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Recovering Overpayments, but Management Attention Should Continue' 
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United States General Accounting Office: 
GAO: 

Report to the Commissioner of Social Security: 

September 2002: 

Supplemental Security Income: 

Progress Made in Detecting and Recovering Overpayments, but Management 
Attention Should Continue: 

GAO-02-849: 

Contents: 

Letter: 

Results in Brief: 

Background: 

Overpayment Deterrence and Detection Are Receiving Additional Emphasis 
but Some Weaknesses Remain: 

Overpayment Recovery Improved, but Other Actions Could Enhance Program 
Management: 

Conclusions: 

Recommendations: 

Agency Comments and Our Evaluation: 

Appendix I: Comments from the Social Security Administration: 

Related GAO Products: 

Figures: 

Figure 1: Percentage Change in Overpayment Waivers, SSI Benefit 
Payments, and SSI Beneficiaries Since 1993: 

Figure 2: Ratio of Overpayments Waived to Overpayments Collected, 
Fiscal Years 1989 through 2001: 

Abbreviations: 

CDI: Cooperative Disability Investigation: 

DDS: Disability Determination Services: 

ISM: in-kind support and maintenance: 

NDNH: National Directory of New Hires: 

OIG: Office of Inspector General: 

SSA: Social Security Administration: 

SSI: Supplemental Security Income: 

SSN: social security number: 

[End of section] 

United States General Accounting Office: 
Washington, DC 20548: 

September 16, 2002: 

The Honorable Jo Anne B. Barnhart: 
Commissioner of Social Security: 

Dear Ms. Barnhart: 

The Supplemental Security Income (SSI) program is the nation’s largest
cash assistance program for the poor. The program paid about $33 billion
in benefits to 6.8 million aged, blind, and disabled persons in fiscal 
year 2001. Benefit eligibility and payment amounts for the SSI 
population are determined by complex and often difficult to verify 
financial factors such as an individual’s income, resource levels, and 
living arrangements. Individual financial circumstances may also often 
change, requiring staff to frequently assess recipients’ eligibility 
for benefits. Thus, the SSI program tends to be difficult, labor 
intensive, and time-consuming to administer. These factors also make 
the SSI program vulnerable to overpayments. In 2001, outstanding SSI 
debt and newly detected overpayments for the year totaled $4.7 billion. 
We designated SSI a high-risk program in 1997 after several years of 
reporting on specific instances of abuse and mismanagement, including 
poor overpayment detection and recovery practices. The following year, 
we issued a report with several recommendations for improving SSI 
program operations. [Footnote 1] 

This report discusses the actions that the Social Security 
Administration (SSA) has taken over the past several years to better 
(1) deter and detect SSI overpayments and (2) recover SSI overpayments 
after they occur. To examine these issues, we reviewed SSI performance 
data, our prior reports, and various internal and external studies of 
the SSI program. We also analyzed SSI penalty and overpayment waiver 
data, as well as trends in overpayments detected and recovered. We 
conducted more than 175 interviews with management and line staff from 
SSA’s headquarters in Baltimore; its Philadelphia, San Francisco, and 
Atlanta regions; and from state Disability Determination Services 
(DDS). During our meetings, we documented management and staff views on 
the priority SSA places on improving program integrity and verified 
policy and procedural changes that have been made in SSI operations. We 
also discussed the effectiveness of new overpayment deterrence, 
detection and recovery tools, as well as remaining program 
vulnerabilities. We conducted our work from June 2001 through July 2002 
in accordance with generally accepted government auditing standards. 

Results in Brief: 

SSA has demonstrated a stronger commitment to SSI program integrity
and taken many actions to better deter and detect overpayments. For
example, SSA: 

* obtained legislative authority in 1999 to use additional tools to 
verify recipients’ financial eligibility for benefits, including 
strengthening its ability to access individuals’ bank account 
information; 

* developed additional measures to hold staff accountable for completing
assigned SSI workloads and resolving overpayment issues; 

* provided field staff with direct access to state databases to 
facilitate more timely verification of recipients’ wages and employment 
information; and; 

* significantly increased, since 1998, the number of eligibility reviews
conducted each year to verify recipients’ income, resources, and
continuing eligibility for benefits. 

Because a number of SSA’ s initiatives are still in the planning or 
early implementation stages, it is too soon to tell what impact they may
ultimately have on improving the accuracy of SSI eligibility decisions 
and reducing overpayments. Moreover, there continue to be 
vulnerabilities that SSA has yet to address. These include excessively 
complex program rules and limited use of monetary and administrative 
penalties for persons who fail to report information affecting their 
benefits and knowingly provide misleading statements. 

In addition to better detection and deterrence of SSI overpayments, SSA
has made recovery of overpaid benefits a higher priority. For example, 
in 1998 SSA began seizing the tax refunds of former SSI recipients with
outstanding debt. Recently, SSA also began more aggressive actions to
recover overpayments from former SSI recipients by reducing any social
security retirement or disability benefits they receive. Despite these
efforts, further improvements in overpayment recovery are possible. For
example, legislation passed in 1999 includes provisions authorizing SSA 
to levy interest and use collection agencies to pursue SSI debt. These 
tools have yet to be implemented. There has also been dramatic growth 
in the amount of overpayments waived. Annual overpayments waived have 
increased 400 percent since 1993 and currently amount to nearly
one-fourth of SSA’s total overpayment collections. At a time when SSA 
has enhanced its debt recovery capabilities, its waiver policies and 
practices may be preventing the recovery of millions of dollars in 
overpayments. 

Sustained management attention should continue to ensure progress 
towards fully implementing crucial overpayment deterrence, detection,
and recovery tools. This report includes recommendations that SSA 
address complex SSI program rules to better prevent payment errors, 
reassess its current polices and procedures for imposing administrative
penalties and sanctions, and ensure that overpayment waiver policies are
designed and implemented in a way that maintains program integrity. In
its response to our report, SSA agreed with our recommendations and said
the report would be helpful in its efforts to better manage the SSI 
program. SSA also provided a number of technical comments that we have
incorporated into our draft report as appropriate. 

Background: 

SSI provides financial assistance to people who are age 65 or older, 
blind or disabled, and who have limited income and resources. The 
program provides individuals with monthly cash payments to meet basic 
needs for food, clothing, and shelter. Last year, about 6.8 million 
recipients were paid about $33 billion in SSI benefits. During the 
application process, SSA relies on state Disability Determination 
Services to make the initial medical determination of eligibility while 
SSA field offices are responsible for determining whether applicants 
meet the program’s nonmedical (age and financial) eligibility 
requirements. To receive SSI benefits in 2002, individuals may not have
income greater than $545 per month ($817 for a couple) or have resources
worth more than $2,000 ($3,000 for a couple). When applying for SSI,
individuals are required to report any information that may affect their
eligibility for benefits. Similarly, once individuals receive SSI 
benefits, they are required to report events, such as changes in 
income, resources, marital status, or living arrangements to SSA field 
office staff in a timely manner. A recipient’s living arrangement can 
also affect monthly benefits. Generally, individuals who rent, own 
their home, or pay their share of household expenses if they live with 
other persons receive a higher monthly benefit than those who live in 
the household of another person and receive food and shelter 
assistance. 

To a significant extent, SSA depends on program applicants and 
recipients to accurately report important eligibility information. 
However, to verify this information SSA uses computer matches to 
compare SSI records against recipient information contained in records 
of third parties, such as other federal and state government agencies. 
To determine whether recipients remain financially eligible for SSI 
benefits after the initial assessment, SSA also periodically conducts 
redetermination reviews to verify eligibility factors such as income, 
resources, and living arrangements. Recipients are reviewed at least 
every 6 years, but reviews may be more frequent if SSA determines that 
changes in eligibility are likely. 

Since its inception, the SSI program has been difficult and costly to
administer because even small changes in monthly income, available
resources, or living arrangements can affect benefit amounts and
eligibility. Complicated policies and procedures determine how to treat
various types of income, resources, and in-kind support and maintenance
that a recipient receives. SSA must constantly monitor these situations 
to ensure benefit amounts are paid accurately. On the basis of our work,
which spans more than a decade, we designated SSI a high-risk program in
1997 and initiated work to document the underlying causes of 
longstanding SSI program problems and the impact these problems have
had on program performance and integrity. [Footnote 2] In 1998, we 
reported on a variety of management problems related to the deterrence, 
detection, and recovery of SSI overpayments. Over the last several 
years, we also testified about SSA’s progress in addressing these 
issues (see app. I). 

Overpayment Deterrence and Detection Are Receiving Additional Emphasis 
but Some Weaknesses Remain: 

Since 1998, SSA has demonstrated a stronger management commitment to
SSI program integrity issues. SSA has also expanded the use of
independent data to verify eligibility factors and enhanced its ability 
to detect payment errors. Today, SSA has far better capability to more
accurately verify program eligibility and detect payment errors than it 
did several years ago. However, weaknesses remain in its debt 
prevention and deterrence processes. SSA has made limited progress 
toward simplifying complex program rules that contribute to payment 
errors and is not fully utilizing several overpayment prevention tools, 
such as penalties and the suspension of benefits for recipients who 
fail to report eligibility information as required. 

Management Has Heightened Attention to SSI Program Integrity: 

Since our 1998 report, SSA has taken a variety of actions that 
demonstrate a fundamental change in its management approach and a much 
stronger commitment to improved program integrity. First, SSA issued a 
report in 1998 that outlined its strategy for strengthening its SSI 
stewardship role. [Footnote 3] This report highlighted specific planned 
initiatives to improve program integrity and included timeframes for 
implementation. In addition to developing a written SSI program 
integrity strategy, SSA submitted proposals to Congress requesting new 
authorities and tools to implement its strategy. In December 1999, 
Congress provided SSA with several newly requested tools in the Foster 
Care Independence Act of 1999. The act gave SSA new authorities to 
deter fraudulent or abusive actions, better detect changes in recipient 
income and financial resources, and improve its ability to recover 
overpayments. Of particular note is a provision in the act that 
strengthened SSA’s authority to obtain applicant resource information
from banks and other financial institutions. SSA’s data show that
unreported financial resources, such as bank accounts, are the second
largest source of SSI overpayments. SSA also sought and received 
separate legislative authority to penalize persons who misrepresent 
material facts essential to determining benefit eligibility and payment 
amounts. SSA can now impose a period of benefit ineligibility ranging 
from 6 to 24 months for individuals who knowingly misrepresent facts. 

SSA also made improved program integrity one of its five agency 
strategic goals and established specific objectives and performance 
indicators to track its progress towards meeting this goal. For 
example, the agency began requiring its field offices to complete 99 
percent of their assigned redetermination reviews and other cases where 
computer matching identified a potential overpayment situation due to 
unreported wages, changes in living arrangements, or other factors. 
During our review, most field staff and managers that we interviewed 
told us that SSA’s efforts to establish more aggressive goals and 
monitor performance toward completing these reviews was a clear 
indication of the new enhanced priority it now places on ensuring 
timely investigation of potential SSI overpayments. 

To further increase staff attention to program integrity issues, SSA 
also revised its work measurement system—used for estimating resource
needs, gauging productivity, and justifying staffing levels—to include 
staff time spent developing information for referrals to its Office of 
Inspector General (OIG). In prior work, we reported that SSA’s own 
studies showed that its employees felt pressured to spend most of their 
time on “countable” workloads, such as quickly processing and paying 
claims rather than on developing fraud referrals for which they 
received no credit. Consistent with this new emphasis, the OIG also 
increased the level of resources and staff devoted to investigating SSI 
fraud and abuse; key among the OIG’s efforts is the formation of 
Cooperative Disability Investigation (CDI) teams in 13 field locations. 
These teams consist of OIG investigators, SSA staff, state or local law 
enforcement officers, and state DDS staff who investigate suspicious 
medical claims through surveillance and other techniques. A key focus 
of the CDI initiative is detecting fraud and abuse earlier in the 
disability determination process to prevent overpayments from 
occurring. The OIG reported that the teams saved almost $53 million in 
fiscal year 2001 in improper benefit payments by providing information 
that led to a denial of a claim or the cessation of benefits. 

Finally, in a June 2002 corrective action plan, SSA reaffirmed its
commitment to taking actions to facilitate the removal of the SSI 
program from our high-risk list. This document described SSA’s progress 
in addressing many of the program integrity vulnerabilities we 
identified and detailed management’s SSI program priorities through 
2005. [Footnote 4] To ensure effective implementation of this plan, SSA 
has assigned senior managers responsibility for overseeing key 
initiatives, such as piloting new quality assurance systems. The report 
also highlighted several other program integrity initiatives under 
consideration by SSA, including plans to test whether touchtone 
telephone technology can improve the reporting of wages, credit bureau 
data can be used to detect underreported income, and public databases 
can help staff identify unreported resources, for example, automobiles 
and real property. To assist field staff in verifying the identity of 
recipients, SSA is also exploring the feasibility of requiring new SSI 
claimants to be photographed as a condition of receiving benefits. 

SSA Has Improved Its Ability to Detect Payment Errors: 

In prior work, we noted that SSA’s processes and procedures for 
verifying recipients’ income, resources, and living arrangements were 
often untimely and incomplete. In response to our recommendations, SSA 
has taken numerous actions to verify recipient reported information and 
better detect and prevent SSI payment errors. 

SSA has made several automation improvements to help field managers
and staff better control overpayments. For example, last year, the 
agency distributed software nationwide that automatically scans 
multiple internal and external databases containing recipient financial 
and employment information and identifies potential changes in income 
and resources. The system then generates a consolidated report for use 
by staff when interviewing recipients. SSA also made systems 
enhancements to better identify newly entitled recipients with 
uncollected overpayments from a prior coverage period. Previously, each 
time an individual came on and off the rolls over a period of years, 
staff had to search prior SSA records and make system inputs to bring 
forward any outstanding overpayments to current records. The process of 
detecting overpayments from a prior eligibility period and updating 
recipient records now occurs automatically. SSA’s data show that, since 
this tool was implemented in 1999, the monthly amount of outstanding 
overpayments transferred to current records increased on average by 
nearly 200 percent, from $12.9 million a month to more than $36 million 
per month. Thus, a substantial amount of outstanding overpayments that 
SSA might not have detected under prior processes is now subject to 
collection action. Nearly all SSA staff and managers that we 
interviewed told us that systems enhancements have improved SSA’s 
ability to control overpayments. 

In commenting on this report, SSA said that it will soon implement 
another systems enhancement to improve its overpayment processes. SSA 
will automatically net any overpayments against underpayments that 
exist on a recipient’s record before taking any recovery or 
reimbursement actions. Presently, netting requires SSA employees to 
record a series of transactions and many opportunities to recover 
overpayments by netting them against existing underpayments are lost. 
SSA estimates that automating the netting process will reduce 
overpayments by up to $60 million each year, with a corresponding 
reduction in underpayments paid to beneficiaries. 

In addition to systems and software upgrades, SSA now uses more timely
and comprehensive data to identify information that can affect SSI
eligibility and benefit amounts. For example, in accordance with our 
prior recommendation, [Footnote 5] SSA obtained access to the Office of 
Child Support Enforcement’s National Directory of New Hires (NDNH), 
which is a comprehensive source of unemployment insurance, wage, and 
new hires data for the nation. In January 2001, SSA began providing 
field offices with direct access to NDNH and required its use to verify 
applicant eligibility during the initial claims process. With NDNH, SSA 
field staff now have access to more comprehensive and timely employment 
and wage information essential to verifying factors affecting SSI 
eligibility. More timely employment and wage information is 
particularly important, considering that SSA studies show that 
unreported compensation accounts for about 25 percent of annual SSI 
overpayments. SSA has estimated that use of NDNH will result in about 
$200 million in overpayment preventions and recoveries per year. 

Beyond obtaining more effective eligibility verification tools such as
NDNH, SSA has also enhanced existing computer data matches to verify
financial eligibility. For example, SSA increased the frequency (from
annually to semiannually) in which it matches SSI recipient social 
security numbers (SSN) against its master earnings record, which 
contains information on the earnings of all social security-covered 
workers. In 2001, SSA flagged over 206,000 cases for investigation of 
unreported earnings, a threefold increase over 1997 levels. 

To better detect individuals receiving unemployment insurance benefits,
quarterly matches against state unemployment insurance databases have
replaced annual matches. Accordingly, the number of unemployment
insurance detections has increased from 10,400 in 1997 to over 19,000 
last year. SSA’s ability to detect nursing home admissions, which can 
affect SSI eligibility, [Footnote 6] has also improved. In 1997, we 
reported that SSA’s database for identifying SSI recipients residing in 
nursing homes was incomplete and its verification processes were 
untimely, resulting in substantial overpayments. At the time, this 
database included only 28 states and data matches were conducted 
annually. SSA now conducts monthly matches with all states, and the 
number of overpayment detections related to nursing home admissions has 
increased substantially from 2,700 in 1997 to 75,000 in 2001. SSA’s 
ability to detect recipients residing in prisons has also improved. 
Over the past several years, SSA has established agreements with 
prisons that house 99 percent of the inmate population, and last year 
SSA reported suspending benefits to about 54,000 prisoners. Recipients 
are ineligible for benefits in any given month if throughout that month 
they are in prison. SSA has also increased the frequency in which it 
matches recipient SSNs against tax records and other data essential to
identify any unreported interest, income, dividends, and pension income
individuals may be receiving. These matching efforts have also resulted 
in thousands of additional overpayment detections over the last few 
years. 

To obtain more current information on the income and resources of SSI
recipients, SSA has also increased its use of online access to various 
state data. Field staff can directly query various state records to 
quickly identify workers’ compensation, unemployment insurance, or 
other state benefits individuals may be receiving. In 1998, SSA had 
online access to records in 43 agencies in 26 states. As of January 
2002, SSA had expanded this access to 73 agencies in 42 states. As a 
tool for verifying SSI eligibility, direct online connections are 
potentially more effective than using periodic computer matches, 
because the information is more timely. Thus, SSA staff can quickly 
identify potential disqualifying income or resources at the time of 
application and before overpayments occur. In many instances, this 
allows the agency to avoid having to go through the often difficult and
unsuccessful task of having to recover overpaid SSI benefits. During our
field visits, staff and managers who had online access to state 
databases believed this tool was essential to more timely verification 
of recipient-reported information. SSA’s efforts to expand direct 
access to additional states’ data are ongoing. 

Finally, to further strengthen program integrity, SSA took steps to 
improve its SSI financial redetermination review process to verify that 
individuals remain eligible for benefits. First, SSA increased the 
number of annual reviews from 1.8 million in fiscal year 1997 to 2.4 
million in 2001. Second, SSA substantially increased the number of 
redeterminations conducted through personal contact with recipients, 
from 237,000 in 1997 to almost 700,000 this year. SSA personally 
contacts those recipients that it believes are most likely to have 
payment errors. Third, because budget constraints limit the number of 
redeterminations SSA conducts, it refined its profiling methodology in 
1998 to better target recipients that are most likely to have payment 
errors. Refinements in the selection methodology have allowed SSA to 
leverage its resources. SSA’s data show that, in 1998, refining the 
case selection methodology increased estimated overpayment benefits—
amounts detected and future amounts prevented—by $99 million over the
prior year. SSA officials have estimated that conducting substantially 
more redeterminations would yield hundreds of millions of dollars in 
additional overpayment benefits annually. However, officials from its 
Office of Quality Assurance and Performance Assessment indicated that 
limited resources would affect SSA’s ability to do more reviews and 
still meet other agency priorities. In June 2002, SSA informed us that 
the Commissioner recently decided to make an additional $21 million
available to increase the number of redeterminiations this year. 

Despite its increased emphasis on overpayment detection and deterrence,
SSA is not meeting its payment accuracy goals and it is too early to
determine what impact its actions will ultimately have on its ability to
make more accurate benefit payments. In 1998, SSA pledged to increase 
its SSI overpayment accuracy rate from 93.5 percent to 96 percent by 
fiscal year 2002. Since that time, however, SSA has revised this goal 
downward twice and for fiscal year 2001 it was 94.7 percent. Current 
agency plans do not anticipate achieving the 96-percent accuracy rate 
until 2005. 

Various factors may account for SSA’s inability to achieve its SSI 
accuracy goals, including lag times between the occurrence of an event 
affecting eligibility and SSA’s receipt of the information. In 
addition, key initiatives that might improve SSI overpayment accuracy 
have only recently begun or are in the early planning stages. For 
example, it was not until January 2001 that SSA began providing field 
offices with access to the NDNH database to verify applicants’ 
employment status and wages. SSA also only recently required staff to 
use NDNH when conducting post entitlement reviews of individuals’ 
continued eligibility for benefits. In fiscal year 2000, SSA estimated 
that overpayments attributable to wages—historically the number one 
source of SSI overpayments—were about $477 million or 22 percent of its 
payment errors. Thus, with full implementation, the impact of NDNH on 
overpayment accuracy rates may ultimately be reflected in future years. 
Furthermore, the Foster Care Independence Act of 1999 strengthened 
SSA’s authority to obtain applicant resource information from financial 
institutions. SSA’s data show that unreported financial resources, such 
as bank accounts, are the second largest source of SSI overpayments. 
Last year, overpayments attributable to this category totaled about 
$394 million, or 18 percent of all detections. In May 2002, SSA issued 
proposed regulations on its new processes for accessing recipient 
financial data and plans to implement a pilot program later this year. 
When fully implemented, this tool may also help improve the SSI payment 
accuracy rate. 

Limited Progress Made in Simplifying Complex Program Rules: 

SSA has made only limited progress toward addressing excessively 
complex rules for assessing recipients’ living arrangements, which have
been a significant and longstanding source of payment errors. SSA staff
must apply a complex set of policies to document an individual’s living
arrangements and the value of in-kind support and maintenance (ISM) 
being received, [Footnote 7] which are essential to determining benefit 
amounts. Details such as usable cooking and food storage facilities 
with separate temperature controls, availability of bathing services, 
and whether a shelter is publicly operated can affect benefits. These 
policies depend heavily on recipients to accurately report whether they 
live alone or with others; the relationships involved; the extent to 
which rent, food, utilities, and other household expenses are shared; 
and exactly what portion of those expenses an individual pays. Over the 
life of the program, those policies have become increasingly complex as 
a result of new legislation, court decisions, and SSA’s own efforts to 
achieve benefit equity for all recipients. The complexity of SSI 
program rules pertaining to living arrangements, ISM, and other areas 
of benefit determination is reflected in the program’s administrative 
costs. In fiscal year 2001, SSI benefit payments represented about 6 
percent of benefits paid under all SSA-administered programs, [Footnote 
8] but the SSI program accounted for 31 percent of the agency’s 
administrative resources. 

Although SSA has examined various options for simplifying rules 
concerning living arrangements and ISM over the last several years, it 
has yet to take action to implement a cost-effective strategy for 
change. In December 2000, SSA issued a report examining six potential 
simplification options for living arrangements and ISM relative to 
program costs and three program objectives: benefit adequacy (ensuring 
a minimum level of income to meet basic needs); benefit equity 
(ensuring that recipients with like income, resources, and living 
arrangements are treated the same); and program integrity (ensuring 
that benefits are paid accurately, efficiently, and with no tolerance 
for fraud). [Footnote 9] SSA’s report noted that overpayments 
attributable to living arrangements and ISM in 1999 accounted for a 
projected $210 million, or 11 percent, of total overpayment dollars. The
report also acknowledged that most overpayments were the result of
beneficiaries not reporting changes in living arrangements and SSA 
staff’s failure to comply with complicated instructions for verifying 
information. SSA concluded that none of the options analyzed supported 
all of its SSI program goals. As a result, SSA recommended further 
assessing the tradeoffs among program goals presented by these 
simplification options. 

SSA’s study shows that at least two of the options would produce net
program savings. For example, one option eliminated the need to
determine whether an individual is living in another person’s household 
by counting ISM at the lesser of its actual value or one-third of the 
federal benefit rate. In addition to ultimately reducing program costs, 
SSA noted that this option would eliminate several inequities in 
current ISM rules and increase benefits for almost 1 percent of 
recipients. Although SSA cited some disadvantages (such as, additional 
development/calculations in some cases and decreasing benefits for 
about 2 percent of recipients), its analysis did not indicate that the 
disadvantages outweighed potential positive effects. Furthermore, for 
two other options in which SSA projected a large increase in program 
costs, it acknowledged that its estimates were based on limited data 
and were “very rough.” Thus, actual program costs associated with these 
options could be significantly lower or higher. Finally, to the extent 
that SSA identified limitations in some options analyzed, such as 
reductions in benefits for some recipients, it did not propose any 
modifications or alternatives to address them. 

SSA’s actions to date do not sufficiently address concerns about complex
living arrangement and ISM policies. During our recent fieldwork, staff
and managers continued to cite program complexity as a problem leading
to payment errors, program abuse, and excessive administrative burdens.
In addition, overpayments associated with living arrangements and ISM
remain among the leading causes of overpayments behind unreported
wages and resources, respectively. Finally, SSA’s fiscal year 2000 
payment accuracy report noted that it would be difficult to achieve SSI 
accuracy goals without some policy simplification initiatives. In its 
recently issued “SSI Corrective Action Plan,” SSA stated that within 
the next several years it plans to conduct analyses of alternative 
program simplification options beyond those already assessed. 

Administrative Penalties and Sanctions Remain Underutilized: 

Our work shows that administrative penalties and sanctions may be 
underutilized in the SSI program. Under the law, SSA may impose 
administrative penalties on recipients who do not file timely reports 
about factors or events that can affect their benefits—changes in wages,
resources, living arrangements, and other support being received. An
administrative penalty causes a reduction in 1 month’s benefits. Penalty
amounts are $25 for a first occurrence, $50 for a second occurrence, and
$100 for the third and subsequent occurrences. The penalties are meant 
to encourage recipients to file accurate and timely reports of 
information so that SSA can adjust its records to correctly pay 
benefits. The Foster Care Independence Act also gave SSA authority to 
impose benefit sanctions on persons who misrepresent material facts 
that they know, or should have known, were false or misleading. In such 
circumstances, SSA may suspend benefits for 6 months for the initial 
violation, 12 months for the second violation, and 24 months for 
subsequent violations. SSA issued interim regulations to implement 
these sanction provisions in July 2000 and its November 2000 report 
cited its implementation as a priority effort to improve SSI program 
integrity. 

In our 1998 report, we noted that penalties were rarely used and
recommended that SSA reassess its policies for imposing penalties on
recipients who fail to report changes that can affect their 
eligibility. To date, SSA has not addressed our recommendation and 
staff rarely use penalties to encourage recipient compliance with 
reporting policies. Over the last several years, SSA data indicate that 
about 1 million recipients are overpaid annually and that recipient 
nonreporting of key information accounted for 71 to 76 percent of 
payment errors. On the basis of SSA records, we estimate that at most 
about 3,500 recipients were penalized for reporting failures in fiscal 
year 2001. SSA staff we interviewed cited the same obstacles or 
impediments to imposing penalties as noted in our 1998 report, such as: 
(1) penalty amounts are too low to be effective, (2) imposition of 
penalties is too administratively burdensome, and (3) SSA management 
does not encourage the use of penalties. SSA has not acted to either 
evaluate or address these obstacles. Although SSA has issued program 
guidance to field office staff emphasizing the importance of assessing 
penalties, this action alone does not sufficiently address the 
obstacles cited by staff. 

SSA’s administrative sanction authority also remains rarely used. SSA
sanctions data indicate that between June 2000 and February 2002, SSA
field office staff had referred about 3,000 SSI cases to the OIG 
because of concerns about fraudulent activity. In most instances, OIG 
returned the referred cases to the field office because they did not 
meet prosecutorial requirements, such as high amounts of benefits 
erroneously paid. At this point, the field office, in consultation with 
a regional office sanctions coordinator, can determine whether benefit 
sanctions are warranted. Cases referred because of concerns about 
fraudulent behavior would seem to be strong candidates for benefit 
sanctions. However, as of January 2002, field staff had actually 
imposed sanctions in only 21 SSI cases. Our interviews with field staff 
identified insufficient awareness of the new sanction authority and 
some confusion about when to impose sanctions. In one region, for 
example, staff and managers told us that they often referred cases to 
the OIG when fraud was suspected, but it had not occurred to them that 
these cases should be considered for benefit sanctions if the OIG did 
not pursue investigation and prosecution. Enhanced communication and 
education by SSA regarding the appropriate application of this 
overpayment deterrent tool may ultimately enhance SSA’s program 
integrity efforts. 

Overpayment Recovery Improved, but Other Actions Could Enhance Program 
Management: 

Over the past several years, SSA has been working to implement new
legislative provisions to improve its ability to recover more SSI
overpayments. While a number of SSA’s initiatives have yielded results 
in terms of increased collections, several actions are still in the 
early planning or implementation stages and it is too soon to gauge 
what effect they will have on SSI overpayment collections. In addition, 
we are concerned that SSA’s current overpayment waiver policies and 
practices may be preventing the collection of millions of dollars in 
outstanding debt. 

Overpayment Recovery Is Receiving Enhanced Emphasis, but Some Key 
Initiatives Are Pending: 

In our prior work, we reported that SSA has historically placed 
insufficient emphasis on recovering SSI overpayments, especially for 
those who have left the rolls. We were particularly concerned that SSA 
had not adequately pursued authority to use more aggressive debt 
collection tools already available to other means-tested benefit 
programs, such as the Food Stamp Program. Accordingly, SSA has taken 
action over the last several years to strengthen its overpayment 
recovery processes. 

SSA began using tax refund offsets in 1998 to recover outstanding SSI 
debt. At the end of calendar year 2001, this initiative has yielded 
$221 million in additional overpayment recoveries for the agency. In the
same year, Congress authorized a cross program recovery initiative, 
whereby SSA was provided authority to recover overpayments by reducing 
the Title II benefits of former SSI recipients without first obtaining 
their consent. [Footnote 10] SSA implemented this cross program 
recovery tool in March 2002. Currently, about 36 percent of SSI 
recipients also receive Title II benefits, and SSA expects that this 
initiative will produce about $115 million in additional overpayment 
collections over the next several years. In 2002, the agency also 
implemented Foster Care Independence Act provisions allowing SSA to 
report former recipients with outstanding SSI debt to credit bureaus as 
well as to the Department of the Treasury. Credit bureau referrals are 
intended to encourage individuals to voluntarily begin repaying their 
outstanding debts. The referrals to Treasury will provide SSA with an 
opportunity to seize other federal benefit payments individuals may be 
receiving. 

While overpayment recovery practices have been strengthened, SSA has
not yet implemented some key recovery initiatives that have been
available to the agency for several years. Although regulations have 
been drafted, SSA has not yet implemented administrative wage 
garnishment, which was authorized in the Debt Collection Improvement 
Act of 1996. In addition, SSA has not implemented several provisions in 
the Foster Care Independence Act of 1999. These provisions allow SSA to 
offset the federal salaries of former recipients, use collection 
agencies to recover overpayments, and levy interest on outstanding 
overpayments. In its comments, SSA said that it made a conscious 
decision to implement first those tools that it judged as most cost 
effective. It prioritized working on debt collection tools that provide 
direct collections or that could be integrated into its debt management 
system. According to SSA, the remaining tools are being actively 
pursued as resources permit. Draft regulations for several of these 
initiatives are being reviewed internally. However, agency officials 
said that they could not estimate when these additional recovery tools 
will be fully operational. 

SSI Overpayment Waivers Have Greatly Increased: 

Our work shows that SSI overpayment waivers have increased 
significantly over the last decade and that current waiver policies and
practices may cause SSA to unnecessarily forgo millions of dollars in
additional overpayment recoveries annually. 

Waivers are requests by current and former SSI recipients for relief 
from the obligation to repay SSI benefits to which they were not 
entitled. Under the law, SSA field staff may waive an SSI overpayment 
when the recipient is without fault and the collection of the 
overpayment either defeats the purpose of the program, is against 
equity and good conscience, or impedes effective and efficient 
administration of the program. 

To be deemed without fault, and thus eligible for a waiver, recipients 
are expected to exercise good faith in reporting information to prevent
overpayments. Incorrect statements that recipients know or should have
known to be false or failure to furnish material information can result 
in a waiver denial. If SSA determines a person is without fault in 
causing the overpayment, it then must determine if one of the other 
three requirements also exists to grant a waiver. Specifically, SSA 
staff must determine whether denying a waiver request and recovering the
overpayment would defeat the purpose of the program because the
affected individual needs all of his/her current income to meet ordinary
and necessary living expenses. To determine whether a waiver denial
would be against equity and good conscience, SSA staff must decide if an
individual incurred additional expenses in relying on the benefit, and 
thus requiring repayment would affect his/her economic condition. This 
could apply to recipients who use their SSI benefits to pay for a 
child’s medical expenses and are subsequently informed of an 
overpayment. Finally, SSA may grant a waiver when recovery of an 
overpayment may impede the effective or efficient administration of the 
program—for example, when the overpayment amount is equal to or less 
than the average administrative cost of recovering an overpayment, 
which SSA currently estimates to be $500. Thus, field staff we 
interviewed generally waived overpayments of $500 or less. 

The current $500 threshold was established in December 1993. Prior to
that time the threshold was $100. Officials told us that this change was
based on an internal study of administrative costs related to 
investigating and processing waiver requests for SSA’s Title II 
disability and retirement programs. However, the officials acknowledged 
that the study did not directly examine the costs of granting SSI 
waivers. Furthermore, they were unable to locate the study for our 
review and evaluation. During our field visits, staff and managers had 
varied opinions regarding the time and administrative costs associated 
with denying waiver requests. However, staff often acknowledged that 
numerous automation upgrades over the past several years may be cause 
for re-examining the current costs and benefits associated with the 
$500 waiver threshold. 

Our analysis of several years of SSI waiver data shows that since the
waiver threshold was adjusted, waived SSI overpayments have increased 
by 400 percent from $32 million in fiscal year 1993 to $161 million in 
fiscal year 2001. This increase has significantly outpaced the growth 
in both the number of SSI recipients served and total annual benefits 
paid, which increased by 12 percent and 35 percent, respectively, 
during the same period (see fig. 1). 

Figure 1: Percentage Change in Overpayment Waivers, SSI Benefit 
Payments, and SSI Beneficiaries Since 1993: 

[See PDF for image] 

This figure is a vertical bar graph. The vertical axis of the graph 
represents percentage change since 1993 from 0 to 500. The horizontal 
axis of the graph represents fiscal years from 1994 to 2001. For each 
fiscal year, bars depict the following: change in the amount of 
overpayments waived; change in amount of benefits paid; and change in 
number of beneficiaries. 

Note: Each year’s percentage change is calculated relative to 1993 when 
SSA’s tolerance increased from $100 to $500. 

Source: GAO’s analysis of SSA’s accounting records. 

[End of figure] 

Furthermore, the ratio of waived overpayments to total SSI collections 
has also increased (see fig. 2). In fiscal 1993, SSA waived about $32 
million in SSI overpayments or about 13 percent of its total 
collections. By 1995, waiver amounts more than doubled to $66 million, 
or about 20 percent, of collections for that year. By fiscal year 2001, 
SSI waivers totaled $161 million and represented nearly 23 percent of 
all SSI collections. Thus, through its waiver process, SSA is forgoing 
collection action on a significantly larger portion of overpaid 
benefits. 

Figure 2: Ratio of Overpayments Waived to Overpayments Collected, 
Fiscal Years 1989 through 2001: 

[See PDF for image] 

This figure is a line graph. The vertical axis of the graph represents 
ratio of waivers to collections from 0 to 35. The horizontal axis of 
the graph represents fiscal years from 1989 to 2001. 

Source: GAO’s analysis of SSA’s accounting records. 

[End of figure] 

While not conclusive, the data indicate that liberalization of the SSI 
waiver policy may be a factor in the dramatic increase in the amount of
overpayments waived. SSA has not studied the impact of the increased
threshold. However, officials believe that the trend in waived SSI
overpayments is more likely due to increases in the number of annual
reviews of recipients’ medical eligibility. These reviews have resulted 
in an increase in benefit terminations and subsequent recipient 
appeals. During the appeals process, recipients have the right to 
request that their benefits be continued. Those who lose their appeal 
can then request a waiver of any overpayments that accrued during the 
appeal period. SSA will usually grant these requests under its current 
waiver policies. 

Another factor affecting trends in waivers may be staff application of
waiver policies and procedures. Although, SSA has developed guidance to
assist field staff when deciding whether to deny or grant waivers, we
found that field staff have considerable leeway to grant waivers based 
on an individual’s claim that he or she reported information to SSA that
would have prevented an overpayment. In addition, waivers granted for
amounts less than $2,000 are not subject to second-party review while
another employee in the office—not necessarily a supervisor—must
review those above $2,000. During our field visits, we identified 
variation among staff in their understanding as to how waiver decisions 
should be processed, including the extent to which they receive 
supervisory review and approval. In some offices, review was often 
minimal or non-existent regardless of the waiver amount, while other 
offices required stricter peer or supervisory review. In 1999, SSA’s 
OIG reported that the complex and subjective nature of SSA’s Title II 
waiver process, as well as clerical errors and misapplication of 
policies by staff, resulted in SSA incorrectly waiving overpayments in 
about 9 percent of 26,000 cases it reviewed. The report also noted that 
50 percent of the waivers reviewed were unsupported and the OIG could 
not make a judgment as to the appropriateness of the decision. The OIG 
estimated that the incorrect and unsupported waivers amounted to nearly 
$42 million in benefits. While the OIG only examined waivers under the 
Title II programs and for amounts over $500, the criteria for granting 
SSI waivers are generally the same. Thus, we are concerned that similar 
problems with the application of waiver policies could be occurring in 
the SSI program. 

Conclusions: 

SSA has taken a number of steps to address long-standing vulnerabilities
in SSI program integrity. SSA’s numerous planned and ongoing initiatives
demonstrate management’s commitment to strike a better balance
between meeting the needs of SSI recipients and ensuring fiscal
accountability for the program. However, it is too early to tell how
effective SSA will ultimately be in detecting and preventing 
overpayments earlier in the eligibility determination process, 
improving future payment accuracy rates, and recovering a greater 
proportion of outstanding debt owed to it. Reaching these goals is 
feasible, provided that SSA sustains and expands the range of SSI 
program integrity activities currently planned or underway, such as 
increasing the number of SSI financial redeterminations conducted each 
year and developing and implementing additional overpayment detection 
and recovery tools provided in recent legislation. 

A fundamental cause of SSI overpayments are the complex rules governing 
SSI eligibility. However, SSA has done little to make the program less 
complex and error prone, especially in regard to living arrangement 
policies. We recognize that inherent tensions exist between simplifying 
program rules, keeping program costs down, and ensuring benefit equity 
for all recipients. However, longstanding SSI payment errors and high 
administrative costs suggest the need for SSA to move forward in 
addressing program design issues and devising cost-effective 
simplification options. Furthermore, without increased management
emphasis and direction on the use of administrative penalties and 
benefit sanctions, SSA risks continued underutilization of these 
valuable overpayment deterrence tools. Finally, rapid growth in the 
amount of overpayments waived over the last several years, suggest that 
SSA may be unnecessarily forgoing recovery of significant amounts of 
overpaid benefits. Thus, it is essential that SSA’s policies and 
procedures for waiving overpayments and staff application of those 
policies be managed in a way that ensures taxpayer dollars are 
sufficiently protected. 

Recommendations: 

In order to further strengthen SSA’s ability to deter, detect and 
recover SSI overpayments, we recommend that the Commissioner of Social 
Security take the following actions: 

* Sustain and expand the range of SSI program integrity activities 
underway and continue to develop additional tools to improve program 
operations and management. This would include increasing the number of 
SSI redeterminations conducted each year and fully implementing the
overpayment detection and recovery tools provided in recent 
legislation. 

* Identify and move forward in implementing cost-effective options for
simplifying complex living arrangement and in-kind support and
maintenance policies, with particular attention to those policies most
vulnerable to fraud, waste, and abuse. An effective implementation
strategy may include pilot testing of various options to more accurately
assess their ultimate effects. 

* Evaluate current policies for imposing monetary penalties and 
administrative sanctions and take action to remove any barriers to their
usage or effectiveness. Such actions may include informing field staff 
on when and how these tools should be applied and studying the extent to
which more frequent use deters recipient nonreporting. 

* Reexamine policies and procedures for SSI overpayment waivers and
make revisions as appropriate. This should include an assessment of the
current costs and benefits associated with the $500 waiver threshold and
the extent to which staff correctly apply waiver policies. 

Agency Comments and Our Evaluation: 

SSA agreed with our recommendations and said that our report would be 
very helpful in its efforts to better manage the SSI program. It will
incorporate the recommendations into its SSI corrective action plan, as
appropriate. SSA also assured us that the SSI program is receiving
sustained management attention. In this regard, SSA noted that under the
current plan it has assigned specific responsibilities to key staff, 
monitors agency progress, and reviews policy proposals at regularly 
scheduled monthly meetings chaired by the Deputy Commissioner. 

While agreeing with each of our recommendations, SSA supplied 
additional information to emphasize its actions and commitment to
improving SSI program integrity. Regarding simplification of complex
program rules, SSA said it will continue to assess various program
simplification proposals, but it remains concerned about the 
distributional effects of potential policy changes. SSA also noted that 
even minor reductions in SSI benefits could significantly affect 
recipients. Thus, SSA plans to use sophisticated computer simulations 
to evaluate the potential impacts of various proposals on recipients. 
We recognize that simplifying the program will not be easy, but it is 
still a task that SSA needs to accomplish to reduce its vulnerability 
to payment errors. 

With regard to its overpayment waiver policies and procedures, SSA
agreed to reexamine its current $500 threshold and analyze the extent to
which its staff correctly apply waiver policies. SSA also produced data
indicating that increases in SSI waivers over the last several years 
were attributable to the completion of more continuing disability 
reviews that result in benefit cessation decisions. Consequently, more 
recipients appeal these decisions and request that their SSI benefits 
be continued. Recipients can then request waivers of any overpayments 
that accrued during the appeal period when a cessation decision is 
upheld. Our report recognizes SSA’s views on the potential cause for 
increased waivers. However, we also note that SSI overpayment waiver 
increases may be attributable to inconsistent application of agency 
waiver policies. 

SSA also provided additional technical comments that we have 
incorporated in the report, as appropriate. The entire text of SSA’s
comments appears in appendix II. 

We are sending copies of this report to the House and Senate committees
with oversight responsibilities for the Social Security Administration. 
We will also make copies available to other interested parties upon 
request. In addition, the report will be available at no charge on 
GAO’s Web site at [hyperlink, http://www.gao.gov]. If you have any 
questions concerning this report, please call me or Daniel Bertoni, 
Assistant Director, on (202) 512-7215. Other major contributors to this 
report are Barbara Alsip, Gerard Grant, William Staab, Vanessa Taylor, 
and Mark Trapani. 

Sincerely yours, 

Signed by: 

Robert E. Robertson: 
Director, Education, Workforce, and Income Security Issues: 

[End of section] 

Social Security:
The Commissioner: 
Social Security Administration: 
Baltimore, MD 21235-0001: 

August 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, "Supplemental Security Income: Progress Made in Detecting and 
Recovering Overpayments, But Sustained Management Attention Needed" 
(GAO-02-849). Our comments on the report are enclosed. If you have any 
questions, please have your staff contact Odessa J. Woods at (410) 965-
0378. 

Sincerely, 

Signed by: 

Jo Anne B. Barnhart: 

Enclosure: 

Comments Of The Social Security Administration (SSA) On The General 
Accounting Office (GAO) Draft Report, "Supplemental Security Income: 
Progress Made In Detecting And Recovering Overpayments, But Sustained 
Management Attention Needed" (GAO-92-849): 

Thank you for the opportunity to review this draft report. As you note 
in the report, the Supplemental Security Income (SSI) program is our 
Nation's largest cash assistance program for the poor. The Social 
Security Administration (SSA) is committed to administering the SSI 
program fairly by ensuring that those individuals who are eligible for 
SSI are paid accurately, and that only those individuals eligible for 
SSI benefits receive them. 

As we told the Comptroller General in our meeting in March, SSA and its 
management team are dedicated to better managing the SSI program and 
getting it removed from GAO's high risk list as soon as possible A new 
Corrective Action Plan was developed, approved and is being 
implemented. Specific responsibilities have been assigned. A SSI 
management report was designed and is being produced monthly. 
Corrective Action Plan progress, legislative and policy proposals and 
other relevant issues are reviewed at a regularly scheduled monthly 
meeting chaired by SSA's Deputy Commissioner. Therefore we believe, 
unlike your title implies, that the SSI program is getting sustained 
management attention. 

In general, we find your report very helpful. One overall comment is 
that the Corrective Action Plan should have been highlighted as it was 
developed for and by SSA's new management team. We believe the plan is 
the blueprint for getting SSI off the high risk fist. We intend to make 
it a living document and will incorporate your recommendations as 
appropriate. Our specific comments are as follows: 

GAO Recommendation 1: 

Sustain and expand the range of SSI program integrity activities 
underway and continue to develop additional tools to improve program 
operations and management. This would include the number of SSI 
redeterminations conducted each year and fully implementing the 
overpayment detection and recovery tools provided in recent 
legislation. 

SSA Comment: 

We agree. The report notes SSA's significant progress in this area 
through increased matches, additional online access to Federal and 
State databases, increased redetermination processing, improved work 
measurement and heightened management oversight over SSI workload 
processing. As our SSI Corrective Action Plan states, we plan to 
continue stressing SST redetermination and diary/alert workload 
processing goals to ensure timely processing and increase overpayment 
detection. We will also he increasing the SSI redetermination workload 
from 2.25 million to 2.45 million in fiscal year 2003. To improve our 
ability to prevent overpayments, we plan to pilot test the 
effectiveness of having recipients, deemors and representative payees 
report monthly wages using touchtone telephone technology, and we will 
test a process to access the records of financial institutions to 
detect unreported income or assets. 

We also agree with the recommendation with respect to the overpayment 
detection and collection tools. We recently sent proposed rules to the 
Office of Management and Budget (OMB) for review to implement 
administrative wage garnishment. We are proceeding with the necessary 
systems changes to implement debt collection initiatives such as 
administrative wage garnishment. 

GAO Recommendation 2: 

Identify and move forward in implementing cost-effective options 
simplifying complex living arrangements and in-kind support and 
maintenance policies, with particular attention to those policies most 
vulnerable to fraud, waste and abuse. An effective implementation 
strategy may include pilot testing of various options to more 
accurately assess their ultimate effects. 

SSA Comment: 

We agree with GAO that living arrangement (LA) and in-kind support and 
maintenance (ISM) policies are highly complex and may significantly 
contribute to payment errors in the SSI program because they arc 
difficult to explain, apply and changes are often difficult to detect. 

We agree that SSA should continue to assess options for simplifying 
living arrangement and in-kind support and maintenance policies. As the 
report mentions, we have committed to doing so in the SSI Corrective 
Action Plan. However, it is important that GAO understands the 
tradeoffs involved in implementing the options included in SSA's 2000 
report on simplifying the SSI program. For example, the report states 
that SSA's analysis of the option to count ISM at the lesser of its 
actual value or one-third of the federal benefit rate does not indicate 
that the disadvantages outweighed the potential positive effects. 
Although this option might reduce program costs, it is estimated to 
increase administrative costs since in some cases SSA staff would be 
required to complete more calculations than they currently do. 

SSA is also very concerned about the distributional effects of 
potential policy changes, as even minor reductions in benefits can have 
a significant effect on a SSI recipient's ability to meet his or her 
basic needs. For example, while the option to reduce benefits by I0 
percent for any recipient living with another adult would streamline 
living arrangement determinations and would be roughly cost neutral 
over a five-year period, it would reduce benefits for over 2 million 
recipients. 

We are continuing our analysis of the administrative effects of various 
simplification proposals before we make a recommendation to proceed 
with any particular one. SSA is analyzing several of the options 
discussed in the 2000 report, looking for modifications that may make 
previously considered proposals more feasible. Rather than pilot 
testing of potential simplification options, we prefer to evaluate 
proposals using sophisticated computer simulations. While we have the 
authority to conduct demonstration projects, we cannot mandate 
participation, nor can we engage in a demonstration that would result 
in a substantial reduction in an individual's income and resources. The 
use of simulation modeling gives us accurate results without running 
the risks associated with a demonstration project. 

GAO Recommendation 3: 

Evaluate current policies for imposing monetary penalties and 
administrative sanctions and take action to remove any barriers to 
their usage or effectiveness. Such actions may include informing field 
staff on when and how these tools should be applied and studying the 
extent to which more frequent use deters recipient reporting. 

SSA Comment: 

We agree. SSA has already taken action to remove barriers for assessing 
penalties. Until recently, assessing a penalty was a completely manual 
process. New screens in the Modernized SSI Claims System (MSSICS) now 
include a screen for assessing penalties. Along the overpayment path, 
the penalty screen is available for the field office (FO) to add a 
penalty to the individual's record. The system automatically adds the 
penalty amount to the record for collection and notice language is now 
automated. These two improvements were implemented in September 200I. 

On March 1, 2002, we issued a program circular reinforcing the policy 
on assessing penalties. The circular pointed out notice software 
enhancements field components can use to more easily produce penalty 
assessment notices. By the end of the year, we will issue a fact sheet 
to FOs reminding them of the importance of applying penalties when 
applicable and the procedures for assessing penalties. 

SSA's administrative sanction authority is relatively new. (SSA began 
using the authority under Interim Final rules in October 2000.) SSA 
sought the authority to act as a deterrent in eases where recipients 
incur overpayments based on fraud, but the dollar amount is not 
significant enough for the Inspector General to recommend for 
prosecution. Through the end of July 2002, we have imposed sanctions on 
60 SSI cases, 16 cases have been deferred pending future entitlement, 
and numerous others are in various stages of due process. To ensure 
that our FOs are aware of the availability of sanctions, we have issued 
several reminder messages, held Broadcast interactive video training 
sessions and issued a policy instruction section on the process. We 
continue to work with the regions and our Inspector General's office to 
improve the identification of appropriate cases to refer for sanction 
and to refine procedures for imposing sanctions. 

We will continue to evaluate our policies for penalties and 
administrative sanctions and take appropriate actions to remove any 
barriers to their usage or effectiveness. 

GAO Recommendation 4: 

Reexamine policies and procedures for SSI overpayment waivers and make 
revisions as appropriate. This should include an assessment of the 
current costs and benefits associated with the 5500 waiver threshold 
and the extent to which staff correctly apply waiver policies. 

SSA Comment: 

We will review the current $500 waiver threshold, including an 
assessment of the costs and benefits associated with the policy and an 
analysis of the extent to which staff correctly apply waiver policies. 
However, we believe that we have substantial evidence to support our 
contention, shared with GAO during the report clearance process, that 
waivers have increased due to the increase in Continuing Disability 
Review (CDR) activity rather than as a result of the waiver tolerance. 

The waiver tolerance, established in December 1993, is a breakeven 
point at which the dollar amount of overpayments recovered from waiver 
requests (including both allowed and denied waivers) equals the 
resource cost of adjudicating those waivers. SSA uses the waiver 
tolerance only when the overpaid person or his representative requests 
waiver; SSA does not arbitrarily decide to grant waiver in the absence 
of a waiver request. The value of waivers granted for debts under $500 
has remained steady at $32 million from I995 through 2001. And, in 
1993, before we adopted the higher tolerance, 25.4 percent of all 
waivers were for debts under $500. In 2001, only 16.8 percent of all 
waivers were for debts of that amount or less. It does not appear that 
the waiver tolerance is the cause of the growth in waivers, which 
really began in 1999. 

In 1999, SSA greatly increased its CDR activity (792,000 SSI-only CDRs 
conducted in 1999; up from 389,000 conducted in I998). When a CDR 
results in a cessation decision, a recipient is entitled to request 
benefit continuation until after an administrative hearing. Because it 
can take a protracted amount of time before the hearing is held and a 
decision is rendered, large overpayments can accrue in these cases. If 
a cessation decision is upheld at a hearing, most recipients request 
waiver of the overpayment, and most meet the requirements for approval 
of the waiver. 

In 1999, waivers also began increasing in total dollar amount. For 
example, SSA waived $9I.I million in I998, $I45.2 million in I999, 
$I94.4 million in 2000, and S174.3 million in 200I. We believe that the 
increase in CDRs is primarily responsible. To reach this conclusion, we 
performed a special systems run of SSI record data to identify the 
dollars waived from I995-2001, where the cause of the overpayment was 
N07 (disability cessation/final decision on CDR). 

FY: 1995; 
N07 Waivers: $0.6 million; 
Non-N07 Waivers: $73.2 million; 
Waivers Under $500: $32.2 million. 

FY: 1996; 
N07 Waivers: $0.9 million; 
Non-N07 Waivers: $774.9 million; 
Waivers Under $500: $33.1 million. 

FY: 1997; 
N07 Waivers: $3.0 million; 
Non-N07 Waivers: $78.0 million; 
Waivers Under $500: $31.9 million. 

FY: 1998; 
N07 Waivers: $10.0 million; 
Non-N07 Waivers: $81.1 million; 
Waivers Under $500: $31.1 million. 

FY: 1999; 
N07 Waivers: $45.0 million; 
Non-N07 Waivers: $100.2 million; 
Waivers Under $500: $31.4 million. 

FY: 2000; 
N07 Waivers: $70.0 million; 
Non-N07 Waivers: $124.4 million; 
Waivers Under $500: $32.1 million. 

FY: 2001; 
N07 Waivers: $46.0 million; 
Non-N07 Waivers: $128.3 million; 
Waivers Under $500: $32.9 million. 

[End of table] 

The chart clearly indicates that the significant increase in waivers 
began in FY I999. This is also consistent with the significant increase 
in overall SSI waiver dollars. 

Other Comments: 

Page 6, Paragraph 1: 

The Cooperative Disability Investigation (CDI) teams are an SSA effort, 
not just an 01G effort. This successful project is managed by SSA's 
Office of Operations and Office of Disability as well as the 01G. It 
has been very much a cooperative effort. In addition, the sentence 
"These teams consist of OIG investigators, state law enforcement 
officers and state DDS staff...." should be corrected to state "These 
teams consist of OIG investigators, SSA staff, state or local law 
enforcement and state DDS staff...." 

Page 7, First Full Paragraph, Sentence 4: 

We recommend revising this sentence to read, "SSA also made systems 
enhancements to better identify newly entitled recipients with 
uncollected overpayments...." 

Page 7: 

We recommend including the following as a separate paragraph after the 
first full paragraph on page 7 to disclose an additional system 
initiative: 

"Also, SSA is implementing another systems initiative to reduce 
instances in which overpayments are computed on supplemental security 
records (SSR). This initiative will create a new automated process to 
net overpayments against underpayments when the SSI system computes 
these amounts on an SSR. Today, netting requires SSA employees to 
record a series of transactions and, as a result, many opportunities to 
perform netting are being lost. SSA estimates that automating the 
netting process will reduce overpayments computed on SSRs by up to $60 
million each year, with a corresponding reduction in underpayments paid 
to beneficiaries. SSA is scheduled to implement automatic netting in 
September 2002 and will routinely monitor the results of this new 
process." 

Page 15, Paragraph 1, 

GAO states that SSA has not yet implemented some debt collection tools. 
While this is true, the report should explain why those collection 
tools have not been implemented. Since 1995, SSA has developed and 
implemented no less than eight new debt collection initiatives: tax 
refund offset for SSI debts; credit bureau reporting for title II 
debts; administrative offset for title II debts; benefit payment 
offset; Federal Payment Levy Program; mandatory cross program recovery; 
credit bureau reporting for SSI debts; and administrative offset for 
SSI debts. We made a conscious decision to implement those tools we 
judged would be most cost effective first. The reason the other tools 
cited by GAO have not been implemented is that SSA has been busy 
working on the debt collection tools that provide direct collections or 
that could be integrated into its existing debt management system. The 
remaining debt collection tools cited by GAO--administrative wage 
garnishment, Federal salary offset, private collection agencies, and 
interest charging—are being actively pursued as resources permit. 

[End of section] 

Related GAO Products: 

Social Security Administration: Agency Must Position Itself Now to Meet
Challenges. GAO-02-289T. Washington, D.C.: May 2, 2002. 

Social Security Administration: Status of Achieving Key Outcomes and
Addressing Major Management Challenges. GAO-01-778. Washington, D.C.: 
June 15, 2001. 

High Risk Series: An Update. GAO-01-263. Washington, D.C.: January
2001. 

Major Management Challenges and Program Risks: Social Security 
Administration. GAO-01-261. Washington, D.C.: January 2001. 

Supplemental Security Income: Additional Actions Needed to Reduce
Program Vulnerability to Fraud and Abuse. GAO/HEHS-99-151. Washington, 
D.C.: September 15, 1999. 

Supplemental Security Income: Long–Standing Issues Require More Active 
Management and Program Oversight. GAO/T-HEHS-99-51. Washington, D.C.: 
February 3, 1999. 

Major Management Challenges and Program Risks: Social Security 
Administration. GAO/OCG-99-20. Washington, D.C.: January 1, 1999. 

Supplemental Security Income: Action Needed on Long-Standing Problems 
Affecting Program Integrity. GAO/HEHS-98-158. Washington, D.C.: 
September 14, 1998. 

High Risk Program: Information on Selected High-Risk Areas. GAO/HR-97-
30. Washington, D.C.: May 16, 1997. 

High Risk Series: An Overview. GAO/HR-97-1. Washington, D.C.: February
1997. 

[End of section] 

Footnotes: 

[1] U.S. General Accounting Office, Supplemental Security Income: 
Action Needed on Long-Standing Problems Affecting Program Integrity, 
GAO/HEHS-98-158 (Washington, D.C.: Sept. 14, 1998). 

[2] U.S. General Accounting Office, High Risk Series: An Overview, 
GAO/HR-97-1, (Washington, D.C.: Feb. 1997). 

[3] Social Security Administration, Management of the Supplemental 
Security Income Program: Today and in the Future, October 8, 1998. 

[4] Social Security Administration, SSI Corrective Action Plan-Removing 
SSI From GAO’s “High-Risk” List, June 2002. 

[5] U.S. General Accounting Office, Supplemental Security Income: 
Opportunities Exist for Improving Payment Accuracy, GAO/HEHS-98-75 
(Washington, D.C.: Mar. 27, 1998). 

[6] Generally, SSI recipients residing in a nursing home for more than 
1 month receive only $30 in SSI benefits per month. 

[7] ISM refers to the noncash income available to a recipient in the 
form of food, clothing, or shelter. The combination of ISM and cash 
income available to an applicant can either reduce or possibly preclude 
the receipt of SSI benefits. 

[8] SSA also administers the Old-Age, Survivors, and Disability 
Insurance Programs under Title II of the Social Security Act. 

[9] Social Security Administration, Simplifying the Supplemental 
Security Income Program: Challenges and Opportunities, December 2000. 

[10] Until 1998, SSA could only reduce these benefits with the consent 
of the former recipient. 

[End of section] 

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