Social Security Administration: Continuing Leadership Focus Needed to Modernize How SSA Does Business

SSA provides vital benefits and services that affect the lives of many Americans. In fiscal year 2017, it paid out nearly $1 trillion in retirement and disability benefits to 67 million beneficiaries, and an average of 420,000 people call or visit one of its 1,200 field offices each day.

However, SSA has struggled to manage its disability workloads, maintain program integrity, and modernize its service delivery and information technology systems. GAO has issued a number of reports on these challenges, and placed SSA's disability programs on GAO's High Risk List, in part due to challenges with workloads and claims processing.

GAO was asked to testify on challenges facing SSA. This statement summarizes ongoing SSA challenges described in SSA's strategic plan and past GAO work in three areas: 1) managing disability workloads and ensuring program integrity; 2) modernizing physical infrastructure and service delivery methods; and 3) modernizing information technology.

Although GAO is not making recommendations in this statement, our prior work included recommendations to help SSA address these challenges, many of which SSA has agreed with and initiated actions on. SSA provided technical comments on a draft of this statement, which we incorporated, as appropriate.

GAO's prior work and Social Security Administration's (SSA) strategic plan for fiscal years 2018-2022 highlight significant demographic and technological challenges facing the agency. For example, SSA's workloads are increasing due to 80 million baby boomers entering their disability-prone and retirement years, and institutional knowledge and leadership at SSA will be depleted due to an expected 21,000 employees retiring by the end of fiscal year 2022. GAO's prior work has identified related management challenges and opportunities for SSA to further modernize and improve its disability programs, service delivery, and information technology (IT) systems.

Managing disability workloads and program integrity. SSA has long struggled to process disability claims and, more recently, appeals of denied claims, in a timely manner. Consistent with our 2013 recommendation, SSA produced a broad vision for improving service delivery, including ensuring prompt and accurate disability decisions. However, SSA is still developing concrete plans to implement its vision. Although SSA has initiatives underway to improve appeals backlogs, GAO reported that some of SSA's appeals initiatives are either contingent on additional funding or have met with limited success when tried in the past. GAO's prior work also identified other challenges related to SSA's disability programs, and actions SSA could take, for example, to modernize disability criteria, prevent and recover overpayments, and manage fraud risks.

Modernizing physical infrastructure and service delivery. Advances in technology have the potential to change how and where SSA delivers its services. For example, individuals can now apply for some disability benefits online rather than in person. However, GAO found that SSA did not have readily available data on problems customers had with online applications or why staff support was needed. Additionally, the agency had not established performance goals to determine whether new service delivery options, such as off-site kiosks, are succeeding. In addition, we found that SSA has not developed a long-term plan for its building space that, among other things, includes a strategy for downsizing offices to better reflect changes in service delivery. We recommended SSA improve building plans and do more to assess and monitor service delivery, with which SSA agreed.

Modernizing information technology. SSA's legacy IT systems are increasingly difficult and expensive to maintain and GAO identified SSA's needed investment in infrastructure operations and maintenance as among the 10 largest expenditures at federal agencies in fiscal year 2015. GAO recommended SSA identify and plan to modernize or replace legacy systems, in accordance with forthcoming Office of Management and Budget guidance. SSA agreed, and reported that it is finalizing its Information Technology Modernization Plan.

Continuing focus by SSA leadership is critical to addressing these broad and long-term challenges and effectively delivering benefits and services to the many Americans who depend on SSA programs.

I am pleased to be here to discuss the significant management  challenges and structural issues currently facing the executive leadership  of the Social Security Administration (SSA).

SSA is a vast enterprise responsible for providing benefits and services  that affect nearly every American at some point in their lives. In fiscal year  2017, SSA paid out nearly $1 trillion in Social Security retirement,  disability, and Supplemental Security Income benefits to 67 million  beneficiaries. While the services it provides are vitally important, SSA  faces significant demographic and technological challenges. For example,  as SSA noted in its 2018-2022 strategic plan and as we have previously  reported, SSA is experiencing increasing workloads due to 80 million  members of the baby boom generation entering their most disability- prone and retirement years. At the same time, SSA projects 21,000 of  its employees will retire by the end of fiscal year 2022, resulting in a loss  of institutional knowledge and impediments to succession management  and knowledge transfer. In addition, SSA noted that Americans are  increasingly relying on technology to access services while information  technology (IT) advances create opportunities for SSA to use  substantially different tools and approaches than it has in the past.

We have issued a number of reports with recommendations addressing  shortcomings in how SSA has addressed these challenges. While SSA  has agreed with and taken action on many of our recommendations,  many others remain open, some of which we have suggested to SSA  should be given high priority. In addition, Social Security disability  programs are on our High Risk List due to persistent workload and other  challenges with processing disability claims. A common theme that cuts  across these issues is the need to modernize how SSA does business.  SSA has acknowledged the importance of modernization in its new strategic plan. The actions SSA leadership will need to take to modernize  the management of disability programs, facility planning and service  delivery, and information technology will require vision and sustained,  long-term attention.

My testimony today summarizes the results from a number of our past  reports on SSA’s operations and will focus on management challenges  and structural issues facing SSA in three key areas: 1) managing its  disability workloads and ensuring program integrity; 2) modernizing its  physical infrastructure and service delivery methods; and 3) modernizing  its information technology.

In developing this testimony, we relied on reports that we have previously  issued. These reports, cited throughout this statement, include detailed  information on the scope and methodology for our reviews. The work on  which this statement is based was conducted in accordance with  generally accepted government auditing standards. Those standards  require that we plan and perform audits to obtain sufficient, appropriate  evidence to provide a reasonable basis for our findings and conclusions.  We believe that the evidence obtained provided a reasonable basis for  our findings and conclusions based on our audit objectives.

The scope of SSA’s operations and responsibilities is vast. One of SSA’s  key responsibilities is to provide financial benefits to eligible individuals  through three benefit programs:

Old-Age and Survivors Insurance (OASI)—provides retirement  benefits to older individuals and their families and to survivors of  deceased workers.

Disability Insurance (DI)—provides benefits to eligible individuals who  have qualifying disabilities, and their eligible family members.

Supplemental Security Income (SSI)—provides income for aged,  blind, or disabled individuals with limited income and resources.

In support of its mission, SSA maintains workers’ earnings information  and in fiscal year 2017 posted over 279 million earnings items to workers’  records. SSA also determines if claimants are eligible for benefits,  completing 10 million claims and more than 680,000 hearings decisions in  fiscal year 2017. SSA also maintains birth and death records and issues  Social Security Numbers. In fiscal year 2017, SSA issued almost 17  million new and replacement Social Security cards.

Beyond administering its programs and core missions, SSA provides key  administrative support to the Medicare program, partners with the  Department of Homeland Security in verifying employment eligibility for  new hires, and assists with the administration of other programs, such as  the Supplemental Nutrition Assistance Program and programs  administered by the Railroad Retirement Board.

SSA’s workforce is large, as is its physical footprint. About 62,000 federal  employees and 15,000 state employees administer SSA programs in  about 1,500 facilities nationwide. These facilities include regional offices,  more than 1,200 field offices, teleservice centers, processing centers,  hearings offices, the Appeals Council offices, and SSA’s headquarters in  Baltimore, Maryland.

Customers can access SSA services in-person at an SSA field office; by  phone with field office staff or through a National 800 number; or online.  In 2018, SSA reported that, each day, about 170,000 people visit and  250,000 call one of its field offices for various reasons, such as to file  claims, ask questions, or update their information. SSA also reported that  its national 800 number handles over 30 million calls each year.

Challenges to Managing SSA’s Disability Workloads and Ensuring Program Integrity

Complex eligibility rules and multiple handoffs and potential layers of  review make SSA’s disability programs complicated and costly to  administer. Program complexity arguably has made it challenging for  SSA to make significant advances in efficiently managing high disability  workloads, ensuring timely and consistent disability decisions, preventing  benefit overpayments, and mitigating fraud risks.

Our recent work highlighted some of the challenges SSA faces in making  disability decisions that are timely, consistent and based on current  concepts of disability, while also preventing and deterring fraud and  ensuring that only beneficiaries who are entitled to benefits receive them.  These findings underscore the need for SSA leadership to approach  these challenges strategically and follow through with rigorous plans in  order to achieve significant improvements in its disability programs.

In recent years, SSA made noteworthy strides in reducing its backlog of  initial disability claims, but delays in deciding disability appeals continue  to worsen. SSA has reduced the number of pending claims each fiscal  year since 2010—from about 842,000 in fiscal year 2010 to about  523,000 in fiscal year 2017. However, the number of appealed claims  pending at the end of 2017 was approximately 1.1 million compared to  about 700,000 in fiscal year 2010, and the average time needed to  complete appeals increased from 426 days to 605 days during that same  time.

In our 2017 High Risk Update, we reported that SSA had taken some  steps to address its growing appeals backlog, such as hiring additional  administrative law judges (ALJ). SSA also published a plan in 2016 to  improve appeals timeliness that called for further hiring, improving  business processes, sharing workloads across offices, and making better  use of IT resources, such as increasing the number of video hearings.  However, SSA’s Office of Inspector General (OIG) found that many of the  initiatives in SSA’s plan duplicated past efforts that had met with limited  success. SSA also noted that some efforts, such as additional hiring, will  depend on resource availability. We also reported that SSA is still  developing plans to implement its broad vision for service delivery, Vision  2025, which addresses SSA’s capacity to provide timely initial claims and  appeals decisions. To address its appeals backlog and position itself to  effectively provide timely disability decisions at all levels, SSA leadership  will need to continue to operationalize Vision 2025, plan and implement  systems support for initial claims, and implement and monitor the success  of its appeals initiatives.

While SSA has made significant progress in updating the outdated  occupational and medical criteria it uses to make disability eligibility  decisions, some of these efforts are multi-year and will require the  continued focus of top leadership. Most significantly, SSA has made  strides updating a decades old Dictionary of Occupational Titles with a  new Occupational Information System (OIS), which contains occupational  data to make disability determinations. SSA expects to have OIS in  place by 2020, and currently plans to update OIS information every 5  years thereafter. Regarding the medical criteria used to make disability  decisions, we reported in our 2017 high risk update that SSA had  published final rules for nearly all of the 14 body systems for adults and  was on track to update criteria for all body systems every 3 to 5 years.  While SSA has addressed all our recommendations in this area, other  opportunities exist for updating aspects of SSA’s disability decision  process. For example, SSA officials have acknowledged that the  vocational rules it uses to determine eligibility may no longer accurately  reflect the nature and scope of work available in the national economy  and stated that the agency is conducting a review to determine if changes  to vocational factors are necessary. Agency leadership will play a key role  in ensuring SSA pursues these opportunities to further modernize its  criteria and devotes appropriate resources to continuously updating its  occupational and medical criteria on a timely basis.

Enhancing the Accuracy and Consistency of Disability Decisions

Our recent work analyzed variation in the rate that different ALJs grant  disability benefits when claimants appeal an earlier denial, and found that  SSA’s efforts to monitor the consistency of appeal hearing decisions are  incomplete. In 2017 after analyzing data on hearings decisions, we  estimated that the allowance (approval) rate could vary by as much as 46  percentage points between different judges with respect to a typical  claim. SSA conducts various reviews to monitor the accuracy and  consistency of ALJ decisions, but SSA has not systematically evaluated  whether its reviews are effective. SSA has also struggled to sustain all of  its quality review efforts, in part, because SSA reassigned staff to help  expedite claims decisions. We also reported on shortcomings in SSA’s  Compassionate Allowance initiative (CAL)—which fast tracks disability  claims for severe medical conditions that are most likely to be approved— that could prevent claims from being consistently and accurately identified  for expedited processing. These shortcomings include lacking a  systematic approach and clear criteria for designating medical conditions  for inclusion in CAL.

With about one in three beneficiaries being granted benefits at SSA’s  appeals hearing level, it remains crucial that SSA leadership commit to  ensuring appeal applications receive fair and consistent treatment,  including assessing persistent and unexplained variations in ALJ  allowance rates. Ensuring oversight and scrutiny of SSA’s CAL initiative is  also essential to avoid potential equity issues with regards to SSA’s most  vulnerable claimants.

Benefit overpayments represent avoidable losses to the DI trust fund and,  for the individual who may have incurred an overpayment despite  conscientiously reporting wages, a financial hardship when required to  repay and a disincentive to pursue work. In fiscal year 2015, the most  recent year for which we have data, SSA identified $1.2 billion in new  overpayments in its DI program, and had $6.3 billion in total overpayment  debt outstanding. In 2015, we reported that the SSA process for  beneficiaries to report earnings (and consequently inform whether they  remain eligible for DI benefits) had a number of weaknesses, including  staff not following established procedures, limited oversight, and a lack of  automated reporting options for beneficiaries, such as an automated  telephone system or smart phone app. SSA has made progress  expanding electronic work reporting, but these efforts will not eliminate  vulnerabilities caused by SSA’s multi-faceted processes for receiving and  handling work reports, and will require additional management focus to  shore up internal controls and avoid unnecessary overpayments.

Once overpayments do occur, SSA will endeavor to recover those  overpayments. However, we recently found that the collection of  overpayment debts warrants more attention than SSA has demonstrated  to date. In 2016, we reported that SSA’s largest source of debt recovery  is withholding a portion of beneficiaries’ monthly benefits payments.  However, we found that amounts withheld may not consistently reflect  individuals’ ability to pay, and that many repayment plans could take  decades to complete. We recommended SSA improve oversight and  pursue additional debt recovery options—recommendations that SSA has  yet to implement. Absent clear policies and oversight procedures for  establishing and reviewing withholding plans—SSA’s main tool for  recovering overpayments—SSA cannot be sure that beneficiaries are  repaying debts in appropriate amounts within appropriate time frames.

Further, by not implementing additional debt collection tools that would  speed up repayment, which can extend past the beneficiaries’ lifetimes  and is diminished in value by inflation, SSA is missing opportunities to  restore debts owed to the DI trust fund.

Strategic Approach to Managing Fraud Risks

Although the extent of fraud in SSA’s benefit programs is unknown, high- profile cases—such as one case reported by SSA’s OIG involving 70  individuals and $14 million in fraudulent benefits—underscore the  importance of continued vigilance on the part of SSA leadership in  managing fraud risks to prevent fraud. We reported in 2017 that SSA  established a new office responsible for coordinating antifraud programs  across the agency, and had taken steps to gather information on some  fraud risks. However, we also found that SSA had not fully assessed its  fraud risks, had not developed an overall antifraud strategy to align its  efforts with those risks, and did not have a complete set of metrics to  determine whether its antifraud efforts are effective. SSA has already  taken action on one of our recommendations by producing a fraud risk  assessment, which we will evaluate, and has stated its intent to take  action on our other recommendations. Nevertheless, leadership will be  essential for developing and implementing an antifraud strategy aligned  with the risk assessment and ensuring that SSA’s efforts to prevent and  detect fraud are effective, thereby helping to safeguard the integrity of its  programs and its delivery of benefits to only eligible individuals.

Challenges to Modernizing SSA’s Physical Footprint and Service Delivery

With one of the largest physical footprints of any federal agency, and in  light of rising facility costs, SSA may be able to achieve efficiencies by  reducing the size of its footprint and pursuing additional, cost effective  service delivery options. However, as we reported in 2013, rightsizing  SSA’s physical infrastructure can be complex, politically charged, and  costly; expanding service delivery options is also challenging due to the  complexity of SSA’s disability programs and the varying needs of SSA’s  customers. Our recent review of SSA’s plans to reconfigure its physical  footprint and expand how it delivers services confirmed a number of  challenges SSA must navigate. It also highlighted the importance of  approaching these challenges strategically and systematically, through  strong leadership that guides robust planning, data collection, and  assessment efforts.

In our 2017 work, we identified several challenges that could hinder  SSA’s ability to readily reconfigure its footprint, align it with evolving  needs and potentially achieve desirable cost savings. For example, we  found that despite progress reducing its square footage and the number  of occupied buildings, SSA’s inflation-adjusted rental costs have  remained steady. SSA’s ability to further reduce or enlarge its physical  space is constrained by rental markets, and by union and community  concerns. According to SSA officials, high rents, limited building stock  and complicated federal leasing processes present difficulties and  community needs and union concerns may further complicate relocating  offices. We also found that, even though SSA is expanding its remote  delivery of services—online and through new technologies—overall  demand for field office services has not decreased, although demand  varied greatly across SSA’s offices.

Expansion of online service—such as the SSI application, which became  available online in 2017—present opportunities for SSA to further reduce  or reconfigure its physical footprint. However SSA may miss those  opportunities because we found that SSA had not fully integrated its  strategic planning and facility planning, despite leading practices that  indicate facility plans should align with an agency’s strategic goals and  objectives. We recommended that SSA develop a long-term facility plan  that explicitly links to its strategic goals for service delivery, and includes  a strategy for consolidating or downsizing field offices in light of  increasing use of and geographic variation in remote service delivery.

SSA agreed with our recommendation, and has since formed a Space  Acquisition Review Board to consider space reductions in light of  operational changes. SSA executive leadership will remain an important  factor in ensuring a concerted effort to align the agency’s physical  footprint with its vision for future service delivery.

Our recent work also found that while the complexity of SSA’s programs  can make it challenging for customers to use online services, the agency  lacked data to identify and address challenges with online applications.  The online disability applications in particular can be confusing and  challenging for customers to complete, according to many SSA managers  and staff we interviewed. Applications that are submitted online often  require follow-up contacts with applicants to obtain missing information,  according to SSA front-line staff. However, while SSA has taken steps to  make its online services more user-friendly, such as adding a click-to-chat  function for customers who run into problems, the agency does not  routinely collect data on the reasons for staff follow-ups with online  applicants. Such data are critical to SSA’s efforts to further improve its  online applications and ultimately allow SSA to shift more of its business  online and further reconfigure its physical footprint.

SSA would also benefit from establishing performance goals to help it  determine whether new service delivery options are succeeding. To help  address access challenges such as limited broadband internet in some  rural areas, SSA has rolled out self-service personal computers in field  offices, icons to link to SSA services on computers in public libraries and  video services accessed from senior centers. SSA also recently  completed a trial of customer service kiosks in seven SSA offices and  third-party locations. SSA staff in field offices reported some positive  impacts from these initiatives in terms of extending remote access to  certain populations, but also cited challenges, such as with customers’  varying ability to use self-service computers. While SSA collects some  data on usage, it has not developed performance targets or goals that  could help it assess these initiatives’ success or identify problems.

We recommended that SSA develop a cost-effective approach to  identifying the most common issues with online benefit claims, and develop performance goals and collect performance data for alternate  service delivery approaches. SSA agreed with our recommendations, and  has since reported taking steps to implement them. As SSA continues to  expand its service delivery options, the agency’s leadership will need to  encourage data driven approaches to ensure high quality and effective  alternative service delivery.

Challenges to Modernizing Information Technology

In 2016, we reported that SSA faces challenges with IT planning and  management, based on over a decade of prior work that identified  weaknesses in system development practices, IT governance,  requirements management, strategic planning, and other aspects of IT.  For example, in 2012, a GAO review reported that SSA did not have an  updated IT strategic plan to guide its efforts and its enterprise architecture  lacked important content that would have allowed the agency to more  effectively plan its IT investments. In addition, SSA and others have  reported substantial difficulty in the agency’s ability to implement its  Disability Case Processing System—intended to replace 54 disparate  systems used by state Disability Determination Services—citing software  quality and poor system performance as issues. Consequently, in June  2016, the initiative was placed on the Office of Management and Budget’s  (OMB) government-wide list of 10 high-priority programs requiring  attention. In February 2018, the SSA OIG completed an assessment of  an independent contractor’s analysis of options for the system. The SSA  OIG concluded that several factors that limited the analysis supporting the  contractor’s recommendation for SSA to continue investing in a new,  custom-build version of the Disability Case Processing System.

Because OMB is no longer identifying high-priority programs, in  November 2017, we recommended OMB resume identifying these  programs. We also recommended OMB ensure that the Federal Chief Information Officer is directly involved in overseeing these high-priority  programs as past experience has shown that this oversight could improve  accountability and achieve positive results. OMB neither agreed nor  disagreed with our recommendations, and has not indicated whether it  will take action on these recommendations.

Beyond the challenges identified in these previous reports, GAO’s May  2016 report on federal agencies’ IT legacy systems highlighted the  increasing costs that agencies, including SSA, may face as they continue  to operate and maintain at-risk legacy systems. We identified SSA’s  investment in IT infrastructure operations and maintenance as being  among the 10 largest expenditures of federal agencies in fiscal year  2015. Further, we pointed out that legacy systems may become  increasingly expensive as agencies have to deal with issues such as  obsolete parts and unsupported hardware and software, and potentially  have to pay a premium to hire staff or engage contractors with the  knowledge to maintain outdated systems. For example, SSA reported re- hiring retired employees to maintain its systems that include many  programs written in Common Business Oriented Language (COBOL).  We highlighted a group of systems for determining retirement benefits  eligibility and amounts which were over 30 years old, with some written in  COBOL. We also noted that the agency had ongoing efforts to modernize  the systems but was experiencing cost and schedule challenges due to  the complexity of the legacy systems. We recommended that the agency  identify and plan to modernize or replace legacy systems, in accordance  with forthcoming OMB guidance. SSA agreed, and reported that it is  finalizing its Information Technology Modernization Plan.

To its credit, SSA has made progress in consolidating and optimizing its  data centers. Specifically, in August 2017, we reported that, as of  February 2017, SSA was one of only two agencies that had met three of  the five data optimization targets established by OMB pursuant to  provisions referred to as the Federal Information Technology Acquisition  Reform Act. Meeting these targets increases SSA’s ability to improve its  operational efficiency and achieve cost savings.

In conclusion, many of the challenges facing SSA today are neither new  nor fleeting because they are inherent in the complexity and massive size  of SSA’s programs and the scope of broad demographic and societal  changes over time. Our past work has pointed to the need for rigorous  solutions to these complex problems, such as strategic planning,  evaluation efforts, measuring for impact, and leveraging data—solutions  that invariably require leadership attention and sustained focus.

Chairman Johnson, Ranking Member Larson, and Members of the  Subcommittee, this concludes my prepared statement. I would be  pleased to respond to any questions that you or other members of the  Subcommittee may have.

If you or your staff have any questions about this testimony, please  contact Elizabeth Curda, Director, Education Workforce and Income  Security Issues, at (202) 512-7215 or curdae@gao.gov. Contact points  for our Offices of Congressional Relations and Public Affairs may be  found on the last page of this testimony statement. GAO staff who made  key contributions to this statement are Michele Grgich (Assistant  Director), Daniel Concepcion (Analyst-in-Charge), Susan Aschoff, Alex  Galuten, Jean McSween, Sheila McCoy, Lorin Obler, Sabine Paul,  Almeta Spencer, and Erin McLaughlin Villas.

Appendix I: GAO Letter to SSA on Priority  Recommendations to Implement  This is a work of the U.S. government and is not subject to copyright protection in the  United States. The published product may be reproduced and distributed in its entirety  without further permission from GAO. However, because this work may contain  copyrighted images or other material, permission from the copyright holder may be  necessary if you wish to reproduce this material separately.