GAO-11-756T, Disability Insurance: Preliminary Observations on SSA Efforts to Detect, Prevent, and Recover Overpayments


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United States Government Accountability Office: 
GAO: 

Testimony: 

Before the Subcommittees on Social Security and Oversight, Committee 
on Ways and Means, House of Representatives: 

For Release on Delivery: 
Expected at 2:00 p.m. EDT:
Tuesday, June 14, 2011: 

Disability Insurance: 

Preliminary Observations on SSA Efforts to Detect, Prevent, and 
Recover Overpayments: 

Statement of Daniel Bertoni, Director: 
Education, Workforce, Income and Security: 

GAO-11-756T: 

GAO Highlights: 

Highlights of GAO-11-756T, a report to Subcommittee on Social Security 
and Oversight, Committees on Ways and Means, House of Representatives. 

Why GAO Did This Study: 

The Social Security Administration’s (SSA) Disability Insurance (DI) 
program paid almost $123 billion in benefits in fiscal year 2010 to 
more than 10 million workers and dependents. The program has grown 
rapidly in recent years and is poised to grow further as the baby boom 
generation ages. GAO examined (1) what is known about the extent SSA 
makes work-related overpayments to, and recovers overpayments from, DI 
beneficiaries, and (2) SSA’s policies and procedures for work 
continuing disability reviews (work CDRs) and potential DI program 
vulnerabilities that may contribute to overpayments to beneficiaries 
who have returned to work. To answer these questions, GAO reviewed 
work CDR policies and procedures, interviewed SSA headquarters and 
processing center officials, and visited 4 of 8 processing centers. We 
reviewed a random nongeneralizable sample of 60 CDR case files across 
those 4 centers to ensure we had a wide range of cases for our review 
(15 cases from each). These 4 centers received almost 80 percent of 
all work CDRs from SSA’s Internal Revenue Service enforcement data 
match in fiscal year 2009. 

What GAO Found: 

Disability insurance overpayments detected by SSA increased from about 
$860 million in fiscal year 2001 to about $1.4 billion in fiscal year 
2010, though the full extent of overpayments to beneficiaries who have 
returned to work and are no longer eligible is unknown. Overpayments 
may also go to beneficiaries who are no longer eligible due to medical 
improvement, but SSA estimates about 72 percent of all DI overpayments 
were work related during fiscal years 2005 through 2009. While the 
agency collected, or recovered, $839 million in overpayments in fiscal 
year 2010, monies still owed by beneficiaries grew by $225 million 
that same year, and total DI overpayment debt reached $5.4 billion. 
SSA does not have agency-wide performance goals for debt collection, 
for example, the percent of outstanding debt collected annually. And 
while SSA does have a policy for full repayment within three years, 19 
of the 60 continuing disability review (work CDR) cases we reviewed 
had repayment plans exceeding three years. SSA officials told us 
lengthy repayment plans are often the result of an individual’s 
limited income, but SSA does not review or approve repayment plans 
which exceed agency policy. During the course of our review, we also 
found a limitation in SSA’s Recovery of Overpayments, Accounting and 
Reporting (ROAR) system. Used to track overpayments and collections, 
ROAR does not reflect debt due SSA past year 2049 so the total balance 
due the program is unknown, and likely larger than the agency is 
reporting. SSA officials acknowledged this issue, but are unable to 
determine the extent of the problem at this time. They told us they 
have a work group which will recommend action to correct the problem. 
But until this issue is addressed, SSA officials told us the agency 
can only track and report on overpayments scheduled to be repaid 
through 2049. The amount owed after that year is unreflected in 
current totals even as it annually increases. 

SSA has numerous policies and processes in place to perform work CDRs, 
though two key weaknesses have hindered SSA’s ability to identify and 
review beneficiary earnings, which affect eligibility for DI benefits. 
First, SSA lacks timely earnings data on beneficiaries who return to 
work. In 49 of the 60 CDR cases we reviewed, there was no evidence in 
the file that the beneficiary reported returning to work, as required 
by the program. To identify these unreported earnings, SSA primarily 
relies on data matching with the Internal Revenue Service (IRS), then 
sends these matches to staff for a work CDR. However, the IRS data may 
be more than a year old when received by SSA, and SSA says it is not 
cost effective to gain access to and use other sources of earnings 
information, such as the National Directory of New Hires database. In 
addition, we found cases may wait up to 15 additional months before 
SSA staff begin work on the CDR. Second, SSA lacks formal, agency-wide 
performance goals for work CDRs. While it targets 270 days to develop 
a case, actual processing time taken ranged from 82 to 992 days (with 
a median of 396 days) in the 60 cases we reviewed, and overpayments 
which accrued as a result topped $1 million total. SSA officials 
reported several initiatives to more effectively prioritize work CDR 
cases, for example, those with the largest potential overpayment 
amounts, but these efforts are in the early stages and we could not 
yet assess their effectiveness. 

What GAO Recommends: 

GAO has ongoing work on this issue and has no recommendations at this 
time. 

View [hyperlink, http://www.gao.gov/products/GAO-11-756T] or key 
components. For more information, contact Dan Bertoni at (202) 512-
7215 or bertonid@gao.gov. 

[End of section] 

Chairmen, Ranking Members, and Members of the Subcommittees: 

I am pleased to be here to present preliminary information on 
overpayments in the Social Security Administration's (SSA) Disability 
Insurance (DI) program. The DI program provides cash benefits to 
workers who are blind or disabled and contributed to the DI Trust Fund 
as workers. In fiscal year 2010, the DI program paid about $123 
billion in benefits to more than 10 million workers with disabilities 
and their dependents. The program has grown substantially in recent 
years and is poised to grow further as the baby-boom generation ages. 
Most importantly, the long-term solvency of the DI trust fund is 
currently jeopardized, and the fund is projected to be exhausted in 
2018. 

SSA guidelines allow DI beneficiaries to work and earn up to $1,000 
per month[Footnote 1] for a limited period of time without affecting 
their benefits--a level of earnings called substantial gainful 
activity (SGA). After completing a 9-month "trial work period" 
beneficiaries who earn more than SGA are generally no longer entitled 
to benefits, and may be overpaid if SSA does not stop their benefits 
in a timely manner.[Footnote 2] To verify an individual's ongoing 
eligibility for DI benefits, SSA conducts periodic reviews of a 
beneficiary's earnings status called work continuing disability 
reviews (work CDRs).[Footnote 3] These reviews typically involve SSA 
staff querying centralized agency data systems to identify earnings, 
sending forms to beneficiaries requesting they report earnings that 
may affect eligibility for DI benefits, contacting employers to verify 
earnings amounts, and assessing other factors such as employer 
subsidies and work-related expenses. 

If SSA does not obtain timely and accurate earning information, or 
fails to act expeditiously to cease benefits to those no longer 
eligible, overpayments can accrue over several years and become very 
large--adding up to tens of thousands of dollars. Overpayments 
adversely affect program integrity, but can also create economic 
hardship for beneficiaries who have to repay them. In addition, the 
prospect of having to repay an overpayment may be a disincentive for 
some beneficiaries to return to work, which runs counter to SSA's goal 
of helping beneficiaries become self-sufficient.[Footnote 4] 

My testimony summarizes ongoing work we are performing at the request 
of the Social Security subcommittee, and focuses on two main 
questions: (1) What is known about the extent to which SSA makes work-
related overpayments to, and recovers overpayments from, DI 
beneficiaries? and (2) What are SSA's policies and procedures for 
performing enforcement work CDRs, including potential DI program 
vulnerabilities that may contribute to work-related overpayments? We 
reviewed DI overpayment debt collection and enforcement work CDR 
performance data, external research studies, and our prior reviews of 
the program. We randomly selected 15 work CDR cases from each of four 
processing centers we visited (Baltimore, Maryland; Chicago, Illinois; 
Kansas City, Missouri; and Queens, New York)--which were closed in 
fiscal year 2009 with an overpayment. Together, the selected 
processing centers received almost 80 percent of SSA's enforcement 
alerts referred for work CDRs in fiscal year 2009. We reviewed each of 
these 60 randomly selected cases to determine whether the case had 
been processed in accordance with SSA program guidelines for 
processing of work CDRs. We used random selection procedures to help 
ensure we drew a wide range of cases for our review - however the 
results cannot be generalized to the population of all work CDR cases 
due to our limited sample sizes. Finally, we conducted in-depth 
interviews with SSA management and line staff responsible for 
performing work CDRs, and overpayment debt collection, at headquarters 
and four of SSA's eight processing centers. We also assessed the 
reliability of all databases used in our review, primarily SSA's 
Disability Control File (DCF), Master Beneficiary Record (MBR), and 
Recovery of Overpayment, Accounting, Reporting (ROAR). While we 
identified a ROAR system limitation, we found the databases to be 
sufficiently reliable for the purposes of our review. We are 
conducting this performance audit from March 2010 to June 2011 in 
accordance with generally accepted government auditing standards. 
Those standards require that we plan and perform the audit to obtain 
sufficient, appropriate evidence to provide a reasonable basis for our 
findings and conclusions based on our audit objectives. We believe 
that the evidence obtained provides a reasonable basis for our 
findings based on our audit objectives. 

Background: 

SSA conducts periodic reviews called work continuing disability 
reviews (work CDRs) to determine if beneficiaries are still eligible 
or are working above the SGA level.[Footnote 5] While work CDRs can be 
prompted by several events, most are generated by SSA's Continuing 
Disability Review Enforcement Operation (enforcement operation). This 
process involves periodic data matches between SSA's Master 
Beneficiary Record database and IRS earnings data. The enforcement 
operation generates alerts for cases that exceed specified earnings 
thresholds,[Footnote 6] which are then forwarded to 1 of 8 processing 
centers for additional development by SSA staff.[Footnote 7] In fiscal 
year 2010, the enforcement operation flagged approximately 2 million 
records of which more than 531,000 were sent to SSA's processing 
centers and field offices for review. 

Work CDRs can also be triggered by other events. For example, SSA 
requires beneficiaries to undergo periodic medical examinations called 
medical continuing disability reviews, or medical CDRs, to assess 
whether they continue to have a physical disability.[Footnote 8] 
During such reviews, the disability examiner sometimes discovers 
evidence that a beneficiary is working, and forwards the case to an 
SSA field office or processing center for earnings/work development. 
Third-party reports from state vocational rehabilitation agencies, 
federal agencies, or anonymous individuals may also trigger a work 
CDR. Finally, some DI beneficiaries report their earnings to SSA as 
set out in regulations[Footnote 9] by visiting an SSA field office or 
calling the agency's 800 number. For each case identified for 
development, SSA staff must review electronic case files in SSA's 
eWork[Footnote 10] and associated data systems, conduct interviews, 
and contact beneficiaries and their employers to verify earnings. 
After initial review, cases indicating a cessation of benefits are 
generally forwarded to a "disability processing specialist" for a 
determination of whether benefits should be discontinued and an 
overpayment assessed.[Footnote 11] (See figure 1) 

Figure 1: SSA's Enforcement Work CDR Process: 

[Refer to PDF for image: process map] 

1) IRS data matching in February, May, and August. 

2) Do the data meet screening criteria? 
If yes, go to #3; 
If no, go to #13. 

3) Remaining matches distributed by Social Security number and age to 
one of eight Processing Centers. 

4) Does Processing Center screening identify work issues? 
If yes, go to #5; 
If no, go to #13. 

5) Work Continuing Disability Review (CDR) assigned to SSA staff. 

6) Earnings development: As needed, SSA staff will: 
* Check SSA records; 
* Send forms to beneficiary; 
* Send forms to employer(s); 
* Check Work Number; 
* Check National Directory of New Hires; 
* Contact bank for up to date beneficiary address. 

7) Is the work determination outcome ‘cessation’? 
If yes, go to #8; 
If no (and beneficiary not yet contacted), go to #13; 
If no (and beneficiary has been contacted), go to #10. 

8) Processing Center sends a proposed cessation decision to 
beneficiary; 
If not contested, go to #9; 
If contested, go to #11. 

9) Final cessation notice informs beneficiary of overpayment; 
If not contested, go to #12; 
If contested, go to #11. 

10) Beneficiary notified that benefits will continue. 

11) New evidence is considered; 
If decision is reversed, go to #11. 
If decision is upheld or modified, go to #12. 

12) Overpayment debt recovery begins. 

13) No action taken and no contact made with beneficiary. 

Source: GAO analysis of SSA procedural guidance. 

[End of figure] 

When a DI work-related overpayment is identified, the beneficiary is 
notified of the overpayment and may request reconsideration or waiver 
of that overpayment. [Footnote 12] SSA may grant a waiver request if 
the agency finds the beneficiary was not at fault and recovery or 
adjustment would either defeat the purpose of the program or be 
against equity and good conscience, as defined by SSA.[Footnote 13] If 
SSA denies a reconsideration or waiver request, full repayment is 
requested. If the beneficiary is also receiving DI or certain other 
SSA benefits, SSA may withhold partial payment of these benefits to 
recover the debt.[Footnote 14] However, if no SSA benefits are being 
received, or if the beneficiary asserts that the proposed withholding 
amount is too large, the agency generally requests repayment over 12 
to 36 months. SSA policy requires a minimum monthly payment of $10 
dollars. SSA may also attempt to recover payments due from the 
individual's estate or subsequent survivor's benefits.[Footnote 15] 
(See figure 2) The agency uses the Recovery of Overpayment, 
Accounting, and Reporting (ROAR) system to track beneficiary 
overpayments and collections. 

Most DI Overpayments Are Work Related, and Their Recovery Can Take 
Decades: 

Medical and work-related overpayments in the DI program detected by 
SSA grew from about $860 million in fiscal year 2001 to about $1.4 
billion in fiscal year 2010.[Footnote 16] Though the true extent of 
overpayments due to earnings is currently unknown, our review suggests 
that most of them are related to beneficiaries who work above SGA 
while receiving benefits. SSA officials estimate that from fiscal 
years 2005 through 2009, about 72 percent[Footnote 17] of all 
projected DI overpayments were work-related, or to beneficiaries who 
returned to work and were no longer eligible. SSA officials attribute 
increases in the percentage of overpayments that are work-related 
during this period to improved detection by its enforcement operation, 
and to changes in how the agency estimates the overpayment numbers. 
Agency officials also explained that the approximately half of the 
increase in overpayment dollars during the 10 year period may be due 
to the increase in DI program benefit levels. 

Beyond SSA's estimates, we found that detected overpayments could be 
even larger than SSA's data reflect because some overpayments have 
been accidentally removed from SSA records due to manual processing 
errors.[Footnote 18] In our current review of 60 work CDR cases, we 
found two manual processing errors which resulted in overpayments 
totaling $53,097 being removed from agency records. In one case, staff 
entered a code to correct an overpayment amount but instead deleted 
the overpayment entirely. As a result of our detection, SSA officials 
reentered the overpayment debts into the system and indicated they 
would proceed with debtor notification and recovery. Because the 
results of our case review are not generalizable, the incidence of 
such occurrences is currently unknown and thus the potential impact on 
total DI overpayments owed by ineligible beneficiaries is not clear. 
SSA officials said that they do not have a mechanism for detecting, or 
a process of supervisory review to catch, such errors. 

A beneficiary's total DI overpayment debt can also increase because of 
multiple periods of employment. DI beneficiaries may reenter and leave 
the workforce based on their ability to perform SGA. As a result, a 
beneficiary could be subject to multiple periods of DI overpayments if 
he or she does not report increased earnings to SSA in a timely 
manner, as regulations instruct. In 49 of the 60 cases we randomly 
selected for review, there was no indication in the file that the 
individual had reported his or her earnings to SSA, and in 15 of the 
60, SSA had detected two or more separate periods of earnings which 
resulted in overpayments. In one of these cases, the ineligible 
beneficiary owed SSA a total of $69,976. 

SSA Lacks Agency-Wide Performance Goals for DI Debt Recovery, and 
Overpayment Debt Continues to Mount: 

SSA does not currently have formal, agency-wide performance goals for 
debt recovery. Specifically, the agency does not have goals for the 
percentage of DI overpayment debt recovered within the 36 month 
timeframe as required by its own policy. Under the Government 
Performance Results Act of 1993 (GPRA), federal agencies are required 
to establish performance goals to define level of performance and 
establish performance indicators to be used in measuring relevant 
outputs, service levels, and outcomes for each program activity. 
[Footnote 19] SSA's policy manual (POMS) requires staff to ask for 
full repayment within 36 months, but the agency has not made this time 
frame a performance goal. SSA officials said they are currently 
working to develop debt recovery goals. In the meantime, without 
agency-wide performance goals for debt recovery, SSA cannot adequately 
measure its performance or fully leverage and target its resources to 
recover overpayments from ineligible beneficiaries and reduce the 
total owed to SSA. Despite a substantial increase in DI debt 
collections--$340 million to $839 million from fiscal year 2001 
through fiscal year 2010--outstanding DI debt[Footnote 20] grew from 
$2.5 billion to $5.4 billion during this time, including a $225 
million increase in fiscal year 2010.[Footnote 21] (see fig. 2) Most 
overpayment debt is collected by SSA through offsets, or the 
withholding of future DI benefits for which a beneficiary is still 
eligible. SSA attributes 77 percent of the approximately $839 million 
of debt collected in fiscal year 2010 to withholding of DI benefits. 
The amount withheld from benefits to recoup previous overpayments may 
be negotiated with the debtor and based on a monthly amount the debtor 
can afford. The remainder of overpayment debt is collected in a 
variety of ways, including payments by the debtor and return of 
uncashed DI benefit checks; withholding of other SSA benefits, such as 
Supplemental Security Income (SSI); [Footnote 22] or through external 
collection including federal salary offset, administrative offset 
(other than against SSA benefits), tax refund offset, and 
administrative wage garnishment. SSA estimates that only about 11 
percent of collections is through external means. Of the 60 cases, 5 
were referred for external collection at the time of our review, for a 
total owed of $79,950, but just $2,478 had been recovered through 
these methods.[Footnote 23] 

Figure 2: Cumulative DI Overpayment Debt, Fiscal Years 2001-2010: 

[Refer to PDF for image: line graph] 

Outstanding debt balance at the end of the fiscal year: 

Fiscal year: 2001; 
Cumulative DI overpayment debt: $2.5 billion. 

Fiscal year: 2002; 
Cumulative DI overpayment debt: $2.7 billion. 

Fiscal year: 2003; 
Cumulative DI overpayment debt: $3.0 billion. 

Fiscal year: 2004; 
Cumulative DI overpayment debt: $3.2 billion. 

Fiscal year: 2005; 
Cumulative DI overpayment debt: $3.8 billion. 

Fiscal year: 2006; 
Cumulative DI overpayment debt: $4.3 billion. 

Fiscal year: 2007; 
Cumulative DI overpayment debt: $4.7 billion. 

Fiscal year: 2008; 
Cumulative DI overpayment debt: $5.0 billion. 

Fiscal year: 2009; 
Cumulative DI overpayment debt: $5.2 billion. 

Fiscal year: 2010; 
Cumulative DI overpayment debt: $5.4 billion. 

Source: SSA. 

[End of figure] 

SSA Policy Does Not Require Supervisory Review of Repayment Plans: 

SSA does not require supervisory review of repayment plans prior to 
approval, including those in which repayment periods exceed the 
recommended 36 months. The agency reported that in fiscal year 2010, 
the median time to collect a DI overpayment debt in full was 48 
months.[Footnote 24] However, in our review of 60 cases, we found that 
SSA agreed to some initial repayment plans which will take many 
decades. We analyzed the initial payment plans established for 
individuals in these cases and found[Footnote 25] 42 of the 60 had a 
payment plan in place, with a median repayment time for all 42 of 
approximately 34 months. While SSA's POMS require that staff should 
seek full repayment within 36 months, SSA officials reported that no 
supervisory approval is needed to exceed the 36 months. Of the 42 
cases with a payment plan, 19 had initial plans requiring more than 36 
months for payment in full and 7 of these required 20 years or more. 
Repayment time frames for the 42 cases ranged from less than 1 year to 
nearly 223 years for a case with a 60-year-old debtor who was paying 
$10 a month on $26,715 owed. (See fig. 3.) SSA officials told us they 
are often unable to increase monthly payment amounts and thus shorten 
repayment time frames because of a debtor's limited income. For 
instance, in a case we reviewed with an initial repayment plan of 148 
years for $44,465 in overpayments owed to SSA, SSA records show the 
individual earned less than $100 in 2010.[Footnote 26] 

Figure 3: Projected Years Needed for Payment in Full in 42 Cases with 
Initial Payment Plans, of 60 Cases Reviewed: 

[Refer to PDF for image: plotted point graph] 

Goal: 3 years. 

Size of debt: $1,126; 
Number of years to repay: 0.1. 

Size of debt: $3,842; 
Number of years to repay: 0.2. 

Size of debt: $2,620; 
Number of years to repay: 0.2. 

Size of debt: $3,218; 
Number of years to repay: 0.2. 

Size of debt: $3,299; 
Number of years to repay: 0.2. 

Size of debt: $8,005; 
Number of years to repay: 0.4. 

Size of debt: $2,677; 
Number of years to repay: 0.5. 

Size of debt: $7,372; 
Number of years to repay: 0.5. 

Size of debt: $4,116; 
Number of years to repay: 0.5. 

Size of debt: $6,660; 
Number of years to repay: 0.6. 

Size of debt: $10,957; 
Number of years to repay: 0.7. 

Size of debt: $20,641; 
Number of years to repay: 1. 

Size of debt: $9,976; 
Number of years to repay: 1. 

Size of debt: $3,202; 
Number of years to repay: 1. 

Size of debt: $11,320; 
Number of years to repay: 1.1. 

Size of debt: $4,898; 
Number of years to repay: 1.2. 

Size of debt: $11,935; 
Number of years to repay: 1.2. 

Size of debt: $15,911; 
Number of years to repay: 1.2. 

Size of debt: $17,010; 
Number of years to repay: 1.8. 

Size of debt: $29,089; 
Number of years to repay: 2.4. 

Size of debt: $47,606; 
Number of years to repay: 2.7. 

Size of debt: $38,734; 
Number of years to repay: 2.9. 

Size of debt: $16,904; 
Number of years to repay: 3. 

Size of debt: $5,134; 
Number of years to repay: 3.3. 

Size of debt: $1,933; 
Number of years to repay: 3.9. 

Size of debt: $3,096; 
Number of years to repay: 5.2. 

Size of debt: $12,482; 
Number of years to repay: 5.2. 

Size of debt: $42,301; 
Number of years to repay: 6.6. 

Size of debt: $8,442; 
Number of years to repay: 7.9. 

Size of debt: $19,843; 
Number of years to repay: 8.3. 

Size of debt: $5,062; 
Number of years to repay: 8.4. 

Size of debt: $7,392; 
Number of years to repay: 12.3. 

Size of debt: $15,429; 
Number of years to repay: 12.9. 

Size of debt: $17,509; 
Number of years to repay: 14.6. 

Size of debt: $22,830; 
Number of years to repay: 19. 

Size of debt: $22,582; 
Number of years to repay: 25.1. 

Size of debt: $16,938; 
Number of years to repay: 28.2. 

Size of debt: $21,539; 
Number of years to repay: 30. 

Size of debt: $52,749; 
Number of years to repay: 30. 

Size of debt: $10,314; 
Number of years to repay: 30. 

Size of debt: $44,465; 
Number of years to repay: 30. 

Size of debt: $26,715; 
Number of years to repay: 30. 

Also on the graph are 5 cases with the following projected repayment 
times: 
36 years; 
44 years; 
86 years; 
148 years; 
223 years. 

Source: GAO analysis of SSA data. 

[End of figure] 

In the course of analyzing repayment plans, we found that the ROAR 
system cannot capture and track overpayment debt scheduled to be 
collected beyond the year 2049. As a result, the overpayment debt on 
the agency's books, and reported to the Department of the Treasury for 
the federal government's consolidated financial statements, is 
understated to some unknown extent. This ROAR system limitation stems 
from a program modification used to address the change of the century 
(Y2K) computer issue, and which extended the debt recovery date in 
ROAR from "1999" to "2049". Under existing SSA policies and 
procedures,[Footnote 27] SSA staff manually remove from the ROAR 
system the portion of any debt that cannot be collected before the 
year 2050, and create a reminder in the system to recover that balance 
beginning in the year 2050. However, because this is a manual process, 
the intended recovery action could be potentially missed by staff. For 
example, 3 of the 60 cases we reviewed had a total of $43,285 in 
overpayments removed from ROAR system records because collection of 
these payments will occur after the year 2049. Because the results of 
our case review are not generalizable, we could not determine how many 
additional disability overpayment cases detected by SSA fell into this 
category. Unless corrected, more overpayments will likely to continue 
to be underreported as the years progress. Since bringing this issue 
to their attention, SSA officials told us that the agency has begun to 
study this ROAR system limitation and an agency working group will 
recommend a course of action to correct the problem. SSA officials 
also reported several initiatives either planned or under way that 
could improve the recovery of overpayment debt, including charging 
interest and penalties, offsetting state payments, and eliminating the 
10-year limit on making referrals of some debts for external 
collection. 

Lack of Timely Earnings Data and Inconsistent Processing of Work CDRs 
Allow Overpayments to Accrue: 

SSA conducts periodic computer matches with wage data from the 
Internal Revenue Service to independently verify beneficiaries' 
earnings. However, earnings data provided through the IRS match are 
often more than a year old when SSA staff begin the work CDR prompted 
by the IRS data. Managers and staff at the four processing centers we 
visited cited this delay as a major obstacle to limiting the 
occurrence and size of overpayments. Our work shows that this has 
delayed processing of work CDRs. In the 60 cases we reviewed, the 
earnings data were already between 6 and 26 months old by the time 
they were available to SSA staff for performing work CDRs. (See figure 
4).[Footnote 28] 

Figure 4: Age of Earnings Data Provided to SSA by IRS Earnings Alerts, 
of 60 Cases Reviewed: 

[Refer to PDF for image: vertical bar graph] 

Age of earnings data (in months): 0-12; 
Number of cases: 3. 

Age of earnings data (in months): 12-18; 
Number of cases: 29. 

Age of earnings data (in months): 18-24; 
Number of cases: 24. 

Age of earnings data (in months): 24 or more; 
Number of cases: 4. 

Source: GAO analysis of SSA data. 

[End of figure] 

While DI beneficiaries are responsible for notifying SSA when they 
return to work as a condition of receiving benefits, they sometimes 
fail to make such notifications. Our review of 60 cases found no 
indication in 49 that the individual had reported earnings to SSA as 
instructed by regulation. In the other 11 cases, beneficiaries had 
reported returning to work, including the name of their employer and 
the amount of their wages, at some point. Yet 6 of these cases 
resulted in about $78,000 in total overpayments, even though the 
beneficiary reported returning to work more than a year prior to 
initiation of the work CDR. In the remaining 5 cases, the beneficiary 
reported working only after the CDR was initiated. 

Earnings data from IRS or from beneficiaries may age further once 
received by SSA because staff sometimes do not begin a work CDR 
immediately. From the date of the initial IRS alert to the date staff 
begin work on the CDR, it is categorized as a case "pending 
development". In the 60 cases we reviewed, the median time cases were 
pending development was 205 days, or about 7 months, and ranged from 2 
to 466 days, or more than 15 months.[Footnote 29] For example, in the 
466-day case, the IRS alert came to SSA in September 2007, when 
earnings (for 2006) were already 15 months old, then aged an 
additional 15 months until SSA staff began developing the work CDR. 
SSA officials could not explain what caused the delay in initiating 
development of this case or of several others we reviewed. 

The delays that occur when staff do not act promptly to begin a work 
CDR, in combination with the initial delays in receiving beneficiary 
earnings data (either from the IRS enforcement operation, or 
beneficiaries' failure to self-report earnings), result in multiple DI 
overpayments which may continue to accrue for extended periods of time 
before they are addressed. For example, in the 60 cases we reviewed, 
delays which occurred after IRS alerts were delivered to SSA resulted 
in individual beneficiaries being overpaid for up to 38 
months.[Footnote 30] Most received fewer than 12 months of 
overpayments, but 19 of the cases received 18 or more months of 
overpayments. According to an SSA official, staff shortages and the 
need to focus resources on competing workloads, such as initial DI 
claims and medical CDRs, are among the factors delaying development of 
work CDRs in SSA's processing centers once earnings information is 
received. (See figure 5): 

[See PDF for image] 

[End of figure] 

Figure 5: Number of Months Overpayments Accrued As CDR Development 
Pending, of 60 Cases Reviewed: 

Months of overpayments: 0-6; 
Number of cases: 18. 

Months of overpayments: 6-12; 
Number of cases: 14. 

Months of overpayments: 12-18; 
Number of cases: 9. 

Months of overpayments: 18-24; 
Number of cases: 9. 

Months of overpayments: 24 or more; 
Number of cases: 10. 

Source: GAO analysis of SSA data. 

[End of figure] 

In 2004, we recommended that SSA seek to use large scale batch matches 
with an alternative database of earnings, the National Directory of 
New Hires (NDNH), which was originally established to help states 
locate noncustodial parents for child support payments. The NDNH could 
provide SSA with quarterly wage information on existing employees 
within four months of the end of a calendar quarter.[Footnote 31] 
Several federal programs and agencies currently use the NDNH to verify 
program eligibility, detect and prevent potential fraud or abuse, and 
collect overpayments. SSA already has the authority to obtain NDNH 
earnings data on a case by case basis,[Footnote 32] but as we 
previously reported[Footnote 33] lacks the authority to match SSA and 
NDNH data on a large scale, or batch, basis. In 2009, SSA conducted a 
cost effectiveness study on use of the NDNH, but SSA officials told us 
the study showed such matches would generate a large number of alerts 
needing development that were not of high quality due to data 
reliability issues, or "false positives". They also said the study 
found return on investment of only about $1.40 in savings for each $1 
spent. SSA provided GAO with a limited overview of the study but we 
were unable to independently verify its accuracy or completeness 
because the information provided lacked sufficient detail. However, 
the agency's experience with the NDNH in its SSI program suggests it 
may be more cost-effective than indicated by SSA's analysis. The NDNH 
provides SSA staff with access to more comprehensive and timely 
employment and wage information, according to SSA officials, and the 
match has resulted in an estimated $200 million in SSI overpayment 
preventions and recoveries per year. Moreover, even if the benefit-to-
cost ratio of using the NDNH for identifying DI beneficaries' earnings 
is only 1.4 to 1.0, as reported by SSA, this still represents a 40 
percent rate of return. 

SSA Lacks Agency-Wide Performance Goals and a Consistent Approach for 
Processing Work CDRs: 

SSA does not have agency-wide performance goals or a consistent 
approach for processing work CDRs across its processing centers. 
Specifically, the agency lacks performance goals for the number of 
cases that are pending development or for number of days taken to 
process a work CDR. While SSA has established an agency-wide goal for 
processing a certain number of medical CDRs in a fiscal year, and 
includes this goal in the agency's annual performance plan, SSA 
officials told us they have not established similar goals for work 
CDRs. Instead, they have established targets for the processing 
centers. For example, SSA has set targets for 95 percent of IRS alerts 
on earnings generated in 2008 or earlier to have a work CDR completed 
by September 24, 2010, and for processing centers to complete 
development of cases within 270 days.[Footnote 34] SSA officials said 
work CDRs completed were generally not tracked prior to fiscal year 
2010. We also found that while SSA's policies establish steps for work 
CDR processing to be followed across all processing centers, 
processing times across the four centers we visited varied widely once 
development was initiated. More specifically, we found that processing 
times for the 60 cases we reviewed ranged from 82 to 992 days (with a 
median of 396 days) [Footnote 35] and resulted in combined 
overpayments totaling more than $1 million. We also found processing 
times varied depending on processing center. For example, while the 
median processing time for the cases we reviewed from three centers 
ranged from 307 to 397 days, median processing time at the fourth 
center, which processes about 50 percent of all work CDRs, was 626 
days. (See figure 6): 

Figure 6: Variance in total case processing time across four 
processing centers visited, for 60 cases reviewed: 

[Refer to PDF for image: illustration] 

Processing center A: 
Minimum: 254 days; 
Median: 397 days; 
Maximum: 552 days. 

254397552 

Processing center B: 
Minimum: 205 days; 
Median: 307 days; 
Maximum: 633 days. 

205307633 

Processing center C: 
Minimum: 82 days; 
Median: 314 days; 
Maximum: 454 days. 

82314454 

Processing center D: 
Minimum: 476 days; 
Median: 626 days; 
Maximum: 992 days. 

Source: GAO analysis of SSA data. 

[End of figure] 

Within the last year, SSA has started work on some new initiatives to 
identify CDR enforcement alerts that pose a greater likelihood of 
resulting in large overpayments. These include prioritizing IRS alerts 
with reported earnings that are greater than or equal to 12 times the 
current SGA level in an effort to better target cases for work CDRs, 
as well as working to update and streamline existing procedures 
regarding the initiation, follow-up timeframes, and overall completion 
of work continuing disability reviews for processing center personnel. 
While these and other recent initiatives represent promising steps, it 
is too early to assess what impact they may have on the prevalence and 
size of DI overpayments. 

Chairmen, Ranking Members, and Members of the Subcommittees, this 
concludes my prepared statement. I would be pleased to respond to any 
questions you or other Members of the subcommittees may have at this 
time. 

Contact and Staff Acknowledgments: 

Daniel Bertoni at (202) 512-7215 or bertonid@gao.gov. 

In addition to the contact mentioned above, Jeremy Cox, Assistant 
Director; Arthur T. Merriam Jr., Analyst-in-Charge; Susan Aschoff; 
James Bennett; David Forgosh; Monika Gomez; Angela Jacobs; Joel Marus; 
Sheila McCoy; Cady Panetta; Nyree Ryder Tee; Vanessa Taylor; Walter 
Vance; and Craig Winslow made key contributions to this statement. 

[End of section] 

Footnotes: 

[1] 20 C.F.R. § 404.1571 (2011). The substantial gainful activity 
level was $1,000 per month in 2010 for beneficiaries with disabilities 
and $1640 per month for blind beneficiaries. 

[2] 20 C.F.R. § 404.1592 (2011). 

[3] 20 C.F.R. § 404.1589 (2011). 

[4] SSA administers the Ticket to Work program, to provide eligible DI 
beneficiaries with employment services, vocational rehabilitation 
services, or other support services to help them obtain and retain 
employment and reduce their dependence on benefits. See GAO, Social 
Security Disability: Ticket to Work Program: Participation Has 
Increased, but Additional Oversight is Needed. GAO-11-324, Washington, 
D.C.: May 2011. 

[5] 20 C.F.R. § 404.1589 (2011). We use the term "work CDRs" to 
describe "full" work CDRs in which a case is fully developed and staff 
fills out specific forms to receive work credit for completing a work 
CDR, as well as instances in which SSA staff perform limited 
development of beneficiary earnings because they determine that a full 
work CDR is not necessary (an activity that SSA refers to as a "work 
CDR action"). SSA also conducts medical CDRs to periodically assess 
beneficiaries' continuing medical eligibility for benefits. 

[6] SSA generally uses six times the monthly SGA amount, or $6,000 in 
2010, as the annual earnings cutoff: Beneficiaries whose annual 
earnings are $6,000 or less are likely to keep their DI benefits 
because their monthly earnings are expected to be below program 
earning limits. 

[7] About half of the cases are sent to the processing center in SSA's 
Office of Disability Operations (ODO) in Baltimore, Maryland. ODO is 
responsible for handling beneficiaries who are less than 54 years of 
age and live in the U.S. The remaining cases are sent to one of the 
remaining 7 processing centers. 

[8] 20 C.F.R § 404.1589 (2011). SSA contracts with state Disability 
Determination Services that are responsible for assessing whether an 
individual has a disability (a "medical" CDR). During the course of a 
medical CDR, examiners sometimes find evidence that a beneficiary may 
be working. 

[9] 20 C.F.R. § 404.1588 (2011). Under the regulation, beneficiaries 
are responsible for reporting certain events that may change their 
disability status. 

[10] In 2004, SSA implemented the eWork system, which is the primary 
system for processing work CDR cases in headquarters and field 
locations. 

[11] "Earnings reviewers" in the processing centers are generally 
responsible for initial analysis of a beneficiary's earnings; however, 
only disability processing specialists have the authority to cease 
benefits. In SSA's field offices, the claims representatives are 
responsible for the duties performed by both the disability processing 
specialist and the earnings reviewer. 

[12] A beneficiary requests reconsideration when he or she disputes 
the occurrence of the overpayment itself 20 C.F.R. § 404.907 (2011); 
and requests a waiver when asserting he or she is both not responsible 
for the overpayment and incapable of repaying the debt, 20 C.F.R. § 
404.506 (2011). A waiver permanently terminates collection of a debt 
and removes the debt from SSA's balance sheet. 

[13] 42 U.S.C. § 404(b). 

[14] 20 C.F.R. § 404.530 (2011). 

[15] In addition, SSA reports overdue debts to consumer and credit 
reporting agencies. 20 C.F.R. §§ 422.305 and 422.306 (2011). This does 
not result directly in increased collections, but acts as a 
disincentive to individuals who decline to establish a repayment plan 
with SSA. The agency sends a notice indicating that a failure to 
establish a repayment plan will result in such referrals. A poor 
credit score can result in greater difficulty borrowing money on 
favorable terms and other negative consequences for the debtor. 

[16] DI benefits paid by the program increased from about $58 billion 
to nearly $123 billion from fiscal year 2001 through fiscal year 2010. 
Most overpayments are detected in the fiscal year, or years after, 
they occur, so overpayment figures do not reflect overpayments made 
during the fiscal year cited. Reported overpayments do not include 
amounts removed from the record due to systems limitations, discussed 
later in this report. 

[17] Percentage applies to projected overpayment dollars, not 
incidents of overpayments. The Office of Quality Performance reviews a 
sample of work CDR cases each year to project total DI overpayments 
for the year as well as the prevalence of types of errors resulting in 
those overpayments. GAO last reported on the estimated share of work, 
or SGA, related overpayments in 2004. GAO Disability Insurance: SSA 
Should Strengthen Its Efforts to Detect and Prevent Overpayments. 
[hyperlink, http://www.gao.gov/products/GAO-04-929]. Washington, D.C.: 
September 10, 2004. 

[18] This could affect all overpayment records, not just work-related 
overpayment records. 

[19] Pub. L. No. 103-62, § 4(b), 107 Stat. 285, 287 (codified at 31 
U.S.C. § 1115(a)). 

[20] Overpayment debt is comprised of existing debt carried forward 
from prior years as well as new debt. 

[21] The stated amounts for DI overpayment debt do not include 
interest or penalties. 

[22] Withholding from old age and survivor's (retiree) benefits is 
limited to 10 percent of the monthly benefit and from SSI to the 
lesser of the amount of the benefit or 10 percent of the beneficiary's 
monthly income. 42 U.S.C. 1320b-17(b). 

[23] Case file data were pulled between September 2010 and November 
2010, or for roughly the first quarter of fiscal year 2011. Most of 
these criteria were established for and by the Department of Treasury, 
which administers external collection, per the Debt Collection 
Improvement Act of 1996, Pub. L. No. 104-134. § 31001, 110 Stat. 1321, 
1321-358 - 1321-380. 

[24] Social Security Administration's Fiscal Year 2010 Performance and 
Accountability Report. 

[25] In the 60 cases we reviewed, we analyzed the number of years to 
repay the initial work-related overpayment debt, less any initial 
waivers or one-time payments, given the first recurring monthly 
payment established in the ROAR record. 

[26] DI does not have a cap on program benefit withholding. Instead, 
debt specialists set withholding amounts on a case by case basis. 

[27] Effective as of April, 2007. 

[28] Alerts for 24 of the 60 cases were delivered in cycles prior to 
2008, most in 2007. Deliveries were delayed that year as well to July 
in the first cycle and September in the second cycle. 

[29] Among the four processing centers we visited, the median time 
spans from alert to beginning work on the CDR was 157, 165, 199, and 
214 days. 

[30] This is illustrative of how long overpayments occurred even 
before the case was flagged for review by the enforcement operation. 

[31] The NDNH contains quarterly state wage information which is more 
recent than the annual wage information that SSA obtains through its 
current IRS data match. SSA currently uses the NDNH to periodically 
monitor the earnings of SSI recipients. 

[32] 42 U.S.C. § 653(j)(4). 

[33] GAO Disability Insurance: SSA Should Strengthen Its Efforts to 
Detect and Prevent Overpayments, [hyperlink, 
http://www.gao.gov/products/GAO-04-929] (Washington, D.C.: September 
10, 2004). 

[34] SSA begins measuring this target from the time staff begin work 
on developing the case through the cessation was made. 

[35] We measured processing time from the time the IRS alert was 
generated through the time the cessation decision was made. 

[End of section] 

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