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entitled 'SSA and VA Disability Programs: Re-Examination of Disability 
Criteria Needed to Help Ensure Program Integrity' which was released on 
August 09, 2002.



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Report to Agency Officials:



United States General Accounting Office:



GAO:



August 2002:



SSA and VA Disability Programs:



Re-Examination of Disability Criteria Needed to Help Ensure Program 

Integrity:



GAO-02-597:



Contents:



Letter:



Results in Brief:



Background:



SSA Provides Benefits to People Found to Be Work Disabled:



Disability Criteria Not Fully Updated to Reflect Scientific Advances:



Disability Criteria Not Updated to Reflect Labor Market Changes:



Incorporating Scientific Advances and Labor Market Changes into 

Disability Criteria Has Several Implications:



Conclusions:



Recommendations for Executive Action:



Agency Comments and Our Response:



Appendix I: Comments from the Social Security Administration:



Appendix II: Comments from the Department of Veterans Affairs:



GAO Comments:



Appendix III: Five-Step Sequential Evaluation Process for Determining 
DI 

and SSI Eligibility:



Appendix IV: GAO Contacts and Staff Acknowledgments:



GAO Contacts:



Staff Acknowledgments:



Tables:



Table 1: Progress of SSA’s Current Efforts to Update Medical Listings:



Table 2: Types of Changes Made (or Proposed) to SSA’s Medical Listings 

during Current Update:



Table 3: Types of Changes Made (or Proposed) to VA’s Schedule for 

Rating Disabilities during Current Update:



Figures:



Figure 1: DI, SSI, and VA Cash Payments to Adults with Disabilities, 

1991-2001:



Figure 2: Percentage Distribution of DI Disabled Workers by Impairment 

Categories, 2000:



Figure 3: Percentage Distribution of SSI Adult Disabled Recipients by 

Impairment Categories, 2000:



Figure 4: Percentage Distribution of Veterans Receiving Disability 

Compensation by Impairment Categories, 2000:



Figure 5: Time Frame of VA’s Efforts to Update the Schedule for Rating 

Disabilities:



Abbreviations:



DI: Disability Insurance:



DOT: Dictionary of Occupational Titles:



O*NET: Occupational Information Network:



SGAsubstantial gainful activity:



SSA: Social Security Administration:



SSI: Supplemental Security Income:



VA: Department of Veterans Affairs:



Letter:



United States General Accounting Office:



Washington, DC 20548:



August 9, 2002:



The Honorable Jo Anne B. Barnhart

Commissioner of Social Security Administration:



The Honorable Anthony J. Principi

Secretary of Veterans Affairs:



The three largest federal disability programs providing cash 

assistance, which are administered by the Social Security 

Administration (SSA) and the Department of Veterans Affairs (VA), in 

2001 collectively provided $89.7 billion in cash benefits to 

approximately 10.2 million adults with a physical or mental condition 

that reduced their earning capacity. With such an extensive cash outlay 

and such a large beneficiary population, it is important to use updated 

scientific, workforce, and economic information to evaluate claims for 

disability benefits. Over time, progress in the fields of medicine and 

technology has provided a better understanding of how disease and 

injury affect the ability to work. Likewise, changes in the labor 

market have affected the skills needed to perform work and the settings 

in which work occurs. Together, scientific advances and labor market 

changes redefine the extent that physical or mental conditions affect 

the ability of people with disabilities to work. If federal disability 

programs do not update scientific and labor market information used in 

assessing program eligibility, they risk overestimating the limiting 

nature of some disabilities while underestimating others. Moreover, not 

keeping abreast of this information puts federal programs at risk of 

undermining their efforts to help some persons with disabilities 

achieve economic independence or work to their full potential.



Although the three largest federal disability programs differ in their 

underlying purpose, they face a similar underlying challenge. SSA 

administers both the Disability Insurance (DI) program and the 

Supplemental Security Income (SSI) program. DI provides benefits to 

workers with severe long-term disabilities who have enough work history 

to be insured for coverage under the program. SSI provides benefits to 

disabled, blind, or aged individuals with low income and limited 

resources, regardless of their work histories.[Footnote 1] VA, 

meanwhile, compensates veterans for their physical or mental conditions 

that are service connected.[Footnote 2] Despite these differences in 

the populations they serve and basic rules of eligibility, these 

programs share the similar task of making complex and difficult 

decisions about individuals with impairments and their ability to work 

in today’s environment. Beneficiaries served by these programs also 

have links to rehabilitation services to help them prepare for, find, 

and maintain employment.



In the past, we and others have reported the DI, SSI, and VA programs 

as being out-of-step with medical and technological advances and 

changes in the workforce and the economy. In this report, we review the 

extent to which DI, SSI, and VA’s disability criteria have been updated 

based on 

(1) scientific advances, including medical and technological 

innovations; and (2) labor market changes, including the growth in 

service-and knowledge-based industries over manufacturing-based 

industries. We also discuss implications of incorporating these 

advances and changes into the programs. To address these issues and to 

consider their implications on the design of these federal disability 

programs, we reviewed agency documents, SSA’s advisory board reports, 

our prior reports, and other literature. In addition, we interviewed 

agency officials and several experts in the field. We conducted our 

work between June 2001 and July 2002 in accordance with generally 

accepted government auditing standards.



Results in Brief:



The DI, SSI, and VA disability criteria have not been fully updated to 

reflect medical and technological advances. About 12 years ago, both 

SSA and VA began reviewing relevant medical advances and updating the 

criteria they use to evaluate claims. However, both agencies are taking 

years to revise the medical criteria and, consequently, the lengthy 

time frames could undermine the very purpose of an update. Moreover, 

because of the limited role of treatment in the statutory and 

regulatory design of these programs, the updates have not fully 

captured the benefits afforded by advances in treatment. That is, 

agencies generally factor in the effects of treatment only when an 

applicant has received or, for SSA, has also been prescribed treatment. 

For example, the effects that medication to control severe mental 

illness may have on an applicant’s ability to work are not 

automatically factored into agencies’ disability decision making. As a 

result, people applying for benefits are not necessarily evaluated at 

their fullest potential for work in their corrected condition. 

Likewise, efforts to update programs’ criteria have not incorporated 

innovations in assistive technologies--such as advanced prosthetics and 

wheelchairs--because of similar program design issues.



Also, the disability criteria used by DI, SSI, and VA programs to 

determine who has a disability have not incorporated labor market 

changes. Programs continue to use outdated information about the types 

and demands of jobs in the economy in determining the impact that 

impairments have on individuals’ earning capacity. SSA uses an outdated 

database--last updated in 1991--for information on the types and 

demands of occupations in the national economy. The agency is working 

on identifying a replacement database but this undertaking could take 

years to complete. VA, meanwhile, has not updated its estimates of the 

effect that impairments have on earning capacity to reflect today’s 

labor market. Its last update was made in 1945. Moreover, without a 

current understanding of the impact of physical and mental conditions 

on earnings given labor market changes, VA and SSA may be 

overcompensating some individuals while denying or undercompensating 

other individuals because of outdated information on earning capacity.



In order to incorporate scientific advances and labor market changes 

into the DI, SSI, and VA programs, some steps can be taken within the 

existing program design and some would require more fundamental change. 

Within the context of the programs’ current statutory and regulatory 

framework, agencies will need to continue their medical updates and 

vigorously expand their efforts to more closely examine labor market 

changes. At a more fundamental level, SSA and VA could consider changes 

to the disability criteria that would revisit the programs’ basic 

orientation. As part of this effort, agencies would consider the 

implications of assessing individuals under corrected conditions for 

maximizing their employment in a knowledge-and service-based economy. 

Moreover, under this scenario, agencies could place a greater emphasis 

on assisting individuals find the appropriate employment assistance and 

obtain employment. Reorienting programs in this direction would align 

them with broader social changes that focus on building and supporting 

the work capacities of people with disabilities. To this end, 

approaches taken from private disability insurers and other countries 

offer useful insights. This shift, however, would raise a number of 

significant policy issues that have not yet been fully explored. For 

example, are there certain circumstances when programs would require a 

beneficiary to accept interventions to enhance work capacities as a 

precondition for benefits? Likewise, would the cost of providing 

treatment and assistive technologies in the disability programs be 

higher than cash expenditures paid over the long-term?



In light of the outmoded criteria, this report contains recommendations 

that agencies use their annual performance plans to help ensure they 

place greater priority on updating their disability criteria within the 

context of the programs’ current design. This report also recommends 

that SSA and VA study the broader implications of how scientific 

advances and labor market changes could affect the programs’ 

eligibility criteria and benefits package. Appendix I contains SSA’s 

comments on the draft of our report while VA’s comments on the draft 

are shown in appendix II.



Background:



The DI, SSI, and VA programs are three separate federal disability 

programs that differ in their underlying intent, populations they 

serve, and the specific approach used by SSA and VA to assess 

disability. Yet, each program provides financial assistance to 

individuals with a reduced capacity to work due to a physical or mental 

impairment. Program beneficiaries also have a connection to vocational 

assistance that can help program beneficiaries minimize the economic 

loss resulting from their disabilities.



Programs Have Grown in Recent Years:



All three programs have experienced growth in recent years. The amount 

of cash benefits paid to program beneficiaries has increased over the 

past 10 years (see fig. 1). In 2001, DI provided $54.2 billion in cash 

benefits to 5.3 million disabled workers, SSI provided $19.0 billion in 

federal cash benefits to 3.7 million disabled and blind individuals age 

18-64, and VA provided $16.5 billion in disability compensation 

benefits to about 2.3 million veterans.[Footnote 3] Since 1991, the 

cash benefits for these programs increased by 69 percent, 55 percent, 

and 32 percent, respectively (adjusted for inflation). In addition, 

since 1991 the number of DI, SSI, and VA beneficiaries grew by 65 

percent, 53 percent, and 6 percent, respectively.



Figure 1: DI, SSI, and VA Cash Payments to Adults with Disabilities, 

1991-2001:



[See PDF for image]



Source: GAO analysis of SSA and VA data.



[End of figure]



The size of the programs could grow in the years ahead. In fact, DI and 

SSI are expected to grow significantly over the next decade. By 2010, 

SSA expects worker applications for DI to increase by as much as 32 

percent over 2000 levels. In 2000, VA predicted that while the number 

of veterans receiving disability benefits will decrease approximately 

18 percent over the next 10 years, the caseload will decline annually 

by less than 1 percent during this time period. VA explained that 

veterans will likely incur more disabilities than the past because, for 

example, veterans of the all-volunteer force are older at time of 

discharge with longer periods of service, and also because better 

outreach and access makes veterans more aware of benefits to which they 

are entitled. Moreover, VA’s estimate of the number of veterans assumed 

the United States would not be engaged in any major global or regional 

conflict. The recent war on terrorism, however, could affect VA’s 

future projections on the size of the disabled veterans population.



SSA Provides Benefits to People Found to Be Work Disabled:



SSA provides disability benefits to people found to be work disabled 

under the DI or SSI program. Established in 1956, DI is an insurance 

program that provides benefits to workers who are unable to work 

because of severe long-term disability. In 2000, the most common 

impairments among DI’s disabled workers were mental disorders and 

musculoskeletal conditions (see fig. 2). These two conditions also were 

the fastest growing conditions since 1986, increasing by 7 and 5 

percentage points, respectively.



Figure 2: Percentage Distribution of DI Disabled Workers by Impairment 

Categories, 2000:



[See PDF for image]



Source: Annual Statistical Supplement to the Social Security Bulletin, 

2001.



[End of figure]



Workers who have worked long enough and recently enough are insured for 

coverage under the DI program. DI beneficiaries receive cash assistance 

and, after a 24-month waiting period, Medicare coverage. Once found 

eligible for benefits, disabled workers continue to receive benefits 

until they die, return to work and earn more than allowed by program 

rules, are found to have medically improved to the point of having the 

ability to work, or reach full retirement age (when disability benefits 

convert to retirement benefits). To help ensure that only eligible 

beneficiaries remain on the rolls, SSA is required by law to conduct 

continuing disability reviews for all DI beneficiaries to determine 

whether they continue to meet the disability requirements of the law.



SSI, created in 1972, is an income assistance program that provides 

cash benefits for disabled, blind, or aged individuals who have low 

income and limited resources. In 2000, the most common impairments 

among the group of SSI blind and disabled adults age 18-64 were mental 

disorders and mental retardation (see fig. 3). Mental disorders was the 

fastest growing condition among this population since 1986, increasing 

by

9 percentage points.



Figure 3: Percentage Distribution of SSI Adult Disabled Recipients by 

Impairment Categories, 2000:



[See PDF for image]



Source: Annual Statistical Supplement to the Social Security Bulletin, 

2001.



[End of figure]



Unlike the DI program, SSI has no prior work requirement. In most 

cases, SSI eligibility makes recipients eligible for Medicaid benefits. 

SSI benefits terminate for the same reasons as DI benefits, although 

SSI benefits also terminate when a recipient no longer meets SSI income 

and resource requirements (SSI benefits do not convert to retirement 

benefits when the individual reaches full retirement age). The law 

requires that continuing disability reviews be conducted for some SSI 

recipients for continuing eligibility.



The Social Security Act’s definition of disability under DI and SSI is 

the same: an individual must have a medically determinable physical or 

mental impairment that (1) has lasted or is expected to last at least 1 

year or to result in death and (2) prevents the individual from 

engaging in substantial gainful activity (SGA).[Footnote 4] Moreover, 

the definition specifies that for a person to be determined to be 

disabled, the impairment must be of such severity that the person not 

only is unable to do his or her previous work but, considering his or 

her age, education, and work experience, is unable to do any other kind 

of substantial work that exists in the national economy. (See app. III 

for a more complete description of SSA’s five-step process to determine 

DI and SSI eligibility.):



While not expressly required by law to update the criteria used in the 

disability determination process, SSA has stated that it would update 

them to reflect current medical criteria and terminology. Over the 

years, SSA has periodically ensured that the medical information and 

the structure of its Listing of Impairments--which describe impairments 

that are presumed by the agency to be severe enough to prevent a person 

from doing substantial gainful activity--were both acceptable for 

program purposes and consistent with current medical thinking. The last 

general update to the Listing of Impairments (also known as the Medical 

Listings) occurred in 1985, at which time expiration dates ranging from 

3 to 8 years were inserted for individual body systems to ensure the 

agency periodically reviews and if necessary, updates the Medical 

Listings.



The statutes establishing the DI and SSI programs presume that 

disability, for program eligibility, is long-term and based on an 

either-or decision. That is, a person is either capable or incapable of 

engaging in substantial gainful work. However, the Social Security Act 

allows beneficiaries to use a “ticket” issued by the Commissioner of 

SSA to obtain free employment services, vocational rehabilitation 

services, or other services to find employment.[Footnote 5] Also, 

Congress has established various work incentives intended to safeguard 

cash and health benefits while a beneficiary tries to return to 

work.[Footnote 6] Despite these provisions, few DI and SSI 

beneficiaries have left the rolls to return to work,[Footnote 7] 

although the ticket program may have an impact on future rates. The 

either-or process produces a strong incentive for applicants to 

establish their inability to work to qualify for benefits, and work-

related supports and services (including health coverage) are offered 

only after individuals have completed the eligibility process. Yet our 

past work found that DI beneficiaries believe that health 

interventions--such as medical procedures, medications, physical 

therapy, and psychotherapy--are primary factors in assisting them to 

work.[Footnote 8]



VA Provides Benefits to Veterans Found to Have Reduced Earning 

Capacity:



VA’s disability program compensates veterans for the average loss in 

earning capacity in civilian occupations that results from injuries or 

conditions incurred or aggravated during military service.[Footnote 9] 

In 2000, the most common impairment category among all disabled 

veterans was illness and injury to bones and joints (see fig. 4). This 

impairment category also experienced the fastest growth among the 

disabled veteran population since 1986, increasing by 6 percentage 

points.



Figure 4: Percentage Distribution of Veterans Receiving Disability 

Compensation by Impairment Categories, 2000:



[See PDF for image]



Note: Percentages do not add to 100 percent due to rounding.



Source: VA’s Compensation and Pension Master File.



[End of figure]



VA’s program is similar to the DI and SSI programs in that all three 

programs provide cash benefits to persons whose physical or mental 

impairments have been deemed to reduce their ability to earn a 

living.[Footnote 10] However, VA relies upon an average reduction in 

earning capacity across a group of individuals with a similar condition 

rather than the actual reduction for an individual veteran applying for 

benefits. As a result, a veteran with a disability is entitled to 

disability cash benefits whether or not employed and regardless of the 

amount earned. The cash benefit level is based on the “percentage 

evaluation,” commonly called the disability rating, that represents the 

average loss in earning capacity associated with the severity of 

physical and mental conditions. VA uses its Schedule for Rating 

Disabilities to determine which disability rating to assign to a 

veteran’s particular condition. Ratings for individual diagnoses in the 

schedule range from 0[Footnote 11] percent to 100 percent.[Footnote 12] 

For example, VA presumes that the loss of a foot as a result of 

military service results in a 40 percent impairment in earning 

capacity, on average, among veterans with this injury. All veterans who 

lose a foot as a result of military service, therefore, are entitled to 

a 40 percent disability rating. Unlike the DI and SSI programs, the law 

does not specifically require VA to conduct continuing disability 

reviews to determine whether veterans continue to meet the disability 

requirements of the law.



The Schedule for Rating Disabilities was first developed in 1919 and 

had its last major revision in 1945. Two major studies have been 

conducted since the implementation of the 1945 version of the schedule 

to determine whether the schedule constitutes an adequate basis for 

compensating veterans with service-connected conditions. One was 

conducted by a presidential commission in the mid-1950s and a second by 

VA in the late 1960s. Both concluded, for various reasons, that at 

least some disability ratings in the schedule did not accurately 

reflect the average impairment in earning capacity among disabled 

veterans and needed to be adjusted.



The law states that VA shall, from time to time, readjust the schedule 

based upon experience. Keeping the schedule current is important 

because cash benefits are based on the schedule. We previously 

reported, however, that VA’s rating schedule that was being used in the 

late 1980s had not been adjusted to incorporate the results of many 

recent medical advances, and as a result, some veterans may be 

undercompensated and others may be overcompensated for their service-

connected disability.[Footnote 13] Further, we recommended that VA (1) 

prepare a plan for a comprehensive review of the rating schedule and, 

based on the results, revise medical criteria accordingly and (2) 

implement a procedure for systematically reviewing the rating schedule 

to keep it updated.



Veterans with a service-connected disability rated at 20 percent or 

higher who are found by VA to have an employment handicap can receive 

rehabilitation services. Eligible veterans can receive vocational 

counseling, training, job search assistance, and supportive 

rehabilitation services. In addition, VA offers veterans a medical 

benefits package that provides a full range of outpatient and inpatient 

services, including primary and specialty care as well as drugs.



Advances in Medicine and Technology, Labor Market Changes, and Social 

Changes Have Affected Work-Related Capabilities of People with 

Disabilities:



Recent scientific advances in medicine and assistive technology and 

changes in the nature of work and the types of jobs in our national 

economy have generally enhanced the potential for people with 

disabilities to perform work-related activities. Advances in medicine 

have afforded the scientific community a deeper understanding of and 

ability to treat disease and injury. Medical advancements in treatment 

(such as organ transplantations), therapy, and rehabilitation have 

reduced the severity of some medical conditions and have allowed 

individuals to live with greater independence and function in settings 

such as the workplace. Also, assistive technologies--such as advanced 

wheelchair design, a new generation of prosthetic devices, and voice 

recognition systems--afford greater capabilities for some people with 

disabilities than were available in the past.



At the same time, the nature of work has changed in recent decades as 

the national economy has moved away from manufacturing-based jobs to 

service-and knowledge-based employment. In the 1960s, earning capacity 

became more related to a worker’s skills and training than to his or 

her ability to perform physical labor. Following World War II and the 

Korean Conflict, advancements in technology, including computers and 

automated equipment, reduced the need for physical labor. The goods-

producing sector’s share of the economy--mining, construction, and 

manufacturing--declined from about 44 percent in 1945 to about 

18 percent in 2000. The service-producing industry’s share, on the 

other hand--such areas as wholesale and retail trade; transportation 

and public utilities; federal, state and local government; and finance, 

insurance, and real estate--increased from about 57 percent in 1945 to 

about 72 percent in 2000.



Although certain jobs in the service economy continue to be physically 

demanding--a cashier in a fast food restaurant might be expected to 

stand for most of his or her shift--other service-and knowledge-based 

jobs can allow greater participation for persons with physical 

limitations. In addition, telecommuting and part-time work provide 

other options for persons with disabilities. However, some labor market 

trends--such as an increasing pace of change in office environments and 

the need for adaptability--can pose particular challenges for some 

persons, such as those with severe mental illness and learning 

disabilities. Moreover, other trends--such as downsizing and the growth 

in contingent workers--can limit job security and benefits, like health 

insurance, that most persons with disabilities require for 

participation in the labor force. Whether these changes make it easier 

or more difficult for a person with a disability to work appears to 

depend very much on the individual’s impairment and other 

characteristics, according to experts.



Social change has promoted the goals of greater inclusion of and 

participation by people with disabilities in the mainstream of society, 

including adults at work. For instance, over the past 2 decades, people 

with disabilities have sought to remove environmental barriers that 

impede them from fully participating in their communities. Moreover, 

the Americans with Disabilities Act supports the full participation of 

people with disabilities in society and fosters the expectation that 

people with disabilities can work and have the right to work. The 

Americans with Disabilities Act prohibits employers from discriminating 

against qualified individuals with disabilities and requires employers 

to make reasonable workplace accommodations unless it would impose an 

undue hardship on the business.



Disability Criteria Not Fully Updated to Reflect Scientific Advances:



The disability criteria used by the DI, SSI, and VA disability programs 

to help determine who is qualified to receive benefits have not been 

fully updated to reflect scientific advances. Both SSA and VA are 

currently in the midst of a process that began around the early 1990s 

to update the medical criteria they use to make eligibility decisions, 

but the progress is slow. The updates include dropping or adding 

conditions that qualify one for benefits, modifying criteria needed to 

establish the presence and severity of certain medical conditions, and 

wording changes for clarification and guidance in making decisions. 

Agencies report that they made some of these changes due to medical 

advances in treatment that have reduced the severity and occurrence of 

some medical conditions. Nevertheless, the statutory and regulatory 

design of these programs limits the role of treatment in determining 

who is disabled. Therefore, treatment advances, by definition, have not 

been folded into the updates. Moreover, because of the statutory design 

of these programs, the role of assistive technologies is not recognized 

in making disability decisions. Consequently, the updates have not 

fully incorporated innovations in this field, such as advanced 

prosthetics and wheelchair designs.



Slow Process to Update Medical Criteria Jeopardizes Progress Already 

Made:



SSA’s current effort to update the disability criteria began in the 

early 1990s. To conduct the current update, SSA gathers feedback on 

relevant medical issues from state officials who help the agency make 

disability decisions. In addition, SSA has in-house expertise to help 

the agency keep abreast of the medical field and identify aspects of 

the medical criteria that need to be changed. SSA staff develop the 

proposed changes and forward them for internal, including legal and 

financial, review. Next, SSA publishes the proposed changes in the 

Federal Register and solicits comments from the public for 60 days. SSA 

considers the public comments, makes necessary adjustments, and 

publishes the final changes in the Federal Register.



Between 1991 and 1993, SSA published for public comment the changes it 

was proposing to make to 7 of the 14 body systems in its Medical 

Listings.[Footnote 14] By 1994, the proposed changes to 5 of these 7 

body systems were finalized, although SSA told us that changes to 2 

systems were relatively minor. SSA’s efforts to update the Medical 

Listings were curtailed in the mid-1990s due to staff shortages, 

competing priorities, and lack of adequate research on disability 

issues. Since the mid-1990s, we, SSA’s Office of the Inspector General, 

and the Social Security Advisory Board have expressed concern that SSA 

was not updating the Medical Listings regularly but simply extending 

the expiration dates that were originally developed by SSA so as to 

ensure that it would conduct the updates. In fact, the Office of the 

Inspector General[Footnote 15] recommended that SSA develop a 

performance measure of its update activities for inclusion in SSA’s 

annual performance plan.[Footnote 16] SSA did not agree with the 

recommendation, responding that revisions to the Medical Listings are 

subject to some factors not fully in their control (e.g., progression 

of scientific advances, input from experts and the public, and shifting 

congressional priorities), which can affect timing and prioritization 

of effort. In our view, these uncertainties--in addition to the size 

and costs of the programs--in fact elevate the need for establishing a 

time frame to ground SSA in its efforts and help keep the agency on 

track. Moreover, SSA is allowed to revise performance measures in its 

annual plans.[Footnote 17]



SSA resumed updating the Medical Listings in 1998. Since then, SSA has 

taken some positive steps in updating portions of the medical criteria 

it uses to make eligibility decisions, although progress is slow. As of 

early 2002, SSA has published the final updated criteria for 1 of the 9 

remaining body systems not updated in the early 1990s (musculoskeletal) 

and a portion of a second body system (mental disorders). SSA also 

plans to update again the 5 body systems that were updated in the early 

1990s. In addition, SSA has asked the public to comment on proposed 

changes for several other body systems. During the course of our work, 

SSA initially indicated to us that the agency planned to publish 

proposed changes for all body systems by 2002 and submit changes to the 

Office of Management and Budget for final clearance by 2003. Recently, 

the new administration at SSA (a new commissioner was confirmed in 

November 2001) reviewed the schedule and timing for the revisions. The 

results of this review pushed back the completion date for publishing 

proposed changes for all remaining body systems to the end of 

2003.[Footnote 18] The revised schedule, as of May 2002, is shown in 

table 1.



Table 1: Progress of SSA’s Current Efforts to Update Medical Listings:



Action : Updates finalized; Body system: Mental disorders (partial 
system 

update); Date of current update: 2000; Date of previous update: 

1985.



Action: Updates finalized; Body system: Musculoskeletal; Date of 
current 

update: 2002; Date of previous update: 1985.



Action: Updates in process; Body system: [Empty]; Date of current 

update: Proposed changes published for comment in the Federal Register; 

Date of previous update: [Empty].



Action: Updates in process; Body system: Hemic and lymphatic; Date 

of current update: Nov. 2001; Date of previous update: 1985.



Action: Updates in process; Body system: Malignant neoplastic diseases; 

Date of current update: Nov. 2001; Date of previous update: 1985.



Action: Updates in process; Body system: Digestive; Date of current 

update: Nov. 2001; Date of previous update: 1985.



Action: Updates in process; Body system: Skin; Date of current update: 
Dec. 

2001; Date of previous update: 1979.



Action: Updates in process; Body system: [Empty]; Date of current 
update: 

Plan to submit proposed changes to OMB; Date of previous update: 
[Empty].



Action: Updates in process; Body system: Multiple body systems; Date of 

current update: Oct. 2002; Date of previous update: 1993.



Action: Updates in process; Body system: Genitourinary; Date of current 

update: Nov. 2002; Date of previous update: 1985.



Action: Updates in process; Body system: Cardiovascular; Date of 
current 

update: Dec. 2002; Date of previous update: 1994.



Action: Updates in process; Body system: Endocrine; Date of current 
update: 

Jan. 2003; Date of previous update: 1993.



Action: Updates in process; Body system: Respiratory; Date of current 

update: Jan. 2003; Date of previous update: 1993.



Action: Updates in process; Body system: Special senses and speech; 

Date of current update: Mar. 2003; Date of previous update: 1985.



Action: Updates in process; Body system: Neurological; Date of current 

update: Aug. 2003; Date of previous update: 1985.



Action: Updates in process; Body system: Immune; Date of current 
update: 

Sept. 2003; Date of previous update: 1993.



Action: Updates in process; Body system: Mental disorders (remaining 
portion); 

Date of current update: Nov. 2003; Date of previous update: 1985.



Source: GAO Analysis of SSA documents.



[End of table]



SSA’s slow progress in completing the updates could undermine the 

purpose of incorporating medical advances into its medical criteria. 

For example, the criteria for musculoskeletal conditions--a common 

impairment among persons entering DI--were updated in 1985. Then, in 

1991, SSA began developing new criteria and published its proposed 

changes in 1993 but did not finalize the changes until 2002; therefore, 

changes made to the musculoskeletal criteria in 2002 were essentially 

based on SSA’s review of the field in the early 1990s. SSA officials 

told us that in finalizing the criteria, they reviewed the changes 

identified in the early 1990s and found that little had taken place 

since then to warrant changes to the proposed criteria. However, given 

the advancements in medical science since 1991, it may be difficult for 

SSA to be certain that all applicable medical advancements are in fact 

included in the most recent update. Similarly, we are concerned about 

the time frames for completing the full update on the criteria for 

another major impairment category--mental disorders. While SSA 

finalized in 2000 a portion of the changes for mental disorders first 

proposed in 1991, the agency deferred action on the remaining portion 

pending further review. SSA recently announced plans to publish these 

proposed changes by November 2003.



Keeping to a set schedule and making necessary updates could help SSA 

minimize the use of outmoded criteria in a large number of disability 

decisions. For example, SSA used the criteria for musculoskeletal 

conditions that were developed in 1985 until 2001. This means that in 

the year prior to the update--2000--SSA allowed 222,750 adults to enter 

the DI or SSI program on the basis of medical criteria that were 15 

years old.



VA has made more progress than SSA in updating the medical criteria 

used to evaluate its disability claims, but overall the process is 

slow. In 1989, VA hired a contractor to bring together practicing 

physicians to review and develop updated criteria for several of the 

body systems contained in the Schedule for Rating Disabilities. The 

practicing physicians, who were organized by teams according to 

specific body systems, were tasked with proposing changes that were 

consistent with modern medical practice and stated in a manner that 

could be easily interpreted by rating personnel. The results of the 

teams’ efforts were reviewed by VA in-house staff. After making 

necessary adjustments, the proposed changes were forwarded to various 

VA offices for review. Proposed changes were published in the Federal 

Register and opened for a 60-day comment period. As of March 2002, VA 

had finalized the criteria for 11 of 16 body systems. VA is currently 

reviewing the remaining body systems.



VA has generally taken more than 5 years to complete the update for 

each body system (see fig. 5). VA has not yet completed updating the 

medical criteria for several important body systems. For example, 

criteria used for evaluating orthopedic impairments were last updated 

in 1986. Yet the number of veterans with a disabling orthopedic 

condition has risen significantly in the past decade, outpacing the 

number of veterans receiving benefits under any other single disability 

group. Therefore, veterans with an orthopedic impairment who applied 

for VA disability benefits since 1996 were evaluated with medical 

criteria that were at least 10 years old.



Figure 5: Time Frame of VA’s Efforts to Update the Schedule for Rating 

Disabilities:



[See PDF for image]



[A] VA has not published an advance notice or proposed criteria. 

Further action is pending following the completion of updates for disc 

disease.



Source: GAO analysis of VA data.



[End of figure]



We found two factors contributing to the amount of time to update VA’s 

medical criteria. First, the review given to the proposed changes is 

lengthy. VA’s legal counsel as well as other entities within VA, such 

as the Veterans Health Administration, Office of Congressional and 

Legislative Affairs, and Office of Inspector General, review all 

proposed changes to the Schedule for Rating Disabilities. The Office of 

Management and Budget also reviews the changes. This entire review 

process can take up to 3 years. Second, the number of staff assigned to 

coordinate the updates at VA also contributes to the lengthy time to 

complete the updates. For example, one staff person is assigned less 

than half time to coordinate the update efforts.



VA does not have a well-defined plan to conduct the next round of 

medical updates. Although VA provided us with a statement acknowledging 

the need to re-review the medical criteria in the future, it had 

neither a strategy nor time frame for completing the task.



Agencies Have Changed Several Aspects of Disability Criteria:



SSA has made various types of changes to the Medical Listings thus far. 

As shown in table 2, these changes, including the proposed changes 

released to the public for comment, add or delete qualifying 

conditions; modify the criteria for certain physical or mental 

conditions; and clarify and provide additional guidance in making 

disability decisions. In addition, SSA has made a number of editorial 

changes.



Table 2: Types of Changes Made (or Proposed) to SSA’s Medical Listings 

during Current Update:



Type of change: Revise qualifying conditions; Examples: Remove peptic 

ulcer.[A]; Add inflammatory bowel disease by combining two existing 

conditions already listed: chronic ulcerative and regional enteritis.; 

Rationales: Advances in medical and surgical management have reduced 

severity.; Reflect advances in medical terminology..



Type of change: Revise evaluation and diagnostic criteria; Examples: 

Expand the types of allowable imaging techniques.; Reduce from 

three to two in the number of difficulties that must be demonstrated to 

meet the listings for a personality disorder.[B]; Rationales: The 

Medical Listings previously referred to x-ray evidence. With 

advancements in imaging techniques, SSA will also accept evidence from, 

for example, computerized axial tomography (CAT) scan and magnetic 

resonance imaging (MRI) techniques.; Specific rationale not 

mentioned..



Type of change: Clarify and provide additional guidance; Examples: 

Remove discussion on distinction between primary and secondary 

digestive disorders resulting in weight loss and malnutrition.; 

Expand guidance about musculoskeletal “deformity.”; Rationales: 

Distinction not necessary to adjudicate disability claim.; Clarify that 

the term refers to joint deformity due to any cause..



[A] A condition removed from the Medical Listings means that SSA no 

longer presumes the condition to be severe enough to ordinarily prevent 

an individual from engaging in substantial gainful activities. However, 

an individual with a condition removed from the Medical Listing could 

still be found eligible under other considerations in the evaluation 

process as described in appendix III.



[B] The criteria for a personality disorder are met when (a) the 

individual has certain behaviors defined in the Medical Listings and 

(b) those behaviors result in at least two of the following: (1) marked 

restriction of activities in daily living; (2) marked difficulties in 

maintaining social functioning; 

(3) marked difficulties in maintaining concentration, persistence, or 

pace; or (4) repeated episodes of decompensation (as specified in the 

Medical Listings).



Source: GAO analysis of SSA publications appearing in Federal Register.



[End of table]



In recognition of medical advances, VA has also made several types of 

changes to its Schedule for Rating Disabilities during the current 

update. As shown in table 3, the types of changes have been quite 

similar to changes made by SSA. Revisions generally consist of (1) 

adding, deleting, and reorganizing medical conditions in the Schedule 

for Rating Disabilities; (2) revising the criteria for certain 

qualifying conditions; and (3) wording changes for clarification or 

reflection of current medical terminology. VA also has made a number of 

editorial changes.



Table 3: Types of Changes Made (or Proposed) to VA’s Schedule for 

Rating Disabilities during Current Update:



Type of change: Revise schedule; Examples: Add pneumoconiosis as a 

qualifying disease under interstitial lung diseases.; Create new 

category for “schizophrenia and other psychotic disorders.”; 

Rationales: Allows for a more complete representation of this disease 

category.; New category is in accordance with terminology used in the 

standard medical texts.



Type of change: Revise criteria; Examples: Evaluation of anemia should 

include clinical findings and not be based solely on hemoglobin 

levels.; Under certain conditions, varicose veins developed after 

leaving the service can be considered as service-connected.; 

Rationales: Provides a more accurate measure.; Specific rationale 

not mentioned.



Type of change: Wording change for clarification or reflection of 

current medical terminology; Examples: Replace “frequent” with “twice 

per year” when assessing frequency of surgical therapies for recurring 

stone formation in the ureter.; ; Change “new growth” to “neoplasm.”; 

Rationales: Standardizes the term for more precise evaluations.;  

Improve technical accuracy.



Source: GAO analysis of VA publications appearing in the Federal 

Register.



[End of table]



Design Issues Have Limited the Incorporation of Treatment, Corrective 

Medical Devices, and Assistive Technologies

into Criteria:



Program design issues have limited the extent that advances in medicine 

and technology have been incorporated into the DI, SSI, and VA’s 

disability decision making. SSA has indicated that the updates are 

being made in recognition of medical advances in treatment and 

technology, and we found examples in SSA’s publications in the Federal 

Register of this occurring. Our methodology for this study, however, 

does not allow us to determine the extent of SSA’s efforts to 

incorporate medical advances into the Medical Listings. Nevertheless, 

the design of these programs limits the role of treatment in deciding 

who is disabled. SSA’s regulations require that in order to receive 

benefits, claimants must follow treatment prescribed by the 

individual’s physician if the treatment can restore his or her ability 

to work.[Footnote 19] The implication of this regulation is that if an 

individual is not prescribed treatment, SSA does not consider the 

possible effects of treatment in the disability decision, even if the 

treatment could make the difference between being able and not being 

able to work. Moreover, the programs do not require individuals to 

receive nonprescribed treatment before or during the time they are 

assessed for eligibility. Thus, treatments that can help restore 

functioning to persons with certain impairments may not be factored 

into the disability decision for some applicants. This limited role of 

treatment means, by definition, the updates have not fully captured the 

benefits that treatments can provide to persons with certain 

impairments. For example, medications to control severe mental illness, 

arthritis treatments to slow or stop joint damage, total hip 

replacements for severely injured hips, and drugs and physical 

therapies to possibly improve the symptoms associated with multiple 

sclerosis are not automatically factored into SSA’s decision making for 

determining the extent that impairments affect people’s ability to 

work. Additionally, this limited approach to treatment raises an equity 

issue: Applicants whose treatment allows them to work could be denied 

benefits while applicants with the same condition who have not been 

prescribed treatment could be allowed benefits.



While some of VA’s changes to the Schedule for Rating Disabilities 

reflect advances in medicine, the changes have generally not 

incorporated the potential benefits of treatment. While treatment can 

improve an individual’s ability to function in the workplace, the 

program is not designed to factor in the potential benefits of 

treatment when evaluating a veteran’s service-connected disability. 

That is, veterans applying for disability benefits--much like, for 

example, workers applying for DI benefits--are not required to undergo 

treatment before or after they are given a disability rating. Moreover, 

the VA program does not, unlike DI and SSI, factor in the potential 

effect of prescribed treatment on an applicants’ abilities.



As with treatment, the benefits of innovations in assistive 

technologies--such as advanced prosthetics and wheelchair designs--

have not been fully incorporated into DI, SSI, and VA disability 

criteria because the statutory design of these programs does not 

recognize these advances in disability decision making. That is, 

programs are not designed to assess an applicant’s ability to work 

under corrected conditions. Conceivably, using innovations such as a 

prosthetic device could reduce the limiting nature of an applicant’s 

impairment and could also reduce, if programs were designed 

differently, eligibility for or the amount of cash benefits. And some 

technologies may not involve sophisticated electronics. For example, a 

factory worker with a back impairment who works on an assembly line 

could benefit from an ergonomic stool or chair and matting that would 

cushion the floor and reduce fatigue. According to VA, technological 

advances, such as voice recognition devices--which can help people who 

do not have the use of their hands to interact with a computer--are not 

considered during the rating process to determine the extent to which 

technology could improve a veteran’s earning capacity.



Disability Criteria Not Updated to Reflect Labor Market Changes:



The disability criteria used by DI, SSI, and VA programs for 

determining who is disabled have not incorporated labor market changes. 

In determining the effect that impairments have on individuals’ earning 

capacity, programs continue to use outdated information about the types 

and demands of jobs in the economy. Given the nature of today’s 

economy, which offers varied opportunities for work, agencies’ use of 

outdated information raises questions about the validity of disability 

decisions.



SSA Relies upon Outdated Labor Market Information to Assess Impact of 

Impairments on Capacity to Perform Work:



For an applicant who does not have an impairment that SSA presumes is 

severe enough ordinarily to prevent an individual from engaging in 

substantial gainful activity, SSA evaluates whether the individual is 

able to work despite his or her limitations.[Footnote 20] Individuals 

who are unable to perform their previous work and other work in the 

national economy are awarded benefits. SSA relies upon the Department 

of Labor’s Dictionary of Occupational Titles (DOT) as its primary 

database to make this determination; however, Labor has not updated DOT 

since 1991 and does not plan to do so. Since 1993, Labor has been 

working on a replacement for the DOT called the Occupational 

Information Network (O*NET). It contains information on about 970 

occupational categories, while DOT had 13,000 occupational titles.



Labor and SSA officials recognize that O*NET cannot be used in its 

current form in the DI and SSI disability determination process. The 

O*NET, for example, does not contain SSA-needed information on the 

amount of lifting or mental demands associated with particular jobs. 

The agencies have discussed ways that O*NET might be modified or 

supplemental information collected to meet SSA’s needs, but no 

definitive solution has been identified. SSA officials have indicated 

that an entirely new occupational database could be needed to meet 

SSA’s needs, but such an effort could take many years to develop, 

validate, and implement. Meanwhile, as new jobs and job requirements 

evolve in the national economy, SSA’s reliance upon an outdated 

database further distances the agency from the current market place.



VA Relies upon Outdated Information in Estimating Economic Loss 

Resulting from Physical and Mental Impairments:



The percentage ratings used in VA’s Schedule for Rating Disabilities 

are still primarily based on physicians’ and lawyers’ estimates made in 

1945 about the effects that service-connected impairments have on the 

average individual’s ability to perform jobs requiring manual or 

physical labor. Although VA is revising the Schedule for Rating 

Disabilities’ medical criteria, the estimates of how impairments affect 

veterans’ earnings have generally not been reexamined. As a result, 

changes in the nature of work that have occurred in the past 57 years-

-which potentially affect the extent to which disabilities limit one’s 

earning capacity--are overlooked by the program’s criteria. For 

example, in an increasingly knowledge-based economy, one could consider 

whether earning capacity is still reduced, on average, by 40 percent 

for loss of a foot.



VA recognizes that there have been significant changes in the nature of 

work, but does not believe that these changes need to be reflected in 

the disability ratings. One official noted that a disability rating is 

essentially an indication of medical severity: the more severe the 

medical condition, then the higher the rating. Moreover, it was stated, 

changes in the nature of work are captured in the types of vocational 

rehabilitation services offered to veterans (e.g., veterans could 

receive computer skills training). Finally, the official noted that 

disability compensation should not be adjusted if an individual veteran 

is able to work despite a disabling condition.



In the past, we suggested to Congress that it may wish to consider 

directing VA to determine whether VA ratings correspond to veterans’ 

average loss in earning capacity and adjust disability ratings 

accordingly.[Footnote 21] VA responded to us that the schedule, as 

constructed, represents a consensus among Congress, VA, and the veteran 

community, and that the ratings generally represent an equitable method 

to determine disability compensation. In conducting the work for our 

present assignment, VA told us that they believe the consensus remains 

and the ratings continue to generally represent an equitable approach. 

We continue to believe, however, that changes in the nature of work 

afford some veterans with a disability the opportunity to become more 

fully employed and that the current estimates of the average reduction 

in earning capacity should be reviewed. Further, we believe that 

updating disability criteria is consistent with the law.



Incorporating Scientific Advances and Labor Market Changes into 

Disability Criteria Has Several Implications:



Incorporating scientific advances and labor market changes into DI, 

SSI, and VA programs can occur within the existing program design and 

at a more fundamental level. Within the context of the programs’ 

existing statutory and regulatory design, agencies will need to 

continue updating the criteria they use to determine which applicants 

have physical and mental conditions that limit their ability to work. 

As we noted above, agencies began this type of update in the early 

1990s, although their efforts have focused much more on the medical 

portion than labor market issues. In addition to continuing their 

medical updates, SSA and VA need to vigorously expand their efforts to 

more closely examine labor market changes. SSA’s results could yield 

updated information they use to make decisions about whether or not 

applicants have the ability to perform their past work or any work that 

exists in the national economy. VA’s results could yield updates to the 

average loss in earning capacity resulting from service-connected 

injuries and conditions.



More fundamentally, SSA and VA could consider the impact that 

scientific advances and labor market changes have on the programs’ 

basic orientation. Whereas programs currently are grounded in assessing 

and providing benefits based on incapacities, fully incorporating the 

scientific and labor market issues we highlight in this report implies 

that agencies would assess individuals with physical and mental 

conditions under corrected conditions for employment in an economy 

increasingly different from that which existed when these programs were 

first designed. Factoring medical and technological advances more fully 

into the DI, SSI, and VA programs implies that some if not many 

applicants would receive up-front assistance--including help in finding 

and maintaining employment--to help agencies evaluate individuals under 

their fullest potential to work. In fact, the types of beneficiaries 

who currently might have benefited from such assistance but have not 

received either timely medical or vocational assistance (for example, 

DI beneficiaries during the 24-month wait period for Medicare benefits) 

could get a package of up-front service under a new approach. Moreover, 

reorienting programs in this direction is consistent with increased 

expectations of people with disabilities and the integration of people 

with disabilities into the workplace, as reflected in the Americans 

with Disabilities Act. However, for people with disabilities who do not 

have a realistic or practical work option, long-term cash support is 

likely the best option.



In reexamining the fundamental concepts underlying the design of the 

DI,SSI, and VA programs, approaches used by other disability programs 
may 

offer some valuable insights. For example, our prior review of three 

private disability insurers shows that they have fundamentally 

reoriented their disability systems toward building the productive 

capacities of people with disabilities, while not jeopardizing the 

availability of cash benefits for people who are not able to return to 

the labor force.[Footnote 22] These systems have accomplished this 

reorientation while using a definition of disability that is similar to 

that used by SSA’s disability programs.[Footnote 23] However, it is too 

early to fully measure the effect of these changes. In these private 

disability systems, the disability eligibility assessment process 

evaluates a person’s potential to work and assists those with work 

potential to return to the labor force. This process of identifying and 

providing services intended to enhance a person’s productive capacity 

occurs early after disability onset and continues periodically 

throughout the duration of the claim. In contrast, SSA’s eligibility 

assessment process encourages applicants to concentrate on their 

incapacities, and return-to-work assistance occurs, if at all, only 

after an often lengthy process of determining eligibility for benefits. 

SSA’s process focuses on deciding who is impaired sufficiently to be 

eligible for cash payments, rather than on identifying and providing 

the services and supports necessary for making a transition to work for 

those who can. While cash payments are important to individuals, the 

advances and changes discussed in this report suggest the option to 

shift the disability programs’ priorities to focus more on work.



We recognize that re-examining the programs at the broader level raises 

a number of significant policy issues, including the following:



* Program design and benefits offered. Agencies would need to consider 

the impact on program design, including fundamental issues of basic 

eligibility structure and benefits and services provided. Would the 

definition of disability change? To what extent would programs require 

some beneficiaries to accept assistance to enhance work capacities as a 

precondition for benefits versus relying upon work incentives, time-

limited benefits, or other means to encourage individuals to maximize 

their capacity to work? Would persons whose work potential is 

significantly increased due to medical and technological assistance 

receive the same cash benefits that are currently provided? Would 

criteria need to be established to identify persons whose severity 

presumes a basis for permanent cash benefits? Would program recipients 

with earned income above a certain level still be eligible for no-cost 

assistance or do they begin to help pay for the support? To change 

program design, what can be done through the regulatory process and 

what requires legislative action?



* Accessibility. Agencies would need to address the accessibility of 

medical and technological advances for program beneficiaries. Are new 

mechanisms needed to provide sufficient access to needed services? In 

the case of DI and SSI, what is the impact on the ties with the 

Medicare and Medicaid programs? For VA, accessibility issues may not be 

as critical because of existing links to health and vocational 

rehabilitation benefits provided by VA.



* Cost. Agencies would need to address cost implications, including the 

issue of who will pay for the medical and assistive technologies (will 

beneficiaries be required to defray costs?). For example, would the 

cost of providing treatment and assistive technologies in the 

disability programs be higher than cash expenditures paid over the 

long-term? The cost to provide medical and technological treatment 

could be quite high for some program recipients, although much less for 

others. Moreover, net costs would need to be considered, as some 

expenditures could be offset with cost savings by paying reduced 

benefits.



* Integration with other program components. Agencies would need to 

address how to integrate a new emphasis on medical and technological 

assistance when making disability determinations with the health care 

and vocational assistance already currently available to program 

beneficiaries. Notably, VA’s program components of cash assistance, 

vocational rehabilitation, and medical care may uniquely position the 

agency to develop an integrated model and evaluate the results. During 

our work, VA officials pointed out that vocational rehabilitation 

services are already available to veterans to help them return to work 

and that such services include incorporating the advances and changes 

addressed in this report. Yet, the restorative benefits of medical, 

technological, or vocational interventions are not considered when VA 

makes an initial assessment of the economic losses that result from a 

condition or injury. With a limited amount of program funding, 

integrating these program components may help VA to equitably 

distribute program funds among veterans with disabilities.



Agencies’ research efforts could help address these broader policy 

issues. In fact, SSA is beginning to conduct a number of studies that 

recognize that medical advances and social changes require the 

disability programs to evolve. SSA’s 2002 annual performance plan 

contains a strategic objective to promote policy change based on 

research, evaluation, and analysis. SSA has funded a project to design 

a study that would assess the extent to which the Medical Listings are 

a valid measure of disability, and began work to design a study for SSA 

to identify the most salient job demands in comparison to applicants’ 

residual functional capacity. Additionally, SSA is sponsoring the 

National Study of Health and Activity, a project intended to enable SSA 

to estimate how many adults live in the United States who meet the 

definition of disability used by SSA and to better understand the 

relationship between disability, work, health care, and community. 

Also, SSA has funded a study to examine the impact and cost of 

assistive technology on employment of persons with spinal cord injuries 

and the associated costs. Finally, SSA had planned to conduct a 

demonstration project to determine the impact of medicine and therapy 

on beneficiaries with mood disorders such as major depressive disorder 

and bipolar disorder in returning them to work. The project was partly 

in response to evidence found by SSA that some beneficiaries with mood 

disorders had not received promising treatment. SSA has placed the 

project on hold while it reconsiders the purpose of the project.



Such research projects could provide important insight into ways that 

medical and technological advances can help persons with disabilities 

work and live independently. The research could also begin to provide 

important information about the cost and outcomes of program changes 

that bring up-front help to individuals receiving or applying for 

disability benefits. Nevertheless, individually, these studies do not 

directly or systematically address many of the implications of 

factoring in medical advances and assistive technologies more fully 

into the DI and SSI programs.



Conclusions:



Given the large size of the DI, SSI, and VA programs, it is incumbent 

that they remain current with medical advances and the changes in the 

demands and opportunities in the world of work. Updating disability 

criteria within existing program structures is prudent, not only as a 

means to best ensure program integrity, but also for agencies to meet 

their fiduciary responsibilities for public funds. We recognize the 

challenge to updating disability criteria. Yet we have concerns that 

while agencies are making some progress, their commitment to this 

effort appears to be inconsistent with the stakes involved: medical 

updates have been slow and there are few written strategies for 

performing timely updates in the years ahead. Moreover, these agencies 

have done little to better take into consideration the implications of 

labor force changes on the ability of persons with disabilities to earn 

a living. To the extent that SSA and VA do not update criteria used to 

reach disability decisions, they cannot ensure their disability 

decisions are valid.



Updating the disability criteria within the context of current program 

design will not fully capture the work-enhancing opportunities afforded 

by recent scientific advances and labor market changes. That is, 

current program design does not assess individuals under corrected 

conditions. To fully capture these advances and changes, policymakers 

would need to comprehensively re-examine some fundamental aspects of 

the DI, SSI, and VA programs, including the type, timing, and 

conditions of providing assistance to persons with physical and mental 

conditions. Such an examination is a complex but increasingly important 

undertaking. Indeed, Congress’ approach to these issues could be quite 

different given the unique characteristics of each program. But 

nevertheless, without a comprehensive analysis about alternatives and 

their impacts, it is likely that little progress will be made.



Recommendations for Executive Action:



To further advance the discussion of issues raised in this report, we 

recommend that the Commissioner of Social Security take the following 

actions:



* Use SSA’s annual performance plan to delineate strategies for and 

progress in periodically updating the Medical Listings and labor market 

data used in its disability determination process.



* Study and report to Congress the effect that a comprehensive 

consideration of medical treatment and assistive technologies would 

have on the DI and SSI programs’ eligibility criteria and benefit 

package. The analysis should estimate the effects on the size, cost, 

and management of these and other relevant programs and identify the 

legislative action, if any, necessary to initiate and fund such change.



To further advance the discussion of issues raised in this report, we 

recommend that the Secretary of Veterans Affairs take the following 

actions:



* Use VA’s annual performance plan to delineate strategies for and 

progress in periodically updating the Schedule for Rating Disabilities 

and labor market data used in its disability determination process.



* Study and report to Congress the effect that a comprehensive 

consideration of medical treatment and assistive technologies would 

have on the VA disability programs’ eligibility criteria and benefit 

package. The analysis should estimate the effects on the size, cost, 

and management of the program and other relevant VA programs and 

identify the legislative action, if any, necessary to initiate and fund 

such change.



Agency Comments and Our Response:



We sent a draft of this report to SSA, VA, and the Department of Labor 

for comments. SSA and VA submitted comments to us, which are 

reproduced, respectively, in appendixes I and II. Our responses to 

their comments appear below. In addition, technical comments and 

clarifications from these two agencies were incorporated as 

appropriate.



SSA’s Comments and Our Response:



SSA concurred with our recommendation to use its annual performance 

plan to delineate strategies for, and progress in, periodically 

updating the Medical Listings and labor market data used in its 

disability determination process, and it cited the strategic objective 

in its 2003 performance plan to promote policy changes that take 

account of changing needs based on medical, technological, demographic, 

job market, and societal trends. However, the performance goals 

associated with this objective do not refer specifically to updating 

either the Listings or labor market data. We believe such specific 

measurable goals are needed in light of the many years that have passed 

since DI and SSI disability criteria have been fully updated.



In addition, SSA provided several other comments on our findings 

concerning the agency’s efforts to update the disability criteria. 

First, SSA mentioned it is unable to determine why our report concludes 

that the DI and SSI updates do not reflect medical advances, citing 

their published commitment to do so and our recognition in the report 

of the agency’s efforts to incorporate some medical updates into the 

Listings. We do not dispute SSA’s contention, which is similar to a 

point also made by VA, that the agency considers the effects of 

treatment, medication, and assistive technologies in some if not many 

updates to the Listings. However, the issues we raise are at a more 

fundamental level. Our report specifically states that, under the 

statutory and regulatory design of these programs, SSA does not 

automatically evaluate individuals applying for benefits under 

corrected conditions. Thus, it is our belief that the programs 

themselves have not been fully updated to reflect scientific advances, 

because interventions that could enhance individuals’ productive 

capacities are not, by design, factored into the disability decision-

making process. Second, SSA commented that the DOT, even though it has 

not been revised since 1991, remains the most complete and up-to-date 

source of comprehensive occupational information. While characterizing 

the database in this manner may be technically accurate, the database 

was generally recognized as outdated by SSA and Labor officials we 

interviewed, and we note that Labor does not plan to update the 

database. Similarly, SSA commented that creating a new database on jobs 

in today’s economy for DI and SSI decision making is only one 

alternative (and, as SSA notes, an unlikely and undesirable one). In 

our view, absent a significant change in the decision-making process, 

SSA has only a few options: it will need to either modify the database 

that Labor developed to replace the DOT, modify the DOT, or develop a 

new database. Each option could require substantial effort, and 

regardless of which approach the agency selects, it will need to update 

the job-related information it uses.



Regarding our recommendation that SSA study and report to Congress the 

effect that a comprehensive consideration of medical treatment and 

assistive technologies would have on DI and SSI’s eligibility criteria 

and benefit package, SSA again states that it already considers in its 

Listings the effect that new medical treatment and assistive 

technologies would have on these two disability programs. Moreover, it 

states, the agency is not reluctant to promulgate regulatory changes or 

to suggest any legislative changes it considers appropriate as the need 

for change arises. We do not agree that SSA currently meets our 

recommendation. Our recommendation underscores the need to move beyond 

updating the disability decision-making process within the existing 

program design. Instead, SSA needs to make a more systematic study of 

options that would maximize an individual’s work potential by focusing 

on early and appropriate supports and interventions that take advantage 

of the advances and changes we identify in this report. As we note in 

the report, SSA has several research studies that could provide useful 

information in consideration of the larger design issues. Yet these 

studies do not directly or systematically address many of the 

implications of factoring in medical advances and assistive 

technologies more fully into the DI and SSI programs. The agency needs 

to lay out a master plan to systematically explore these larger policy 

and design issues.



VA’s Comments and Our Response:



VA did not concur with our recommendation to use its annual performance 

plan to delineate strategies for and progress of periodically updating 

the Schedule for Rating Disabilities and labor market data used in its 

disability determination process. VA stated that developing timetables 

for future updates to the Schedule for Rating Disabilities is 

inappropriate while its initial review is ongoing. We continue to 

believe that VA needs to include measurable goals about how and when it 

will complete the current round of medically-focused updates as well as 

future updates. VA should incorporate this information into its plan 

because portions of the Schedule for Rating Disabilities still remain 

to be updated and the agency has taken years to update individual body 

systems. In addition, VA should now begin to develop strategies for the 

next round of updates because portions of the Schedule for Rating 

Disabilities updated during the current round were completed about 8 

years ago and were based on expert input collected about 12 years ago. 

As such, it is important to begin planning for the next cycle of 

review. VA’s annual performance plan can help the agency hold itself 

accountable for ensuring that disability ratings are based on current 

information.



VA also did not concur with our recommendation to use its annual 

performance plan to discuss strategies and progress on updating the 

Schedule for Rating Disabilities because the agency does not plan to 

initiate an economic validation study or a revision of the Schedule for 

Rating Disabilities based on economic factors. The agency stated that 

prior attempts to change the Schedule for Rating Disabilities by 

conducting an economic validation were met with dissatisfaction among 

Congress, the veteran community, and VA. Moreover, VA noted that it 

believes the Schedule for Rating Disabilities is medically based; 

represents a consensus among Congress, VA and the veteran community; 

and has been a valid basis for equitably compensating America’s 

veterans for many years. We do not disagree that validating the 

Schedule for Rating Disabilities could lead to significant if not 

controversial changes, and the Schedule for Rating Disabilities does 

have a medical component and has been used as a basis for disability 

compensation for years. However, our analysis of the extent to which 

the VA--as well as DI and SSI--disability criteria were updated was 

grounded in the current law that authorizes this program. The law 

states that veterans are entitled to compensation for the average 

reduction in earning capacity for injuries incurred or aggravated while 

in service. Because earning capacity is clearly linked to the types and 

demands of jobs in the economy, and given that the economy has changed 

over time, updating the Schedule for Rating Disabilities based on labor 

market changes is sound administrative policy. Moreover, the concept of 

disability has changed significantly since the economic data 

assumptions in the Schedule for Rating Disabilities were last updated 

in 1945, further supporting the need to keep current with workforce 

requirements and opportunities.



In addition, VA did not agree with our finding that VA disability 

criteria have not been fully updated based on medical advances, noting 

that disabilities are commonly evaluated based on disabling effects 

while on treatment. We do not dispute VA’s contention that it 

recognizes the effects of treatment, medication, and assistive 

technologies that have been received by veterans in some, if not many, 

of its disability ratings. Much like our response to a similar comment 

made by SSA, our conclusion is based on the overall design of the 

program rather than on whether specific ratings have been updated to 

reflect treatment options. VA does not automatically evaluate a 

veteran’s average reduction in earning capacity under corrected 

conditions when making a decision about benefit eligibility and as 

such, a veteran not receiving a medical intervention or assistive 

technology that could increase work capacity is not evaluated according 

to his or her potential or actual capacity to work. Again, although 

VA’s current approach is consistent with program design, it also 

downplays the role that medical and technological advances can play in 

helping enhance work capacity. Consequently, we conclude that the 

program is not fully aligned with medical and technological advances.



Finally, VA did not concur with our recommendation that it study and 

report to Congress the effect that such a comprehensive consideration 

of medical treatment and assistive technologies would have on the 

program. VA believes moving in this direction would present a radical 

change from the current program, and the agency raised questions about 

whether Congress and the veteran community would support the idea. We 

believe that our society is very different from the times when VA and 

SSA disability programs were first designed. In addition to scientific 

advances and economic changes, expectations for people with 

disabilities are different. We believe more information is needed about 

the effects of a fuller consideration of these advances and changes on 

the program. VA should systematically study the implications of such 

changes and provide the results to Congress to facilitate future 

decision making.



Copies of this report are being sent to appropriate congressional 

committees and other interested parties. The report is also available 

at no charge on the GAO Web site at http://www.gao.gov. If you have 

any questions about this report, please contact me at (202) 512-9889. 

Other contacts and staff acknowledgments are listed in appendix IV.



Robert E. Robertson, Director

Education, Workforce, and

 Income Security Issues:



Signed by Robert E. Robertson:



[End of section]



Appendix I: Comments from the Social Security Administration:



SOCIAL SECURITY Office of the Commissioner:



June 26,2002:



Mr. Robert E. Robertson:



Director, Education, Workforce and Income Security Issues:



U.S. General Accounting Office Washington, D.C. 20548:



Dear Mr. Robertson:



Thank you for the opportunity to review and comment on the draft 

report, “Social Security Administration and Veteran’s Administration 

Disability Programs: Re-Examination of Disability Criteria Needed to 

Help Ensure Program Integrity” (GAO-02-597). Our comments on the report 

are enclosed. If you have any questions, please have your staff 

contact:



Trudy Williams at (410) 965-0380.



Sincerely,



Jo Anne B. Barnhart Commissioner:



Signed by Jo Anne B. Barnhart:



Enclosure:



SOCIAL SECURITY ADMINISTRATION: BALTIMORE MD 211235-0001:



COMMENTS OF THE SOCIAL SECURITY ADMINISTRATION (SSA) ON THE GENERAL 

ACCOUNTING OFFICE (GAO) DRAFT REPORT “SOCIAL SECURITY ADMINISTRATION 

AND VETERAN’S ADMINISTRATION PROGRAMS: RE-EXAMINATION OF DISABILITY 

CRITERIA NEEDED TO HELP ENSURE PROGRAM INTEGRITY” (GAO-02-597):



Recommendation 1:



SSA should use its annual performance plan to delineate strategies for 

and progress in periodically updating the Medical Listings and labor 

market data used in its disability determination process.



Comment:



We concur. One of the 23 Supporting Strategic Objectives in SSA’s FY 

2003 Annual Performance Plan is to “Promote policy changes, based on 

research, evaluation and analysis, that shape the disability program in 

a manner that increases self-sufficiency and takes account of changing 

needs, based on medical, technological, demographic, job market, and 

societal trends.”:



Recommendation 2:



SSA should study and report to Congress the effect that a comprehensive 

consideration of medical treatment and assistive technologies would 

have on the disability (DI) and supplemental security income (SSI) 

programs’ eligibility criteria and benefit package. The analysis should 

estimate the effects on the size, cost, and management of these and 

other relevant programs and identify the legislative action, if any, 

necessary to initiate and fund such change.



Comment:



We believe that SSA already considers the effect that new medical 

treatment and assistive technologies would have on the disability 

programs we administer. As the need for change arises, we are not 

reluctant to promulgate regulatory changes or to suggest any 

legislative changes we think appropriate. This can continue to be 

accomplished without the requirement of a formal study and report to 

Congress.



Other Comments:



In several places, the draft report discusses how SSA’s disability 

program rules consider or fail to consider medical advances, assistive 

technology and medical treatment. The report, on page 14, paragraph 1, 

sentences 5-7, states, “Nevertheless, the statutory design of these 

programs limits the role of treatment in deciding who is disabled. 

Therefore, treatment advances by definition, have not been folded into 

the updates. Moreover, because of the statutory design of these 

programs, the role of assistive technologies is not recognized in 

making disability decisions. Consequently, the updates have not fully 

incorporated innovations in this field, such as advancedprosthetics 

and wheelchair designs.” The revisions to the listings do 

reflect advancements in medical knowledge and treatment, including 

engineering advances and prosthetics. In a recent update to the 

listings SSA stated, “...we are committed to ensuring that the listings 

for the musculoskeletal body system continue to reflect appropriate 

advances in medical knowledge, treatment and methods of evaluating 

musculoskeletal impairments.” (See 66 Fed.Reg. 58010 (2001).) SSA also 

stated in the update that, “Engineering advances have produced 

prosthetic devices which minimize ... so that some individuals wearing 

artificial limbs ...are able to work.” (See 66 Fed.Reg. 58018.):



As noted elsewhere in the draft, the disability program design limits 

the extent to which SSA might assess an applicant on the basis of 

anticipated benefits from medical treatment that has not been 

prescribed by the individual’s treatment source(s), and that the 

individual has not undergone. However, program updates (i.e., revisions 

to the Listing of Impairments) do reflect advances in medical 

treatment. That is one of the most important reasons we periodically 

update these criteria. Further, program rules require that we consider 

any benefits that individuals have received from medical treatment when 

making our disability determinations.



SSA has not been able to update all sections of the Listing of 

Impairments as quickly as we would like. Consequently, some sections of 

the Listings do not fully reflect more recent medical advances. 

However, treatment advances have been folded into these updates. We 

note that, on page 20, the draft report acknowledges that SSA has 

informed GAO that its program updates reflect medical advances in 

treatment and that GAO has found examples in SSA’s publications in the 

Federal Register of this occurring.In addition, the report states that 

GAO’s study did not allow it to determine the extent of our efforts to 

incorporate medical advances. Consequently, we are unable to determine 

why the report concludes that our program updates do not reflect 

medical advances.



While the report does mention some of the research that is designed to 

address the policy issues raised by the report, some equally important 

research efforts, in particular the Disability Research Institute’s 

(DRI) work on job demands, are not addressed. The ongoing DRI project 

is designed to develop a way for SSA to study the most salient job 

demands in comparison to applicants’ residual functional capacity. 

Additionally, the planned demonstration project on early intervention 

is directly relevant to the policy implication mentioned on page 25, 

sentence 2, which reads, “Factoring medical and technological advances 

more fully into the DI, SSI, and VA programs implies that some if not 

many applicants would receive up-front assistance-including help in 

finding and maintaining employment-to help agencies evaluate 

individuals under their fullest potential to work.”:



Technical Comments:



On page 1, the letter to the Commissioner states that 11.3 million are 

served by DI, SSI and VA. However, this figure includes substantial 

overlap in these programs and thus overstates the number served.



On page 4, the first sentence in the “Background” section says “The DI, 

SSI, and VA programs ... that differ in their underlying intent, 

populations they serve, and the specific approach they use to assess 

disability.” This statement is not accurate since DI and SSI do not 

differ in their approach to assessing disability.



On pages 4 and 5, payment levels cited are referred to as calendar year 

when they are actually fiscal year values.



On page 9, in the first sentence, the word “substantial” should be 

inserted before “gainful work.”:



Page 9, sentence 2 of the report states, “However, the statutes also 

allow beneficiaries to use a payment voucher-referred to as a ticket-to 

obtain free employment services, vocational rehabilitation services, or 

other services to find employment.” We believe that the use of the term 

“voucher” is inappropriate. We recommend that this sentence be revised 

to read, “However, the statute also provides that the Commissioner may 

provide a “ticket” to beneficiaries that they may use to obtain 

vocational rehabilitation, employment or other support services from an 

approved Employment Network (EN) or State Vocational Rehabilitation 

agency (VR agency) of their choice.”:



On page 22, regarding SSA’s use of the Department of Labor’s (DOL) 

Dictionary of Occupational Titles (DOT): although it has not been 

revised since 1991, the DOT remains the most complete and up-to-date 

source of comprehensive occupational information. As the report goes on 

to say, the O*NET cannot be used in its current form in the DI and SSI 

disability determination process. Even when fully populated with 

updated data, O*NET will not meet SSA’s occupational data needs.



On page 23, in the first paragraph, sentence four states, “SSA 

officials have indicated that an entirely new occupational database 

could be needed to meet SSA’s needs, but such an effort could take many 

years to develop, validate, and implement.” Although this statement is 

technically correct, that is only one possible scenario-and an unlikely 

and undesirable one. Neither SSA nor DOL expect that to be necessary, 

and we are working together to meet SSA’s occupational data needs 

within the context of DOL’s occupational data systems.



[End of section]



Appendix II: Comments from the Department of Veterans Affairs:



THE SECRETARY OF VETERANS AFFAIRS WASHINGTON:



June 24, 2002:



Mr. Robert E. Robertson Director, Education, Workforce, and Income 

Security Issues:



U. S. General Accounting Office 44,1 G Street, NW:



Washington, DC 20548:



Dear Mr. Robertson:



The Department of Veterans Affairs (VA) has reviewed your draft report, 

SSA AND VA DISABILITY PROGRAMS: Re-Examination of Disability Criteria 

Needed to Help Ensure Program Integrity (GAO-02-597). VA does not agree 

with GAO’s recommended approach to revising the method for disability 

determinations. The medically based Schedule for Rating Disabilities 

represents an equitable method for determining compensation and pension 

ratings. Indeed, VA is systematically updating the body systems 

contained in the Schedule to reflect advances in medicine.



The enclosure discusses in detail VA’s nonconcurrence with GAO’s 

recommendations.



Sincerely yours,



Anthony J. Principi:



Signed by Anthony J. Principi:



Enclosure:



THE DEPARTMENT OF VETERANS AFFAIRS COMMENTS TO GAO DRAFT REPORT SSA AND 

VA DISABILITY PROGRAMS: Re-Examination of Disability Criteria Needed to 

Help Ensure Program Integrity (GAO-02-597):



GAO recommends that to further advance the discussion of issues raised 

in this report, the Secretary of Veterans Affairs take the following 

actions:



* Use VA’s annual performance plan to delineate strategies for and 

progress in periodically updating the Schedule for Rating Disabilities 

and labor market data used in its disability determination process.



Do not concur - VA does not plan to initiate an economic validation 

study or a revision of the rating schedule based on economic factors. 

In 1973, VA conducted an Economic Validation of the Rating Schedule 

(ECVARS), but no changes were adopted because of widespread 

dissatisfaction in Congress, the veteran community, and VA.



This recommendation is very similar to the major point in a former GAO 

report titled VA Disability Compensation: Disability Ratings May Not 

Reflect Veterans’ Economic Losses (GAO/HEHS-97-9, dated January 7, 

1997). VA reiterates its position on that report by stating (a) the 

Schedule for Rating Disabilities from its beginnings in the early 20TH 

Century has been medically based, as are all other major disability 

compensation systems; (b) the Schedule represents a consensus among 

Congress, VA, and the veteran community; and (c) the current medically-

based schedule has been a valid basis for equitably compensating 

America’s disabled veterans for so long, and VA sees no reason to 

validate the ratings solely from an economic perspective.



The study of the President’s Commission on Veterans’ Pensions (the 

Bradley Commission), referenced by GAO in its 1997 report, concluded 

that the basic purpose of disability compensation for VA was not to 

strictly adhere to the basic standard of assigning percentages based on 

average impairment of earning capacity. Furthermore, VA’s standard has 

been primarily a physical disability standard that also takes into 

consideration pain, suffering, shortening of life, disfigurement, and 

social inconvenience. The report also states that on the whole, 

veterans’ compensation tends to result in average wage losses of those 

who are disabled being made up through compensation.



At meetings during the course of this audit, VA reported that the 

Department intends to update each portion of the Schedule for Rating 

Disabilities as soon as a comprehensive review is completed. VA does 

not believe it is appropriate to develop a firm timetable for future 

changes while the initial review is ongoing.



* Study and report to Congress the effect that a comprehensive 

consideration of medical treatment and assistive technologies would 

have on the VA disability programs’ eligibility criteria and benefit 

package. The analysis should estimate the effects on the size, cost, 

and management of the program and other relevant VA programs and 

identify the legislative action, if any, necessary to initiate and fund 

such change.



Do not concur - The proposed concept would present a radical change 

from VA’s current program. This recommendation presumes that VA, 

Congress, and the veteran community would all be supportive of the idea 

that in order to receive full benefits, veterans should be required to 

take full advantage of the range of modern medical treatment and 

assistive devices available through the Veterans Health Administration.



The recommendation erroneously takes for granted that disabled veterans 

do not currently receive such treatment and assistance. Many of VA’s 

treatment and rehabilitation programs (for example, post-traumatic 

stress disorder treatment programs and spinal injury treatment and 

rehabilitation programs) are among the highest rated in the world.



General Comments:



GAO’s report states that a valid study of labor market data should be 

done as a basis for updating the Schedule for Rating Disabilities. 

(page 24):



* VA is not at all confident that such a study is feasible or would be 

useful. For example, the National Research Council completed a study 

for the Social Security Administration earlier this year titled, 

“Visual Impairments Determining Eligibility for Social Security 
Benefits.” 

One conclusion of the study was that it is not possible to establish a 

relationship between visual function and employment. While visual 
function 

is clearly measurable, the inability to establish a relationship 
between 

it and employment only underscores the difficulty in establishing a 

relationship for more complex conditions based on subjective and 

objective findings.



* Clearly, it is not an easy task to determine how disease and injury 

affect the ability to work. Therefore, the major disability 

compensation systems in the world have settled on medical impairments 

as the basis of their determinations.



* Finally, it is not clear from the report that GAO understands that 
the 

great majority of disabled veterans are working, including a number who 

are evaluated at 100 percent. The term “disability” for VA purposes 

encompasses all gradations of impairment from slight to total. Many who 

are fully employed suffer the effects of their disability in various 

ways, some subtle and some obvious. There may, for example, be pain, 

anxiety, fatigue, weakness, or nausea that does not prevent employment 

but that would certainly make it more difficult to work. Therefore, 

fully employed veterans may deserve compensation based on a medical 

impairment even if the effects on employment are not obvious and are 

hard to measure.



The GAO report generalizes that the updated criteria have not fully 

captured the benefits afforded by advances in treatment and that the 

current program design does not assess individuals under corrected 

conditions. It specifically states that the effects that medication to 

control severe mental illness may have on an applicant’s ability to 
work 

are not automatically factored into decision making. The report asks to 

what extent would programs require some beneficiaries to accept 
assistance 

as a precondition for benefits.



* GAO’s statement is not borne out by the facts. A thorough study of 
the 

Schedule for Rating Disabilities and its application would reveal that 

disabilities are commonly evaluated based on disabling effects while on 

treatment. For example, there is an extensive section on evaluating 

joints after replacements (although this section has not yet been 

updated), and VA evaluates heart disease after coronary artery bypass; 

peripheral vascular disease after arterial bypass or grafting; renal, 

liver, and heart disease after transplant; Hodgkin’s disease following 

treatment; and diabetes mellitus and hypertension while on treatment. 

Of the approximately 147,000 veterans service-connected for 

hypertension, for example, over 90 percent are evaluated at zero or 10 

percent indicating that they are being treated effectively, are taking 

their medication, and have been evaluated taking into account the 

benefits of treatment. Without treatment, their disability ratings 

would be much higher.



* In reference to mental disorders, if GAO means that VA does not 

speculate in its ratings on what the possible effectiveness of full 

treatment might be, that is certainly correct. No one can be sure 

whether a particular mental disorder (or other types of disorders) will 

respond even to optimal treatment. However, the evaluation criteria 
take 

into account all beneficial effects of medications that a veteran may 
take. 

A rating is assigned based not on a diagnosis but on the actual effects 

of a mental disorder on social and occupational impairment. Ratings 
reflect 

that better functioning veterans receive less compensation.



The report states that VA may be providing benefits to some who have 

little, if any, reduced earning capacity and may be denying or 

undercompensating other individuals whose condition severely reduces 

earning capacity.



* This sweeping statement is without a specific example of either 

situation. Furthermore, this assessment reverts to the concept of 

individual assessment based on an individual’s particular disability 

and job. In 1933, VA abandoned the occupational variant concept and 

returned to the original so-called:



“average man” concept of evaluation that is still in use, and which is 

a reflection of 38 U.S.C. 1155.



Further, the report states that the law does not specifically require 

VA to conduct reviews of disability determinations, as SSA does. This 

is correct. Review examinations are ordinarily scheduled only when a 

condition has been shown to be unstable or is expected to improve or is 

only minimally disabling. Conducting additional examinations in cases 

that do not meet these criteria would be a waste of resources and would 

be unlikely to result in substantial savings.



The report implies that veterans are not receiving nor taking advantage 

of optimal modern treatment but offers no supporting evidence. It also 

suggests that benefits should be linked to the acceptance of treatment.



* Service-connected veterans are offered free treatment at VA medical 

facilities if they receive greater than a zero-percent evaluation. The 

more than four million veterans, both service-connected and 

‘nonservice-connected, seen annually in VA’s medical system indicates 

large numbers already take advantage of this treatment.



* Many people with mental disorders, for example, both veterans and 
non-

veterans, do not take their medications regularly. To some extent, this 

may occur because of the effects of the mental disorder itself. 

Withholding or decreasing compensation in the case of veterans who are 

already mentally disabled but fail to take their medication is a 

punitive concept not in keeping with VA’s mission.



Note: GAO comments supplementing those in the report text appear at the 

end of this appendix.



[End of comment letter]



GAO Comments:



1. VA cites the 1955 President’s Commission on Veterans’ Pensions 

(commonly called the Bradley Commission) as support that VA’s 

disability ratings represent noneconomic factors, such as pain and 

suffering, in addition to average loss of earnings. However, as we 

reported in 1997,[Footnote 24] “the Commission’s overall recommendation 

with regard to the Schedule was that it should be revised thoroughly on 

the basis of factual data to ensure that it reflects veterans’ average 

reduction in earning capacity, as required by law. The Commission 

stated that the basic purpose of the program is economic maintenance 

and, therefore, it is appropriate to compare periodically the average 

earnings of the working population and the earnings of disabled 

veterans…” Even if the ratings are intended to reflect noneconomic 

factors, this does not negate the need for updating the schedule due to 

changes in the labor market. The extent to which, if at all, disability 

compensation reflects noneconomic factors is a policy issue which lies 

beyond the scope of this report.



2. We recognize that veterans who are paid disability benefits can also 

be receiving various types of treatment and assistance. Our 

recommendation reflects the need for more information on the 

implications of integrating the effects of treatment and assistance 

into the disability determination process, including the process to 

determine (1) the impact of physical and mental conditions on earnings 

and (2) the appropriate type and timing of benefits--such as cash, 

medical, and vocational assistance--to minimize the reduction of 

earnings associated with the disabilities.



3. We recognize that the link between medical impairments and the 

ability to work is complex and difficult to measure and can be affected 

by other factors like social support and individual motivation. Yet the 

VA program, by legislative design, compensates for loss in earning 

capacity that results from injuries or medical conditions. Thus, we 

believe, it is important to maintain good data on the skills and 

demands in the labor market to provide the best estimate of loss in 

earning capacity that is reasonably associated with particular injuries 

and conditions. In our 1997 report, we lay out options for the design 

and methodology for estimating loss in earnings among veterans with 

disabilities.[Footnote 25] But VA’s comment underscores the larger 

point we are making: Past assumptions that underlie these programs are 

increasingly outmoded as the confluence of scientific, economic, and 

social forces are redefining the relationship between impairments and 

abilities. Additional information on how programs can take advantage of 

this change will help Congress make better-informed decisions on 

disability policy.



4. We recognize that veterans can work and still receive disability 

compensation benefits. In fact, at the beginning of fiscal year 2002, 

two-thirds of veterans had a rating at 30 percent or less, implying 

that many veterans receiving disability compensation are working. 

Moreover, we recognize that VA’s use of an “average” reduction in 

earnings capacity implies that some veterans rated at 100 percent are 

employed, including those without an actual reduction in earnings. See 

comment 1 for our response to VA’s point that benefits may be partially 

compensated on noneconomic factors.



5. See the third paragraph of our response to VA comments in the body 

of the letter (p. 33).



6. As we report in 1997, VA conducted the Economic Validation of the 

Rating Schedule (ECVARS) in the 1960s in response to the Bradley 

Commission recommendations and recurring criticisms that ratings in the 

schedule were not accurate. This study was designed to estimate the 

average loss in earning capacity among disabled veterans by calculating 

the difference between the earnings of disabled veterans, by condition, 

and the earnings of nondisabled veterans, controlling for age, 

education, and region of residence. On the basis of the results, VA 

concluded that of the approximately 700 diagnostic codes reviewed, the 

ratings for 330 overestimated veterans’ average loss in earnings due to 

their conditions, and about 75 underestimated the average loss among 

veterans.



[End of section]



Appendix III: Five-Step Sequential Evaluation Process for Determining 
DI 

and SSI Eligibility:



To determine whether an applicant qualifies for DI or SSI disability 

benefits, SSA uses a five-step sequential evaluation process. In the 

first step, an SSA field office determines if an applicant is working 

at the level of substantial gainful activity and whether he or she 

meets the applicable nonmedical eligibility requirements (for example, 

residency, citizenship, Social Security insured status for DI, and 

income and resources for SSI). An applicant who is found to be not 

working or working but earning less than the substantial gainful 

activity level (minus allowable exclusions), and who meets the 

nonmedical eligibility requirements, has his or her case forwarded to a 

state Disability Determination Service (DDS) office. Applicants who do 

not meet these requirements, regardless of medical condition, are 

denied benefits. DDS offices gather medical, vocational, and other 

necessary evidence to determine if applicants are disabled under the 

Social Security law.



In step two, the DDS office determines if the applicant has an 

impairment or combination of impairments that is severe and could be 

expected to last at least 12 months. According to SSA standards, a 

severe impairment is one that significantly limits an applicant’s 

ability to do “basic work activities,” such as standing, walking, 

speaking, understanding, and carrying out simple instructions; using 

judgment; responding appropriately to supervision; and dealing with 

change. The DDS office collects all necessary medical evidence, either 

from those who have treated the applicant or, if that information is 

insufficient, from an examination conducted by an independent source. 

Applicants with severe impairments that are expected to last at least 

12 months proceed to the third step in the disability determination 

process; applicants without such impairments are denied benefits.



At step three, the DDS office compares the applicant’s condition with 

the Listing of Impairments (the Medical Listings) developed by SSA. The 

Medical Listings describe medical conditions that, according to SSA, 

are severe enough ordinarily to prevent an individual from engaging in 

substantial gainful activity. An applicant whose impairment is cited in 

the Medical Listings or whose impairment is equally as severe or more 

severe than those impairments in the Medical Listings and who is not 

engaging in substantial gainful activity is found to be disabled and 

awarded benefits. An applicant whose impairment is not cited in the 

Medical Listings or whose impairment is less severe than those cited in 

the Medical Listings is evaluated further to determine whether he or 

she has vocational limitations that, when combined with the medical 

impairment(s), prevent work.



In step four, the DDS office uses its physician’s assessment of the 

applicant’s residual functional capacity to determine whether the 

applicant can still perform work he or she has done in the past. For 

physical impairments, residual functional capacity is expressed in 

certain demands of work activity (for example, ability to walk, lift, 

carry, push, pull, and so forth); for mental impairments, residual 

functional capacity is expressed in psychological terms (for example, 

whether a person can follow instructions and handle stress). If the DDS 

office finds that a claimant can perform work done in the past, 

benefits are denied.



In the fifth and last step, the DDS office determines if an applicant 

who cannot perform work done in the past can do other work that exists 

in the national economy.[Footnote 26] Using SSA guidelines, the DDS 

considers the applicant’s age, education, vocational skills, and 

residual functional capacity to determine what other work, if any, the 

applicant can perform. Unless the DDS office concludes that the 

applicant can perform work that exists in the national economy, 

benefits are allowed. At any point in the sequential evaluation 

process, an examiner can deny benefits for reasons relating to 

insufficient documentation or lack of cooperation by the applicant. 

Such reasons can include an applicant’s failure to (1) provide medical 

or vocational evidence deemed necessary for a determination by the 

examiner, (2) submit to a consultive examination that the examiner 

believes is necessary to provide evidence, or (3) follow a prescribed 

treatment for an impairment. Benefits are also denied if the applicant 

asks the DDS to discontinue processing the case.



[End of section]



Appendix IV: GAO Contacts and Staff Acknowledgments:



GAO Contacts:



Kay E. Brown, Assistant Director (202) 512-3674

Brett S. Fallavollita, Analyst-in-Charge (202) 512-8507:



Staff Acknowledgments:



The following people also made important contributions to this report: 

William A. McKelligott, Barbara W. Alsip, and Daniel A. Schwimer.



FOOTNOTES:



[1] References to the SSI program throughout this report refer to 

disabled or blind, not aged, recipients who are of working age. SSI 

benefits are also available to children with disabilities, although SSA 

uses a different definition of disability for children than for adults. 



[2] In addition, VA provides a disability pension to certain veterans 

who are permanently and totally disabled by non-service-connected 

impairments and served during a wartime period. Under the Veterans 

Education and Benefits Expansion Act of 2001, enacted on

December 27, 2001, veterans who are 65 years of age or older do not 

have to be permanently and totally disabled to become eligible for 

pension benefits, as long as they meet the other requirements for 

income and military service. 



[3] These figures do not include cash benefits awarded to other 

eligible groups, such as disabled widow(er)s and disabled adult 

children of disabled workers (DI) and children with disabilities (SSI). 

Included among the 5.3 million DI beneficiaries are about 1.1 million 

beneficiaries who were dually eligible for SSI disability benefits 

because of the low level of their income and resources. DI and SSI data 

are based on 2001 calendar year while VA data are based on 2001 fiscal 

year. 



[4] Regulations currently define SGA for both the DI and SSI programs 

as employment that produces countable earnings of more than $780 a 

month for nonblind disabled individuals. The SGA level is indexed to 

the annual wage index. The SGA level for DI blind individuals, set by 

statute and also indexed to the annual wage index, is currently defined 

as monthly countable earnings that average more than $1,300. 



[5] The Ticket to Work and Work Incentives Improvement Act of 1999 

(Public Law 106-170) was signed into law in December 1999. In February 

2002, SSA began sending tickets to beneficiaries living in the 13 

states chosen for the first round of implementation. SSA regulations 

require that to be eligible to receive a ticket, a beneficiary must, 

among other factors, have a permanent medical condition or a condition 

for which medical improvement is possible but cannot be predicted (a 

beneficiary whose impairment is expected to improve is not eligible to 

receive a ticket unless the individual has undergone at least one 

continuing disability review). Participation in the ticket program is 

voluntary. 



[6] For example, the DI work incentives provide for a trial work period 

in which a beneficiary may earn any amount for 9 months within a 60-

month period and still receive full cash benefits. The SSI work 

incentives, among other features, allow beneficiaries to earn more than 

the SGA level and retain part of a cash benefit. 



[7] U.S. General Accounting Office, Social Security: Disability 

Programs Lag in Promoting Return to Work, GAO/HEHS-97-46 (Washington, 

D.C.: Mar. 17, 1997). 



[8] U.S. General Accounting Office, Social Security Disability 

Insurance: Multiple Factors Affect Beneficiaries’ Ability to Return to 

Work, GAO/HEHS-98-39 (Washington, D.C.:

Jan. 12, 1998).



[9] Veterans’ Benefits, 38 U.S.C. §§ 1110 and 1155.



[10] We met with several veterans service organizations to discuss the 

issues in this report. These organizations stated that they believe 

disability compensation benefits, in addition to representing payment 

for economic loss, also represent compensation for noneconomic loss due 

to an injury or illness as well as service to the country. 



[11] A veteran can receive a 0 percent noncompensable rating that may 

be increased to a compensable rating of 10 percent or more if the 

veteran’s condition worsens. A 0 percent rating generally means that VA 

has determined that a veteran has a condition that can be classified as 

service-connected; however, it is not severe enough to qualify for 

monetary compensation on the basis of the medical criteria specified in 

the schedule.



[12] Congress sets the specific benefit amount for each of the 

disability ratings. Congress typically adjusts the benefit amount each 

year. In 2002, the basic monthly amount for veterans without dependents 

ranged from $103 for conditions assigned a rating of 10 percent to 

$2,163 for conditions assigned a rating of 100 percent. 



[13] U.S. General Accounting Office, Need to Update Medical Criteria 

Used in VA’s Disability Rating Schedule, GAO/HRD-89-28 (Washington, 

D.C.: Dec. 29, 1988).



[14] Our analysis excludes SSA’s changes to the childhood-related 

Medical Listings.



[15] Office of the Inspector General, Social Security Administration, 

Status of the Social Security Administration’s Updates to the Medical 

Listing, A-01-99-21009 (Washington, D.C., 2000).



[16] The Government Performance and Results Act of 1993, Public Law 

103-62, requires SSA to develop performance indicators that assess the 

relevant service levels and outcomes of each program activity.



[17] Agencies are permitted to revise the performance targets in their 

performance plans--based upon congressional action, the occurrence of 

unanticipated exigencies, consideration of actual performance data from 

the prior year, and other reasons--under the Government Performance and 

Results Act of 1993 as implemented by OMB Circular No. A-11, Part 2: 

Preparation and Submission of Strategic Plans, Annual Performance 

Plans, and Annual Program Performance Reports (Washington, D.C., 2000). 



[18] Social Security Administration, “Semiannual Unified Regulatory 

Agenda,” Federal Register 67, no. 92 (13 May 2002): 34016 - 34038.



[19] SSA does not consider the effects of treatment that has been 

prescribed but not received under certain circumstances, such as when 

the treatment is contrary to the established teaching and tenets of the 

individual’s religion.



[20] SSA refers to this level of ability to work despite physical and 

mental limitations as a residual functional capacity. Specifically, SSA 

evaluates whether the applicant has an impairment that prevents him or 

her from performing previous work or considering his or her age, 

education, and work experience, performing any other kind of 

substantial work that exists in the national economy.



[21] U.S. General Accounting Office, VA Disability Compensation: 

Disability Ratings May Not Reflect Veterans’ Economic Losses, GAO/

HEHS-97-9 (Washington, D.C.: Jan. 7, 1997).



[22] U.S. General Accounting Office, SSA Disability: Other Programs May 

Provide Lessons for Improving Return-to-Work Efforts, GAO-01-153 

(Washington, D.C.: Jan. 12, 2001). This report also addresses the 

reorientation of the social insurance systems of Sweden and The 

Netherlands toward a return-to-work focus. In addition, this report 

addresses the German social insurance system, which has had a long-

standing focus on the goal of rehabilitation before pension.



[23] In general, for the three private insurers that we studied, 

claimants are initially considered eligible for disability benefits 

when, because of injury or sickness, they are limited in performing the 

essential duties of their own occupation and they earn less than 60 to 

80 percent of their predisability earnings, depending upon the 

particular insurer. After 2 years, this definition generally shifts 

from an inability to perform one’s own occupation to an inability to 

perform any occupation for which the claimant is qualified by 

education, training, or experience. It is this latter definition that 

is most comparable to the definition used by SSA.



[24] See GAO/HEHS-97-9, p.15.



[25] See GAO/HEHS-97-9.



[26] By definition, work in the national economy must be available in a 

significant amount in the region where the applicant lives or in 

several regions of the country. It is inconsequential whether (1) such 

work exists in the applicant’s immediate area, (2) job vacancies exist, 

or (3) the applicant would actually be hired.



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