Audit Report - A-07-95-00833

Office of Audit

The Social Security Administration’s Payment for Medical Evidence of Record Obtained by State Disability Determination Services - A-07-95-00833 - 3/26/97

This report provides you with the results of our review of the Social Security Administration’s (SSA) payment for medical evidence of record (MER) obtained by State Disability Determination Services (DDS) in making disability determinations. The objective of our audit was to assess SSA’s policy of reimbursing medical providers for the cost of providing MER.

In allowing payment for MER under the Disability Insurance Program in 1980, Congress intended that MER would be received more timely, thereby reducing the need to purchase consultative examinations (CE) and the time to process disability claims. We reviewed the processing times for title II Disability Insurance (DI) and title XVI Supplemental Security Income (SSI) disability claims from Fiscal Years (FY) 1985 to 1994. We found that claims processing times increased for DI and SSI by 42 percent and 39 percent, respectively. We also reviewed the trend in DDS purchases of CEs during the same time period. CEs are ordered when a DDS has insufficient medical evidence to reach a disability decision. CE purchase rates remained relatively constant, with only a 3.7 percent decrease from FYs 1985 to 1994. Given the substantial increase in claims processing times and the relatively constant CE rates, we have concluded that payment for MER has had no apparent impact on improving the timeliness of MER or reducing the purchases of CEs.

This conclusion reaffirms a Department of Health and Human Services’, Office of Inspector General (HHS/OIG) report, issued in February 1994, and an SSA Disability Process Redesign Report, issued in March 1994. The OIG and SSA Redesign Team reported that delays in MER collection resulted in increased claims processing times. Further evidence came from the State of Connecticut where a State law ending MER reimbursement has had no adverse impact on claims processing timeliness or the purchases of CEs.

We believe that our audit results raise concern regarding SSA’s policy of reimbursing medical providers for the cost of providing MER. The policy allows medical sources to be paid for MER even when medical sources fail to submit MER within a reasonable time period. The medical sources failure to submit MER timely results in DDSs expending limited staff resources to make follow-up requests for MER, as well as unnecessary CE purchases and increased claims processing times.

Congress authorized payment for MER under the DI program as an incentive for medical sources to submit MER timely. However, our audit results indicate that medical sources are not always submitting MER within a reasonable time period. We do not believe that it was Congress’ intent to reimburse medical sources when the source’s failure to provide timely MER negatively impacts the disability programs.

We are recommending that SSA re-evaluate its policy for paying for MER. As part of this re-evaluation, we suggest that SSA capture data on MER processing times to determine the extent to which MER is not being submitted timely. We are also recommending, assuming the re-evaluation discloses significant delays in receiving MER, that SSA initiate a legislative proposal precluding payment to medical sources for medical records which were not received within 30 days from the date of the request. We believe that 30 days is a reasonable time period for medical sources to respond to DDS requests for MER. The 30-day time period seems reasonable based on SSA`s policy which directs DDSs to follow up within 20 days after the request and allow at least 10 days for the provider to respond.

SSA agreed that payment for MER should be used as an incentive for timely and responsive submission of medical evidence. The Agency deferred commenting on our specific recommendations pending the results of a planned re-evaluation of policies and procedures related to the collection of medical evidence.

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INTRODUCTION

Background

Each year, more than 2 million people apply for DI and/or SSI disability benefits. Determinations of disability under DI and SSI programs are made by State DDSs in accordance with Federal regulations. The disability process begins when a claimant completes an application for DI or SSI benefits. The application, or claim, includes information that relates to the claimant’s alleged disability. The SSA field office verifies the claimant’s nonmedical eligibility requirements. When the nonmedical eligibility requirements are met, the disability claim is forwarded to the State DDS for a medical determination of disability.

The State DDS is responsible for obtaining and reviewing MER from a claimant`s medical sources to determine if the claimant is disabled. MER includes, but is not limited to, copies of laboratory reports, prescriptions, x rays, ancillary tests, operative and pathology reports, consultative reports, and other technical information used in assessing the patient’s health condition.

According to SSA Program Operations Manual System (POMS) DI 22505.001B.5, DDSs should make every reasonable effort to obtain MER from claimants’ treating sources. This POMS reference defines every reasonable effort as: (i) making an initial request for MER from the treating source; (ii) making a follow-up request any time between 10 and 20 calendar days after the initial request if the MER has not been received; and (iii) allowing a minimum of 10 calendar days from the follow-up request for the treating source to respond.

Congress authorized SSA to pay for MER under the SSI program since its inception in 1974 because, under a needs program, it was considered unreasonable to expect a claimant to pay for the medical evidence. In 1980, Congress amended The Social Security Act (the Act) to allow payment for MER under the DI program. In amending the Act, Congress believed that reimbursing providers for MER would result in obtaining medical records timely, thereby reducing the need to order additional CEs, an expensive and time-consuming process.

Each State is responsible for determining the rate of payment to be used by its DDS to purchase MER. SSA reimburses DDSs for 100 percent of MER costs. The following table shows the amounts expended to purchase MER and the number of claims cleared nationwide by SSA during FYs 1992 through 1995.

Scope

Our audit was conducted in accordance with generally accepted government auditing standards. The objective was to assess SSA’s policy for reimbursing medical sources for the cost of providing MER. Audit field work was performed from April 1995 to June 1996 and included:

• reviewing legislation governing SSA’s medical records collection process;
• interviewing SSA officials regarding SSA’s medical records collection process;
• reviewing DDS claims processing statistics from SSA’s Disability Programs Branch;
• interviewing Connecticut DDS officials and reviewing Connecticut legislation which precludes reimbursement for the purchase of medical records under any provision of the Act, and reviewing documentation regarding the Connecticut DDS’ claims processing; and
• reviewing published reports related to SSA’s medical records collection process.

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RESULTS OF REVIEW

Reimbursement Has Not Improved the Timeliness of MER Collection

In authorizing payment for MER under the DI program, Congress intended that the records would be received more timely and, as a result, claims processing time reduced. Since statistics on MER collection times were not maintained, we were unable to determine the portion of claims processing times related to MER collection. Nonetheless, the following evidence shows that the time required to obtain MER accounts for a considerable portion of claims processing times and contributes to delays in the disability determination process. Based on this evidence, we concluded that reimbursing medical sources for MER has had no apparent impact on improving the timeliness of MER collection.

We reviewed the processing times for DI and SSI claims from FYs 1985 to 1994. As shown in Appendix A, claims processing times for DI and SSI increased by 42 percent and 39 percent, respectively. We also reviewed the trend in DDS purchases of CEs during the same time period. CE purchase rates remained relatively constant, with only a 3.7 percent decrease from FYs 1985 to 1994. These statistics indicate that reimbursing medical sources has had no apparent impact on improving the timeliness of the disability determination process or reducing the purchases of CEs.

HHS/OIG reported that delays in MER collection resulted in an increase in claims processing times. HHS/OIG reviewed a sample of 398 pending disability claims from 5 DDSs and found that: (i) 153 claims, or 38 percent, were awaiting receipt of medical records an average of 77 days after DDS received the disability claims; and (ii) follow-up requests had to be made for 222, or 56 percent, of the 398 claims.

SSA formed a Disability Redesign team to study and develop recommendations to improve the disability process. The team reported that "SSA’s ability to provide timely and accurate disability decisions depends to a significant degree on the quality of medical evidence it can obtain and speed with which it can obtain it." The team added that "the medical evidence collection process accounts for a considerable portion of the total time involved in processing disability claims."

The Connecticut MER Collection Process

Connecticut General Statutes created by Connecticut Public Act No. 91-137 and Connecticut Public Act No. 92-78 precluded the charging of fees for MER obtained in support of a claim or appeal under the Act. The Connecticut General Statutes require all medical providers to furnish the claimant (or appointed representative) a complete copy of a claimant`s MER within 30 days.

The Connecticut legislation was sought by the Connecticut legal services organization, Legal Assistance to Medicare Patients (LAMP). LAMP believed that medical providers were imposing prohibitive charges for medical records which, in some cases, could cause claimants to be denied benefits because they could not afford to purchase medical records. LAMP also believed that facilitating claimant access to free medical records would make benefits more accessible and decrease State expenditures under a variety of State-funded programs.

The Connecticut DDS’ MER costs were almost eliminated in FY 1994 (see following table), the first full fiscal year after the legislation was enacted by DDS, effective July 2, 1993. DDS still incurs a minimal MER cost from out-of-State providers who were not included under the provisions of the Connecticut legislation. Also, DDS was able to reassign four full-time clerical staff who had been responsible for processing MER billings prior to enactment of the legislation to other duties.

As shown in the above table, the legislation has not had a negative effect on either claims processing times or CE purchases. In fact, DI and SSI processing times from FYs 1992 to 1995 improved by 8.5 days and 12.9 days, respectively. In addition, CE purchase rates have remained relatively constant, with the FY 1992 rate the same as the FY 1995 rate.

The legislation requires that medical sources provide MER to DDS within 30 days of the request. Although the legislation does not provide any penalty, DDS officials stated that most providers respond within 30 days. The officials further stated that the providers exceeding the 30-day limit were the same providers who historically have been slow in processing MER requests.

We selected for review a judgmental sample of 200 MER requests where the Connecticut DDS issued disability decisions between the period April 9 through April 22, 1996. We found that MER was received within 30 days or less for 138, or 69 percent, of the 200 requests. For the remaining 62 requests, MER was not received at all for 43 requests and received after 30 days for 19 requests. In discussing these results with DDS officials, the DDS officials stated that these results were representative and believed that receiving 69 percent of DDS’ MER within 30 days was a reasonable estimate.

We interviewed 11 Connecticut DDS officials, including the Director, the Medical Relations Officer, a Disability Unit Supervisor, and 8 disability examiners. The common response from these officials was that the legislation had no adverse effect on the disability determination process.

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CONCLUSION AND RECOMMENDATIONS

Claims processing times during the period from FYs 1985 to 1994 substantially increased while CE purchase rates remained relatively constant. In addition, the time required to obtain MER accounts for a considerable portion of claims processing times and contributes to delays in the disability determination process. Furthermore, the State of Connecticut law precluding reimbursement to medical providers for MER has had no negative impact on either claims processing timeliness or the purchase of CEs. Accordingly, we have concluded that reimbursing medical sources has had no apparent impact on improving the timeliness of MER receipt or reducing CE purchases.

Recommendations

We are recommending that SSA:

1. Re-evaluate its policy for paying for MER. As part of this re-evaluation, we suggest that SSA, for a specified time period, have selected DDSs capture the time between the initial MER request and the receipt of MER. This information will provide SSA with the data necessary to determine the extent to which MER is not being submitted timely.

2. Assuming the re-evaluation discloses significant delays in receiving MER, initiate a legislative proposal precluding payment to medical sources for medical records not received within 30 days from the date of the request.

Agency Comments

SSA deferred commenting on our specific recommendations, but agreed that payment for MER should provide an incentive for timely and responsive submissions of medical evidence. As part of the Agency`s ongoing disability redesign process, it plans to complete a re-evaluation of the medical evidence collection process within 9 months. If the evaluation results support our position, SSA agreed to propose the necessary legislation.

David C. Williams

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APPENDICES

APPENDIX A

CLAIMS PROCESSING TIME AND
CONSULTATIVE EXAMINATIONS PURCHASE RATES
DISABILITY DETERMINATION SERVICES NATIONWIDE
FISCAL YEARS 1985 THROUGH 1994