Improving the Social Security Disability Decision Process: Interim Report (2006)

The Social Security Administration (SSA) provides Social Security Disability Insurance (SSDI) benefits to disabled persons of less than full retirement age and to their dependents. SSA also provides Supplemental Security Income (SSI) payments to disabled persons who are under age 65. For both programs, disability is defined as a “medically determinable physical or mental impairment” that prevents an individual from engaging in any substantial gainful activity and is expected to last at least 12 months or result in death.

As of December 2004, SSA was making disability payments to 10.8 million adults and children based on their own disability and 1.5 million dependents of disabled adults. In fiscal year (FY) 2005, SSA estimated it would process approximately 2.5 million initial claims for disability benefits, 25 percent more than in FY 2000.

Assuming that an applicant meets the nonmedical requirements for eligibility (e.g., quarters of covered employment for SSDI; income and asset limits for SSI), the file is sent to the Disability Determination Services (DDS) agency operated by the state in which he or she lives for a determination of medical eligibility. SSA reimburses the states for the full costs of the DDSs.

The DDSs apply a sequential decision process specified by SSA to make an initial decision whether a claim should be allowed or denied. If the claim is denied, the decision can be appealed through several levels of administrative and judicial review. On average, the DDSs allow 37 percent of the claims they adjudicate through the five-step process. A third of those denied decide to appeal, and three-quarters of the appeals result in allowances. Nearly 30 percent of the allowances made each year are made during the appeals process after an initial denial.

In 2003, the Commissioner of Social Security announced her intent to develop a “new approach” to disability determination. The goals of the new approach are to (1)

make the correct decision as early in the claims process as possible and (2) foster return to work at all stages of the process.

In late 2004, SSA asked the Institute of Medicine (IOM) to help in two areas related to its initiatives to improve the disability decision process.

1. Improvements in the criteria for determining the severity of impairments. Currently, SSA uses a Listing of Impairments (the Listings) to identify impairments and associated medical findings that are so severe that SSA can consider individuals with one of these impairments, or their equivalent in severity, to be disabled without additional evidence of their inability to work.

2. Improvements in the use of medical expertise in the disability decision process. Currently, each DDS has medical consultants on staff and a roster of outside medical sources it uses to conduct independent medical examinations, called consultative examinations, and each regional office of the Office of Hearings and Appeals has a roster of medical experts who have agreed to provide their opinions in cases being heard by administrative law judges. Other than state licensure, SSA does not have national qualification standards or training and certification requirements for any of these medical sources.

SSA’s request to IOM was broken down into 10 specific tasks. The first seven tasks pertain to the Listings, and the final three—tasks 8, 9, and 10—pertain to presumptive disability categories, organization of medical expertise, and training and certification of consultative examiners, respectively (see Appendix A). The last three tasks are addressed in this interim report.

In July 2005, SSA published a notice of proposed rulemaking (NPRM) that included establishment of a Federal Expert Unit that would set up and administer a national network of medical, psychological, and vocational experts to support the disability decision process at the initial decision point and subsequent levels of appeal. In the NPRM, SSA announced that it is looking to the IOM committee’s interim report for advice on the qualifications of the medical and psychological experts to be recruited for the national network.

The final report, due in 2006, will address the remaining tasks, which pertain to the criteria and procedures of the disability decision process. It is possible that after further information gathering and analyses of the effectiveness of the disability decision process in identifying those who qualify for benefits and excluding those who do not, the committee may refine its recommendations concerning medical and psychological expertise in the final report.

NOTE: In this interim report, tasks 9 and 10 are presented before task 8. This is because, due to the NPRM, the recommendations on the qualification standards and training requirements for medical experts are of immediate importance while presumptive disability is not the subject of rulemaking at this time.

The committee supports the primary goals of SSA’s new disability decision process—to make the right decision as early in the claim process as possible, and to improve the accuracy, consistency, and timeliness of disability decisions at all levels of the disability process. Because the agency has not adopted the final version of its new plan, it is too early to reach any conclusions about the new process itself. Nevertheless, the committee believes that several factors significantly limit SSA’s ability to make the correct decision early in the process and these factors contribute to error, inconsistency, and delay in decision making.

One factor is the lack of emphasis on developing a complete record at the beginning of the disability decision process, although fuller case development has been recommended in a number of reports. More complete case development at the front end of the process may not be essential for an accurate initial disability decision in every case, but overall it should reduce the impetus for appeals, reduce the number of reversals on appeal, and shorten the average length of time before reaching final adjudication. This is difficult to accomplish, however, because disability decision makers in the DDSs are subject to strong pressures from SSA to decide cases quickly and to reduce administrative costs (including medical costs) per case.

A second factor is a contrasting set of incentives for DDSs and administrative law judges, which has the effect of pushing decision outcomes in different directions at different levels of adjudication. By law, DDSs are subject to a “pre-effectuation” review by SSA regional offices of 50 percent of all decisions to allow claims in SSDI cases. Denials are not reviewed for correctness. SSA’s quality assurance system, which does look at denials as well as allowances after the fact, reviews only one percent of the cases. Although a third of the denials are appealed for review by an administrative law judge, and the majority of those appeals result in allowances, the costs of decisions reversed by the administrative law judges are not internal to the DDS. In addition, there is no information feedback loop from the appeals process on the results of hearings, especially on the characteristics of cases allowed on appeal that were denied initially. In contrast, administrative law judges have incentives to allow claims. The chances of having an allowance decision subsequently reviewed are very small, while more than half of all denial decisions are appealed to the Appeals Council, the next level of review.

The new disability plan recently set forth by the Commissioner describes SSA’s intent to “create and operate a comprehensive and multidimensional approach to quality assurance” in order to improve quality and accountability throughout the disability process. The committee agrees that fundamental change is needed in the SSA quality review process to place equal emphasis on allowances and denials. The committee plans to address the role of balanced incentive systems in its final report.

Claimants must have a medical basis for impairments disabling them from work to qualify for benefits. Accordingly, SSA relies on medical experts to provide medical evidence (including treating physicians and independent medical examiners), analyze the evidence, and determine if it justifies an allowance (the last two activities are performed by medical and psychological consultants in the DDSs).

DDSs collectively have more than 2,100 medical and psychological consultants (hereafter, MCs), most of them part-time contractors. In most DDSs, the MC works with a lay disability examiner to make the disability decision jointly.

The applicant’s own medical providers, called treating sources by SSA, are the primary source of medical evidence throughout the entire disability decision-making process. By regulation, DDSs must seek medical evidence and opinions from treating sources and, unless there are inconsistencies or ambiguities, give their evidence controlling weight.

Medical expertise is also provided by medical personnel who perform consultative examinations (CEs)—i.e., examinations and tests—on claimants at SSA’s request, when needed information is not available from existing medical records. Although the claimant’s own treating source is the preferred CE provider, SSA usually uses providers that it recruits specifically to perform these examinations and tests.

For cases appealed for a hearing, administrative law judges may request the presence of a medical expert (ME) to serve as an expert witness at a hearing. MEs are private practitioners who agree to serve for a fee and are recruited by the regional offices of the Office of Hearings and Appeals (OHA).

SSA also has MCs in a federal DDS and in the regional offices, where they are involved in quality review and case consultation.

At committee meetings, SSA staff raised concerns that not all DDSs have a full range of medical specialists among their MCs. The committee also heard from organizations representing the state DDS directors and the disability examiners and MCs that not all DDSs always have all the specialties desired. The committee also heard from administrative law judges that they are not always able to find certain specialists to serve as medical experts at hearings. According to DDSs and administrative law judges, the main reasons for lack of access to all specialties are inadequate compensation to attract higher-paid specialties and scarcity of specialists in rural areas and less populous regions of the country.

There are several possible arrangements for ensuring DDSs access to specialists, including the establishment of a national network of experts coordinated by a Federal Expert Unit (FEU), as proposed by the July 2005 NPRM. An FEU organized as a decentralized network of medical, psychological and vocational experts could play several roles. First, network experts could serve as consultants to adjudicators at the DDSs and OHA, similar to what MEs do for OHA currently, which would provide adjudicators with access to expertise that is not otherwise available. Second, network experts could serve as MCs in the adjudication process and make the disability determination in conjunction with the disability examiner. Third, network experts could perform CEs (this is not proposed in the NPRM).

However, establishing a national network of experts who would play different roles at different points in the process (e.g., acting as agency adjudicators in initial decisions and providing expert opinions to administrative law judges in de novo proceedings) will require arrangements that ensure that the same medical expert does not serve as adjudicator and expert witness in the same case. Likewise, if members of the network perform CEs, they should be instructed to be impartial and not be permitted to serve in other roles in the same case.

Currently, DDSs rely on state licensure or, in the case of psychologists and speech-language pathologists, certain alternative qualification requirements, to ensure a minimum level of medical expertise and competence among MCs. MCs are not required to be board certified, possess any additional credentials, or have an active practice in patient care.

Board certification is rapidly becoming the standard credential for the practice of medicine and psychology. Certification also has the benefit of requiring periodic recertification to demonstrate continued competence.

The committee recognizes that requiring a higher level of qualification (i.e., board certification) may affect SSA’s ability to attract and retain experts. Historically, SSA has had difficulty recruiting qualified experts given the nature of the work and comparatively low reimbursement rates. Therefore, if SSA is to attract enough candidates, a requirement for higher qualifications must be accompanied by increased compensation.

Board certification represents mastery of a specific body of knowledge and continuing education, but the certification process alone does not ensure that an individual is qualified to provide expertise in SSA’s disability programs. Currently, SSA has no standardized national training program for MCs, to ensure a reliable level of knowledge and promote consistency in decision making, although it has been working on an MC training program for several years.

The training program should concentrate on the aspects of the MC role that are not usually learned in medical school or residency programs, namely, evaluation of work disability and Social Security disability program policies and procedures. The training should be ongoing, it should be competency based, and SSA should perform an ongoing assessment of MC competency as a component of its revised quality assurance program.

Many of the Listings have a substantial functional component and at least half the adult claims are decided on the basis of the interaction of medical and vocational factors, not on severity of impairment alone. Under current procedures, MCs must be physicians, psychologists, or other “acceptable medical sources” (i.e., podiatrists, optometrists, speech-language therapists). This policy has the effect of excluding from DDSs many medical personnel who could contribute to the disability decision-making process, including personnel trained to evaluate functional limitations and their impact on ability to work (e.g., nurse practitioners, occupational therapists, physical therapists, registered nurses, psychiatric social workers).

For example, DDSs could use registered nurses who are certified as nurse practitioners or case managers to help triage cases, advise disability examiners on what is needed to complete development of the medical record, and help decide when a case should be referred to a MC for review or to a specialist.

Using technology (e.g., electronic case files and video hearings) to make medical experts more widely available, establishing rigorous, standardized qualification requirements for all experts, and compensating experts at a level commensurate with their expertise will help to ensure that disability adjudicators have sufficient expertise to help them address complex medical issues in most cases. However, there will still be circumstances in which SSA needs more specialized expertise than the network of experts may have. Examples include more complex or rare cases, newly developing conditions (e.g., emerging infectious diseases), or conditions for which research is rapidly changing the state of the art in clinical practice.

SSA should consider developing demonstration projects with academic clinical research centers that focus on conditions that are difficult to evaluate, similar to the demonstration project that SSA currently has with the Association of University Centers on Disabilities, even though few medical experts in academic research centers will be familiar with the SSA disability program or with evaluating the work capacities and limitations of patients. The centers would nevertheless be an excellent source of medical expertise in reviewing complex cases, a means of learning how to improve adjudicative evaluation and decision making and improving the training of disability examiners, MCs, and administrative law judges, and an input to the revision and updating of the Listings.

Greater participation by treating sources is an excellent means of obtaining all the relevant medical and functional information early in the disability decision process, which speeds the process, leads to more informed decisions, and saves the costs of going back to the treating physician for additional information or of having to order a CE.

Efforts should focus on making treating sources more knowledgeable about SSA rules and procedures and what is expected of them, providing protocols and forms that elicit and organize relevant information, making it easier technologically for treating sources to provide the information, and compensating them adequately for the extra practice expenses involved in providing records and a useful report.

Current rates of compensation for providing records and preparing reports significantly affect both treating source participation and report quality. Rates are generally low relative to fees paid by other disability benefit agencies, which discourages the participation of treating sources.

MEs function as independent expert witnesses in a quasi-judicial process. They have no direct adjudicative function, and they do not examine the claimant. They use their medical expertise at hearings to help the administrative law judges and other participants understand complex medical issues of the case in layman’s terms. SSA has not required specific qualification standards for MEs.

Regardless of whether MEs are drawn from existing rosters, or some newly established network as is proposed in the July 2005 NPRM, SSA should establish consistent national qualification standards for MEs to ensure a level of uniformity across the country. As discussed earlier, board certification is fast becoming the standard credential for the practice of medicine and psychology.

The fee schedule for ME services is low compared with fees paid for expert witnesses by other programs and has not been increased for some time. More adequate com-

pensation will help increase the participation of MEs from higher-paid specialties and specialties with relatively few members.

DDSs purchase consultative examinations (CEs) to obtain or clarify information that is missing, conflicting, or ambiguous in a claimant’s medical records. CE providers are asked to report examination and test results, a diagnosis and prognosis, and an opinion on what the claimant can do despite their impairment or impairments.

Each DDS is charged with recruiting and orienting medical personnel who agree to be available to perform CEs in return for a fee set by each state. CE providers are not required to be what SSA defines to be an “acceptable medical source,” if a medically determinable impairment is established and the issue at hand is the severity of the impairment and how it affects an individual’s functioning. CE providers may be what SSA calls “other sources,” who may be other medical practitioners such as nurse-practitioners, physical therapists, occupational therapists, chiropractors, and audiologists, or nonmedical sources such as teachers, day care providers, social workers, and employers.

SSA requirements for CE providers are minimal. They must be currently licensed to practice medicine in the state and have the training and experience to perform the type of examination or test being requested. They are not required to have training or certification specifically in the evaluation of disability.

Currently, each state makes its own arrangements for orienting and training CE providers. SSA furnishes CE providers with a guide, known as the Green Book, which provides general information about the Social Security disability programs and how claims are adjudicated, including the role of CEs, how CE providers are selected, and what the DDSs look for in a report of a CE.

The ability to diagnose and treat diseases and injuries is fulfilled by the current requirement that CE providers be licensed or certified in their area of expertise. However, licensure and board certification do not necessarily ensure that CE providers are expert in evaluating how a person’s impairment limits his or her functioning in employment settings or that providers know how to provide medical evidence in a form useful for evaluating whether someone meets Social Security’s definition of disability. Accordingly, CE providers should be required to demonstrate competence in these subject areas, namely, functional assessment of disability and SSA disability program policies and procedures.

A comprehensive disability examination entails much more than a standard medical examination. The clinician must assess the nature and severity of the impairment or impairments by reviewing medical records, taking a history, performing an examination, and if needed, administering a diagnostic test or tests, and then he or she must evaluate the functional consequences of the impairment or combination of impairments, determine what the claimant’s capabilities are to work (in adults) or engage in age-appropriate activities (in children), and prepare a report that helps the DDS determine the nature, severity, and duration of the impairment and the claimant’s residual functional capacity (or, in SSI children, functional limitations).

The median fee that DDSs pay for an examination and report is approximately $30. Few pay more than $65. These fees are qu ite low compared with the fees that other disability benefit programs pay for disability evaluations and reports, including the federal and state workers’ compensation programs and private disability insurers.

SSA should conduct market studies and studies of fees that other public programs pay for similar services to determine a national fee schedule for CEs, adjusted for geographic differences in practice costs, with several fee levels depending on how focused or comprehensive the examination is. The fee schedule should be updated annually.

Higher fees should increase the pool of medical sources willing to perform CEs, especially in harder-to-recruit specialties such as orthopedics. It should also provide the incentive for more treating physicians to be willing to perform CEs.

Improving the quality of CEs depends not only on the skill and knowledge of the CE providers but also on whether they have been asked for the right information.

SSA could develop templates for CE request letters for common types of cases that can be easily individualized. In addition to a checklist of standard items to consider, each request letter should contain a narrative paragraph to provide further guidance to the CE provider that describes what the disability examiner is concerned about and thinks is needed to evaluate the claim in question.

An applicant for SSI based on disability or blindness may receive up to six months of payments prior to the final determination of disability or blindness if he or she is determined to be “presumptively disabled” or “presumptively blind” (hereafter presumptive disability) and meets all other (i.e., financial) eligibility requirements. SSA field offices can make presumptive disability determinations in cases involving certain impairments specified by SSA. DDSs can make presumptive disability findings in any case in which the available evidence indicates a “strong likelihood” that the claim will be allowed after going through the regular formal determination process.

Presumptive disability is primarily a social policy which recognizes that applicants for SSI have little or no income or assets and probably need immediate assistance with the costs of living. Therefore, the committee is unable to recommend specific categories to include or delete because the selection criteria are not solely medical.

The nonmedical criterion in selecting presumptive disability categories is the degree of risk, i.e., the reversal rate because of false positives for which SSA is willing to pay in order to reach all true positives. Early in the SSI program, SSA determined that a reversal rate of more than 10 percent over several months made a category a candidate for deletion. Only 9 of the 15 current categories meet this criterion, however. A reversal rate of 20 percent or less would bring the total to 13. At the same time, the presumptive

disability categories do not include conditions that consistently have high allowance rates, which therefore on equity grounds could be considered as candidates for inclusion as presumptive disability categories. In 2004, for example, cases with 1 of 12 primary impairment codes had a 90 percent chance of approval, and only 4 of those codes corresponded closely to existing presumptive disability categories.

Calculations based on SSA allowance rates by impairment category indicate that there are a number of conditions in which the probability is high that a claimant who alleges he or she has one of the conditions will end up being allowed, which makes them good candidates to be presumptive disability categories. The question the committee cannot answer is whether that probability should be 90 percent, 85 percent, 80 percent, or some other number. The answer depends on the tradeoff society wishes to make between helping groups of low-income persons with a given probability of being determined disabled by SSA and the cost of paying for cases that end up being disallowed.

The percentage of SSI claims that are granted presumptive disability status varies widely across SSA field offices and DDSs, a situation that SSA could improve. The percentage of field office presumptive disability cases ranges from 0.1 percent to 3.5 percent of SSI claims. The range for DDSs is from 0.6 percent to 34.6 percent. The majority of field offices do not use all 15 presumptive disability categories.

Currently, the use of the presumptive disability procedure is voluntary, which leads to large differences in practice from office to office that are not just the result of inherent difficulties in assessing cases. If SSA has a presumptive disability process, and it is part of national social policy, it should be applied uniformly from place to place. This is primarily a matter for administrative policy to achieve.

Presumptive disability is a policy to expedite payments. TERI (TERminal Illness) cases involve expedited decisions. According to the SSA program operations manual, “Cases where there is an indication of a terminal illness (TERI) are to be handled in an expeditious manner because of the sensitivity involved.”

TERI cases are subject to special procedures through which the case is expedited through every step of the disability determination process, including the appeals process and the payment process. The issue is whether field office interviewers are able to identify TERI cases with some accuracy. This would involve determining the percentage of cases flagged as TERI cases that turn out to meet the criteria and also the percentage of cases that were not flagged that should have been. Differences between types of cases and offices could be analyzed for better understanding of TERI decision making and ways to improve it.

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