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Audit Report - A-04-95-06015


Office of Audit

Review of the Effectiveness of the Social Security Administration`s Low Birth Weight Baby Program - A-04-95-06015 - 7/29/97

This final report presents the results of our review of the effectiveness of the Social Security Administration`s (SSA) Low Birth Weight Baby Program. The objective of our review was to evaluate the effectiveness of SSA`s policies and procedures for determining initial and continuing Supplemental Security Income (SSI) eligibility for children with low birth weight (LBW).

At the beginning of 1995, about 892,000 of the 6.3 million SSI recipients were blind or disabled children. Our sampling of LBW cases showed that SSA`s operating policies and procedures for determining SSI eligibility for LBW children were generally effective.

SSA performs periodic continuing disability reviews (CDR), as required by statute, to establish the continuing eligibility of SSI recipients. An SSA initiative to reduce the backlog of CDRs in the LBW program began in late 1993. SSA could not process SSI medical improvement diaries prior to that time. To date, over 40 percent of the 2,864 CDR cases in the 2 initial phases of SSA`s initiative resulted in cessation of benefits. In these cases, the children`s impairments sufficiently improved to enable them to function in an age-appropriate manner. Similar rates are expected from the 6,000 cases released during the last 2 phases in 1995.

Our sample of 50 CDR cases showed that 92 percent of these LBW children had diary dates that matured 1 year after adjudication. Although 16 of the 35 cases in our sample with completed CDRs were terminated from the SSI program, CDRs were not performed in a timely manner. CDRs for the 35 cases occurred between 4 to 30 months after the scheduled review date. We estimate that SSA could have saved about $79,900 if these children`s benefits had been terminated when their diary dates matured. Statistically projecting our sample results to the 8,864 children in SSA`s LBW initiative, $7.78 million to $20.56 million may have been saved if CDRs had been performed in a timely manner.

The Welfare Reform Reconciliation Act of 1996 (the 1996 Welfare Act) contains new requirements for childhood disability, including CDRs for LBW babies no later than 12 months after birth. The selection criteria identified by SSA is intended to meet the new legislative requirements for LBW children. We recommend SSA prepare a written implementation plan with anticipated time frames in which to address the requirements of the new law and report the results to the Congress. SSA agreed with our recommendation (see Appendix B).

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INTRODUCTION

SSI is a cash assistance program administered by SSA and financed from general funds of the Department of the Treasury. The SSI program, authorized in 1974 by title XVI of the Social Security Act, assures a minimum level of income to people with limited income and resources who are aged, blind, or disabled. Applicants must meet all of the following requirements to be eligible for SSI benefits:

  • at least age 65, blind, or disabled;
  • a resident of the United States (citizen or qualified alien);
  • no greater income and resources than permitted; and
  • filed an application for SSI benefits.

As of the beginning of 1995, 6.3 million individuals were receiving federally-administered SSI benefits--an increase of 5.2 percent over the previous year. Of that number, 14 percent, or about 892,600 recipients, were blind or disabled children. During 1994, about 205,600 blind and disabled children were awarded benefits. The SSI program payments totaled $25.9 billion in 1994, up 5.4 percent from 1993.

Disability is defined as the inability to perform any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or to last for a continuous period of not less than 12 months. Until early 1990, individuals under the age of 18 were considered disabled if they suffered from any medically determinable physical or mental impairments which were comparable in severity to disabling impairments for adults. However, as the result of the February 22, 1990, Supreme Court decision in Sullivan v. Zebley, the criteria for evaluating disabled children were revised to include assessment of the child`s ability to engage in age-appropriate activities. Monthly SSI payments for disabling impairments are determined mainly by individual income and resources.

Children born with a birth weight of less than 1,200 grams, or a birth weight of at least 1,200 grams but less than 2,000 grams (4 pounds 6 ounces) and small for gestational age, are considered disabled until age 1 and thus eligible for monthly disability payments. These children must also meet SSI eligibility requirements for income and resources. Parent and/or guardian income and resources are also considered in granting SSI benefits to LBW children.

SSA is required by statute to perform reviews from time to time to establish the continuing eligibility of SSI recipients. To comply with the statute, SSA uses periodic CDRs to determine whether the impairment(s) have improved sufficiently, since the most recent disability determination, to permit recipients to engage in substantial gainful activity. CDRs also apply to title XVI disabled children whose impairments are expected to improve sufficiently to enable them to function independently and effectively in an age-appropriate manner.

SSA uses a diary date as the mechanism for scheduling CDRs based on the individual`s chances for medical improvement. Claims examiners at the offices of State disability determination services (DDS) annotate the diary dates on disability determination and transmittal forms (Form SSA-831), when initial entitlement is established.

Under current SSA policy, the diaries for LBW children are set to mature at age 1, if medical improvement is expected by that time. However, the diary dates may be established at any appropriate later date within 3 years of the adjudication date, depending on the claims examiner`s judgment as to when medical improvement is likely to occur.

Over the years, SSA has accumulated a backlog of CDRs in the SSI program. In an initiative to reduce the backlog, SSA began targeting LBW children for CDRs in December 1993. SSA notified State DDS agencies to begin CDRs on selected cases. Initially, 1,203 cases were released to State agencies for review and 888 determinations were completed through December 1994. Of those determinations, 357 resulted in cessation of benefits, a cessation rate of 40.2 percent. An additional 1,661 cases were released for CDRs in March 1994 and a total of 6,000 cases were released in January and May 1995. SSA experienced a cessation rate of 42.4 percent for the cases released in March 1994, and a similar rate is expected for the cases released in 1995.

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SCOPE

Our review was performed in accordance with generally accepted government auditing standards. Our objective was to evaluate the effectiveness of SSA`s policies and procedures for determining initial and continuing SSI eligibility for LBW children and included the following sub-objectives on whether:

1. a need exists to establish earlier diaries for CDRs on LBW children;
2. missing claim folders affect CDRs;
3. proper deeming of income and resources to LBW children had occurred;
4. other medical insurance was the primary payer of medical expenses before Medicaid;
5. timely notification of the deaths of LBW children was being made to SSA; and
6. the initial eligibility process for disability determinations was proper.

To accomplish our objective, we:

  • Reviewed SSA`s policies and procedures in the Program Operations Manual System, Supplemental Security Income Records, and income queries.
  • Reviewed the laws and regulations relating to LBW children.
  • Discussed cases with SSA`s Office of Disability, SSI program and field office (FO) personnel, DDS personnel, and representatives of various State Medicaid and vital statistics agencies.
  • Selected 50 Social Security numbers (SSN) from a LBW population of 8,864 SSNs identified and released by SSA for CDRs between December 1993 and May 1995. SSA`s criteria for selection of the December 1993 cases included initial disability determinations and reconsiderations based on denials for continued disability. None of the 50 cases reviewed were in the appeal stage, or pending appeal, at the time of the Office of the Inspector General (OIG) review (see Appendix A for statistical and supplemental documentation).
  • Requested and reviewed case folders for selected SSNs based on a questionnaire designed to capture specific data on the six sub-objectives identified.
  • Calculated savings only on those cases where a CDR had been completed. Cases terminated for reasons other than a CDR were not included in the savings computation. Savings determinations for initial cases were based on a period commencing 60 days after the diary maturity date. Savings determinations for reconsideration cases were based on a period commencing 60 days after all appellate reviews had been completed. See Appendix A for the sampling methodology.

We reviewed the internal controls necessary to meet our objective. Major contributors to the report are listed in Appendix C. Audit work was performed at the Southeastern Program Service Center and the Alabama DDS from April 1995 to March 1996.

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RESULTS OF REVIEW

SSA complied with all procedures relating to the six sub-objectives. Our review of case folder contents revealed that documents were present to support DDS and FO decisions on SSI disability for LBW children.

SSA’s initiative has reduced the backlog of CDRs on LBW cases, although CDRs were not performed in a timely manner. Our sample statistics show that 46 of 50 CDR diaries, or 92 percent, were set to mature 1 year after adjudication. However, CDRs were overdue from 4 to 30 months for those that were completed or in process at the time of our review.

We reviewed case folders for 49 of the 50 cases in our sample. One case folder was destroyed in the bombing of the Oklahoma City Federal Building on April 19, 1995. However, we determined that SSI payments in that case had been terminated prior to our review. The child no longer met the SSI income/resources eligibility requirement due to his mother`s remarriage. Since SSI benefits were no longer being received, we considered it unnecessary to determine the effect of the missing claim folder on the CDRs reviewed. The child will be required to meet all SSI eligibility requirements at the time of any future filing; therefore, the missing case folder guidelines will not apply.

CDRs were performed on 35 of the 49 cases reviewed. Even though diary dates for all but 2 of the 35 cases had been set for 1 year from the date of adjudication, no CDRs were completed by the time the diary dates had matured. As a result of CDRs that were performed, children in 16 of the 35 cases reviewed, or 46 percent, were terminated from the program.

Twelve of the 14 remaining cases (49 less 35) on which CDRs had not been performed were overdue from 5 to 26 months, even though 11 of the cases had been diaried for 1 year. One of the two remaining children was terminated from the program before the CDR diary matured, and the other child`s participation was terminated after the diary matured but before the CDR was completed.

If CDRs for the 16 cases in our sample had been performed in a timely manner and the children`s benefits terminated from the SSI disability program at the time the diary dates matured, SSA could have saved about $79,960.

By statistically projecting our sample results to the 8,864 children in SSA`s LBW initiative, we estimate that $7.78 million to $20.56 million may have been saved if CDRs had been performed in a timely manner and the children whose impairments had sufficiently improved to enable them to function in an age-appropriate manner had been terminated from the SSI disability program.

The 1996 Welfare Act contains new requirements for childhood disability. CDRs for LBW babies are now required to be performed no later than 12 months after birth.

We discussed with SSA officials their plan for implementing the CDR requirement for LBW children in the 1996 Welfare Act. Selection criteria for targeting LBW children who fall within the parameters of the new law are in place for CDRs to be performed during Fiscal Year 1997. We believe the selection criteria identified by SSA will accomplish the goal of including LBW children. However, we believe that SSA should prepare a written implementation plan to present the methodology and anticipated time frames for addressing the requirements of the new law and reporting the results to the Congress.

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RECOMMENDATION

We recommend that SSA prepare a written implementation plan addressing the requirements for LBW children in the 1996 Welfare Act that would include performing timely CDRs, closer to the diary dates, and anticipated time frames for completion and reporting the results to the Congress.

Agency Comment

SSA agreed with our recommendation and will develop a comprehensive plan. SSA also made several technical comments. Our report reflects the changes we believed were appropriate; however, there were three comments that we believe do not warrant change.

Agency Comment

SSA was not required by statute to perform periodic CDRs of SSI recipients prior to the enactment of the Social Security Independence and Program Improvements Act of 1994.

OIG Response

SSI CDRs were provided for in the law prior to 1994. However, OIG acknowledges there may have been circumstances in which SSA management decided not to perform title XVI CDRs.

Section 1601 of the Social Security Act, as amended through January 1, 1991, states that for purposes of establishing a national program to provide SSI to individuals who have attained age 65 or are blind or disabled, sums sufficient to carry out this title are authorized to be appropriated.

Section 1611(e) 3(B) of the Social Security Act further states that the Secretary shall provide for the monitoring and testing of all individuals who are receiving benefits under this title.

In addition, Title 20 of the Code of Federal Regulations (CFR), Chapter III, Part 416 entitled, Supplemental Security Income for the Aged, Blind, and Disabled, Subpart I - Determining Disability and Blindness, section 416.989 provides that after individuals are found to be disabled, SSA must evaluate their impairment(s) from time to time to determine their continued eligibility for payments based on disability.

Section 416.990(a) of the CFR further mandates that SSA conduct CDRs to determine whether individuals continue to meet the disability or blindness requirements of the law.

Agency Comment

Since the review may take an average of 120 days, any computation of savings should not be based on the diary maturation date.

OIG Response

The sample cases generally showed reviews of 30 to 90 days duration. The calculations of savings were based on an average 60-day period for the reviews. We also considered the 60-day grace period during which SSI recipients continued to receive benefits after the date SSA determined the recipient was no longer disabled and eligible for benefits.

Agency Comment

The report does not provide a basis to support the assumption that a timely CDR (when the diary matured) would have resulted in a cessation.

OIG Response

It is just as likely that the ultimate number of cessations will be greater than the projection as that it will be less. Although the sample size is limited, nevertheless, the projection is statistically valid and the results are significant.

Agency Comment

SSA was concerned about the potential savings cited in the report and the methods used.

OIG Response

OIG used valid statistical sampling methods in accordance with OIG`s policies and standards. The results were reviewed and accepted as statistically valid.

We could not use SSA`s approach because we did not know how many of the 8,864 cases did not have CDRs. More importantly, SSA`s method (a nonstatistical estimate) would only predict the effect on those cases for which no CDR had been performed. It would ignore those cases for which CDRs had been completed. Moreover, we would not have been able to calculate the sampling error because SSA`s method would require projecting our sample results to a population different from which we sampled. SSA`s method would violate the rules of probability upon which statistical sampling is based.

David C. Williams

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APPENDICES

Appendix A

SAMPLING METHODOLOGY

Children Terminated Due To A Completed Continuing Disability Review

Total Population: 8,864

Total Sample Size: 50

Number of Delayed CDRs: 16

Projection of Delayed CDRs: 2,836

CONFIDENCE LEVEL: 90 percent confident the actual number of children terminated due to a completed CDR is between 1,882 and 3,939 inclusively.

Value of Delayed CDRs: $79,963

Value of Projection of Delayed CDRs: $14,175,841

CONFIDENCE LEVEL: 90 percent confident the actual amount is between $7,785,009 and $20,566,672 inclusively.

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Appendix C

MAJOR CONTRIBUTORS TO THIS REPORT

Office of the Inspector General

Gary Kramer, Director, Program Audits
Betty Alexander, Team Leader
William McMillan, Team Leader (Acting)
Kathy Woodcock, Team Leader
Ellen Justice, Team Member (Auditor-in-Charge)
Donna Reynolds, Team Member

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