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APPENDIX C SSA's FUNCTIONS AND INFORMATION FLOWS 1 . This appendix is organized by the types of services that the Social Security Administration (SSA) performs. These services are carried out through a variety of physical facilities that include: . Approximately 1,300 district offices (DOB) 37 teleservice centers (TSCs), including 4 megasites 10 regional offices 6 program service centers (PSCs) 3 data operation centers (DOCs) 132 hearing offices The Title XVI Folder Servicing Operation A headquarters complex which separately houses: - l the central management/administrative/staff components the Office of Central Records Operations the National Computer Center (NCC) the Office of Disability and International Operations (ODIO) MAJOR SERVICES Most services provided by the SSA involve more than one of these facilities. The SSA also interacts with other federal and state agencies such as the U.S. Department of the Treasury, the Internal Revenue Service (IRS), State Disability Determination Services, and the Health Care Financing Administration (HCFA) for Medicare payments. In the following sections we list the major services that the SSA's computer systems must support with an indication of how the task is carried out, which facilities are currently involved, and the associated volume of work. We have identified 17 different types of tasks. 65

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66 Getting a Social Security Number The process of getting a social security number (SSN) is called enumeration. The current standard method for obtaining one requires that every applicant must provide the SSA with evidence of age, identity and U.S. citizenship or lawful alien status. In aciciition, any individual age 18 or older must consent to a face-to-face interview with a SSA staff when applying for a new number. Increasingly, enumeration of newborns is being done through a process by which parents elect to apply for a SSN for their newborns as part of the birth registration process. If parents choose to use this process, the states provide certain basic identifying information to the SSA electronically, an SSN is assigned, and a card is mailed to the parents. Currently, SSNs can be secured through the enumeration-at-birth (EAB) service in 38 states. EAB will be fully operational in ~ more states by early 1990. California will begin participation in 1991; the remaining 3 States are still evaluating their position. As of 198S, the SSA had issuer! 326,850,000 SSNs. The typical yearly enumeration workload is 12 million to 13 million requests; approximately 40 percent of these requests are for assignment of a new SSN. In fiscal year 198S, changes in the tax laws that required enumeration of dependents significantly increased the enumeration workload: about 23 million requests for social security cards were processed that year. Workloads are expected to stabilize back to typical levels after 1990. Getting an SSN is now done by an on-line entry of a request to a batch program. Applicants usually receive their card in 2 weeks. This function is a candidate for full on- line validation and processing of the requests, even though the actual document would still have to be mailed to the applicant's residence. Card Replacement and Information Updates More than half of the enumeration workload involves requests for replacement SSN cards to reflect name changes or to replace cards that have been lost or damaged. Application for replacement cards can be obtained by phone or by visiting a field office. Since the applicant's identity must be verified, the applicant must either visit a field office or mail to the office original proof of identity. Field office personnel make an on-line request for a replacement card to be issued. The requests are processed in batch mode at the NCC and the new card is mailed from the NCC within a few days. Obtaining General Information Information such as brochures on benefits or procedures can be obtainer! from field offices or by using the national 800 telephone number to reach a teleservice center (TSC). During high call periods, TSCs collocated with district offices (DOB) may use DO personnel to handle some of the telephone workload. In addition, calls received by a TSC during a period of high local workloads may be switched to remote TSCs. However, personnel at the -

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67 remote TSCs may not be as well informed about specific local questions. For example, questions about the black lung program resulted in a sizable workload in West Virginia but are rare in other states. there are public ~ . . ~ . . The demand for general information increases greatly when announcements or legislative changes, but the request rate is reduced when users tong the lines busy. The general information workload is difficult to predict, but it can be a significant burden to the available telephone line facilities. It can overload access circuits, increasing the rate of busy signals, which lead to customer dissatisfaction. Crediting of Earnings Records The SSA must maintain accurate records of an individuals earnings in order to determine both eligibility for program benefits and benefit payment amounts. At present the SSA maintains over 332 million separate earnings records in its master earnings file. Over 10p million accesses are made to this file every year for processing claims, responding to requests for earnings statements, and for other activities. The Agency obtains earnings information by processing the data submitted by employers as required by Internal Revenue Service (IRS) form W-3, which is a summary of the information individuals received from their employers on IRS form W-2. The SSA processes all W-3 information for transmittal to the IRS including information on FICA contributions paid. The SSA records data about the wage and selfemployment income for which FICA contributions are due, as well as noncovered earnings, pension payments, and other non-FICA information. W-3 data may be submitted by employers on magnetic media or on paper forms. Paper W-3's are sent to the DOCs for scanning or keying to magnetic tape; the information is then transmitted to the NCC for processing. Data on magnetic media are received directly by the NCC. Approximately 235 million wage items were processed in fiscal year 1988. Of these, 148 million were reported on magnetic media, and 87 million were on forms W-3. Wage amounts are posted to the employee's earning record on an annual basis. Earnings reports are due to SSA by January 30 of the year following the year in which earnings were paid but a 30 day grace period is permitted before earnings reports are considered late. The posting of these earnings is now accomplished by July of the same year, 5 months after the last annual earnings report is received in February. Earnings reports received late from employers may not be posted on time. In addition, earnings postings are subject to correction as past tax records are corrected. Public Law 95-216, enacted in December 1977, was responsible for changing the agency's earnings reporting requirements from quarterly to annually. Earnings records containing yearly total earnings are accessible on-line for the years 1951 to the present. Detailed records containing a breakdown of earnings under different employers are accessible on-line for 1978 to the present. Earnings before 1951 are not on- line; however, the importance of pre-1951 information is diminishing. Because wage amounts are posted in the year following the one in which they are earned, neither the last nor current yearns earnings may be available when a retirement claim is made. If a claimant has not accumulated enough quarters of coverage to qualify for benefits unless the current yearns earnings are credited to his/her record, these earnings must be documented separately. In addition, the use of current earnings levels in the computation of benefits may result in a higher benefit amount.

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68 Determination of Medicare Part A Payments The apportionment of monies to the three SSA trust funds--Olci Age and Survivors Insurance (OASI), Disability Insurance (DI), ant! Health Insurance (HI)--is prescribed by law on the basis of total wages reported. Certification of total wage amounts reported is made to the Secretary of the Treasury. This information is shared with the HCFA, in effect providing them with information concerning Medicare Part A payments. Obtaining Benefit Estimates In order to assist inclividuals in planning for their retirement, the SSA provides benefit estimates on request. Generally, benefit estimates are provided through two mechanisms: 1. 2. The Personal Earnings and Benef it Statement (PEBES)--This service provides individuals with a record of their earnings to date and an estimate of retirement, disability, and survivors' benefits. The disability and-survivors' benefit estimates assume a current death or onset of disability and are based on posted earnings; anti the requester's projected retirement estimates use both the posted earnings future earnings. The service is initiated by submitting a completed form SSA-7004-PC-OPR to the SSA. An SSN holder can request the form via the SSA's national 800 telephone number or can obtain it from any of the SSA's district offices. Completed forms are mailed by the SSN holder to one of the SSA's three DOCs. The DOC keys the information in a batch process and transmits it to the NCC overnight using a remote job entry (RJE) service. The NCC processes the data and sends the information to a contractor, who prints and mails the PEBES to the SSN holder. Although the capability exists for personnel in a modern DO to enter the request on- line for immediate processing at the NCC, this service is not made available to the public because of processing capacity limitations at the NCC. Before the introduction of PEBES, the average yearly number of requests for earnings statements from individuals was 3.3 million. In the first 7 months of fiscal year 1989, the SSA received 4.6 million requests for PEBES. Pre-retirement processing at DOs--Individuals who are close to retirement age may contact an SSA office to find out what benefit payment they can expect to receive when they retire. Getting immediate complete benefit payment information is not always possible, since, as explained above, current year earnings must be documented separately and pre-1951 earnings are not on-line. However, a DO can provide an unedited earnings summary, allowing an inquirer to verify that earnings were posted correctly, and does, of course, determine the exact amount of a benefit payment during the development of a claim once one has been fileci.

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69 Initiating Retirement Benefits This process normally begins when an applicant for OASI benefits calls or visits an SSA office. Although many individuals still prefer to visit an office for assistance, most initial OASI claims can be handled through telephone and mail contact. To establish a claim each person must file an application and submit the evidence needed to establish entitlement (em., evidence of identity, age, marriage, divorce, and current year earnings). In 1988? the SSA received 3.1 million OASI applications for workers and family members. There were 38.6 million OASDI beneficiaries as of ' September 30, 1988; of these, 34.5 million receiver! OASI benefits. The beneficiary population is expected to increase during the next 20 years as life expectancies increase end' baby boomers reach retirement age. All fielc! offices have access to a modernized claims system (MCS), which provides for automated entry and control of claims data. Approximately 99 percent of all initial claims can be taken using the MCS screens. Of these 99 percent, approximately 80 to 85 percent can be completely adjudicated in MCS; that is, the SSA can collect all application data, control the development process, ant! trigger an award or disallowance in the Claims Automated Processing System (CAPS). The other 15 or 20 percent of claims taken through MCS require that adjudication be triggered via a paper form. Field' offices 'now have final authority to authorize award/disallowance on 99 percent of claims, with the other I percent requiring authorization in a processing center. Claims such as those involving clual entitlement are typically processed through the Manual Adjustment, Credit and Award Process (MADCAP), usually triggered via a paper input document from the processing center. Disability Claims Individuals who have earned sufficient quarters of coverage and who meet the definition of being disabled under Title IT of the Social Security Act are eligible for benefit payments under the DI program. Because eligibility for benefits is partially based medical information, which is subject to interpretation, the adjudication of disability benefits is more complex than of OASI benefits. " As in OASI claims, an applicant for Disability Insurance (DI) applies for benefits with the SSA, which determines if the applicant's work record qualifies him or her for disability benefits. The state Disability Determination Section (DDS) requests medical evidence and makes the initial determination of disability. Once all determinations of eligibility have been made, the DO triggers payment of benefits (or a disallowance notice) via an automated system. In most cases, before entitlement to disability benefits can begin, the applicant must serve a waiting period of 5 full calendar months, during which time no benefits are paid. Claimants who are dissatisfied with the disability decision maple in their case can avail themselves of an appeals process. Reconsideration of the case by the DDS is the first of four levels of administrative appeal available to the claimant. After administrative appeals have been exhausted, the claimant may' take his or her case to the appeal. The following is an approximate breakdown of the disposition of the initial claims received in fiscal year 1988: -

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70 36% 35% 15% 14% 100% Approved Disapproved and not appealed Disapproved, appealed and denied Disapproved, appealed and granted Records are established and maintained on the SSA's Master Beneficiary Record for disability beneficiaries by the CAPS and MADCAP systems, as they are for OASI beneficiaries. The paper folders that document their claims, however, are maintained by the Office of Disability Operations until the beneficiary reaches age 59, at which time the folder is transferred to the PSC. A DI beneficiary's benefits are converted from DI to OAST when the beneficiary attains age 65. After an individual is determined to be disabled, the law requires a periodic review to determine whether the individual continues to be disabled. These continuing disability reviews (CDRs) are scheduled based on the likelihood of medical improvement. If improvement is expected, a CDR is generally scheduled between 6 and 24 months after entitlement. If improvement is possible but not predictable (most cases), a CDR is set for 3 years after entitlement. If improvement is not expected a CDR is set for seven years from entitlement. The beneficiary and medical sources are contacted for evidence, and the DDS determines whether disability continues or has ceased. If disability continues another CDR is set. When a CDR is due the case is system controlled and alerts are generated for individual states based on budgeted workloads. The reviews themselves are done manually requiring folder movement, beneficiary and medical source contact, and evaluation of evidence. In fiscal year 1989 the SSA did 337,000 medical CDRs. In addition, 29,000 work issue CDRs were performed to determine whether these individuals had returned to work at a level indicating substantial gainful activity. In fiscal year 198S, 1.2 million workers applied for DI benefits; there were 4.1 million DI beneficiaries in the same year. Approximately 23 percent of these beneficiaries receive their payments through a representative payee. Supplementary Security Income The SSA also administers Title XVI of the Social Security Act to ensure a minimum level of income for needy aged, blind, and disabled people. Federal funding for this program, the Supplemental Security Income (SSI) program, comes from general revenues rather than from the social security trust funds. The federal payment rate and eligibility requirements are uniform nationwide, but almost all states provide supplements, at varying rates, to the federal oavment. In fiscal Year 1988 nearly 1.3 million SSI applications were taken bY the SSA. At the end of that year, there were 4.5 million Title XVI beget iciaries, over 66 percent of whom were blind and/or disabled. Payments in calendar year 1988 totaled $13.8 billion; of this amount, $10.S billion came from federal funds and $3.0 billion from state supplemental funds. Because eligibility for the SSI program is based on need rather than a person's history of Includes all levels of appeals, beginning with reconsideration

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71 earnings as documented in SSA's records, establishment of eligibility can be much more complex under Title XV] than under Title II. In addition, the SSA must redetermine payee eligibility on a periodic basis. This is done in a variety of ways, ranging from payee completion of a simple form to complete reverification of eligibility by field office personnel. In the case of the needy disabled, the disability determination process is the same as that used for disabled claimants under Title XVI. The SSI system is automated for both claims and postentitlement actions. However, input data for the claims process (and certain other processes) are still captured on paper forms and transcribed for data entry in coded format. In addition, programmatic software code has not been modernized. The SSA is currently developing the functional requirements for a modernized SST system. The SST master file, called the Supplemental Security Record (SSR), is distinct from the master file of Title lI beneficiaries (the MBR). A new copy of the file is sent to the Treasury Department each month. An annual crosscheck flags individuals listed in multiple payment systems. Dependents' Benefits If a retiree has an eligible spouse and/or children, each eligible family member can receive a payment based on the retiree's earnings. Children are eligible up to age IS or to any age if the child was disabled before attaining age 22. Disabled widow~er) over age 50 may also be eligible on a deceased beneficiary's record. This results in a higher total payment to the family than would accrue to the retiree alone. When the spouse is eligible for retirement benefits based on his or her own earnings record as well as that of the retiree, benefits are computed on both records. If the SSA determines that the spouse would receive more benefits if entitled on the retiree's record alone, the spouse receives his or her own benefit payment plus an amount which when added to this payment will make the spousal payment equal to what he or she would have received if entitled to benefits solely on the retirees record. This action ensures that the spouse receives the highest benefit for which he or she is eligible. In cases such as these, where a comparison of two individual~records is needed, manual processing is usually necessary through the MADCAP system. On-line access to multiple earnings records facilitates the computation. Benefits may also be paid to eligible dependents in the case of the death or disability of the covered individual. The most common case is one in which the retiree dies and leaves a surviving wife. These cases are processed through the MADCAP system. Most of them are finally adjudicated at the DO, although some very complex cases and some involving systems alerts will be forwarded to a processing center for adjudication. The results of the processing are entered into the automated system; if changes in the status of the case arise subsequently, a manual recomputation is required. Medicare Part B Funds Processing The SSA withholds the premiums for Medicare Part B from the benefit payments of individuals who have chosen Part B coverage and who are in current pay status. The records are flagged, and several batch processing programs at the NCC perform funds transfer

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72 documentation and reconciliation. Premiums from individuals who are in conditional, deferred, or uninsured status are collected by HCFA through its seperate operations for billing entitlement and remittances (SOBER) billing system. Updating Postentitlement Personal Information Information that affects entitlement to benefits, benefit payment amount, or receipt of payment must be reported to the SSA. Types of postentitlement information normally reported include the following: . . Changes in name or address Changes in marital status Requests for electronic funds transfer or changes in EFT account information Post-entitlement earnings Changes in status of dependents Notification of death . The SSA's postentitlement workload also includes responding to inquiries from beneficiaries. Beneficiaries may contact the SSA by phone, by mail, or by visiting a field office. Most phone reports/inquiries are received and handled by personnel at the teleservice center (TSCs). If a postentitlement event can be handled with a system input, the teleservice representative (TSR) handles it to completion. If the event will require extensive development, the TSR refers the item to a field office by administrative message. Personnel in both field offices and TSCs make nearly all inputs to the system interactively. However, while the on-line transactions access the master files as part of the data collection process, most on-line transactions do not directly modify the SSA's databases. Rather, they update on-line pending files that feed batch update processes. Most of the SSA's master files are updated on a daily basis. The only exceptions to the batch update processes are certain critical systems that require immediate update to their databases. In addition, the DDS database is updated on-line by the states DDSs. The SSA's automated master files are maintained at the NCC. Two backup tape copies are created: one is kept at the NCC, and the other is kept off-site in a secure facility. Some postentitlement information reports result in documentation in the claims folder as well as modification of the database. The SSA has over 70 million active and inactive claims folders. High-activity folders remain in SSA office space (merged files) at the processing centers. Low-activity folders are maintained in SSA warehouse space or in record centers managed by the National Archives and Records Administration (NARA) (active files). Folders are maintained in merged or active file space until all beneficiaries are no longer currently entitled to benefits. At that time the folders are put in archive storage at an NARA site pending eventual destruction. Postentitlement access to low-activity files number approximately 7 million per year. c,

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73 -Cost-of-Living Adjustments Nearly all benefits payment records must be modified to reflect annual cost-of-living adjustments. These adjustments, which used- to take 2 continuous weeks of automated processing, are now accomplished in 24 hours. The processing is wholly performed at the NCC. Check Production Benefits are paid monthly to over 40 million beneficiaries. Magnetic tapes that document new payment records ant! changes to existing payment records to be made to beneficiaries are sent monthly to the U.S. Department of Treasury. The Treasury processes the tapes against copies of master payment tapes that it maintains. Payments are made by the Treasury in check form or by EFT, as desirer! by the beneficiary. The number of OASDI benefit payments maple by EFT was 16.6 million in 1986, or 44.1 percent. As of July 1989, 48.2 percent of OASDI ant! 16.4 percent of SSI payments were made by EFT. Beneficiaries continue to receive payments until a "delete" request from the SSA is processed by the Treasury. Should a processing failure occur at the NCC, payment tapes from the previous month would be used by the Treasury to issue payments. Since these tapes would not reflect any changes made during the current month, overpayents anti underpayments would result. Such incorrect payments wouic! be corrected as soon as updated payment tapes could be produced by the SSA. Payment Inquiries Inquiries regarding missing or incorrect payments are directed to the DOs or the TSCs by calling the 800 number telephone service. Because payments are made on a monthly basis and since inquiries generally are received soon after payments are made, this workload is very cyclic. Information about Death from State Records The SSA obtains information from states concerning the deaths of beneficiaries using an automated State death-match operation. This data exchange helps the SSA ensure that it does not continue to make benefit payments to deceased beneficiaries. Handling of Overpayments and Underpayments Of the over 400 million payments made in 1986, approximately 3.6 million were incorrect. Overpayments and underpayments are caused by a number of factors. Many payment amounts are incorrect because reports of changes in beneficiary status are sometimes incorrect, delayed, or not received. Chief among the types of information whose receipt affects payment amounts

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74 are notification of death, changes in status of surviving dependents, and reports of beneficiary earnings.2 In addition, delays and errors within the SSA's processes and revisions of disability claims determinations after appeal can result in overpayments and underpayments. Numerous remedies for overpayments are available including offset of benefit payments (for current beneficiaries). Collection efforts for overpayments are made by debt collection staffs at the PSCs, primarily using manual collection methods. Debt collection workloads are directly dependent on the volume of incorrect payments. 2Legislation sets limits on the amounts a beneficiary may earn before his or her benefits are affected. The 19901imits are as follows: Monthly Annually Age 65 and older $780 $9~360 Under age 65 $570 $6,840 . .,