKWIERCZYNSKI. Thank you, Mr. Chairman.

My name is Witold Skwierczynski. I am with the AFGE union. We represent employees who work in the 1,300 field offices and 36 teleservice centers around the country. It is a bargaining unit of about 25,000 people.

The people whom I represent interview the public; they take and process disability claims. Our front-line workers are dedicated, they care about the disability program, and they want changes.

The disability program is broken. What we are experiencing right now is higher processing times; there is no uniform decision making; each State has different approval rates and criteria. We have a sad situation where there are 150,000 cases that SSA has sent to States that are not assigned to any disability examiners and are sitting up to 6 weeks before they are assigned.

It is our experience that the prototype is a failure. It has resulted in higher processing times. Claimant satisfaction is low. Employees are dissatisfied with the process. The claimant conference is, frankly, a joke; only 2 percent of those who do a claimant conference have a reversal. And hearings requests have escalated out of control. The States are complaining about the quality of the product that is produced in Social Security offices, and Social Security employees complain about the State backlogs.

There are some solutions, and in my statement, I include a number of them, but I will concentrate on three--more resources, the Disability Claims Manager pilot, and the Ticket to Work pilot and employee support representatives.

I think that more resources are absolutely necessary. Efficiencies, internet claims, and streamlining the decision making process will not derive the kinds of changes that the Subcommittee is looking for.

The disability process is labor-intensive. Actuaries predict that our workloads are going to go up close to 50 percent by the end of the decade. I was disappointed with Commissioner Massanari's support of the President's budget. The previous Commissioner Apfel in his budget that he proposed before he left asked for 2,426 more work years, and in that budget, he indicated that if Congress provided that kind of assistance, we would be able to process more disability cases, reduce the SSA pendings, produce more hearings, and reduce the pending hearings.

So I urge the Committee to encourage the Appropriations Committee to seriously consider the Apfel proposals.

On the Disability Claims Manager (DCM), the pilot ends today. DCM is a caseworker approach and combines the disability and entitlement decision making.

What are the results of the pilot? It is a winner. Why? High levels of customer satisfaction. I include a chart comparing customer satisfaction to the prototypes, and it is amazing.

On processing time, average processing time is 73 days. The agency in their FY 2002 goals is shooting for 108 days; that is 32 percent better than the agency's goal.

Accuracy, costs, and productivity are comparable to the current process. Employee satisfaction is very high.

Why is SSA shutting it down? It is a tragedy, actually. There is State resistance. They think it is a threat to the 45-year monopoly that the States have on the disability decision making process. There is no political will for SSA to buck that trend, and they are afraid to come to you and ask for the changes that are needed in legislation to allow Federal employees to make disability decisions. We would ask that you strongly consider that in view of the success of the DCM pilot, that having a caseworker approach is a much more efficient, speedy, and better way to process disability claims.

We would also ask you to look at the Employee Support Representative program. This Committee was the catalyst for the Ticket to Work legislation. Part of Ticket to Work is the establishment of the Employee Support Representative program. It is a pilot; there are only 32 of them. That worker plans and develops outreach and communication regarding work incentives with community groups. They also do work issues and continuing disability review investigations.

The recent evaluation on that program is excellent. For every $1 spent on just the CDR portion of the program, the trust fund gets a $12 return. This will reduce overpayments if we have an aggressive Employee Support Representative (ESR) program across the country.

Currently, people on disability who work is the second-highest incidence of overpayments within Social Security. It also has a redeeming social factor in that we are helping disabled people to return to work and to have more dignity in their situations and not have them permanently on the disability rolls.

We would ask Congress to urge the agency and to provide funding to expand ESR to every office in the country so that it will be a more effective program than just the 32 that we have. I think the agency is reluctant to do that. They are afraid that expanding the ESR program under current staffing constraints will cause problems in the initial disability case work.

So we need help from this Committee to urge the agency and to ensure the agency does expand that program which is of benefit not only to disabled people but enhances the viability of the trust fund.

Thank you.

[The prepared statement of Mr. Skwierczynski follows:]

Chairman SHAW. Thank you, Mr. Skwierczynski. Mr. Korn?

STATEMENT OF STEVE KORN, PRESIDENT, NATIONAL COUNCIL OF SOCIAL SECURITY MANAGEMENT ASSOCIATIONS, INC., VALLEJO, CALIFORNIA

Mr. KORN. Thank you.

Chairman Shaw and members of the Subcommittee, my name is Steve Korn, and I am here as President of the National Council of Social Security Management Associations. I thank you for giving me the opportunity to come before you today to talk about the challenges and opportunities facing SSA's disability program from the perspective of SSA's front-line managers and supervisors.

SSA's field offices are the primary points of interface for disability claimants. We hear their stories and see firsthand the effect that our processes have on their lives.

In my testimony this afternoon, I will provide information about current problems with the disability program and specifically suggest the establishment of a new position in SSA's field offices designed to improve the front-end process. I will discuss other opportunities for improving the disability program, and I will talk about the resources that will be necessary to address the significant problems facing the disability program.

By far the most common customer complaint about the disability program is the amount of time it takes to receive a decision. Claimants wait an average of almost 4 months from filing for an initial decision. And backlogs at State agencies, as we have heard already, are growing. In addition, a majority of claimants seem to have little understanding of how the process works, and what they should do to document their claim.

Fortunately, SSA is piloting a process--and you heard about this in the last testimony--that successfully addresses many of these problems. In the Disability Claims Manager, or DCM pilot, a single employee is given responsibility for the complete processing of an initial disability claim. DCMs process claims faster while maintaining a level of accuracy that is at or above the traditional process. DCMs were more productive, and both claimants and employees alike express increased levels of satisfaction.

While nationwide implementation of DCM may be very difficult or impossible due to issues relating to the Federal-State relationship, we recommend that SSA capitalize on the success of the DCM by creating a new position in SSA's field offices whose focus would be the processing of disability claims. This Technical Expert for Disability, or TED, would receive the same basic medical training received by new DDS Disability Examiners.

Implementation of this position should accelerate initial decisions and have a positive impact on accuracy. Their medical training, coupled with their non-medical program knowledge, would equip them to truly provide single-point-of-contact service. In addition, the TED's location in community-based field offices would help to deter fraud.

TEDs could be used to make final medical decisions with the State's concurrence. For example, TEDs could make same-day decisions for claimants with terminal illnesses, decisions that can currently take weeks or even months. States that are temporarily unable to handle their full volume of cases could give TEDs authority to make final decisions for the full range of cases, and this would give SSA additional flexibility to deal with growing backlogs.

TEDs could also help focus SSA's efforts to help disabled applicants return to the workforce.

Besides implementation of the TED position, SSA needs to focus its efforts to improve automated support. There is an immediate need for software that would provide field offices with an intelligent front-end interview system that would include an interview path based on the nature of someone's disability rather than SSA's current scattergun approach, in which we ask for all possible information that might be needed by the State agencies.

Other improvements in the process should include, number one, making the appeals process more efficient while significantly reducing the time it takes to receive a decision; second, a serious look at changes to the current Federal-State relationship, which should include at a minimum issues of regulations to ensure quality and uniformity in the performance of the 54-State Disability Determination Service (DDS); and third, an examination of the definition of disability to see if it is still consistent with national disability policy. The current definition, as was pointed out, does seem to focus more on the inabilities that people have rather than the abilities they might have to go back into the workforce.

While the suggestions offered above will result in significant improvements to SSA's disability process, none will provide the kind of productivity gain that will allow SSA to address its currently workload problems without additional resources. Even those changes that will provide a more efficient process, such as automation of front-end intake, will require up-front resources to design and implement. And of course--and you have heard this--as if the current situation were not troublesome enough, SSA expects a tremendous increase in disability applications over the next 10 years as the baby boomers reach the age in which disability is more likely.

We believe it is a mistake for the new administration and Congress to fail to provide the resources needed to address the problems affecting the disability program. Working Americans who have paid into the program since joining the workforce have every right to expect that they will receive a level of service commensurate with their investment.

With total administrative costs for the entire SSA program running at less than 1 percent of trust fund receipts, we think Americans will support increased funding devoted to disability processing.

Again, Mr. Chairman, I thank you for the opportunity to appear before this Subcommittee. I would be happy to answer any questions that you and your colleagues may have.

Thank you.

[The prepared statement of Mr. Korn follows:]

Chairman SHAW. Thank you, Mr. Korn. Ms. Heflin?

STATEMENT OF SUE HEFLIN, PRESIDENT, NATIONAL ASSOCIATION OF DISABILITY EXAMINERS, JACKSON, MISSISSIPPI

Ms. HEFLIN. Chairman Shaw, members of the Subcommittee, on behalf of the National Association of Disability Examiners (NADE), thank you for the opportunity to share our views on the challenges and opportunities facing the Social Security disability programs today.

We agree with the assessment of the Social Security Advisory Board in their February 2001 report that "In recent decades, disability policy has come to resemble a mosaic, pieced together in response to court decisions and other external pressures rather than the result of a well-thought-out concept of how the programs should be operating. Policy and administrative capacity are dramatically out of alignment."

This fragmented policy and lack of appropriate and adequate resources have seriously undermined the Social Security Administration's ability to maintain fairness and consistency in the disability programs today.

While SSA's administration of the retirement programs generally receives high grades in terms of public confidence, the public has significantly less confidence in the disability programs. In part, this is due to the inconsistencies in decisional outcomes between the States and regions. A larger factor, however, is the difference between DDS decisions and those made at the hearing level.

Few realize that 80 percent of the claims that are allowed are allowed at the DDS level. The need to change this perception and the reality that underlies it must be viewed as one of SSA's biggest challenges.

Disability decisions are not made in a nationally uniform manner. While to some extent this has always been true, it has become increasingly more pronounced in recent years. We are concerned that this trend will continue. New policies developed by SSA, both in response to and independent of court decisions and other litigation, have required that increasingly more weight be given to the subjective complaints of disability applicants. Assessing these subjective complaints has added to the growing belief that there is a general lack of consistency in what should be a uniform national program.

Social Security lacks a clear quality review process that would provide meaningful feedback to all decision makers. Quality assurance reviews and the adjudicative climate under which claims are reviewed are inconsistent and reflective of and convoluted by politics and/or litigation. Regulations are frequently promulgated and implemented before operating procedures, instructions, and other tools have been developed.

In order to increase the consistency and uniformity of disability decisions, the Social Security Administration must become truly "one SSA." While NADE supports the current Federal-State partnership structure, we believe that it must be strengthened to provide more effective oversight of the process. Individual State government downsizing, hiring freezes, and other aspects that are particular to the different States should not be allowed to interfere with the efficient operation of the DDS.

In addition, SSA must continue with the development of a single presentation of policy that will be binding on all adjudicators. Ongoing communication between the field offices, the State DDSs, and the ALJs must become a priority.

In addition to this, NADE believes that ongoing joint training for all decision makers is essential if we are going to provide fair, accurate, and consistent decisions. This training must be clear and include interaction and discussion among the different components.

SSA's quality assurance process must be designed to provide nationally consistent feedback. We are encouraged that SSA is now looking seriously at the quality assurance issue. However, we are concerned that this initiative, like so many others, will be curtailed for lack of resources. Failure to devise an effective and meaningful quality assurance process would compromise the public's confidence in the program.

NADE has long supported the establishment of a Social Security court. The development of and decision on an individual's claim should not be dependent upon his or her residence or judicial jurisdiction. The ever-increasing complexity of disability claims and the growth of medical technology makes the need for a specialized court with expertise in these matters a necessity.

The State DDSs must have the necessary resources to hire and retain staff. Because this is a medical-legal decision, disability examiners must have a thorough understanding of the medical, vocational, and administrative/technical issues involved. The increasing turnover rate in the DDS due to the increasing complexity of the program and the failure of the DDSs to offer salaries commensurate with job duties invites public concern.

NADE does not support changing the definition of disability at this time. The current definition provides a solid foundation for the disability program. We do believe that any action to reform the disability program should include elimination of the 5-month waiting period for Title II applicants, and NADE has prepared a position on paper on this issue which we have included with prior testimony. There is now proposed legislation that would eliminate this.

We strongly believe in fair and equal treatment for all disabled citizens, and we urge the Congress to give favorable consideration to H.R. 344.

In conclusion, we want to echo the opinion expressed by the Advisory Board that "disability policy and administrative capacity urgently need to be brought into alignment." This is critical in light of the increase in claims from the baby boom generation who are just now entering their most disability-prone years.

We strongly concur with the Advisory Board about some of the changes that need to be done, particularly the fact that we need to given the tools that we need to render fair and timely decisions so that the disabled citizens who come to us for assistance can be treated with respect and humanity.

Thank you.

[The prepared statement of Ms. Heflin follows:]

Chairman SHAW. Thank you, Ms. Heflin. Mr. Willman?

Mr. WILLMAN. Chairman Shaw and members of the Subcommittee, on behalf of our organization, thank you for the opportunity to appear here today to present our views regarding the challenges and opportunities now facing the disability programs.

The NCDDD is a professional organization of the directors of the State agencies that perform the disability determination function. Our goals include finding ways to establish, maintain, and improve accurate, timely, and economical decisions to persons applying for benefits.

We and the Social Security Advisory Board are generally in agreement as to the broad courses of action that are necessary to improve our service delivery. The following five key challenges are important areas in which we on the Advisory Board hold similar positions.

First, the disability program must have the resources that are necessary to deliver the level of service that the public deserves. The complex task of applying the statutory definition of disability requires acquisition of extensive medical evidence and careful analysis of that evidence and thorough explanation of the conclusions. Therefore, the process is costly.

The recent history of downsizing, attempts to implement multiple costly projects and the creation of new policies that are expensive to administer have contributed to the current situation in which the program and the resources available to carry it out are seriously out of alignment.

The result is that our program now has by our count about 175,000 more cases pending than we are able to handle. Assignment of these cases to caseworkers is not happening because all the caseloads are full. Worse, SSA has predicted that with the current resource allocation, this backlog will actually grow. We feel that this level of service delivery is unacceptable and amounts to a failure to provide the service that the public deserves.

Second, SSA should modify its organizational structure so the disability program occupies a level commensurate with its size and importance. As the Advisory Board has reported, SSA's current operational structure disperses function and authority for the disability program over too many components. The individual most identifiable as being responsible for the disability program is at the Associate Commissioner level. We find this curious in view of the fact that the program consumes two-thirds of SSA's administrative budget and comprises nearly 5 percent of all Federal expenditures.

Problems result because policy development, program evaluation, budgeting, systems, et cetera, are all managed separately. Such an environment does not provide for the level of accountability that the program needs. We feel that the program would benefit if it were managed by having one high-level individual who would report directly to the Commissioner and whose authority would cross functional lines.

Third, improvement in policy and training is necessary to produce more consistent and accurate decision making. As reported by the Advisory Board, the most important step SSA can take to improve the process is to provide ongoing joint training for all adjudicators and all the components that make and review the disability the disability determinations. The Board also noted that such a training program would first be based on the existence of a policy base which is clear, concise, and applicable in a real world setting.

Presently, SSA's policies are neither clear nor consistent among the components, nor practicable. This compromises our ability to decide cases consistently and accurately and is part of the reason why about 60 percent of the applicants who appeal the initial denial of benefits receive those benefits after appeal.

Fourth, the quality assurance system must be improved. We recommend that SSA assign a high priority to revising its QA system so as to achieve the goal of unifying the application of policy among all components. The present QA system is out-of-date, it applies differently to the various components, and it actually induces inconsistency of decision making.

SSA is in possession of an independent consultant's report concerning changes in the QA system. We endorse many aspects of the Lewin report and recommend that it receive expedited attention by top management at SSA.

Lastly, SSA should find better ways to develop its computer systems. We rely on electronic systems in order to deliver high-quality service at a reasonable cost. Historically, the States have had an excellent track record of having worked together to develop systems to support their business processes, but in the last several years, our ability to improve our own systems has been curtailed by various SSA initiatives which have been costly and which have not produced advantages commensurate with their cost.

NCDDD recommends that future development and enhancement of electronic systems be accomplished with greater reliance on State systems personnel and through the use of private sector contracting.

Mr. Chairman, members of the Committee, thanks again for the opportunity to provide this comments on the challenges and opportunities facing our program.

[The prepared statement of Mr. Willman follows:]

Chairman SHAW. You stopped right on 5 minutes. Thank you, Mr. Willman. Mr. Hill?

STATEMENT OF JAMES A. HILL, ATTORNEY-ADVISOR, OFFICE OF HEARINGS AND APPEALS, SOCIAL SECURITY ADMINISTRATION, CLEVELAND HEIGHTS, OHIO, AND PRESIDENT, CHAPTER 224, NATIONAL TREASURY EMPLOYEES UNION, CLEVELAND HEIGHTS, OHIO

Mr. HILL. Good afternoon, Mr. Chairman.

My name is James Hill. I have been an attorney advisor at the Cleveland, Ohio, OHA office for over 18 years. For nearly 11 years, I have also been the President of Chapter 224 of the National Treasury Employees Union which represents attorneys and other staff members in over 100 OHA offices across the United States.

I want to thank you for inviting me to testify regarding the challenges and opportunities facing Social Security disability programs today.

I last testified before the Subcommittee in March 2000, when the Hearings Process Improvement (HPI) Initiative was in its infancy. At that time, the backlog pending at OHA was 321,000 cases. At the end of last month, the backlog was over 405,000 cases. Indeed, in the last month alone, the backlog grew by over 10,000 cases.

Average processing time for SSA cases has increased from approximately 250 days at the end of fiscal year 2000 to the current level of 300 days and is still climbing.

In my testimony in March 2000, I predicted that HPI would fail, but I had no idea the magnitude of that failure.

We are now in yet another crisis, and corrective action must be both rapid and decisive. This is not a time for yet another untested experiment. This crisis is the latest disability in a long saga beginning in the early 1990's when, for a variety of reasons, the number of cases pending at OHA skyrocketed. During the period from 1995 through December 1999, we were able to reduce the backlog by approximately 250,000 cases. During that time, senior attorneys produced approximately 200,000 fully favorable, on the record decisions, with an average processing time of about 100 days.

The correlation between senior attorney decisions and the decline in the backlog is obvious and inescapable. The Senior Attorney Program solved the backlog problem once; it can solve it again.

We recommend that SSA permanently reinstate the original Senior Attorney Program. The immediate improvement in productivity caused by this reinstatement will give SSA the time it needs to carefully consider additional changes that will further improve the adjudication process. Reinstatement of the Senior Attorney Program would permit as many as 100,000 disabled claimants to receive their benefits on a much more timely basis, without increasing the payment rate at OHA. I understand the current payment rate of OHA ALJs exceeds 60 percent. It would also commit limited OHA resources to be concentrated on those cases that require an ALJ hearing.

The Senior Attorney Program offers a nearly unique opportunity, the chance to provide better service at lower cost. OHA receives approximately 100,000 cases a year that, with minimal development, could receive a fully favorable on the record decision. Currently, these cases must go through the entire OHA adjudication process, including an ALJ hearing. During the current fiscal year, ALJs have issued slightly more than 5,000 on the record decisions. This is a far cry from fiscal year 1997, when Senior Attorneys issued nearly 50,000 fully favorable on the record decisions, and ALJs added over 10,000 more.

The expense of going through the entire adjudication process is considerable, and in those cases that should be paid on the record, that cost is excessive. Reinstating the original Senior Attorney Program would provide deserving claimants with a favorable decision in considerably less time and at considerably lower cost. To maintain the integrity of the disability adjudication system, it is essential that the original Senior Attorney Program be reestablished immediately.

Thank you.

[The prepared statement of Mr. Hill follows:]

Chairman SHAW. Thank you, Mr. Hill. Mr. Bernoski?

Mr. BERNOSKI. Mr. Chairman, thank you for inviting us to testify at this hearing.

I represent the Association of Administrative Law Judges, and my comments are not those of the Social Security Administration.

The Social Security Administration has long struggled to develop and implement an efficient office procedure for its disability program. In the early 1990's, the agency tried a system called "Redesign" which failed in the pilot stage. In October 1999, the agency introduced the Hearing Process Improvement plan, or HPI. The purpose of HPI was to reduce processing time, improve quality and productivity, promote individual case management, and increase employee job satisfaction.

The HPI was developed without any input from the judges; it removed all support staff from the judges and placed them in teams; skilled clerical workers were promoted to decision writers without adequate past training or experience, and many skilled decision writers were placed in supervisory-type positions. It turned a simple procedure into a 14-step process, which I have handed out for you to look at.

The judges lost control of most of the pre-hearing case development and were left without assigned support staff. The result has been delay and confusion. Processing times are getting longer; case backlogs are growing; pre-hearing work products and decision writing is of poorer quality; employee morale is dropping, and there is a lack of accountability for work product.

Judges have on occasion been asked to issue decisions on cases where the exhibits are not in a marked exhibit record. The offices are paralyzed and are not able to deliver cases to the judges to hear. We are now in a much poorer state than we were before HPI started, and we are waiting for the next change.

Any change from HPI must return the control of the casework product to the judge and provide the judges with sufficient staff. This is needed to provide quality service to the American public.

Several groups, including the Judicial Conference, the Social Security Advisory Board, and the Administrative Conference of the United States (ACUS), have looked at the Social Security disability system, and all agree that replacing the Appeals Council with another body that can handle the case backlog and improve quality is essential.

Therefore, any change must improve the quality of the agency's final administrative decisions and reduce the Appeals Council's case backlog. The change that we propose--and it is set forth rather extensively in our statement--creates a separate adjudication component within the agency consisting of administrative law judges, that is managed by a chief judge. The appeals process is transferred to local appellate review panels, with each panel consisting of three administrative law judges, with the number of panels varying depending upon the need.

This appellate change is based upon the Bankruptcy Court system, which has been working well. This change is needed because small boards such as the Appeals Council, a board or a commission cannot handle a workload of over 100,000 cases a year. In the Bankruptcy Court system, the appellate panels have resulted in shorter processing times, higher-quality decisions, fewer appeals to the Federal courts, and fewer appellate reversals.

Under our plan, the Commissioner of Social Security retains all authority for agency rulemaking, and our plan saves money because it closes the Social Security regional management offices.

We believe, Mr. Chairman, that it is now time for us to come to a consensus on the reform for the Social Security process. The plan that we propose is a new concept for Social Security that is based on an existing system that works well. It will improve the quality and efficiency of the Social Security Administration and provide a quality product for the American public.

Our proposal has been reviewed by a former Associate Commissioner of the Office of Hearings and Appeals and a Northwestern University Law School professor, and both were enthusiastic with this realistic approach to this issue and have expressed a willingness to testify before your Committee.

Thank you, Mr. Chairman.

[The prepared statement of Mr. Bernoski follows:]

Chairman SHAW. Thank you, Judge. Mr. Brady?

Mr. BRADY. Thank you, Mr. Chairman.

One of the questions that Members of Congress are frequently asked in our town hall meetings is, Is there anything that you all agree on up there? This is a common question. So let me ask the same question of this panel. Is there anything that you all agree on that we can take steps on for improvement?

We have heard from six very smart people with about 60 different ideas for improvement. Are there one or two that are the highest priority that you can all agree on?

Mr. KORN. I think the one area that is obviously the most difficult to deal with is the resource issue. I do not think anyone on this panel would tell you that, while we all have different ideas about things that can be done to fix the system, and certainly, I think we all agree that it does need fixing, none of them by themselves will be a magic bullet. And quite honestly, regardless of how we restructure disability, whether it is setting up a different structure in OHA, in the Appeals Council, what the Federal-State relationship is, when you look at the net effects of those things, it still does not change the fact that we have backlogs that are going to take people to adjudicate, and we have a huge increase in people coming. I think it would be a mistake to take away that message, because--and again, everyone can speak for himself--but I think all six of us would tell you that these problems at some point, regardless of how we restructure, will take a significant infusion of resources. Granted you want something for those resources, and that is obviously going to have to be part of the process.

Mr. BRADY. I understand. But I think that obviously, pouring more water into a leaky bucket does not necessarily accomplish what we want to accomplish. So in addition to that, which is a good point, is there any other area--and there is even disagreement about more people, more information technology, more computer help, more integrated resources.

Yes?

Mr. WILLMAN. I think we agree on three things--first, what has already been said, that more resources are necessary; second, I think we all agree that we just have to do better. The world is changing, and the program has not changed enough with it over the course of the past couple of decades. We need to do better. I think all of us represent organizations or people who are sincerely interested in improving service to the public and will work hard to do it. And third, I think and I hope that we all agree that each component might have to give up something in order to form a program that is going to work better for the entire public, so we need to be open-minded to dissolving the lines and the barriers that have traditionally differentiated us. And I think I have heard that all of us would agree with that.

Mr. BRADY. Does any other panel member want to respond?

Mr. BERNOSKI. I think we also all agree, too, that the HPI program is a failure, as Chairman Ross indicated, and that the Social Security Administration should immediately address that issue, because if the case backlog keeps growing, as Jim Hill indicated, and if the downturn in the economy leads to increased filings as has happened in the past, we are going to have serious problems in the not-too-distant future.

Mr. SKWIERCZYNSKI. I think one area of agreement could be that--we all represent different constituencies of individuals who work either for Social Security or for the DDSs, and oftentimes, top management of the agency does not include us in the planning and decision making process and to provide our expertise as to what is happening with the disability program.

I heard today Mr. Massanari was complimented for setting up a bunch of work groups that are going to report to the new Commissioner about changes that need to be made in the disability program. Well, he certainly did not invite me or the union to participate in that process.

So I think it is important--and when you are not inviting the union, you are not inviting the front line employees, who know best how to do the work, to provide their expertise and knowledge about the problems that exist and recommendations on how it can improve. So on that area, I suspect we would all agree that we ought to be involved in the dialogue.

Mr. BRADY. I am shocked that union would criticize management on these kinds of things, but I appreciate the point.

[Laughter.]

Mr. BRADY. Are there any other thoughts from panel members?

Mr. HILL. Yes. I would like to second a couple things that were said. I think the comment that Witold just made about not including the people on the front lines, whether they be union members or whether they simply be people on the front lines, in the planning stages of some of these experiments, which is what they turn out to be, has caused a lot of trouble.

And the HPI--and of course, we are from OHA and have very little to do with DDS and what goes on there--but Judge Bernoski mentioned that the judges were not consulted. Nobody else was, either, in the hearing office. It was a proposal that came from on high, and this is what happens when you do that.

So I think we agree that the agency itself has to involve its front line employees at the initial levels where we can tell them, "No, that is not going to work."

Mr. BRADY. So additional resources; doing better by giving something up, or everyone giving up a little; HPI as a failure; and more input, especially from front line people, are all areas where there is common agreement.

Finally, let me ask you this--and I am way over my time already--I am surprised that we have not heard about the need for better information. It seems to me that in the initial examination, there are a number of cases that go through and are basically denied or not approved and later on turn out to be cases with merit. It seems to me there must be a lack of information at that point for an examiner to make the right decision. The administrative law judges tell us privately that one of the reasons for the nearly year-long delay is that there is not enough information in that case to be making a judgment at a time when, again, there are fewer and fewer cases where a medical provider says "Yes, you are disabled," and more and more cases where a vocational counselor is saying "They are disabled if...," or "They can work under this situation."

I would think that information is one area, from a common denominator standpoint, that is needed to make these cases accurate in the future.

Are there any comments on that?

Mr. SKWIERCZYNSKI. I think the Subcommittee should question--when SSA gives you statistical data, you should question it. I will give you a case-in-point which is a little different from what you were saying, Congressman. When the agency measures processing time on a disability case, included in that measure is a bunch of claims that are taken which I would think would be unnecessary. If somebody comes in and is clearly not eligible, some managers encourage that we take those claims basically to build up their productivity and cut the processing time. So when you are looking at processing time statistics, you are looking at quick, one-day cases where people are clearly ineligible and should have never filed in the first place.

So when you look at statistical data, you ought to ask a lot of questions about what it is actually measuring.

Mr. BRADY. Thank you. I appreciate the input. Thank you, Mr. Chairman, very much.

Chairman SHAW. Mr. Hulshof?

Mr. HULSHOF. Thank you, Mr. Chairman.

For the benefit of everyone else, the Chairman held a congressional field hearing in my district of Columbia, Missouri on the University of Missouri campus where we talked about the long-term solvency of Social Security. We were not pursuing any particular solution, but it was a very interactive hearing. In fact, we had people just like yourselves at tables, and at the conclusion of our presentation, we had them get together and try to formulate some sort of an end-game result so we could have long-term solvency of Social Security.

Perhaps, Mr. Chairman, we should lock these people in a room and not let them out until they resolve these matters.

[Laughter.]

Mr. HULSHOF. We welcome you. Judge, since I sort of invoked your name, hopefully not in vain, with the previous witnesses, let me ask you for a quick comment on the suggestion Mr. Ross made about having the agency represented before you. Is that a good idea, bad idea?

Mr. BERNOSKI. Yes, Mr. Hulshof--

Mr. HULSHOF. I am sorry. That was a bad question--a good idea? Is that a good idea, or is that a bad idea?

Mr. BERNOSKI. It is a good idea.

Mr. HULSHOF. Okay. Why is it a good idea?

Mr. BERNOSKI. It is a good idea for the reasons that Chairman Ross indicated. These cases are becoming more complex. More claimants are being represented at the hearing. Also, the traditional role of the Social Security administrative law judge, as Mr. Ross indicated, is to wear the so-called three hats. You have to make sure that the Government's evidence is in the case; you have to make sure that the claimant's evidence is in the case; then, you have to make a decision on the record, plus you have to be very careful, as I think you raised in the question before, that you do not get into the posture where it looks like you are tipping to one side or the other in the form of the judge's questions.

So it puts the judge in a very difficult situation, and you do not get as good a quality of evidence as when both of the adversaries appear. The attorneys or representatives bring the evidence that they have available to them before the judge for the decision. It would be a much better process.

Mr. HULSHOF. I appreciate that.

Let me go to Mr. Skwierczynski. Welcome back before us. We have had occasion to hear you in prior Congresses, and it is great to have you again.

Mr. SKWIERCZYNSKI. Thank you.

Mr. HULSHOF. Let me make sure that I understand, because I have gone through your testimony. Do you agree or disagree with SSA management's attempts to make operations more efficient using information technology?

Mr. SKWIERCZYNSKI. Certainly, efficiency is laudable. If you are referring to the claims on the internet, which I address in my written testimony, not in my oral, but we have some serious concerns about the quality of work that our employees are telling us they are seeing with regard to the retirement and survivors insurance (RSI) claims on the internet. I have had a number of reports where individuals have said they have questioned further individuals who submitted claims to the internet and found out, with some digging, that there were individuals who were entitled on the record but were not listed on the form; that there were wages that they had earned in the past that were not listed in their earnings record which, if they had not done the digging, they would have had a reduced monthly benefit.

I think that when you are asking basically the claimant, without any intervention of a trained interviewer, to file a claim, you are going to see those kinds of problems. Much of the RSI system is automated. Their earnings records are on the record, and a lot of claims can go pretty quickly. Disability, as has been noted here, is a little different. There is a lot of subjective decision making, and there is a lot of information regarding a medical condition that you require to make a decision.

We are already being criticized by the States for producing a poor product. The agency, because of staffing constraints, is taking about half of the disability claims over the phone. We rely on self-help. We send the claimant a form, they fill it out, we accept it, send it to the State without a lot of review. Those kinds of measures result in a poor product, and if you have no intervention at all with people who are not familiar with the form and the kind of information that is needed on it, you are looking at problems.

So what I was trying to say in my written testimony was take a step back before you automate the disability process and look at what is happening with the RSI process, do some study and close analysis, and if there are errors and mistakes in it, fix it first before you go to disability.

Mr. HULSHOF. I appreciate your response, and I want to let you respond fully. I think that that is an interesting perspective in that the Internal Revenue Service is encouraging more income tax filers to file electronically so that it would in fact result in fewer mistakes. Now, I do take your point that there are some subjective measures as far as disability is concerned, but I think the complexity is equal.

If the Chairman would permit me, because of the Ticket to Work issue being so important, again, just to make sure I am not misreading your testimony, the $23 million that we have allocated, you talk about the Employment Support Representative, the ESR, and yet the concern about the funding and that the $23 million that was allocated has been primarily--or it has all been allocated, I think, according to your testimony--toward grants and cooperative agreements for private agencies and not-for-profit organizations. Do you oppose private agencies and not-for-profit organizations providing assistance to disabled beneficiaries from returning to work?

Mr. SKWIERCZYNSKI. No, we are not opposed to that. We think that the vocational rehab system that has existed in the past has not worked and that the action of your Committee and Congress to look at alternatives was a good idea. But unfortunately, the agency took the entire appropriation and used it for that.

The Employment Support Specialist, who is the Federal employee who is the outreach into the community, is attempting to sell the concept of Ticket to Work and also, in order to get a ticket, you have to have a continuing disability review, or CDR, investigation to even be eligible for the ticket. You need staff to do that.

What the agency did was take 32 existing staff and start the pilot. The results are good. They are talking about expanding it to 100. Now, we have 1,300 offices in the country; 100 is not going to do the trick. If you want a successful program, you want good outreach, you want the work that is necessary in terms of doing the CDRs in order to get eligibility for a ticket, you need to have this program across the board. Now, the agency legitimately is afraid that shifting people from one task to another is going to hurt the task, so my testimony is that if you are committed to the program, which you seem to be, provide the resources so that it can work.

Mr. HULSHOF. Thanks. Thank you, Mr. Chairman.

Chairman SHAW. Mr. Ryan?

Mr. RYAN. Thank you, Mr. Chairman.

I appreciate the panel's testimony. It was very interesting. I would like to ask the panel to focus on the backlog issue. That is really something that we are all very concerned about.

Mr. Hill, in particular I was intrigued by your comments. You believe that there is more or less a time-tested solution that you identified through the Senior Attorney program to get at that. What do you think of Judge Bernoski's proposal? I would be interested in your impression of that proposal.

It is nice to hear people coming in with different ideas on how to attack the backlog. And then, Judge, I would like to hear what your thoughts are on the Senior Attorney program as well.

Mr. Hill?

Mr. HILL. When you are talking about whether there should be an independent ALJ agency, I have some reservations about that. I think that further bifurcating how the disability program is administered and in the end, taking the decision out of the hands of the agency is probably not a way that I would like to go.

On the other hand, I strongly support--I was on the work group with the Lewin report--adversarial type hearings. I think that report said that there had been no examples of a successful system the way that ours was operated. And I think that with the great influx of cases and the expertise that the claimants' bar is now bringing, it does place a considerable burden on the ALJ, and I think that we need to take a good, hard look at that.

Chairman SHAW. Would the gentleman yield on that, please?

Mr. RYAN. Certainly.

Chairman SHAW. I am a little curious as to what that would do to the backlog situation. I think that would probably increase it substantially. Maybe Judge Bernoski could comment on that--to turn this into a fully adversarial situation.

Mr. BERNOSKI. I think that if you turned our hearings into an adversarial proceedings, the program would also have to encompass a concept or a procedure for bargaining out or settling cases, like in the civil court system.

One problem that we have in Social Security is that every case is tried, and we all know what that would do to the criminal system, it would paralyze it. But that is the way it is here, we try every case except those where the claimant withdraws the claim. In some situations the administrative law judge may suggest a "closed period," but that is a rare situation.

So if we are going to have an adversarial process, I believe it would have to have that component in it, where the attorneys could come to some type of resolution of the case, like they do in other court proceedings, and settle some of the claims before they go to full hearing.

Chairman SHAW. Thank you. Mr. Ryan?

Mr. RYAN. Judge, since the mike is in front of you, could you give me your comments and your opinion of the former Senior Attorney program?

Mr. BERNOSKI. Yes. Our association has taken the position that we have not been in favor of the Senior Attorney program. We have felt that there were resources that were not being efficiently utilized in the program to the extent that the attorney's primary function was to review the case files and look for favorable cases where a decision could be written and the claim paid. So in all the cases that they go through where there is not a determination that the case can be paid the time is lost to the extent that the case is put aside, and it is placed back in the system and it has to go through the whole process.

So it is not cost-effective  from a manpower standpoint. We have felt that the system would be more efficient if the attorney, when he/she would go through the file, would make some notes in the file such as: "I have gone through the file, and I found these problems, and this should be done," so that the next person who looked at the file could build on that expertise. These are very talented people, the Senior Attorneys, they know the program, and they could add a lot to the file under those circumstances.

Mr. RYAN. So maybe a modification of the program as you just described would be in order. I kind of suspected that the two of you might have had those positions.

Judge, I am interested in your program for a separate ALJ agency. Exactly how would that work? You mentioned that it would represent substantial cost savings to the SSA; how would that be reflected, and how would the net cost savings occur?

Mr. BERNOSKI. Thank you.

The plan that we propose, even though it creates a separate component for the administrative law judge function, for the adjudication function, that component is still within the agency. It is not a new agency.

Mr. RYAN. So it would answer to the Commission?

Mr. BERNOSKI. Well, yes, to the extent that the decision of the adjudication component would be the final decision of the agency after it goes through the appellate process, but the Commissioner would be responsible, as he or she is now, for the total rulemaking of the agency.

The cost savings that we talked about, when you take the total budget of the Social Security Administration, which is in the billions of dollars, is not going to be that substantial. I believe we said it was something like $13 million that would saved by closing the OHA regional offices. That is based on a GAO study that was prepared when we had our prior legislation for the Unified Corps Bill, so that is what that figure is based on.

And then, we propose there would be some additional savings by the changing of the function of the Appeals Council, but many of those resources, I suspect, would be plowed back into the system.

Mr. RYAN. I appreciate the ideas for getting the backlog down. I would be interested in hearing from the other panelists, just to engage in a dialogue--what do you think is the best thing we can do right away to work on the backlog?

Mr. SKWIERCZYNSKI. My key suggestion was a rollout of the Disability Claims Manager. I think the Disability Claims Managers are very productive; they do quick work; they eliminate hand-offs. Under the current system, a Federal employee takes the case, takes the information, without understanding the adjudicative requirements of the disability process, ships it to the State, what we are seeing is that a lot of those cases do not immediately get assigned, and when they do get assigned, the State employee has to review the case for the first time, understand the principles, make a disability decision, ship it back to the Federal employee. These are hand-offs that we think are unnecessary.

The whole idea under the pilot was to see, first, if it could be done, and in phase one, we found out that it was feasible that someone could do the work, both ends of the decision making process; and second, under the formal pilot, whether it was productive, cost-effective, and whether they could do the cases, how fast they could do it, a general pilot. And although the results have not been published yet, I understand a draft is going out tomorrow--I have been briefed on it, and the results are good. I think that that would not only streamline the process but would provide additional resources into the disability-making system.

The way the pilot was designed, the States had DCMs as well as the Federal Government. Our employees were trained in the disability aspect; the State employees were trained in the entitlement factors. And it is my assessment that it works, and it would help to bring down the backlog.

Again, I do not think anything will be overly successful without additional resources. I really think that to ask the hardworking employees of both the State and Federal governments to continue to work without additional staff is unrealistic. What we have is a growth agency, claims are going up, and staffing is going down. That does not work.

Mr. RYAN. Mr. Willman?

Mr. WILLMAN. I think we have found something that we disagree on, and that is the question of the Disability Claims Manager. And actually, I am not sure that we disagree yet. What I do know is this. We all agreed to give this concept a fair test. There was a period of time under which individuals who were trained as Disability Claims Managers got very thorough training, and they got mentoring, and they got brought up-to-speed, and they were asked to do the job this way for a finite period of time during which information and data would be collected, and then there would be an analysis and evaluation piece.

Where we are now is that that analysis and evaluation piece is not done. So I think that to proclaim the success of this project now is premature. We need to see and analyze the data and make sure that it fairly represents the experience of these folks out there. It may prove to have been successful, and it may not, but I think it is clearly too soon to say now.

But to answer your question about what we need to do to reduce the backlog, we need to do one of two or a combination--and this is not my idea; this comes from the Advisory Board report--we either need to resimplify the process and stop introduce more complication and labor-intensiveness into the process and/or we need to increase the number of people who are available to do this job as the applications come in. I do not think anything else will work.

Mr. RYAN. Thank you. Ms. Heflin, did you want to make a comment?

Ms. HEFLIN. I was just going to say that we have not been briefed on the DCM process, we do not have the draft that is about, and our reservation is not that we do not believe that it can be done but that we are not convinced yet that it can be done cost-effectively.

Mr. RYAN. Mr. Korn?

Mr. KORN. I was just going to say that one of the reasons that our organization is suggesting a position--from what we could see, and I agree with Mr. Skwierczynski, we think it really has initially shown some success--we understand the limitations because of the Federal-State relationships, and we understand the concerns that both the NADE and NCDDD have. So what we wanted was a position that could take the benefits of that and still meet the concerns of the State. That really is why we developed it that way.

There are States that are very willing to have Federal help in making decisions. There are other States that do not need that help. And we really think that having a position that takes the benefits of a one-stop process that can be used when needed, or that even takes part of it, and other places where it is not needed, where the backlogs do not exist, you do not have to do that, would really be a flexible way to address the process.

So the reason we came to that rather than a full DCM, which we think is good, was really after looking at this broader perspective to something that maybe everyone could agree on rather than what is good for one component or another.

Mr. RYAN. Thank you very much. It seems that process simplification is something that everybody seems to agree on, albeit not in the details.

I see that my time has expired, and I yield.

Chairman SHAW. Twice.

[Laughter.]

Mr. RYAN. Thanks for the 20 minutes.

Chairman SHAW. I want to thank this panel. You have been very instructive and very helpful. It is quite obvious that everyone seems to agree that we have a lot of work to do.

I was looking at the chart that was supplied to us by Judge Bernoski, and it looks like the Republican interpretation of Hillary Clinton's health plan. I have been sitting here trying to figure it out.

[Laughter.]

Mr. BERNOSKI. And it probably had the same success.

Chairman SHAW. Okay. Thank you. I thank all of you for being here. We appreciate it. The hearing is adjourned.

[Whereupon, at 4:43 p.m., the hearing was adjourned.]
[Questions submitted from Chairman Shaw to the panel, and their responses follow:]

National Council of SSA Field Operations Locals
American Federation of Government Employees, AFL-CIO
Chicago, Illinois 60661-7576
July 31, 2001

1. You are not happy with third parties, nor do you agree with SSA management’s attempts to make SSA’s operations more efficient using information technology despite the fact that better information technology is being demanded by the public. With access and use of information technology becoming more acceptable every day, are you saying that customers should not have access to the faster and easier service they want? Why shouldn’t beneficiaries get to chose the most convenient way to get their services from SSA?

Response 1 - AFGE agrees that customers should have access to the faster and easier service that they want. We have urged SSA Management to ask our current and future customers how they want service delivered now, but they have shown no interest. Only in 1993, through a series of focus groups conducted with groups of current and future customers, has SSA objectively asked the public how they want service delivered.

These Service Delivery Focus Groups, held throughout the country, revealed that the public preferred face-to-face service provided by SSA employees in transacting their most important business. As defined by the public, important business consists of filing applications for benefits, and resolving payment problems. Our customers expressed satisfaction with the convenience of handling more routine business, at their option, by calling a local field office or the 800 number.

Focus group moderators asked participants about other service delivery methods. Focus group participants showed little interest in doing business through third parties, or by computer, rather than with SSA employees. They were strongly opposed to use of telephone technology, such as voice mail and automated attendant, that did not involve interaction with SSA employees. SSA and AFGE have copies of these focus group tapes, and of the written report derived from this activity.

The Agency has not conducted subsequent focus groups to objectively ask the public how they wish to do business with SSA. However, customers who call the 800 number are asked if they would do future business by calling the 800 number. Over the years, the percentage who indicates they will choose this method has usually (but not always) increased slightly. SSA uses this data, from those who have shown their preference for the 800 number by using it, to argue that the general public increasingly wants to do business by telephone. Customers who visit or call field offices are not surveyed at all regarding their preferences. The increased volume of calls and visits to field offices that we have observed, neither of which is measured by SSA, demonstrates a strong continued interest in local community-based service delivery.

Constrained by administrative spending caps and staffing ceilings, and unwilling to petition the Congress for substantial increases in front-line service delivery positions, SSA has turned to third party involvement in disability claims and self-service via the Internet for retirement claims. The choices were not made by our customers, but were foisted on the public by senior SSA officials. Incorrect payments, program integrity and fraud problems, and general mismanagement plague these service delivery methods.

All third party organizations involved in taking disability claims are motivated by money. Some make profits by charging fees, legally or illegally. Others are interested in shifting costs for income maintenance and medical coverage from state and local governments and non-profit agencies to the Federal taxpayer. Personnel in these third party organizations are not adequately trained to take applications for our complex disability programs. They cannot legally provide reporting instructions, according to SSA’s Office of General Counsel, making prevention and collection of overpayments problematic. Only SSA employees are charged with administering the Social Security Act equitably, and in the interest of applicants and Federal taxpayers. Our Agency does not identify or track third party claims for quality assessment, or to monitor program integrity. For-profit and non-profit third party organizations have been involved in illegal fee-charging arrangements, and in fraudulent entitlement schemes. Some have been found guilty of fraud and even criminal activity, but we are convinced that those represent just the tip of the iceberg. Nevertheless, hundreds of millions of dollars in excess payments and medical benefits have been detected and documented.

Documentation is enclosed from the 1997 SSA/AFGE Third Party Assistance Team recommendations (Attachment A), and from a grievance filed this year in the Seattle Region that is now pending arbitration (Attachment B). More information can be supplied upon request by AFGE. The SSA Inspector General should be requested to supply information from their many investigations of fraud and other improper activities by third parties involved in disability claims and appeals.

Internet claims filing is initiated and often completed without an SSA employee ensuring that claimant rights are protected, or reporting responsibilities explained. Identity of the applicant is not verified. SSA is not conducting special studies to compare this new process to the traditional process, so little data is available and none is being shared with AFGE. We must rely, therefore, on the following disturbing reports received from our Claims Representatives:

1. Benefits are being lost when applicants are unable to complete applications, sometimes failing to establish a claim after multiple attempts.

2. Benefits are lost when customers fail to file timely, due to misunderstandings about how earnings affect entitlement.

3. Earnings Record reviews are not done with an SSA employee’s assistance, and corrections not made, resulting in continuing underpayments to many beneficiaries that will never be corrected.

4. Military service credits are not calculated and included in computations, creating ongoing underpayments that will never be corrected.

5. Entitlement to auxiliary and survivor benefits for spouses and children are not always identified and paid.

6. Individuals other than the proper applicant are filing claims, providing opportunities for fraud (attachment C), because a Claims Representative does not verify identities of applicants.

Until quality and integrity of Internet claims are comprehensively studied, and compared to claims filed with Claims Representatives through traditional processes, no further expansion should be allowed.

2. You recommend that we not restrict the authority for making disability decisions to State employees. Could you elaborate? What authority do they have now that you suggest we take away?

Response 2 - The Social Security Act currently provides that disability determinations are the sole responsibility of a State agency. Section 221(a)(1) and 1633(a) of the Act states that the determination of whether or not an employee is disabled shall be made by a State agency, notwithstanding any other provision of law, in any State which notifies the Commissioner that it wishes to make disability determinations. The Act provides only limited circumstances in which the Commissioner may perform the disability determination function for a class or classes of cases in a State without the State’s consent. These limited instances involve situations when a State’s performance in making disability determinations deteriorates to an unacceptable level.

Thus, the States have a virtual statutory monopoly in the disability decision making role. The DCM pilot was only possible with State concurrence. SSA had to obtain State concurrence in each of the fifteen pilot states. This process was long and tortuous. The states demanded a severely diminished pilot in order to participate at all.

The original union-SSA agreement provided for 750 DCM’s phased in over a 3-year period on both the state and federal side. After State objection the test began with only 115 federal DCM’s and 104 State DCM’s. SSA and the union agreed to establish eight Disability Processing Centers (DPC’s). This project would involve establishing disability centers in facilities with personnel that already have a working knowledge of disability decision making. These Centers could have been initiated without the training effort and costs that were involved in the DCM pilot. The parties (i.e., SSA and the union) felt that these centers could concentrate on teleservice claims and have the resources and capacity to process a high volume of claims swiftly and accurately. Such an effort could relieve State DDS backlogs by shifting some of these cases to federal Disability Processing Centers

Unfortunately, the States refused to participate in the DCM pilot unless SSA severely limited the Disability Processing Centers. The States demanded that only three processing centers be established with a limit of 15 DCM’s in each center. The States later reneged on this agreement and the DPC’s were never established

The termination of the DCM pilot is also another example of the State’s control of the disability decision-making process. Although data indicates that the DCM pilot has been a huge success, States were unwilling to extend their three-year agreement to test the DCM. Thus, rather than keep the pilots in place until a final DCM Evaluation Report is issued and the Commissioner makes a decision on the fate of the project, the Agency discontinued all DCM sites effective June 29, 2001. Part of the reason for this action is State refusal to continue to participate in the pilot. Due to their statutory disability decision-making monopoly, SSA is powerless to demand continuing State participation. The result is that trained DCM’s return to their former jobs and their expertise in disability decision-making will erode due to nonuse. What a waste of training resources! What an insult to the public that overwhelmingly approves of the DCM and demands better service from their government.

It is time to end this monopoly and change the statute to allow SSA employees to make disability decisions. The DCM draft evaluation report shows that the DCM exceeded both control group and current process performance in all statistically valid reviewed categories. Claimant satisfaction was overwhelmingly high. Employee satisfaction remained very high throughout the pilot despite great uncertainty about its continuance or termination. Processing time was substantially better than either the control groups or the current process. (67 days processing time for DCM T-II and T-XVI cases is 44% better than SSA’s performance goal for FY 2001 and FY 2002 of 120 days). Accuracy equals and in some categories exceeds the current process. (Accuracy significantly exceeds the current process in technical accuracy for disability allowances and dollar accuracy of T-II DCM cases.) Productivity data indicated that in the last few months of the pilot, DCM productivity exceeded the current process.

The concept of the DCM is a good one: assign one individual decision maker to the claimant who will be the claimant’s caseworker and will make all decisions on their case. The test shows that it works. Despite this fact, the States oppose the DCM for narrow parochial interests, namely, to preserve their monopoly. Only Congress can change this tragedy by amending the statute to expand disability decision-making ability to SSA workers.

Congress should strongly consider statutory modifications in the State monopoly. Although the union supports a full roll out of the DCM, any expansion of SSA disability decision-making requires legislative action. If SSA workers were permitted to make disability decisions on a limited degree to alleviate State backlogs or to expedite certain obvious favorable decisions, legislative change is necessary. The State currently holds all the cards and is unwilling to deal. A change is needed. This change will result in better customer service. Good government demands it.

3. In your testimony you state your concern that overpayments are escalating because of SSA’s inability to properly monitor eligibility of current beneficiaries. Can you provide us with some of the initiatives you would like to see put in place by SSA?

Response 3 - The primary initiative that SSA should implement that would both reduce overpayments and result in the return to work of disability beneficiaries is the Employment Support Representative (ESR). Congress of Ticket To Work began the ESR initiative in response to the passage of legislation. The Ticket To Work initiative cannot succeed without federal support. At minimum a Continuing Disability Review (CDR) investigation is required for Ticket eligibility. Under the current 32-person ESR pilot, the CDR is an ESR responsibility. ESR’s are also intended to be a corps of trained, accessible and responsive work incentive specialists. These specialists plan, develop and lead an outreach and communications effort to promote understanding and use of Social Security work incentives provisions among beneficiaries, claimants and support groups, advocates employers and the public.

The recently released Agency ESR Pilot Evaluation Report indicates that both disability beneficiaries and community organizations were highly appreciative of the ESR services. The report concluded that ESR outreach was effective in educating customers about SSA’s employment support programs. All surveyed respondents indicated that ESRs were most successful when working in SSA field offices in the community. The report recommended that the ESR should be made a permanent position and that as many ESRs as possible should be placed in community based field offices.

The union enthusiastically concurs with these recommendations. SSA should assign at least one ESR in all 1300 field offices who are charged with being the "single point of contact" to beneficiaries trying to return to work, to monitor their progress, initiate reviews and updates on a timely basis, and to work the cases without the current backlogs, handoffs and bureaucratic run around that the beneficiaries are subjected to in the current environment.

Many SSA Regional Commissioners have endorsed these recommendations. Unfortunately the also express concerns that increasing the number of ESRs cannot adversely affect the daily claims pressures that exist in every field office. Reshuffling staff to emphasize the Return To Work concept would just harm the ability of SSA to process initial claims for disability, survivors and retirement benefits swiftly and accurately.

The Subcommittee wisely passed legislation implementing the innovative Ticket To Work program. However, resources are necessary for this program to succeed. The union recommends that the Subcommittee support allocation of sufficient funds to enable the ESR position to be established in every SSA field office. Such action should be taken without reducing the current field operations staffing levels that are required to process the ongoing flow of disability, survivor, retirement and SSI benefits applications and post entitlement work. This would best be done by way of a special FTE allocation for federal Ticket to Work activity that is not subject to the spending caps. Congress provided similar allocations to SSA for CDR activity in the past.

Spending money now in order to fully fund the ESR job will result in significant trust fund savings in the future. Currently only 1% of disability beneficiaries ever leave the benefit rolls. The goal of Congress with Ticket to Work was to increase this percentage. This goal can be achieved with an aggressive expansion of the ESR job.

Other initiatives that would reduce overpayments are to use trained SSA field office disability decision makers to assist the States in making CDR disability determinations. State backlogs are inhibiting the ability of states to process this workload are often sent to the State DDS and are not processed timely. This requires SSA to redevelop CDR’s for current medical evidence before the cases can be processed. The result is wasted time, effort and money. Permitting SSA workers to make CDR medical determinations will result in a more timely and efficient process and, consequently reduce the incidence of overpayments.

Similar arguments can be made for increasing full SSI Reconsiderations. Studies have shown that expenditures for Redeterminations are cost effective and result in many times more dollars in return. If Congress desires reducing the incidence of SSI overpayments, it can require more frequent and extensive Redeterminations. Of course, sufficient FTE must be appropriated to achieve his goal.

Congress should also be cautious about SSA’s increasing efforts to shift claims taking to the Internet. One danger of allowing the public to initiate retirement, survivor, disability and SSI without the intervention of an SSA worker is that the claimant will be deprived of receiving reporting instructions. One of the key requirements for SSA Claims Representatives (CR’s) is to provide the public with an explanation of reporting instructions. Sending written material or posting instructions on the Internet is a poor substitute for the dialogue between claimant and Claims Representative regarding the earnings test and other reporting requirements. The Internet claims experience is relatively new. It is not possible yet to assess the impact of diminished delivery of reporting instructions. Unfortunately, SSA is not initiating appropriate studies to compare Internet claims to other claims. SSA should be required to initiate studies both short term and long term to assess the impact of Internet claims. Reporting instruction impact should be an area addressed in such studies.

4. In your testimony you state that the Management Information Integrity Partnership Team issued a 300 page report to SSA/AFGE National Partnership Council listing 57 inappropriate practices used by SSA to manipulate work processes and work measurement many of which were involved in disability claims and appeals. You also state that these practices were employed to give the false impression of service levels had been maintained or even improved despite a lack of staffing. Can you tell us who makes up this team? Do you have any more recent data than five years ago? Did you share this with the Inspector General’s office?

Response 4 - The Agency’s Office of Assessment verified that practices were being used to manipulate work processes and work measurement, and issued a Report in 1980, in response to concerns raised by AFGE.

AFGE surveyed employees in 4 SSA Regions in 1992 that revealed that many of these practices, and others, were being used. The Ways & Means Subcommittee on Social Security was contacted, and issued a Report. The issue was subsequently addressed in hearing testimony by AFGE to the same Subcommittee and others.

AFGE followed up with a 1993 survey of employees in all 10 Regions that showed widespread cheating encouraged and directed by Management throughout SSA. A Report was issued in early 1994. Former Commissioner Shirley Chater met with AFGE, and agreed to deal with the issue through an SSA/AFGE Partnership initiative.

The June 1996 Report of the SSA/AFGE Management Information Integrity Partnership Team pulled and analyzed data, corroborated the earlier findings, and issued a comprehensive set of recommendations. The Inspector General requested and received 15 copies, and AFGE met twice with OIG. The SSA/AFGE National Partnership Council adopted nearly all of the recommendations in August 1996, but few have been implemented. A grievance filed by AFGE is scheduled for arbitration in November 2001. One of those adopted (but unimplemented) recommendations required annual data retrieval from Management Information Systems to determine whether the particular inappropriate practices studied in depth by the Team from 1994-1996 have increased or decreased.

An AFGE survey of employees in the Seattle Region in late 1998 and early 1999 indicated that there was no overall improvement in the integrity of MI, and that the use of some practices was increasing. The results were reported in an AFGE newsletter in April 1999 (Attachment D).

In 1999, SSA changed its policy on SSI claim filing dates, allowing for a date later than the application date to be used. Later that year, technical denial disability claims were merged in Management Information Systems with claims requiring a medical determination, introducing powerful new incentives to take claims from individuals clearly not entitled to benefits. Management increased its efforts to ensure that Claims Representatives took yet more technical denial claims, allegedly resulting in a 50% increase by early 2001 (about 500,000 more claims annually). AFGE objections made to the SSA Management Information Integrity Monitoring Team regarding policy and MI changes were ineffective.

On May 7, 2001, the technical denial issue was referred to the Inspector General, who responded by saying he would do nothing (Attachment E).

The explosion in technical denials has affected the evaluation of the Disability Claim Manager position, resulting in an understatement by SSA of the success of the pilot (Attachment F).

The SSA/AFGE Management Information Integrity Partnership Team members are listed in the 300-page Report issued June 1996. Many high-ranking SSA and AFGE officials participated. Mark Blatchford, now Associate Commissioner, Office of Automation Support, Operations, was the SSA Team Co-Chair. His telephone number is (410) 965-4844. Steve Kofahl, Seattle Regional Vice-President, National Council of SSA Field Operations Locals, was the AFGE Team Co-Chair. The Co-Chairs can provide copies of the Report, which was issued to Management in all SSA facilities in 1997. Mr. Kofahl can also provide the complete 1994 AFGE survey data and Report to Commissioner Chater. Summary information from the 1980 and 1994 Reports is also included in the June 1996 Report.

5. We would be interested in any comments you would like to make on testimony provided by other witnesses at the hearing.

Response 5 - I will provide comments about some of the testimony provided by other hearing witnesses.

I was disappointed that Acting Commissioner Massanari did not feel that it was necessary to support the budget proposal sent to Congress by his predecessor Commissioner Apfel. Commissioner Apfel proposed an appropriation that would provide about 2400 more FTE to SSA in order to decrease both the disability claims backlogs and the hearings backlogs. SSA is a growth industry. Work is increasing and resources provided by Congress should reflect this increase in work requirements. It is disappointing that Acting Commissioner Apfel seems to think otherwise.

I was also disappointed when Acting Commissioner Massanari indicated that he would not seek a supplemental appropriation to assist in processing the Special 130,000 case T-II disability workload. This labor-intensive effort will require SSA employees to reconstruct up to 27 years of records for some SSI beneficiaries. It will also require new disability decisions for most of these cases. SSA is busy establishing special units from existing resources to handle these cases. Resources devoted to this workload will adversely affect SSA’s ability to process other work. However, the Commissioner says a neither a budget request adjustment nor a supplemental appropriation is necessary. I was very disappointed by these remarks.

I also was disappointed by the fact that Mr. Massanari did not mention the DCM in either his oral or written remarks. He should be touting this SSA success story but instead is silent.

The union applauds the strong and consistent statements form Stanford G. Ross, Chairman of the Social Security Advisory Board regarding the need to provide more administrative resources to SSA. We also echo his concern about the lack of consistency and fairness in the disability decision-making process. Disability award rates vary significantly from state to state. The union feels that a greater federal role in the disability decision-making process will assist in reducing this problem. Rather than 50 State decision systems, federal decision makers are much more likely to provide consistency and fairness. This is another reason for considering the DCM as a potential solution to the SSA disability crisis.

I am intrigued by the proposal by Steve Korn of the National Council of Social Security Management Associations, Inc. regarding the establishment of a federal Technical Expert for Disability (TED) position that would be empowered to process some disability decision type work leaving the ultimate decision making responsibility with the States. I don’t think that this proposal will provide the type of DCM service that was so fully embraced by both claimants and workers. However, if Congress is unwilling to loosen up the State monopoly on disability decision-making, the union would be interested in examining this proposal more closely.

I was alarmed after reading the statement of Sue Heflin, National Association of Disability Examiners. She indicates that the turnover rate of Disability Examiners (DE’s) is astronomical. She stated that over 50% of DE’s have less than two years of experience. She also decried the inadequate pay and benefit package that most DE’s receive This seems to be more evidence that an increased federal role in disability decision making will bring experience, stability and professionalism to this critical government function.

Mr. Willman, National Council of Disability Determinations Directors, complained about the 175,000 shelved cases that the DDS’s couldn’t process due to a "task to resource deficit". It is odd that Mr. Willman and his organization is the biggest obstacle to the DCM. Even if the DCM provides relief for the DDS backlogs, Mr. Willman opposes it. He feels that the disability decision-making monopoly must be preserved at all costs. This type of attitude is the real reason for Congress to act now to reform the statute and permit SSA workers to do the job that the DCM demonstrates that they can do.

A variety of witnesses addressed the problems with the Office of Hearings and Appeals and the Hearings Process Improvement (HPI) project. HPI was a radical change in concept that requires some time to succeed. Acting Commissioner Massanari has established a task force to with multiple stakeholders, including the union, to review the HPI experience and recommend improvements. The union endorses this effort.

The union also urges that this task force take another look at the discontinued Adjudicative Officer (AO) position. This position was able to make favorable disability decisions only. If favorable decisions could not be made, AO’s would set up the files for hearings, take depositions and interrogatories for use at the hearing and arrange for consultative examinations and other additional evidence. The judges, including Mr. Bernoski, appeared much more favorably disposed to AO’s than the HPI project. Unfortunately SSA discontinued the AO under mysterious circumstances without ever issuing a final evaluation of the pilot.

Thank you again, Congressman Shaw, for this opportunity to comment on the key issues facing the Social Security disability program.

Sincerely,

Witold Skwierczynski
President

[The attachments are being retained in the Committee files.]

National Council of Social Security Management Associations
Washington, DC 20002
July 31, 2001

NCSSMA testified that failure to see the claimant face-to-face increases the opportunity for fraudulent activity. Face-to-face interviews do increase the overall integrity of the process. In fact, SSA has recently issued draft instructions that recommend face-to-face interviews for certain cases deemed prone to fraud. Face-to-face interviews make it easier to verify the applicant’s identity, and to identify inconsistencies between allegations and behavior. However, we are not suggesting that all disability applicants be required to come into the office versus using the Internet or filing by phone. Due to the very nature of the program, many applicants, especially those with mobility impairments or other severe disabilities would be better served without a face-to-face requirement. However, we believe face-to-face interviews remain an effective means of reducing fraudulent activity that needs to be balanced against the convenience of the Internet and telephone application process. At the very least, SSA must continue to allow disability applicants the option of coming in to their local field office for a face-to-face interview.

NCSSMA testified that SSA should capitalize on the success of the Disability Claims Manager (DCM) pilot by expanding and strengthening the role and performance of the field office in the front-end of the disability process. Specifically, we recommended creation of a new position in SSA’s field offices whose focus would be the processing of disability claims. We believe this new position, which we have labeled a Technical Expert for Disability or TED, would both speed the disability process and improve the accuracy of initial disability decisions.

DCM pilot results demonstrated that decisions were made faster than under the traditional process. In fact, in states such as New Jersey, where the DDS is experiencing performance problems, claims handled under the DCM pilot were processed up to four months faster in Title XVI and up to two months faster in Title II. Accuracy rates for claims processed in the DCM pilot were higher than for claims processed the traditional way, though the differences were not statistically valid based on the sample size. In fact, denial accuracy was 3.2% higher (93.3% versus 90.1%). We believe it stands to reason the DCM accuracy would be higher since the employees responsible for completing the medical questionnaire, that is central to the ensuing medical development, are trained medical adjudicators. In the traditional current process they have no medical adjudication training.

The TED position, which NCSSMA recommends, would be flexibly structured so that its function could vary depending on the needs of each particular state DDS. In impacted states like New Jersey, the TED would function like the pilot DCMs and provide single point of contact medical decisions. Thus we would expect the same significant processing time improvements that were demonstrated in the DCM pilot. And their knowledge of the medical adjudication process would help ensure a more accurate and targeted medical questionnaire that should result in more accurate decisions.

NCSSMA has recommended the creation of a new field office position called a "Technical Expert for Disability" (TED) that would focus on the processing of disability claims. We suggested this position to take advantage of the positive results of the Disability Claims Manager pilot, within the confines of the current Federal-State relationship, as well as to shore up what we have identified as current weaknesses in the initial intake and adjudication process. As indicated above, we believe this position would both improve the timeliness and accuracy of initial disability decisions. The TED would offer other advantages, as well. Applicants would have help available to them from someone in their community who is familiar with medical sources, transportation issues, community resources and employment opportunities. Additionally, the TED would, through their enhanced knowledge of medical providers and sources, investigative work and personal contacts, help to strengthen the integrity of the program and thus help to deter fraud.

As envisioned, the role of the state DDS would not substantially change with creation of the TED position. In fact, the TED would be flexibly structured so that its function could vary depending on the needs of each particular state DDS. States that need the most assistance, like New Jersey, could give TEDs authority to make final decisions for the full range of cases. This would give SSA additional flexibility to deal with growing backlogs. In less impacted states, TEDs could simply make final and potentially same day decisions for claimants with severe and easily defined disabilities, such as those with terminal illnesses.

Even where the TED did not make the final decision, it would help establish closer cooperation between field offices and DDSs. It would result in a clear delineation of duties between the TED and DE, putting full responsibility for a high quality initial product on the TED, while providing that TED with the background, knowledge and focus that they need to produce such a product. It results in a shift in both process and responsibility that is essential if the TED is to develop a true feeling of ownership and accountability for this work product.

The number of TEDs needed would vary from state to state depending on their degree of involvement in making disability determinations. We do yet not know exactly how many TEDs an office would need to function most effectively. However, we can say that the number could vary from a single individual in a smaller field office in which the TED’s role is limited to intake and review of claims going to DDS, to a half dozen or more in larger offices where the TED is truly responsible for the entire initial claim, from intake to decision. Because TEDs would generally be filled from SSA’s existing pool of 16,000 Claims Representatives (CRs), they would not affect current DDS staffing levels or require any additional allocation of staff to field offices.

We do not believe the cost to create the TED position would be very significant. The major cost would be the initial training effort. However, because CRs are already fully trained in non-medical adjudication, training would simply focus on medical adjudication and development. SSA could use its existing Interactive Video Teletraining (IVT) network to deliver this training at the employee’s worksite. While the TED would probably grade out at the GS-12 level, this would represent a relatively minor cost and is consistent with SSA’s service vision which envisions the agency moving towards a higher graded technical workforce. Finally, it should be noted that creation of the TED position does not require any growth in either the SSA or DDS workforce. While we think such growth is warranted to deal with current backlogs and future workload growth, the TED would allow SSA to more efficiently deal with the disability workload regardless of staffing levels.

NCSSMA testified that one of the significant problems with the current disability program is that a majority of claimants seem to have little understanding of how the process works and how decisions are made. Claims Representatives fail to fully explain the process to applicants for two main reasons, their lack of a full understanding of how disability decisions are made, and lack of time.

NCSSMA believes establishment of the Technical Expert for Disability (TED) position in field offices would address the first reason. Unlike CRs, TEDs would receive full medical decision adjudication training. TEDs would personally conduct a significant percentage of initial disability interviews. The DCM pilot demonstrated that applicants – especially applicants whose claim was denied – were significantly more satisfied with the disability determination process when the claim was taken by a DCM trained in disability adjudication, than under the tradition process where the claim is taken by a CR. And there is a strong correlation between applicant satisfaction and their understanding of the disability decision process.

Even when the TED did not conduct the interview, they would work side by side with CRs involved in the disability process, and would provide training and mentoring to ensure they have a better understanding of the medical decision making process. In addition, the TED would review the first action on disability claims being forwarded to the DDS for development and medical decision, which would enable them to provide continuous feedback to CRs, thus reinforcing this knowledge.

While the TED will help ensure that field office employees have the knowledge base necessary to help applicants fully understand the process and how disability decisions are made, they will continue to be challenged to find the time to actually do so. This is a function of the overall resources available in field offices. Quite simply, staffing levels in field offices must be increased to ensure that field office employees have sufficient time to fully explain the process to disability applicants and answer all their questions. As a result of NCSSMA’s recently completed Staffing Survey, which was distributed to all Congressional offices in March of this year, NCSSMA believes that field office staffing should immediately be increased by 5000 positions to address significant service delivery gaps, including the lack of adequate time to fully explain the process to disability applicants.

I would like to comment on a point made by Douglas Willman of the National Council of Disability Determinations Directors in his written testimony. Mr. Willman testified that the DDSs currently have at least 175,000 more cases pending than they are able to process, and he expects this backlog to grow. We agree. And with the demise of the DCM pilot, SSA simply does not have any internal means for assisting DDS with this backlog.

Establishment of the Technical Expert for Disability (TED) position in SSA’s field offices would give SSA another option. With the state’s consent, TEDs could significantly reduce or eliminate the number of cases DDS does not have the resources to handle. While using TEDs in this fashion will obviously impact on other field office workloads, if overall staffing levels are not increased, at least SSA will have the ability to address this growing disability claims backlog to the extent it is determined to be a high priority. The capacity to do so does not currently exist regardless of its relative importance.

Sincerely,

Steve Korn
President

National Association of Disability Examiners
Jackson, Mississippi 39215

1. You state that there is inconsistency in decisional outcomes between states and regions. Why do you think this is? You also state to a larger extent this is more evident between DDS decisions and those made at the hearing level. Why is this?

Numerous reasons have been cited to explain the inconsistencies in decisional outcomes and/ or allowance rates between the various states and regions of the country. While it is reasonable to expect some differences due to social and economic factors, the failure of SSA to adequately explain these factors, or to offer an explanation of the other reasons that would contribute to such inconsistency, has helped dilute the public’s confidence in the disability program. NADE welcomes the opportunity to address some of these issues.

QUALITY ASSURANCE. While SSA has denied the role that their quality assurance process has had in contributing to these inconsistencies, the fact remains that quality assurance drives policy. This fact cannot be overstated. Quality assurance is the responsibility of SSA’s Office of Quality Assurance and Performance Assessment but the important function of quality assurance is not conducted in the central office. Instead, the responsibility for "policing" the decisions made by the DDSs has been given to the Disability Quality Branch (DQB) offices in SSA’s ten Regional Offices. Disability Examiners have long known (and SSA has failed to acknowledge) that these ten Regional Offices have different views regarding case documentation requirements or other case development actions. Although our information is anecdotal, examiners who have moved from one Region to another have consistently reported that a claim which would be returned for further development in the Region they left would not be returned in the new Region. Likewise, a claim that would not have been returned in the Region they left would be returned for further development in the new Region. It has been our observation that views regarding impairment severity also differ among the Regional Offices. Since the Regional DQBs appear to rate impairment severity differently the DDSs will rate impairment severity differently. Hence, a case may be allowed or denied simply because of the claimant’s geographic residence. In addition, all decision-makers are not reviewed equally or by the same component. A high percentage of DDS allowances are reviewed by the DQB via the pre-effectuation (PER) review while ALJs have more denials than allowances reviewed by the Appeals Council.

SOCIAL AND ECONOMIC CONDITIONS. A second factor, one which impacts on the allowance rate, is the social and economic condition in the state. States with strong economies, or strong social supports such as General Assistance or short term disability benefits, generally produce fewer disability claims. When claims are filed they are likely to be filed by people with more severe impairments. States with weaker economies and/ or limited social supports generally see a higher incidence of disability applications, and many of these are filed by people who are seeking financial relief of any sort that is available to them. Such filings adversely affect that state’s allowance rate and contribute to the public’s perception of inconsistency in what they expect should be a nationally uniform program.

EXPERIENCE AND TRAINING. Also contributing to inconsistencies in decisional outcomes is the ability of the DDSs to attract and retain highly qualified people to perform the job. Disability decision making is an art, not totally a science. The job of the disability examiner is much more complex today than it has ever been, and it is becoming increasingly more so. Yet, most states have not recognized this change and have not adjusted the pay levels for disability examiners accordingly. It is generally acknowledged that it takes two years or longer for a disability examiner to become proficient in the job. However, currently, more than 50% of the disability examiners in the DDSs have less than two years of experience. This combination of inexperience and the inability to attract and retain highly qualified employees means that DDSs, out of the necessity created by the increasing turnover in their staff, are spending too much of their training budgets on initial training, leaving little money in the budget for ongoing training of current staff. Additionally, increasing caseloads make it difficult for DDS Administrators to arrange suitable times for staff training even when the budget permits such training. Couple this with the fact that claimants –and the impairments they allege –have changed dramatically over the years, requiring more documentation of impairments and impairment related symptoms.

In the past the majority of claimants were older workers who had a significant physical impairment, more easily documented with objective medical findings. Today’s typical applicant is younger and is more likely to allege a mental impairment and/or impairment related symptoms which require significant non-medical development and evaluation (obtaining Activities of Daily Living information from the claimant and collateral sources and assessing credibility).

Ongoing, comprehensive training of all decision makers, not just DDS staff, is imperative to ensure that decisions are made as consistently as possible. As more weight is afforded to individual subjective factors such as pain, fatigue, assessing credibility and treating source opinions, there is a greater likelihood of more "inconsistent" decisions. A single presentation of policy that is binding on all decision-makers and consistent QA reviews of all decision-makers can assist in ensuring that policies are being applied consistently across states, regions and decisional levels.

APPEALS. Much attention has been focused on the differences in decisions between the DDSs and those produced by the Office of Hearings & Appeals. The most common explanation for this is that the time interval between the DDS decision and when the ALJ sees the case (months or years) adds more subjective and objective medical and vocational information. This results in a "de novo" decision on what has become an outdated -or frequently a totally different -case to review. We are, in essence, adjudicating a different case. While this may be true in some cases, we believe that the differences in decisional outcomes between DDS and ALJ decisions is due to the fact that DDS decisions are based primarily on medical evidence, considering the subjective issue of pain, the credibility of the claimant’s complaints and the appropriate weight of the treating source opinion, while the Hearings decision is based primarily on the outcome of a legal procedure. The sources of information for a Hearing decision are different in that there is no required Medical Consultant review. Medical evidence is likely to be developed to support a specific outcome. The claimant is represented by a professional, who interprets medical and vocational information along with the rules and regulations in building their case for the ALJ. SSA has chosen not to have anyone present at the ALJ hearing to explain the DDS decision for fear of creating an adversarial environment. The result, of course, has been that the Administrative Law Judge is presented only one side of the story and if they choose to question the facts in the case presented to them, they are fearful of being labeled as biased. NADE supports having the DDS decision explained at the hearing level by someone qualified to do so.

COURT DECISIONS. SSA’s acquiescence rulings customarily only apply in the circuit which issues the court decision. Thus these policies become mandatory in a handful of states in a particular circuit. Because there are numerous acquiescence rulings, and because the federal judicial circuits do not correspond to SSA regions even states within the same region have different adjudicative mandates.

NADE members have expressed similar mixed reviews. The stronger implementation of Process Unification in the Prototype states has given the DDSs the ability to allow claims they might have otherwise denied. Examiners participating as Single Decision-Makers have reported this to be a positive and fulfilling experience on a personal and professional basis. However, without additional staffing, backlogs build and the production pressures on the disability examiner increases to the point that the personal and professional fulfillment is not worth the stress of the workload. In addition, while the new claims process was expected to produce a better public understanding of the disability program and higher claimant satisfaction with the decision and, thereby, reduce the appeal rate, the opposite has occurred. Without a reconsideration step, Hearing Offices in these prototype states are being overwhelmed by the growing number of appeals.

It takes longer to process a claim under Prototype and it costs more to do the additional development required. The elimination of the reconsideration has not produced the savings anticipated to pay for the additional costs. SSA’s initial plans for a face to face "claimant conference" between the initial disability examiner and the claimant were quickly scrapped when SSA realized that there were insufficient funds to pay for this process, a fact that NADE had made clear very early in the process. Now, the Agency acknowledges that the elimination of the reconsideration step will not produce sufficient savings to pay the additional costs of the prototype process.

The basic idea behind prototype, to allow claims which should be allowed as early in the process as possible, was good. NADE has always endorsed this concept. ! Increasing the personal contact between the trained disability examiner and the claimant is a good idea but any realistic plan to achieve this goal must also examine its costs. Our concern with the prototype process, however, was always, "How will SSA pay for this?" Now we know – they can’t

NADE does not support changing the definition of disability AT THIS TIME. We are not opposed to changing it later if it becomes necessary to do so. Our position on this matter is simple – SSA has too many other problems right now and they need to direct their attention and resources to finding credible solutions to these problems. The definition of disability is the foundation of the disability program. It does not represent a significant problem for the Agency at this time. In fact, it is the only part of the house that is not crumbling at this time. Repairs are urgently needed to the roof and walls and once these have been achieved, then it may be time to examine the foundation.

The aging of the baby boom population and the increased incidence of disability anticipated with that, as well as a transitioning labor force due to increased retirements, make this a time of massive hiring and training with large workload increases. We need stability within the core of the program to be able to make a successful transition. In addition, with so many changes taking place in the system we would not be able to effectively measure the effects of the change in definition compared to the other changes. NADE urges Congress and SSA to proceed cautiously in any attempt to change or overhaul the definition of disability.

The issue of medical improvement is one that needs close examination, especially if the Congress decides to also look at the definition of disability. Individuals who receive disability benefits have a right to rely on the validity of the decision and expect that they will continue to receive these benefits unless there is a change in their condition that would justify termination of these benefits. However, one major problem with demonstrating medical improvement is that it requires evidence that the underlying condition has changed for the better. When a person is allowed benefits without a significant medical condition, it will be difficult, if not impossible, to show improvement even though the person may be perfectly capable of working. NADE is on record as supporting the Medical Improvement Review Standard but we have supported making changes in that standard.

We believe that the time has come that the issue of medical improvement should be revisited to ascertain if it is still relevant. Improvement in a medical condition is not the only change that can occur that would justify termination of benefits. Technology and an expanding job market has created many opportunities for disabled people to return to work. The federal laws have changed in recent years making it easier for disabled people to return to work.

It is time to ask the question, "Has the Medical Improvement Review Standard outlived its usefulness?" However, whether or not the medical improvement standard is changed we believe that it is vital that SSA become, and remain, current on the Continuing Disability Reviews.

An individual’s subjective complaints are very important and should be given full consideration by the disability examiner. This goes to credibility for the system. When people feel they are disabled and they have multiple subjective complaints on which they base that belief, failing to consider those complaints will result in the person believing the system failed. If they then take the same complaints to a hearing and receive an allowance, they can prove the system failed them. So, full assessment is critical.

The current SSA medical model with an individualized functional assessment is an appropriate "balance" but implementing and administering the policies and procedures associated with that has been extremely problematic due to the lack of a single presentation of policy binding on all decision-makers, the lack of consistent feedback from quality review components regarding applying these and the lack of follow through on clarification of policies once they are implemented. Much stronger guidance is needed regarding how to integrate objective tests, clinical findings and claimant symptoms to arrive at a correct assessment of what a particular claimant can reasonably do as a result of their medical condition. This guidance must be provided to, and be binding on, all decision-makers. Discounting objective evidence because it is inconsistent with subjective complaints is clearly the wrong way to go. We believe the subjective complaints should only be applied to a decision when it is consistent with the objective findings.

SSA, the Congress, and the American public must also recognize that consideration of these subjective complaints have contributed to the growth in inconsistencies in the decisions made on disability claims by the DDSs. Also, evaluating subjective complaints is more time consuming for examiners, hence it is a more costly process. The need to document and evaluate the severity of such complaints has created stronger decisions but has added to the growth in complexity in the program and added to the growth in pending cases. It takes more time to process each case as examiners attempt to contact the claimants and third parties to obtain more detailed information about the claimant’s objective and subjective complaints.

Our responses to the other testimonies presented at the hearing is as follows:

Acting SSA Commissioner – NADE generally supports the testimony presented by the Acting Commissioner of Social Security but we were disappointed that this testimony did not address the increased costs of doing business under the new disability claims process that is being tested in the prototype study. SSA has invested much of its pride and hopes for the future in this process while refusing to acknowledge the increased costs . Nor have they been honest about some of the data and the data they have released has not generally supported their position that the new process is more efficient and more customer friendly.

NADE has maintained from the outset that the elimination of the reconsideration step in the appeal process would not produce the required savings to pay for the enormous costs of implementing the new claims process. SSA has only recently acknowledged this to be so and delayed the expected national rollout of this new process while they seek more information.

Also, much of the highly touted savings in processing time that SSA has used to justify this new process was created simply by the elimination of the reconsideration step and not by any new policies showcased on the new claims process. Unfortunately, the data appears to show that the time saved by the elimination of the reconsideration step will be added to the appeals process as the backlogs at the appeals process have increased

Social Security Advisory Board Chairman – NADE is in fundamental agreement with SSAB reports and with the testimony presented at this hearing

AFGE – NADE concurs with the statement made by the AFGE spokesperson that solving the problems inherent in the Social Security and SSI disability program will be a daunting task and will require a multi-faceted approach.. We do not understand, and strongly disagree with, the conclusion that many of SSA’s disability related problems can be solved if SSA rolls out two pilots, namely the Disability Claims Manager (DCM) and the Employment Support Representative (ESR). While we have little or no experience with the ESR, the superiority of the DCM was vastly overstated. While the concept may be feasible, it was never tested in a "real world" situation. Our experience with Prototype (which was piloted as the "Full Process Model") demonstrates that a process which appears successful when piloted must undergo dramatic changes when implemented on a larger scale. Production and processing time considerations, in addition to resource and staffing concerns, have required SSA and the DDSs to implement a number of "expedients" (shortening the claimant conference, including more of the claimant conference information in an initial letter to the claimant, shortening the rationale, etc.) in order to process cases. The DCM could not survive in its present form if implemented nationally and continuing to pilot this process will not add anything to the information already gathered.

National Council of Social Security Management Association – The proposal for a Technical Expert for Disability (TED) makes absolutely no sense, especially in light of NCSSA’s testimony that, "Field offices also cannot keep up with the growing workloads". We do agree that SSA must address "…one of the most pervasive problems in the initial disability decision making process by improving the quality of initial medical transmittals to DEs in the DDSs". However, the DDSs do not need the Field Offices to develop medical evidence or to assist in making the medical decision. Rather, we need them to provide complete, accurate applications and detailed descriptive observations when the application is taken in person.

NCDDD – NADE concurs with the testimony presented by NCDDD.

NTEU – NADE believes that it is absolutely amazing that the solution to the problems facing the disability program is the creation of more federal jobs. This is what we see when we read the testimonies presented by the spokespersons for the various federal unions and management associations. Based on the testimony presented by NTEU, it is clear that they believe that the creation of the Senior Attorney program would solve all of the problems in the program.

Association of Administrative Law Judges – NADE shudders at the thought of an independent ALJ corps. SSA presently exercises very little control over the Office of Hearings & Appeals and we believe that many of the problems in the program can be traced to this very fact. OHA has strongly resisted SSA’s attempts to introduce change in the manner in which OHA conducts its business, a resistance that has seriously impaired the ability of SSA to successfully move forward with its new disability claims process at the DDS level. SSA needs greater control over the Administrative Law Judges. NADE does support a mandate that SSA should proceed to develop as soon as possible a single presentation of policy – that is that the rules guiding the decisions made by the DDSs and the ALJs should be the same. We also agree with the assessment that subjecting favorable decisions to more scrutiny than unfavorable decisions works to the detriment of the claimants and undercuts the perception of fairness and impartiality of agency adjudication. NADE has consistently advocated for review of an equal percentage of allowances and denials at all levels in the adjudication process.

Sue Heflin
President

National Council of Disability Determination Directors
Lincoln, Nebraska 68512
July 31, 2001

The Honorable E. Clay Shaw, Jr.
Chairman, House Subcommittee on Social Security
U.S. House of Representatives
Washington, D.C. 20515

Dear Congressman Shaw:

This responds to your letter of July 13 in which you asked five questions in follow up to testimony presented at a hearing on June 28, 2001. I am happy to have the opportunity to respond to your questions.

First, you asked if the NCDDD feels that the definition of disability, essentially unchanged in 30 years, is in need of review and possible revision.

Certainly a review of the basic definition is in order. The world of medicine and the world of work in particular, and our economy and our culture in general, have experienced such dramatic changes over the past three decades that the original definition delineating the requirements for receiving cash disability benefits should be reconsidered. In this millenium, there are few, if any, medical conditions that can be said to "preclude any substantial gainful activity". Persons who are totally without sight, or totally without hearing, or confined to wheelchairs are gainfully employed and fully participate and contribute to our economy. The Americans with Disabilities Act made fundamental changes to retaining and regaining the contributions that persons with medical impairments can make to the workplace and society. The relationship between the disability program and the ADA can be a starting point for re-examining the definition of total and permanent disability.

Second, you asked which elements of the Lewin Report are the most important to implement.

The Lewin Report is a lengthy, detailed, and complex document that includes many far reaching and overlapping recommendations. Much work among the various components in the disability program will be required to sort out and prioritize Lewin’s suggestions. Our point is not to endorse the report in its entirety, but to urge SSA to start the dialogue that will be necessary to realize any benefits from the potentially valuable report. For too long, the report has been locked in bureaucratic inertia and the time is long past to start considering some action. The following are among its more important aspects.

1) The structure of the disability program is too fragmented with too many components responsible for the various pieces of the program and too little coordination among those units. We particularly agree with Lewin’s recommendation that SSA develop a new organizational structure that clearly establishes responsibility and authority for the disability program across all SSA functions. This would include not only operations and quality review but also policy development, budgeting, training, and systems design.

2) The current model is based on a decades old industrial approach to quality control in which end-of-process reviewers check a sample of the completed product and report and describe "errors". The primary effect is not to educate the front line workers or to develop their abilities but simply to make them fearful of being identified as error prone workers. The SSA quality assurance system should place much more emphasis on in-line process improvement and much less emphasis on finding and reporting on defects.

3) The front line workers and the quality reviewers should develop a shared definition of what "quality" means to replace the current process in which they view the concept much differently. Presently, front line workers must always simultaneously balance concerns for the amount of documentation, the thoroughness of analysis and explanation, case processing time, and case costs. The operations definition of "quality" includes all these elements. But at the case review level, "thoroughness" is the only consideration and cost and timeliness of case processing are entirely ignored. The result is that operations workers on the front lines receive feedback from the quality reviewers which is virtually impossible to apply to the reality of the work environment. SSA needs to establish a quality concept that all components can work toward rather than continue the present model which places the components in adversarial positions to one another.

4) Lewin recommends that DDSs be responsible for first level reviews (which would incorporate emphasis on in-line improvements) and that federal resources be used to coordinate and develop the DDS QA units rather than to perform direct reviews of the DDS work.

Third, in regard to the development of information systems, you asked what enhancements would be helpful and what SSA is doing toward providing these enhancements.

Our concerns in the area of information systems focus on the question of which component will be responsible for designing and developing the hardware and software which is critical to our operation. The DDSs, as a community, have a history of systems development which has been successful both in terms of effectiveness and economy. Our systems work every day, and they have been developed and are being maintained at very reasonable cost. Most DDSs rely on support from the private sector for the maintenance and enhancement of the systems that support their business processes.

But from time to time, SSA introduces major systems initiatives without adequate consultation or input from the state agencies. Usually these initiatives involve hardware and software replacements which are centrally and federally conceived and managed. These initiatives do not have a history of success. Most recently, SSA spent most of a decade and tens of millions of dollars attempting to develop a replacement system called the Redesigned Disability System (RDS). Although the great majority of the project has been abandoned, its real cost goes well beyond the direct expense. The real cost includes the fact that enhancements to the DDS systems was curtailed while RDS consumed, with almost no positive result, the vast majority of the resources available for systems development.

One of the key challenges to systems development in the future will be adapting the DDS world to the electronic exchange of medical evidence. This will soon become critical as the health care community adapts its practices to the Health Information Portability and Accountability Act. We urge that SSA continue to involve the DDS systems personnel in this challenge and to rely upon the local development of necessary systems capabilities rather than attempting another centralized approach. Because of their placement in state government and their varying local circumstances, DDSs must retain control of their information processing systems. We also believe it is reasonable to consider if systems software development should be a task for which the knowledge, skills, and abilities of the private sector, by way of the contract process, could be better utilized.

Fourth, you asked how SSA should change its policy instructions for evaluating disability claims.

As indicated in our testimony, medical policy in the disability program is complex, fragmented, and confusing. We have four suggestions for changing policy development and implementation.

1) policy should be developed and ‘enforced’ by the same component;

2) the presentation and communication of policy should be identical among initial level adjudicators, appeals level decision makers, and quality reviewers --- they should all use the same policy to make decisions;

3) training in the policy should involve more emphasis on ‘real world’ application rather than being so focused on theory and philosophy;

4) SSA must reconsider its increasing emphasis on subjective and ‘functional’ considerations and keep in mind that objectivity in policy results in more consistent and less costly application.

Fifth, you asked if NCDDD would like to comment on the testimony of the other witnesses at the hearing. We do have a few comments.

The testimony of Stanford Ross of the Social Security Advisory Board was very impressive. NCDDD agrees with the great majority of Mr. Ross’ comments and recommendations. We take note of the fact that the Board, not representing any particular component in the program, is in a position to offer an objective and impartial point of view.

We do disagree with the manner in which two witnesses characterized the recently concluded test of the Disability Claims Manager (DCM) concept. The test was described as a "resounding success" and as having shown that the concept "is a winner" because it resulted in higher levels of customer satisfaction, higher levels of employee satisfaction, lower case processing time, and higher productivity all at comparable cost. Accuracy of decision making was described as equal to above the traditional process.

At the time of the hearing, we did not have the draft report of the DCM test. Now that we do, we are able to comment on the above description of the outcome of the test.

With regard to administrative costs, the draft report estimates that the DCM process was between 6% and 20% more costly than the existing process. We believe that this summary figure is understated because some cost categories were not included. We doubt that such an increase in administrative spending will become available and even if it did, we feel it could be better invested in program changes other than DCM.

With regard to accuracy, the correctness of DCM allowance decisions was comparable to the control group, but the correctness of denials fell short of the regulatory minimum threshold for acceptable decision making. Denial accuracy for traditional cases was 93.3% while that for DCM cases was 90.1%. The accuracy for non-medical decisions on Title XVI cases is not known.

With regard to processing time, the DCM process did save 10 days on Title II cases and six days on Title XVI cases. This is a noteworthy achievement, but is less impressive than one of the witnesses characterized to the committee. The witness stated that

"Average processing time is 73 days. The agency in their FY 2002 goals is shooting for 108 days; that is 32 percent better than the agency’s goals".

This statement, while factually correct, could be interpreted to state that DCM approach improves processing time by 35 days. In fact, it does not. The real gain was about eight days, and this gain was achieved only by controlling case receipts, excluding some types of complex cases from the workload, and excluding delayed development of cases. These controls are not possible in a "real world" setting.

With regard to productivity, SSA’s draft report estimates that DCM productivity, depending on the model used to measure it, was between 87% and 108% of the traditional process. But those chosen as personnel for the test were historically more productive than their peers, so the result may represent an actual loss in productivity.

Any evaluation of the DCM test must consider the very unusual circumstances under which the test was conducted. These included the following: the test utilized exceptionally well qualified personnel; attrition among the DCM corps was considerably less than for personnel handling comparison cases; all of the federal DCMs received promotions for participating in the test; DCMs were able to set limits on the size of their caseloads; DCMs were not required to handle some types of cases that are regarded as more difficult; and DCMs received amounts of training, mentoring, and coaching that are unprecedented in the history of the disability program.

While customer satisfaction was improved under DCM, this may result more from the investment of significantly more resources and the artificial conditions of the work than from the DCM concept itself. Curiously, the increase in customer satisfaction was accompanied by an increase in the number of denied applicants who filed for reconsideration.

We do want to thank the state and federal personnel who undertook this pilot, and we will work proactively with SSA in order to glean positive results and usable work processes from it. Even so, we must point out that the actual outcomes of the test fall far short of what was characterized at the hearing.

Thank you for the opportunity to provide this additional information and explanation. Please contact me again if further information is desired.

Sincerely,

Douglas Willman
Past President

National Treasury Employees Union, Chapter 224
Cleveland Heights, Ohio 44118

"Delegalization" is the process of eliminating or reducing the use, independence and effectiveness of attorneys, whether they are ALJs, staff attorneys or claimant’s representatives in the disability decision process. The disability system has experienced one crisis after another since the early 1990’s when the Social Security Administration failed to timely react to a significant increase in disability receipts leading to a disastrous increase in the number of cases pending, the disability backlog. In 1994 and 1995 a considerable number of claimants were waiting over a year for hearing decisions. By the time SSA decided to respond, the situation was entirely out of control with the OHA backlog increasing by as many as 10,000 cases a month. (I note that for the past four months, April to July 2001, the backlog has again gone up an average of more than 10,000 cases a month.)

SSA’s response then was the overly ambitious and very expensive Disability Process Redesign (DPR) that was intended to introduce radical changes to the adjudication process over an extended period of time. Unfortunately, the individuals charged with the task of dealing with the disability backlog used the opportunity to promote their philosophical agenda to de-legalize the Office of Hearings and Appeals. Unfortunately, the DPR was fundamentally flawed, its scope was too large, and the project was poorly planned and executed. Cynthia M. Fagnoni, Director of Education, Workforce, and Income Security Issues; Health, Education, and Human Resources Division of the General Accounting Office, testified before the Subcommittees on Social Security and Human Resources on October 21, 1999 that,

"The agency’s first ambitious redesign plan in 1994 yielded little. When the agency scaled back its plan in 1997, progress was slow, in part because even the scaled-back plan proved to be too large to be kept on track."

SSA once again has an overly ambitious and very expensive plan, but it is not a response to the disability backlog crisis but the cause of it. Under the guise of preparing for the future, SSA has implemented many of the concepts of the ill-fated Disability Process Redesign under the rubric of the Hearings Process Improvement Plan. Delegalization begins at the very core of HPI with the elimination of the Senior Attorney decision maker. While the name "Senior Attorney" remains, its effectiveness has been stripped away along with all its decision-making authority. Similarly, the "Supervisory Attorney" position is now a "Group Supervisor" and is more likely to be filled by a non-attorney paralegal than an attorney. Attorneys and non-attorneys, worried about violating state bar ethical considerations or engaging in the unauthorized practice of law must carefully consider whether each supervisory directive involves the legal aspects of an attorney’s work. This is an inefficient process that demoralizes both attorney and supervisor. Consistent with this delegalization, attorneys represent a much smaller percentage of the individuals responsible for drafting ALJ decisions under HPI. Thus, HPI has effectively reduced the use and effectiveness of attorneys in the pre-Hearing process, the post-Hearing process and in supervision of the process. This "de-legalization" has helped contribute to the 21.5% increase in processing time since the close of January 2000, the month that the Phase I offices implemented HPI, and an increase in the backlog of almost 75,000 cases this fiscal year alone, more than 44,000 cases in the last 4 months alone.

While the job title "Senior Attorney" continues to be used in SSA, the position has no decision-making authority and thus there are no decisions to review. The Hearing Office Director is the first-line supervisor of the current Senior Attorney and the Hearing Office Chief Administrative Law Judge is the second-line supervisor.

In the Senior Attorney program prior to the Hearing Process Improvement plan (HPI) Senior Attorneys did issue fully favorable decisions. Senior Attorneys were supervised by a Supervisory Attorney as the first line supervisor and the Hearing Office Chief Administrative Law Judge as the second line supervisor. The fully favorable decisions issued by Senior Attorneys were subject to off-site quality review by the Office of Quality Assurance and Performance Assessment (OQAPA), which reviewed a random sample on a post-effectuation basis; own motion case reviews of a random sample of cases by the Appeals Council on a pre-effectuation basis also was part of the review process. Case examination referrals were conducted by OQAPA where an OQAPA screened case was selected to meet an automatic profile and the case was forwarded to the Appeals Council for consideration of own motion review, where appropriate, again on a pre-effectuation basis.

In addition to these review processes, beginning in July of 1998 Supervisory Attorneys in each office were directed to select a random sample of approximately 10 percent of Senior Attorney dispositions for on-site quality review feedback on a post-effectuation basis. For new Senior Attorneys, the Supervisory Attorney was to review at least 50 percent of the dispositions for the first three months. The Supervisor completed an on-site review checklist that was provided to the Senior Attorney and returned the case file to the Senior Attorney if the Supervisor identified a correctable error. On a quarterly basis the Supervisor was instructed to collate his or her comments and furnish a summary to the regional training coordinator for planning purposes. Finally, if the Senior Attorney or an effectuating component, discovered an error in a decision or received additional evidence that precluded a fully favorable decision, procedures were in place to terminate effectuation of the decision and schedule the case for a Hearing before an Administrative Law Judge, or for the Appeals Council to either vacate the dismissal of the claimant’s Request for Hearing or reopen and revise the decision of the Senior Attorney, as appropriate.

NTEU believes that, with minor changes, this same process would work well in a new attorney decision maker program. Most offices no longer have a Supervisory Attorney with supervisory responsibility over all attorneys in the office. Such a position must be re-established to have an effective on-site quality review program. Further, SSA is critically understaffed in the ALJ position and thus ALJs should not be removed from production to perform quality reviews of attorney decisions. Finally, to be consistent with the SSA Performance Plans, decisional accuracy should be based on the "substantial evidence" standard with the same accuracy goal as that for ALJ decisions, 89% in FY2002 and 90% by FY2005. Like ALJs, attorney decision makers will need training and continuing legal education to attain these goals.

I certainly do not think that SSA intended HPI to increase the backlog, increase processing time, decrease production, decrease productivity and decrease service to the public, but that is what HPI did. Clearly management wanted to enhance ALJ productivity, since they eliminated the only other OHA decision maker, the Senior Attorney decision maker.

If their goal had been merely to increase OHA productivity, rather than specifically ALJ productivity, why would they have eliminated a program that decreased the backlog, decreased processing time, increased production, increased productivity and increased service to the public; particularly a program that did it with few added resources at a much lower cost per decision than an ALJ decision?

HPI, however, was based on a number of fundamental misconceptions that would have been made apparent had it been tested prior to implementation.

First, it was based on the belief that ALJs spent significant amounts of time on the pre-hearing development of their cases. This was simply not true. Most ALJs spent time instructing staff as to how they wanted their cases developed and staff members actually performed the developmental functions. Even if development of the case could be effectively delegated, the ALJ could not delegate the pre-hearing review of the case necessary for the Judge to prepare for questioning the witnesses at the hearing and the later review of the case necessary to making a decision on the merits. The Judge has to review the actual evidence and no amount of summarization, review by the staff or certification can substitute for this. Thus, removing the ALJ from pre-hearing development saved virtually no ALJ time that could be used for ALJs to hold more hearings and decide more cases.

At the same time, because of the reorganization of the process in Hearing Offices, employees worked for groups rather than individual ALJs, as was common prior to HPI, and could no longer develop each case to meet the requirements of each ALJ. ALJs, who still required that cases be developed as they desired thus had to spend more time on pre-hearing development assuring that all the development they needed was obtained. In some offices, the attempts to avoid this problem through long and detailed "standing orders" got the ALJs the cases developed as they desired, but at great expense in terms of staff time and staff productivity. In many cases the ALJs associated with a group could not agree on "standing orders" so none were issued. Therefore, the group did not know how the ALJ wanted them to prepare the file. This resulted in over-development in some cases, and the need for further development in other cases.

HPI also added the function of certifying that a case was "Ready to Hear". Since ALJs had lost significant control over the pre-hearing development of the case but not the ability to require that the case be developed as they required before they held a hearing, the certification that a case was "Ready to Hear" was a meaningless waste of limited assets that added no value to most cases.

Most importantly, the designers and directors of HPI failed to recognize the skills and abilities required to perform the many different tasks in processing cases from docketing the claim to mailing the decision when they eliminated "stove-piping" and organized the office in groups of technicians and analysts. They so under valued the work performed by employees that they assumed that everyone could do virtually everything with less training than a new crew member gets at McDonald’s. They promoted many employees out of clerical jobs that they did well, into the job of drafting ALJ decisions, a difficult job for which many did not have the basic skills and for which they were not sufficiently trained. It will take years, if ever, for them to become skilled at this job. Those employees that were not promoted were often left with even more difficult jobs, with substantial new tasks added to all the tasks they had to perform before, again with little if any training on how to perform the tasks and no decrease in production expectation on the old tasks in spite of the additional duties added. In many cases the added tasks were those previously associated with lower graded positions, so that those not promoted often found their position to have been degraded.

Finally, HPI failed because OHA employees had neither confidence in the plan nor the management that designed it and implemented it. Employees correctly viewed the failure to test HPI not as a sign of confidence by management that it would be a success but a sign that management knew that it would fail the test. It was a common saying by OHA employees that the only thing that SSA learned from the failed Adjudication Officer pilot was never to pilot a program again. Nothing was more damaging than management insisting that HPI "reduced handoffs" and then producing a flow chart showing fewer hand-offs of cases under HPI. It was very clear to all employees that the flow chart simply combined or left off many of the steps in the process and that the process had many more handoffs than what offices were doing prior to HPI.

By any measure HPI has been a failure. It has not increased ALJ productivity even though that was clearly its design. Monthly ALJ productivity in FY2001 has approached, but never reached, what it averaged in FY2000.

I was disappointed that Acting Commissioner Massanari did not consider the Senior Attorney Program to be very successful. Neither Commissioner Chater nor Commissioner Apfel expressed these concerns when they authorized and reauthorized Senior Attorney decision maker programs. One of Social Security Administration’s goals is to provide claimants with the correct decision at the earliest possible time. When the Senior Attorney Program began in 1995 the disability backlog was 570,000 cases and OHA disability processing time averaged 386 days. During the life of the Program Senior Attorneys provided decisions to over 200,000 claimants with an average processing time of just over 100 days. Overall, the backlog was reduced to just over 310,000 cases and processing time for all claimants was reduced to just over 260 days. Furthermore these attorneys continued to provide most of the decision writing support for Administrative Law Judges and the time needed to draft ALJ decisions was maintained at approximately 10 days. This provided the administration with the flexibility to address workloads and allowed the Agency to utilize assets in an efficient, cost effective manner.

I was even more disappointed by Acting Commissioner Massanari’s misleading statement regarding disability processing time. He reported to you that the processing time had been reduced almost 100 days from its peak of 397 days in 1997. That is true as far as it goes, but it hides the deterioration that has occurred in the last few months. In actuality, in large part due to the senior attorney program, processing times had been reduced to just over 260 days by January 2000. Overall processing time by the end of June 2001 had actually increased to 316 days (306 days for SSA cases only). Because of the increase in processing time and the backlog at OHA, we believe that HPI can categorically be described as a failure. Indeed Mr. Ross’s statement that people view HPI as a disaster seems to be the most accurate description of these changes.

Acting Commissioner Massanari also raised concerns about the quality of the decisions rendered. The dramatic improvements in processing time and the decreased level of pending produced by the Senior Attorney program only represents a true improvement in public service if the decisions issued were correct. Had Commissioners Chater and Apfel had significant concerns about the quality of the Senior Attorney decisions they would not have continued to authorize and reauthorize the program from 1995 until November of 2000. The Appeals Council reviewed senior attorney decisions using the same criteria they use to review Administrative Law Judge decisions and found them to be of the same quality. Please see my response to question #2 for more information on this point.

Finally, I note with satisfaction that ALJ Ronald Bernowski, President of the ALJ Union, testified that with some changes, re-institution of the Senior Attorney Program would significantly improve the backlog problem at OHA.

James A. Hill
President

Association of Administrative Law Judges
Milwaukee, Wisconsin 53203
July 31, 2001

The Honorable E. Clay Shaw, Jr.
Chairman
Subcommittee on Social Security
Committee on Ways and Means
B-316 Rayburn House Office Bldg.
Washington, D.C. 20515

Re: June 28 Hearing on Social Security Disability Programs’ Challenges and Opportunities

Dear Mr. Shaw,

I again thank you for the opportunity to testify before your Subcommittee at the hearing on the Social Security Disability Programs’ Challenges and Opportunities. The following are my answers to the questions that you posed in your letter dated July 13, 2001, to complete the hearing record, which I submit to you on behalf of the Association of Administrative Law Judges ("AALJ"):

1. Question: You propose an ALJ-administered independent agency and that you want a separate budget, not subject to review by the President or any executive branch officer, special treatment that an independent agency like SSA does not have. Why would the taxpayer and the claimants have any confidence in a government agency with few or no controls on it through the purse string?

Answer: Congress directly would control the purse string for a new independent adjudicative agency for Social Security Act cases, the United States Office of Hearings and Appeals ("USOHA"), the same as it does for all of the other independent agencies that Congress has created. AALJ’s recommendation for the administrative budget process of a USOHA is identical to that which the Social Security Administration ("SSA") currently has. AALJ’s recommendation is substantively the same as the provisions of 42 U.S.C. § 904(b), which sets forth the budget process for the SSA as an independent agency, including (1) having the USOHA Chief Judge prepare an annual budget for the USOHA, which would be submitted by the President to the Congress without revision, together with the President’s annual budget for the USA, (2) making appropriations requests for staffing and personnel of the USOHA based upon a comprehensive work force plan that is established and revised from time to time by the Chief Judge, and (3) appropriations for administrative expenses of the USOHA would be authorized to be provided on a biennial basis. Thus, the USOHA budget would be subject to review by the President, but Congress also would see the budget that the Chief Judge of the USOHA prepared in view of only the need to have timely and high quality adjudications.

The degree of independence that an agency has is affected by the degree of control that it has in preparing and submitting its budget requests to Congress. Budget requests usually are changed by the Office of Management and Budget ("OMB"). However, Congress can and has permitted independent agencies, including SSA, to submit their budgets without revision, so that the Appropriations Committees can compare the agency budget with the OMB revisions.

In order to address the concerns raised by the Social Security Advisory Board ("SSAB") that the SSA has not adequately staffed the OHA to produce timely and high quality decisions, Congress may want to consider barring OMB from submitting revisions of the new USOHA’s budget requests, as Congress did for the U.S. Postal Service, 39 U.S.C. § 203, 3604, and the U.S. International Trade Commission, 19 U.S.C. § 2232. As the SSAB has pointed out in its September 1999 report entitled How the Social Security Administration Can Improve Its Service to the Public, the SSA’s reduced staffing and other tight resource constraints has limited its capacity to respond to growing and more complex workloads, which has resulted in diminishment in the quality and timeliness of program service to the public. pp. 3, 19-20, 47-49.

The claimant’s and taxpayers should have the utmost confidence that Congress would provide the funds sufficient to get the work of the final administrative appeals of Social Security Act cases done efficiently and well without permitting waste. Also, the Chief Judge of an independent USOHA would have the one goal of the adjudication of the cases in a timely and high quality fashion in setting the budget needed to carry out this task, rather than the conflicted goals that currently exist within SSA that the SSAB found wanting.

2. Question: Your proposal basically recommends setting yourself separate from all other branches of government because you do not want [to] be managed by the Commissioner in the executive branch. The Congress sets Social Security policy and the President through his Commissioner carries it out and the courts interpret the policy.

(a) In your proposal, in what part of government will you operate and who will you be accountable to?

Answer: The USOHA will be an independent adjudication agency within the executive branch that is accountable only to the President and Congress. It will function as an independent agency within SSA for logistical reasons, but its officers and employees will not be supervised by any other part of SSA. (Placing the USOHA within SSA results in no new costs for office space and information systems and is a practical necessity, given the USOHA’s substantial space needs that currently are in place at SSA, the need to share the SSA’s information services and data bases, and the need to use the same case files.)

The USOHA would have the exclusive jurisdiction to make the final administrative decisions of Social Security Act Title II and XVI claims. The USOHA will have permissive jurisdiction over other classes of cases, so it may hear and decide Medicare cases and other classes of cases such as those that the SSA ALJs have heard in the past, which have included Black Lung and FDIC cases. The final decisions of the USOHA that are made by its appellate panels would be appealed only to the federal courts, with the District Courts as the first step in the judicial review.

(b) If you want to stay within the executive branch, then you will have to be accountable to the President of the United States, isn’t that correct?

Answer: Yes.

(c) Since the Commissioner carries out Social Security policy for the President, will your Chief Judge then have to become the equal of the Commissioner in policy execution?

Answer: No. The Chief Judge of an independent USOHA would not have any authority to implement Social Security policy. The authority to implement Social Security policy would remain exclusively with the Commissioner of SSA.

Only the final administrative adjudication authority of SSA would be abolished, including the Appeals Council. The Commissioner of SSA, who sets and implements the policy standards for entitlement to Social Security Act benefits, will continue to have the power to make only initial decisions on Social Security Act claims. However, the Commissioner of SSA will retain all authority for all of the policy-making, policy-implementation, rulemaking, investigation, and prosecutorial functions vested in the SSA by law. An independent USOHA would have the power only to render the final administrative adjudications of Social Security Act claims, as well as adjudicate any other classes of claims that Congress sees fit to authorize the USOHA to hear and decide, or that other agencies contract with the USOHA to hear and decide.

(d) How is the public assured that one national Social Security disability policy can be maintained?

Answer: The USOHA would be administered centrally by the Chief Judge, Principal Deputy Chief Judge, and Deputy Chief Judges from a single national headquarters, which makes sense for an agency that would adjudicate claimant for national programs. The ten OHA regional offices and the position of Regional Chief Judge would be abolished so that only one set of support staff and administrative offices, instead of 11, will exist. A centralized structure will eliminate inconsistencies in the interpretation and communication to the administrative law judges of policies that affect the adjudication of claims arising out of the national Social Security programs, which has been a problem with the OHA regional offices.

The several Deputy Chief Judges can perform the administrative duties of the Regional Chiefs. There will be fewer administrators and only one support staff and set of offices at the department headquarters, instead of ten support staffs and offices in addition to the headquarters staff and offices. Also, having one central office will create a more efficient organization, in view of instant modern electronic communications such as e-mail and fax.

3. Question: You mention in your testimony that SSA policymakers have the ability to subtly and indirectly incline the Appeals Council to more or fewer awards. Can you explain how SSA does this and why?

Answer: Your question is asking about an observation that was made by the two authors of a law review article that was an exhaustive review of the operation and use of the Appeals Council that was published in 1990, which was as follows: "SSA policymakers nevertheless are able to create an adjudicative climate that subtly and indirectly inclines the Appeals Council toward more or fewer awards, noting that the Appeals Council always reflects, to some extent, the interests and style of the OHA Associate Commissioner. Some have expressed the view that the Appeals Council is still perceived in some quarters as an even more partisan "arm of the [agency]." The Fourth Bite at the Apple: A Study of the Operation and Utility of the Social Security Administration’s Appeals Council, Charles H. Koch, Jr. & David A. Koplow, 17 Fla. St. U.L. Rev. 199, 236-240 (1990). As is stated in my testimony, there is no significant evidence of direct agency pressure by SSA upon the ALJs to grant or deny more claims. The article expressed a concern that SSA policymakers can use the Appeals Council to set a tone as to what is expected and desired in terms of the proportion of cases that are granted, even though no examples were given. However, there are examples of SSA directing the Appeals Council to do "own motion" review of only the favorable decisions of ALJs, which has the effect of indirectly pressuring ALJs to issue fewer favorable decisions. The Appeals Council’s administrative appeals judges have had no choice in this matter, since they are not independent adjudicators, unlike the ALJs, whose independence is established by the Administrative Procedure Act.

The SSA’s Bellmon Review Program in the early 1980s was a process by which SSA had the Appeals Council do "own motion" review of 25% to 100% of only the favorable decisions issued only by ALJs who the SSA had targeted as having high allowance rates of 70% or more. The details of how the Bellmon Review was conducted and its impact on the ALJs’ decisional independence are set forth in Association of Administrative Law Judges v. Heckler, 594 F.Supp. 1132, 1134-1136 (D.D.C 1984) and Specialized Court, 15 Fla. St. U.L. Rev. at 12-15.

A federal district court found that SSA’s Bellmon Review Program in the 1980s had the Appeals Council do "own motion" review of 25% to 100% of only the favorable decisions issued only by ALJs who the SSA targeted as having high allowance rates. The court also found that the Bellmon Review, together with SSA’s practices of non-acquiescence, having ALJs who have a high allowance rate attend peer counseling, and threatening MSPB disciplinary actions was an "unremitting focus on allowance rates in the individual ALJ portion of the Bellmon Review Program [that] created an untenable atmosphere of tension and unfairness which violated the spirit of the APA, if no specific provision thereof," Heckler, 594 F.Supp. at 1139, 1143.

In 1983, the Subcommittee on Oversight of Government Management of the Senate Committee on Governmental Affairs held hearings on the ALJs’ role in the Title II disability insurance program and issued a report that stated its findings:

The principal findings of the Subcommittee is that the SSA is pressuring its ALJs to reduce the rate at which they allow disabled persons to participate in the Social Security Disability Program….[The Subcommittee found that the SSA was limiting the decisional independence of ALJs through its Rulings, its non-acquiescence to federal court decisions, and its increasing of case quotas that reduced the time an ALJ could spend on each case to develop additional evidence that may support an allowance decision, among other things.] The APA mandates that the ALJ be an independent, impartial adjudicator in the administrative process and in so doing separates the adjudicative and prosecutorial functions of an agency. The ALJ is the only impartial, independent adjudicator available to the claimant in the administrative process, and the only person who stand between the claimant and the whim of agency bias and policy. If the ALJ is subordinated to the role of a mere employee, an instrument and mouthpiece for the SSA, then we will have returned to the days when the agency was both prosecutor and judge.

Sen. Rep. No. 98-111 (September 16, 1983).

In 1997, the SSA General Counsel publicly rationalized SSA’s making an end run around the APA to justify the SSA’s current Quality Assurance Review program practice of having the Appeals Council do "own motion" review of only favorable decisions by all of the ALJs and remand them for new proceedings, if they are found to be not supported by substantial evidence in the record or defective in any respect. This practice subjects the ALJs’ favorable decisions to more scrutiny than unfavorable decisions, which works to the detriment of the claimants and undercuts the perception of fairness and impartiality of agency adjudication of administrative claims that the APA is intended to foster. The newly independent SSA has decided it is legally permissible to again do "own motion" review only of favorable decisions, just as long as only ALJs with high allowance rates are not the only ones whose cases are reviewed. This clearly shows that the independent SSA still believes that targeting only favorable decisions is permissible and now subjects all of its ALJs to such review. SSA’s current Quality Assurance Review Program inherently is unfair and discourages the granting of benefits by ALJs.

SSA’s use of the Appeal Council in this fashion is an intrusion of its policy-implementation function into the adjudication process. The intrusion of the policy-making and policy-implementation functions of the SSA into the adjudication process is the primary reason why the adjudication process must be independent of SSA.

4. Question: In their testimony, the Advisory Board cited variability in disability determinations across states and lack of consistency in decisionmaking. Can you tell us how having OHA as a separate agency decreases variability in disability determinations and help promote consistency in decisionmaking across all states at the hearing level of appeals?

Answer: Please the answer to question 2(d).

5. Question: Please provide your views as to the recommendations of the Advisory Board relative to the Office of Hearings and Appeals and the appeals process.

Answer: Need for fundamental change. The SSAB makes a very strong case in favor of making fundamental changes at the SSA OHA, the concept of which was carried over into the title of its most recent report on the topic, but it does not present any specific recommendations or options for structural reform of the ALJ hearing process or Appeals Council process to engender a higher quality or faster handling of the caseload. "Charting the Future of Social Security’s Disability Programs: The Need for Fundamental Change" (January 2001) (the "SSAB Report"). The SSAB Report, which was submitted to your Subcommittee, makes the point that many support making the individual ALJ decision the final decision of the SSA, which would eliminate the Appeals Council bottle neck. However, the SSAB Report also correctly points out the impracticality of taking this step, since the SSA has shown by testing that this would result in a large increase of court appeals.

SSAB recommendation to improve SSA-ALJ relations. AALJ would welcome the improvement of the relationship between SSA’s management and its administrative law judges.

SSAB recommendation to have adversarial SSA proceedings and close the record after the ALJ hearing. The SSAB’s recommendations that the SSA be required to have representation at the hearings and that the record be fully closed after the hearing before the administrative law judge are procedural choices that the new USOHA should be permitted to make in its discretion. AALJ has proposed that the USOHA have the exclusive power to prescribe such rules of practice and procedure and other regulations as it deems necessary or appropriate to carry out the adjudicatory functions of the Office of Hearings and Appeals. The Administrative Procedure Act provides that "[a] party is entitled to appear in person or by or with counsel or other duly qualified representative in an agency proceeding." 5 U.S.C. § 555(b). Therefore, the SSA, as a party, will have a right to appear on its own behalf at the proceedings before the Office of Hearings and Appeals, if it wishes to do so, and also may choose to waive its right to appear. The USOHA’s decisions are for the parties, rather than just on behalf of the SSA or the USOHA. The purposes of separation of the appellate administrative adjudication process from SSA is to provide more timely and higher quality adjudications for the claimants, not to make the process more complex and difficult for the claimants to negotiate.

SSAB recommendation to close the record after the ALJ hearing. SSA regulations currently do not close or limit the record at any point in the administrative adjudication process. Even at the final step of administrative review, the Appeals Council engages in plenary review unless it says to the contrary. Sims v. Apfel, 530 U.S. 103, 120 S. Ct. 2080, 2085-2086, 147 L. Ed. 2d 80 (2000), citing, 20 C.F.R. § 404.975. The SSA regulations also state that "[w]e will consider at each step of the review process any information that you present as well as all the information in our records." 20 C.F.R. § 404.900(b). "The regulations further make clear that the [Appeals] Council will ‘evaluate the entire record,’ including ‘new and material evidence," in determining whether to grant review." Sims, 120 S. Ct. at 2086, quoting, 20 C.F.R. § 404.970(b). The reason the SSA keeps the record open is explained by the provision in the "judicial review" section of the Social Security Act, which authorizes the remand of a case when a claimant shows that there is material new evidence and there is good cause for not including it in the record earlier. 42 U.S.C. § 405(g).

However, not limiting the documentary record at all results in a significant number of additional remands of cases by the Appeals Council to the ALJs for a supplemental hearing based upon new evidence submitted to it that would not occur if the record were closed at the ALJ hearing level. Not closing the record also permits some abuse by a few representatives who hold back evidence until the Appeals Council level. However, the claimants’ advocacy groups oppose closing the record because doing so would foreclose the claimants’ ability to continue to provide evidence of new or worsening impairments as their cases progress. Also, while closing the record at the ALJ level would reduce the number of Appeals Council remands and abuse of the process, there may well be an increase in new applications being filed because of new or worsening impairments that occurred after the record was closed and thus cannot be considered in the pending case.

One effective way to address the competing interests in what the record should include is to keep the record open without limit for new and material medical evidence that is regarding medical treatment that occurred on or after the State agency (DDS) determination that is being appealed or is newly discovered evidence. New and material documentary evidence of treatment that occurred before the appealed State agency determination was issued should not be admitted unless good cause is shown for why it was not submitted during an earlier proceeding. This standard is in keeping with that set forth in the "judicial review" section of the Social Security Act for the courts, which is described above. 42 U.S.C. § 405(g).

Using the same "good cause" standard at all levels will prevent the confusion by the claimants and their representatives that would occur if different standard were used at different levels. Admitting all new and material medical evidence that arose since the date of the appealed State agency determination is appropriate at the ALJ level because the ALJ hearing is a de novo proceeding. (Admitting such new and material medical evidence at the appellate panel/Commission level will prevent excessive appeals to the district courts just to get remands to consider the new evidence pursuant to 42 U.S.C. § 405(g).) Always allowing evidence of new treatment since the last determination or decision into the record creates a climate of fairness for the claimants. Allowing evidence of new treatment also eliminates the need for claimants to file new claims in order to get their new evidence reviewed that a closing of the record at the ALJ level would require. Setting a "good cause" standard for admitting older evidence is likely to discourage representatives from holding back existing evidence. Finally, a "good cause" standard will encourage the State agencies to gather all of the documentary evidence to make the record complete as possible. A more complete record at the State agency level will result in more accurate State agency determinations of disability.

The proposal for closing the record pertains only to documentary evidence. Testimony regarding all relevant periods may be taken at the hearing without limit.

SSAB recommendation of a Review Board as an Appeals Council substitute: Although the SSAB Report also correctly states that the Appeals Council model needs to be changed, its suggestion that another small body be substituted for the Appeals Council, namely a Review Board, which will have the same quality and timeliness issues as the Appeals Council, will not be an improvement. No small body of less than 30 people, such as the Appeals Council or a Board or Commission, effectively can handle the caseload, which now is over 115,000 cases per year.

The use of panels of ALJs as the final administrative step, instead of the Appeals Council, likely will have the same impact as the use of Bankruptcy Judge panels in lieu of District Court review: faster and higher quality decisions that are appealed less often and, when they are appealed, affirmed more often. The relatively high number of SSA ALJs, now about 1,000, provides a large pool of locally available adjudicators who are available for such work.

The AALJ proposal for a new adjudication agency is a detailed and practical blueprint to improve the Social Security disability process. The AALJ proposal would improve the timeliness and quality of ALJ and final administrative review decisions which, at the same time, likely will reduce the claimant’s need to resort to federal court review and thus reduce the federal court Social Security caseload. The process AALJ is proposing is realistic in terms of handling the large caseload, which I respectfully submit is not the case for the Board suggested by the SSAB. SSAB correctly recognizes the need for change, but relies on the creation of a small body, a Board, that would suffer from the same problems of low decision quality and untimely action as the SSA Appeals Council, another small body, has had for years.

SSAB recommendation of an Article I court as a District Court substitute: Regarding judicial review at the District Court level, the SSAB did not make a convincing case in its SSAB Report for its suggestion that there is a need to replace the District Court with an Article I court. The pressing issue is to improve the final administrative adjudication process so that fewer claimants feel a need to resort to judicial review. This will result in fewer appeals to the courts. The final decisions of the USOHA that are made by its appellate panels would be appealed only to the federal courts, with the District Courts as the first step in the judicial review. A District Court appeal step is essential for several reasons: (1) The huge size of the Social Security appellate caseload would overwhelm the Circuit Courts if the District Court step is removed. An Article I court as a substitute for the District Courts would suffer from the same problems of being too small to effectively handle the case load that the Appeals Council does. (2) Retaining District Court judicial review keeps local decisional generalists in the appeals chain who are sensitive to due process concerns, including adherence to the Administrative Procedure Act. (3) Social Security claimants have come to rely on the availability of the District Courts as a part of the judicial review due process. (4) Congress has a demonstrated preference for local control and decisionmaking with Social Security programs. (5) It is desirable to retain local access to the judicial review process for the often indigent Social Security claimants.

Also, as is stated above, there are several practical reasons to maintain the District Court appeal step for the claimants. These include the massive Social Security appellate caseload, which would overwhelm an Article I court of the small size typically created by Congress and result in the same quality and timeliness issues that have plagued the Appeals Council, another small body with an unmanageable caseload.

As of September 30, 1999, and September 30, 2000, the numbers of Social Security cases filed in the District Courts throughout the country during the preceding year were 13,320 and 15,829, respectively. Title II and Title XVI claims made up 99% of the cases in both 1999 and 2000. As of September 30, 1999, and September 30, 2000, the numbers of all civil cases filed in the District Courts throughout the country during the preceding year were 260,271 and 259,517, respectively. Judicial Business of the United States Courts: 1999 and 2000 Annual Reports of the Director, Tables S-7, S-9. Article I courts are small courts. The U.S. Court of Federal Claims has 16 judges, the U.S. Tax Court has 19 judges, and the U.S. Court of Appeals for Veterans Claims has 7 judges. As of October 1, 1999, there were 600 active and 334 senior District Court Judges, for a total of 934 Judges. As of February 1, 2001, there were 599 active and 342 senior District Court Judges, for a total of 941 Judges. Administrative Offices of the U.S. Courts, Statistical Report for Justices and Judges of the United States, October 1, 1999, and February 1, 2001. These numbers suggest that an Article I Social Security Court would require at least 50 to 75 judges to handle the caseload in a timely and high quality manner.

SSAB recommendation of a specialized Social Security Court of Appeals as a regional Circuit Courts of Appeal substitute: Under the AALJ proposal, the appeals from the District Courts will remain with the regional Circuit Courts of Appeal, as they do now, rather than go only to the D.C. Circuit or the Federal Circuit. Even with District Court review, placing all of the Social Security Circuit-level appeals in either of these courts would increase their workload by over 50%. The SSAB’s suggestion of a specialized Social Security Court of Appeals in its SSAB Report superficially may sound attractive as a device to have one national interpretation of the Social Security Act. However, the SSAB does not demonstrate a strong need for such a specialized court. First, as SSAB points out, the Supreme Court already serves the function of providing a national interpretation of the Social Security Act, and having the regional circuits address the issues allows for legal debate that would otherwise not occur. Second, continuing to have the appeals go to the regional Circuits allows somewhat local access to the claimants. This is the same procedure as for appeals from both Bankruptcy Court decisions after District Court review and Tax Court decisions, which are appealed to the regional Circuits, which makes sense since they also serve individual claimants throughout the country who often have limited means. (Although the Tax Court is based in Washington, D.C., it sits throughout the country.) Regional circuit review has worked for tax and bankruptcy cases, despite the obviously strong argument that a single standard for construing the tax and bankruptcy laws is desirable so that they are applied the same to everyone. Finally, the regional circuits are not being overrun with Social Security cases. During the years that ended on September 30, 1999, and September 30, 2000, only 891 and 845 Social Security cases respectively were filed with the regional Circuit Courts of Appeals. Judicial Business, 1999 and 2000 Reports, Table B-1A. This is less than two percent of the 54,693 cases that were filed in 1999 and 54,697 cases filed in 2000 in the regional Circuit Courts. Judicial Business, 1999and 2000 Reports, Table B.

No substantive changes in the process of judicial review after the final administrative decision are recommended by AALJ, other than to amend the Social Security Act to reflect that judicial review will be from the final decisions of the new agency, not the SSA. Our recommendations pertain only to the appellate administrative adjudication process that results in a final administrative decision of the claimants’ entitlement to Social Security benefits, since that is where the problems lie.

6. Question: How would an independent OHA agency be more successful at handling the huge appellate administrative caseload? How would OHA revise its processes to reduce the time spent waiting for an appeal decision?

Answer: The USOHA will have a two tier appellate process: a decision after a hearing by an ALJ and then an appeal to a local panel of three ALJs akin to the Bankruptcy Court Appellate Panel model. The Appellate Panels will be required to give deference to the individual ALJs’ decisions, if they are supported by substantial evidence in the record. Deference will end the Appeals Council’s current practice of just substituting its opinion for that of the individual ALJs, which has been criticized by the SSAB.

The two tier appellate process is modeled in principal on the Bankruptcy Court Appellate Panel statute, 28 U.S.C. § 158. Individual ALJs’ decisions would be appealed to appellate panels staffed by ALJs, each of which would consist of three ALJs who would review the cases locally. The appellate panel step would be the final and exclusive level of administrative appellate review. The USOHA would establish a Social Security Appellate Panel Service in each region composed only of ALJs from the hearing offices in each region. A sufficient number of appellate panels would be designated so that appeals may be heard and disposed of expeditiously. An ALJ may not hear an appeal of a case from his/her own hearing office. This also would be a good assignment for senior judges.

The appellate panels would be akin to the Bankruptcy Court appellate panels and is one of the key features that makes the ALJ self-administration model superior to the current SSA Appeals Council model or a Commission or Board model, all of which are small bodies that cannot timely and effectively handle a heavy caseload. The Bankruptcy Court system is another nationwide network of tribunals that hears a high volume of cases in a specialized area that is generated mostly from individual petitioners. There are 92 Bankruptcy Courts situated in proximity to the District Courts. 28 U.S.C. § 152. There are 140 Social Security hearing offices. Over 1,300,000 cases were filed in Bankruptcy Court in 1999. Judicial Business of the United States Courts: 1999 Annual Report of the Director, Table F. Over 500,000 cases are brought before Social Security ALJs every year. Accordingly, Social Security claimants can benefit from the use of an appellate system that demonstrably works on a large scale.

The Bankruptcy Court Appellate panels have a short average disposition time, which was only 75 days in the Ninth Circuit in 1994. The Establishment of Bankruptcy Panels Under the Bankruptcy Reform Act of 1994: Historical Background and Sixth Circuit Analysis, Tisha Morris, 26 U. Memphis L. Rev. 1501, 1530 (1996). The large pool of over 1,000 ALJs permits the timely determination of appeals, which has not occurred with the Appeals Council, despite the SSA’s implementation of the recent Appeals Council Process Improvement plan. Timely and high quality review also cannot occur with a Board or Commission, which likely will not have more than 12 members and would have to resort to hiring Appeals Council-type reviewers to handle the caseload.

In addition to being an appellate system that timely can handle a large caseload, the appellate panel system has several other benefits that would afford high quality service to the Social Security claimants and likely reduce the requests for judicial review. Based upon the Bankruptcy Court experience, the appellate panel model (1) is an appellate system that can handle a large caseload, (2) results in a shorter disposition time because the large pool of about 1,000 ALJs throughout the United States permits the timely determination of appeals that cannot take place with a small body such as the Appeals Council or a Commission or Board, (3) results in higher quality decisions because of expertise, (4) results in substantially fewer appeals to the courts and a substantially lower reversal rate by the courts because of the confidence in the high quality of the decisions, which reflects a higher degree of decision accuracy, (5) results in a substantially reduced federal court caseload, and (6) affords the claimants access to a local administrative appellate process.

As is stated in answer 2(d), the USOHA will be run as nationally, rather than regionally, administered operation to provide centralized and efficient adjudication service for the national Social Security programs.

7. Question: We would be interested in any comments you would like to make on testimony provided by other witnesses at the hearing.

Answer: The testimony of the Honorable Stanford Ross, the Chairman of the SSAB, and the witnesses for the six SSA and DDS employee organizations were consistent in their statements that SSA’s recent reorganization of the hearing level of OHA operations, which is called the Hearing Process Improvement plan, has failed and resulted in an increasing backlog of cases waiting for a hearing, longer processing times for claimants to receive a hearing and decision of their cases, and lower quality decisions. Also Mr. Ross stated that "the entire role of the Appeals Council should be carefully considered in terms of how well it is performing its functions.’ All of the witnesses who commented on the OHA process agreed that fundamental change in the administration and structure of OHA is needed at the hearing and/or Appeals Council levels to achieve timely and high quality adjudications for the members of the American public who apply for Social Security benefits.

I gladly will provide any additional information that you wish.

Sincerely,

Ronald G. Bernoski
President

[Submissions for the record follows:]

American Federation of State, County and Municipal Employees, AFL-CIO, statement

Association of Attorney Advisors, Greenville, SC, Elizabeth B. Dameron, statement

Cannistraro, Al, Clifton Park, NY, statement

Hitchcock, James R., Knoxville, TN, letter

Independent Life Center, Inc., Craig, CO, Evelyn Tileston, letter and attachment

National Law Center on Homelessness & Poverty, Jeremy Rosen, statement