July 29, 2019

A New Strategy for Improving Social Security’s Disability Determination Process

Each year, the Social Security Administration (SSA) reviews millions of applications for disability benefits. In 2018 alone, SSA processed 2.4 million claims and paid out nearly $200 billion in benefits. SSA’s disability determination process is a massive operation and, not surprisingly, has a significant backlog. Until recently, more than one million people were waiting an average of 600 days for a hearing on their application. Beyond the backlog, critics question (PDF) whether states and administrative law judges (ALJs)—key players in the determination process—are making reliable and valid decisions. 

SSA uses state offices to conduct an initial determination of an applicant’s claim. In most of the country, denied applicants can request a second review by the same state agency—a formal step called reconsideration. Twenty years ago, policymakers attempted to streamline the disability determination process by eliminating the reconsideration stage in all or part of 10 states. 

Last year, SSA announced (PDF) it would reintroduce reconsideration in those 10 states, a change that will have a small effect on spending and create a more uniform process across the country. SSA actuaries estimate that reintroducing reconsideration into the process could result in a small reduction in people receiving disability benefits in those states because the number of appeals and eventual awards would be reduced and would result in $3.4 billion in savings over 10 years.

This decision has raised concerns among critics of reconsideration who see little value in this step as it is currently conducted. They suggest that reconsideration imposes additional waiting time on workers seeking decisions on their claims and discourages further appeals. It has also reignited debate over the best approach to improving SSA’s disability determination process.

In our new research report, we argue that reconsideration could be a valuable step in the disability determination process if combined with other more robust reforms. 

Enhance reconsideration to make better decisions within constraints

Critics of reconsideration say it functions as little more than a “rubber stamp” on the initial determination of a disability claim and propose eliminating reconsideration (PDF) and directing resources to the initial determination stage. But eliminating reconsideration misses the opportunity to leverage the work done at the initial determination stage, which successfully resolves about 70 percent of all applications without further appeal. This allows limited resources to be directed more efficiently to claims that are appealed but could be decided without advancing to an ALJ hearing.

An enhanced reconsideration could mean avoiding referring cases to ALJ hearings and accelerating decisions by months or years. At the same time, a more robust review of an initial denial should convince more applicants—those who will eventually have their claim denied at an ALJ hearing—to accept a denial at reconsideration.

Under an enhanced reconsideration review, more time and resources would be spent developing the medical evidence with applicants who are denied at the initial determination phase and appeal their case. This would address the difficulties in obtaining medical evidence during the initial determination phase, leading to denials of claims that should have been awarded.

SSA could also test new technologies to enhance communication with applicants and techniques for identifying gaps in the evidence record. SSA could draw on data gathered through a new functional assessment tool developed by the National Institutes of Health that uses state-of-the-art automated interviewing techniques to systematically describe a person’s assessment of their own functional abilities. This tool could help identify and address gaps in the medical evidence record during reconsideration and therefore avoid the need for an ALJ hearing later.

Over time, an enhanced process does not need to increase administrative or program costs. If an enhanced process results in fewer appeals for an ALJ hearing, SSA will achieve substantial administrative savings. In terms of program costs, more awards at the reconsideration phase could be offset by fewer awards at ALJ hearings.

Learning from the past to explore a new path forward

A renewed effort to evaluate approaches to enhancing reconsideration requires the strong support of the Social Security commissioner and Congress, as well as lessons from past reform efforts.

As shown in the timeline below, over the past 30 years, SSA’s leadership has undertaken two major regulatory overhauls of the disability determination process—one that sought to invest in the initial stage and one that aimed to enhance reconsideration, as well as a series of incremental reforms plans. These efforts had some successes, but ultimately, both regulatory efforts were quickly suspended or rolled back because of changes in leadership. 

Chronology of Major Social Security Disability Reform Efforts

To address the challenge of sustaining commitment to reform over time, Congress could extend the Social Security Disability Insurance demonstration authority and authorize SSA to test and evaluate improved approaches to making disability determinations. Broad bipartisan guidance from Congress, with special demonstration authority funding for this purpose, would enable SSA’s effort to be sustained over time while providing the commissioner with latitude to design and test a range of options.

SSA’s decision to reintroduce reconsideration in 10 states could be a step in the right direction if it is combined with more fundamental changes to how reconsideration is conducted. An improved process could provide millions of applicants with more timely and reliable decisions.

Cathy Sandez, 32, of Etiwanda suffers from multiple sclerosis, but the federal government denied her disability benefits because the government's computer had no record of her social security contributions. In fact, the government's computer had lost her electronic file. Sandez is a patient at Queen of the Valley Hospital in West Covina for rehabilitation. (Photo by Gina Ferazzi/Los Angeles Times via Getty Images)

 

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