Statement of the Honorable Jo Anne B. Barnhart
Commissioner of Social Security
Social SecuritTestimony before the House Committee on Ways and Meansy Subcommittee
Hearing on the Social Security Administration's Management of the
Office of Hearings and Appeals

September 25, 2003

Mr. Chairman and Members of the Subcommittee:

I want to thank you and the entire Subcommittee for your continuing support for the people and programs of the Social Security Administration, and most especially for your interest in and commitment to improving the disability process. I also want to thank you for holding this hearing which provides the opportunity for me to describe my approach for improving the Social Security and Supplemental Security Income disability process. As I told you and the other members of the committee when I first appeared before you, I did not assume the position of Commissioner of Social Security to manage the status quo.

As a member of the Social Security Advisory Board, I was well aware that the administration of our disability programs represented one of the biggest challenges facing SSA. These essential and complex programs are critically important in the lives of almost 13 million Americans. Claimants and their families expect and deserve fair, accurate, consistent, and timely decisions.

Early in my tenure I began a comprehensive Service Delivery Assessment to thoroughly examine all of SSA's workloads. We began that assessment with the disability claims process and mapped out each step from the initial claim through a final administrative appeal. Our analysis of the process showed that the length of time required to move through the entire appeals process was 1153 days -- 525 days due to backlogged cases and 628 days to move through the process.

Based on that analysis, I developed a Service Delivery Plan which formed the basis of our FY 2004 budget submission. The President responded to that plan by recommending an 8.5% increase in the administrative budget for SSA workloads. Passage of the President's budget will put us on a path to eliminating by 2008 backlogs in all workloads -- including disability.

While eliminating backlogs is essential to improving processing times, we recognized that improving workload management and the process itself were also required to achieve our goal of providing timely and accurate service. To tackle the management and process issues, we developed both a short-term and long-term strategy.

The short-term strategy is focused on identifying areas where immediate action was possible, while the long-term strategy would focus on improving the overall disability determination process. Over the past year and a half, we have implemented a number of short-term initiatives. These include:

• including Administrative Law Judges (ALJs) in early screening for on-the-record decisions;
• developing a short form for fully favorable decisions;
• creating a law clerk (attorney intern) position;
• deploying speech recognition technology to hearing offices;
• ending the practice of rotating hearing office technicians among different positions;
• using scanning technology to track and retrieve folders;
• eliminating the tape transcription backlog, and
• eliminating delays in presenting cases to the U.S. District Courts.

We are in the process of implementing two other initiatives:

• allowing ALJs to issue decisions from the bench immediately after a hearing; and
• expanding video teleconference hearings.

And we are preparing to implement an initiative to digitally record hearings.

I am pleased to report that we have achieved some positive results.

• In FY 2001, it took an average of 447 days to get a decision on a hearing appeal. As of July 2003, that time had dropped to 259 days.
• In FY 2002, our hearings offices cleared over 530,000 hearings - almost 10 percent above their goal. This year we are on track to process 20,000 more hearings than last year.
• At the end of FY 2002, there were 593,000 initial disability claims pending. As of July 2003, there were approximately 15,000 fewer pendings despite a significant increase in the number of claims filed. In addition, we have already processed in excess of a hundred thousand more initial disability claims compared to this time last year.

We are proud of our progress, but we know we have a long way to go to provide the kind of service the American people expect.

A prerequisite for our long-term strategy is development and implementation of an electronic disability claims system. The Accelerated Electronic Disability System (AeDIB) is a major Agency initiative that will move all components involved in disability claims adjudication and review to an electronic business process through the use of an electronic disability folder. These components include the field office, regional office, the program service center, the State Disability Determination Service (DDS), the hearings and appeals office, and the quality assurance staff. When the process is fully implemented, each component will be able to work claims by electronically accessing and retrieving information that is collected, produced and stored as part of the electronic disability folder. This will reduce delays that result from mailing, locating, and organizing paper folders.

SSA field offices are currently collecting disability information for initial adult and child cases using the Electronic Disability Collect System (EDCS). Also, claimants can now use the Internet to submit disability information which is then propagated into EDCS. We will begin national roll-out of AeDIB in January 2004 starting in the Atlanta region. Additional DDS offices and States will come up on a flow basis during the 18-month roll-out.

Implementation of an electronic disability folder is essential for process improvements. Therefore, structurally, my long-term strategy for achieving process improvements is predicated on successful implementation of our electronic disability system.

In designing my approach to improve the overall disability determination process, I was guided by three questions the President posed during our first meeting to discuss the disability programs.

• Why does it take so long to make a disability decision?
• Why can't people who are obviously disabled get a decision immediately?
• Why would anyone want to go back to work after going through such a long process to receive benefits?

I realized that designing an approach to fully address the central and important issues raised by the President required a focus on two over-arching operational goals: (1) to make the right decision as early in the process as possible; and (2) to foster return to work at all stages of the process. I also decided to focus on improvements that could be effectuated by regulation and to ensure that no SSA employee would be adversely affected by my approach. My reference to SSA employees includes State Disability Determination Service employees and Administrative Law Judges (ALJs).

As I developed my approach for improvement, I met with and talked to many people -- SSA employees and other interested organizations, individually and in small and large groups -- to listen to their concerns about the current process at both the initial and appeals levels and their recommendations for improvement. I became convinced that improvements must be looked at from a system-wide perspective and, to be successful, perspectives from all parts of the system must be considered. I believe an open and collaborative process is critically important to the development of disability process improvements. To that end, members of my staff and I visited our regional offices, field offices, hearing offices, and State Disability Determination Services, and private disability insurers to identify and discuss possible improvements to the current process.

Finally, a number of organizations provided written recommendations for changing the disability process. Most recently, the Social Security Advisory Board issued a report prepared by outside experts making recommendations for process change. My approach for changing the disability process was developed after a careful review of these discussions and written recommendations. As we move ahead, I look forward to working within the Administration and with Congress, as well as interested organizations and advocacy groups. I would now like to highlight some of the major and recurring recommendations made by these various parties.

The need for additional resources to eliminate the backlog and reduce the lengthy processing time was a common theme. This important issue is being addressed through my Service Delivery Plan, starting with the President's FY 2004 budget submission which is currently before Congress. Another important and often heard concern was the necessity of improving the quality of the administrative record. DDSs expressed concerns about receiving incomplete applications from the field office; ALJs expressed concerns about the quality of the adjudicated record they receive and emphasized the extensive pre-hearing work required to thoroughly and adequately present the case for their consideration. In addition, the number of remands by the Appeals Council and the Federal Courts make clear the need for fully documenting the administrative hearing record.

Applying policy consistently in terms of: 1) the DDS decision and ALJ decision; 2) variations among state DDSs; and 3) variations among individual ALJs -- was of great concern. Concerns related to the effectiveness of the existing regional quality control reviews and ALJ peer review were also expressed. Staff from the Judicial Conference expressed strong concern that the process assure quality prior to the appeal of cases to the Federal Courts.

ALJs and claimant advocacy and claimant representative organizations strongly recommended retaining the de novo hearing before an ALJ. Department of Justice litigators and the Judicial Conference stressed the importance of timely case retrieval, transcription, and transmission. Early screening and analysis of cases to make expedited decisions for clear cases of disability was emphasized time and again as was the need to remove barriers to returning to work.

My approach for disability process improvement is designed to address these concerns. It incorporates some of the significant features of the current disability process. For example, initial claims for disability will continue to be handled by SSA's field offices. The State Disability Determination Services will continue to adjudicate claims for benefits, and Administrative Law Judges will continue to conduct hearings and issue decisions. My approach envisions some significant differences.

I intend to propose a quick decision step at the very earliest stages of the claims process for people who are obviously disabled. Cases will be sorted based on disabling conditions for early identification and expedited action.

Examples of such claimants would be those with ALS, aggressive cancers, and end-stage renal disease. Once a disability claim has been completed at an SSA field office, these Quick Decision claims would be adjudicated in Regional Expert Review Units across the country, without going to a State Disability Determination Service. This approach would have the two-fold benefit of allowing the claimant to receive a decision as soon as possible, and allowing the State DDSs to devote resources to more complex claims.

Centralized medical expertise within the Regional Expert Review Units would be available to disability decision makers at all levels, including the DDSs and the Office of Hearings and Appeals (OHA). These units would be organized around clinical specialties such as musculoskeletal, neurological, cardiac, and psychiatric. Most of these units would be established in SSA's regional offices.

The initial claims not adjudicated through the Quick Decision process would be decided by the DDSs. However, I would also propose some changes in the initial claims process that would require changes in the way DDSs are operating. An in-line quality review process managed by the DDSs and a centralized quality control unit would replace the current SSA quality control system. I believe a shift to in-line quality review would provide greater opportunities for identifying problem areas and implementing corrective actions and related training. The Disability Prototype would be terminated and the DDS Reconsideration step would be eliminated. Medical expertise would be provided to the DDSs by the Regional Expert Review units that I described earlier.

State DDS examiners would be required to fully document and explain the basis for their determination. More complete documentation should result in more accurate initial decisions. The increased time required to accomplish this would be supported by redirecting DDS resources freed up by the Quick Decision cases being handled by the expert units, the elimination of the Reconsideration step, and the shift in medical expertise responsibilities to the regional units.

A Reviewing Official (RO) position would be created to evaluate claims at the next stage of the process. If a claimant files a request for review of the DDS determination, the claim would be reviewed by an SSA Reviewing Official. The RO, who would be an attorney, would be authorized to issue an allowance decision or to concur in the DDS denial of the claim. If the claim is not allowed by the RO, the RO will prepare either a Recommended Disallowance or a Pre-Hearing Report. A Recommended Disallowance would be prepared if the RO believes that the evidence in the record shows that the claimant is ineligible for benefits. It would set forth in detail the reasons the claim should be denied. A Pre-Hearing Report would be prepared if the RO believes that the evidence in the record is insufficient to show that the claimant is eligible for benefits but also fails to show that the claimant is ineligible for benefits. The report would outline the evidence needed to fully support the claim. Disparity in decisions at the DDS level has been a long-standing issue and the SSA Reviewing Official and creation of Regional Expert Medical Units would promote consistency of decisions at an earlier stage in the process.

If requested by a claimant whose claim has been denied by an RO, an ALJ would conduct a de novo administrative hearing. The record would be closed following the ALJ hearing. If, following the conclusion of the hearing, the ALJ determines that a claim accompanied by a Recommended Disallowance should be allowed, the ALJ would describe in detail in the written opinion the basis for rejecting the RO's Recommended Disallowance. If, following the conclusion of the hearing, the ALJ determines that a claim accompanied by a Pre-Hearing Report should be allowed, the ALJ would describe the evidence gathered during the hearing that responds to the description of the evidence needed to successfully support the claim contained in the Pre-Hearing Report.

Because of the consistent finding that the Appeals Council review adds processing time and generally supports the ALJ decision, the Appeals Council stage of the current process would be eliminated. Quality control for disability claims would be centralized with end-of-line reviews and ALJ oversight. If an ALJ decision is not reviewed by the centralized quality control staff, the decision of the ALJ will become a final agency action. If the centralized quality control review disagrees with an allowance or disallowance determination made by an ALJ, the claim would be referred to an Oversight Panel for determination of the claim. The Oversight Panel would consist of two Administrative Law Judges and one Administrative Appeals Judge. If the Oversight Panel affirms the ALJ's decision, it becomes the final agency action. If the Panel reverses the ALJ's decision, the oversight Panel decision becomes the final agency action. As is currently the case, claimants would be able to appeal any final agency action to a Federal Court.

At the same time these changes are being implemented to improve the process, we plan to conduct several demonstration projects aimed at helping people with disabilities return to work. These projects would support the President's New Freedom Initiative and provide work incentives and opportunities earlier in the process.

Early Intervention demonstration projects will provide medical and cash benefits and employment supports to Disability Insurance (DI) applicants who have impairments reasonably presumed to be disabling and elect to pursue work rather than proceeding through the disability determination process. Temporary Allowance demonstration projects will provide immediate cash and medical benefits for a specified period (12-24 months) to applicants who are highly likely to benefit from aggressive medical care. Interim Medical Benefits demonstration projects will provide health insurance coverage to certain applicants throughout the disability determination process. Eligible applicants will be those without such insurance whose medical condition is likely to improve with medical treatment or where consistent, treating source evidence will be necessary to enable SSA to make a benefit eligibility determination. Ongoing Employment Supports to assist beneficiaries to obtain and sustain employment will be tested, including a Benefit Offset demonstration to test to effects of allowing DI beneficiaries to work without total loss of benefits by reducing their monthly benefit $1 for every $2 of earnings above a specified level and Ongoing Medical Benefits demonstration to test the effects of providing ongoing health insurance coverage to beneficiaries who wish to work but have no other affordable access to health insurance.

I believe these changes and demonstrations will address the major concerns I highlighted earlier. I also believe they offer a number of important improvements:

• People who are obviously disabled will receive quick decisions.
• Adjudicative accountability will be reinforced at every step in the process.
• Processing time will be reduced by at least 25%.
• Decisional consistency and accuracy will be increased.
• Barriers for those who can and want to work would be removed.

Describing my approach for improving the process is the first step of what I believe must be -- and will work to make -- a collaborative process. I will work within the Administration, with Congress, the State Disability Determination Services and interested organizations and advocacy groups before putting pen to paper to write regulations. As I said earlier, and I say again that to be successful, perspectives from all parts of the system must be considered.

Later today, I will conduct a briefing for Congressional staff of the Ways and Means and Senate Finance Committees. I will also brief SSA and DDS management. In addition, next week I will provide a video tape of the management briefing describing my approach for improvement to all SSA regional, field, and hearing offices, State Disability Determination Services, and headquarters and regional office employees involved in the disability program. Tomorrow, I will be conducting briefings for representatives of SSA employee unions and interested organizations and advocacy groups, and I will schedule meetings to provide an opportunity for those representatives to express their views and provide assistance in working through details, as the final package of process improvements is fully developed.

I believe that if we work together, we will create a disability system that responds to the challenge inherent in the President's questions. We will look beyond the status quo to the possibility of what can be. We will achieve our ultimate goal of providing accurate, timely service for the American people.

As to the issue with the file assembly contract in Chicago, it cannot be emphasized enough that no member of the public will be disadvantaged in any way as a result of this situation. All indications are that no medical evidence has been lost. But just to be certain, we are contacting every single person whose case has not already been favorably decided and providing an opportunity to review the file for completeness. We will also provide the opportunity to submit additional evidence, and to request a supplementary hearing.

The contractor behavior was unacceptable and we have terminated the contracts in question. We are also fully cooperating with the Office of the Inspector General (IG) in its investigation of this incident. Additionally, even though the contractors in question were not taking work home, future contractors will be forbidden to take work home in order to further protect the integrity of the claims folder.

Regarding the problems in the Milwaukee Hearing Office, while I was disturbed that the problems existed, I want to assure you that upon discovery of the problems, immediate steps were taken to address them. As you know, while press reports characterized the review of office performance as an audit, the review was actually carried out as a routine part of SSA's internal management oversight.

We uncovered the shortcomings in the office and we worked to address them expeditiously.

We sent in a team of 35 staff to correct the problems. Seven of them stayed for several weeks, monitoring our efforts to fix the problems. We also put in place controls to improve local office management and conducted many hours of employee training. We are also fully cooperating with the IG who has already confirmed that there was no criminal activity involved.

I have asked my Deputy Commissioner for Disability and Income Security Programs, Martin Gerry, to oversee that process personally. Recently, Mr. Gerry and other senior staff members visited the Milwaukee office. They will continue to make visits and do onsite checks of operations, as well as conducting another full review of the office early next year.

Again, I thank the Subcommittee for your continuing help and support. I look forward to working closely with you to improve the disability determination process, and I would be happy to answer any questions you may have.