Office of the Inspector General
Jo Anne B. Barnhart
Commissioner

Inspector General

Follow-up Review of SSA’s Implementation of Drug Addiction and Alcoholism Provisions of Public Law 104-121 (A-01-01-11029)

The attached final report presents the results of our audit. Our objective was to determine whether the Social Security Administration implemented the recommendations in our prior audit report entitled "Implementation of Drug Addiction and Alcoholism Provisions of Public Law 104-121."

Please comment within 60 days from the date of this memorandum on corrective action taken or planned on each recommendation. If you wish to discuss the final report, please call me or have your staff contact Steven L. Schaeffer, Assistant Inspector General for Audit, at (410) 965-9700.


James G. Huse, Jr.

Executive Summary

Our objective was to determine whether the Social Security Administration (SSA) implemented the recommendations in our prior audit report entitled "Implementation of Drug Addiction and Alcoholism Provisions of Public Law 104-121."

In May 2000, we issued an audit report which concluded that SSA did not identify and terminate benefits to all beneficiaries for whom drug addiction or alcoholism (DAA) was a contributing factor material to the finding of disability in accordance with Public Law (P.L.) 104-121. Our review of diagnosis (DIG) codes and DAA indicators on the Master Beneficiary Record and Supplemental Security Record identified 19,946 cases with a DAA indicator and/or a DIG code which represented alcoholism or drug addiction. Based upon the results of our statistical sample, we estimated that of the 19,946 cases:

1. 3,190 individuals were incorrectly paid $38.74 million in benefits from the date P.L. 104-121 took effect; and
2. 14,420 individuals did not have the correct DIG codes and/or DAA indicators on their records to show that DAA is not material to the finding of disability.

In our prior audit report, we recommended that SSA:

• Review the 19,946 cases we identified to ensure that the coding was corrected and the benefits were terminated where appropriate.
• Modify its systems so that primary DIG codes for DAA will no longer be accepted.

SSA agreed with these recommendations.

Generally, SSA implemented the recommendations from our prior audit. SSA reviewed the cases that we suggested be reviewed and it modified its systems. Of the 100 cases in our random sample, SSA did not complete its required DAA review in only one case. Also, we found that in 14 cases where DAA reviews were completed, SSA did not update its systems to identify the individuals’ new disabling condition. Projecting the results of these 14 sample cases to the population of 19,946, we estimate that 2,792 individuals do not have the correct DIG codes on their records to show that DAA is not material to the finding of disability. Additionally, our audit showed that systems changes made by SSA to preclude the use of primary DIG codes for DAA worked in most cases.

In response to our draft report, SSA agreed with our recommendation. (See Appendix B for SSA’s comments.)

Table of Contents

APPENDIX B – Agency Comments

APPENDIX C – OIG Contacts and Staff Acknowledgments

Acronyms

Introduction

Our objective was to determine whether the Social Security Administration (SSA) implemented the recommendations in our prior audit report entitled "Implementation of Drug Addiction and Alcoholism Provisions of Public Law 104-121."

The Social Security Act was amended on March 29, 1996 as part of the Contract with America Advancement Act of 1996 (Public Law 104-121) to prohibit the payment of Disability Insurance (DI) benefits and Supplemental Security Income (SSI) payments if Drug Addiction or Alcoholism (DAA) is material to the finding of disability. This law required SSA to terminate DI benefits and SSI payments for individuals whose disabilities were based on DAA. If beneficiaries timely appealed their terminations, this law required SSA to conduct medical redeterminations by January 1, 1997.

In May 2000, we issued an audit report which concluded that SSA did not identify and terminate benefits in accordance with Public Law (P.L.) 104-121 for all beneficiaries for whom DAA was a contributing factor material to the finding of disability. We estimated that 3,190 individuals were incorrectly paid $38.74 million in benefits from the date P.L. 104-121 took effect through the date we reviewed the cases. Additionally, we estimated that 14,420 individuals did not have the correct diagnosis (DIG) codes and/or DAA indicators on their records to show that DAA is not material to the finding of disability. Incorrect coding could impact SSA’s ability to identify cases affected by new legislation, as well as to profile cases for continuing disability reviews (CDR).

In our prior audit report, we recommended that SSA:

• Review the 10,611 SSI cases that it asserted were either properly handled or miscoded and apply the provisions of P.L. 104-121 where appropriate.
• Ensure that benefits are terminated if DAA is material to the finding of disability when conducting the next scheduled CDR for the 6,066 DI cases in our extract.
• Ensure that the 3,269 cases it agreed to review are completed, the coding corrected, and the benefits terminated where appropriate.
• Modify its systems so that primary DIG codes of 3030 and 3040 will no longer be accepted.

In response to our prior report, SSA agreed with our recommendations and stated that corrective actions had been initiated and/or completed. In their comments to our report (dated April 17, 2000) and also in testimony to Congress on September 12, 2000, SSA stated that it (1) had already begun the reviews on all 19,946 cases, and (2) completed modifying its systems in August 1999 to preclude primary DIG codes of 3030 and 3040 in all cases except denials.

To accomplish our objective, we:

• Reviewed our prior DAA audit report entitled, "Implementation of Drug Addiction and Alcoholism Provisions of Public Law 104-121" which was issued in final in May 2000.
• Selected a random sample of 100 cases from the 19,946 DAA individuals identified in our prior audit.
• Determined whether a review had been completed, the coding corrected and benefits terminated where appropriate for our sample cases by using the Master Beneficiary Record (MBR), Supplemental Security Record (SSR), National Disability Determination Service System (NDDSS), CDR Control File, and/or case folder.
• Contacted SSA staff to gain an understanding of systems modifications implemented to preclude primary DIG codes of 3030 and 3040 in all cases except denials.
• Obtained an extract from the NDDSS of all individuals whose application for disability benefits was approved in Calendar Year (CY) 2000 with a DIG code of 3030, 3040 or 3050 and determined whether these or other DIG codes were on the beneficiaries’ MBRs or SSRs.

We conducted our follow-up audit between April and July 2001 in Boston, Massachusetts. The entities audited were SSA’s Office of Disability and Office of Systems Requirements. We conducted our audit in accordance with generally accepted government auditing standards.

Results of Review

Generally, SSA implemented the recommendations from our prior audit. SSA reviewed the cases that we suggested it review and modified its systems. Our review of 100 cases found:

• a DAA review was not completed in 1 case.
• DAA reviews were ongoing or were not needed in 24 cases.
• DAA reviews were completed in 75 cases. However, in 14 of these cases, the MBR/SSR was not updated to reflect the beneficiaries’ current disabling condition. Projecting the results of these 14 sample cases to the population of 19,946, we estimate that 2,792 individuals do not have the correct DIG codes on their records to show that DAA is not material to the finding of disability.

Additionally, our audit showed that systems changes made by SSA to preclude the use of primary DIG codes of 3030 and 3040 worked in most DAA cases.

We identified one case where a required DAA review was not completed. This beneficiary started receiving DI benefits in March of 1994 with a primary DIG code of 3030 (Alcoholism) and no review has subsequently been completed to determine whether DAA is material to this beneficiary’s disability. SSA personnel stated they had no explanation other than "Human Error" for why this review had not been completed. SSA personnel informed us they "will have to secure the folder for review."

Our audit identified 24 cases that either did not require a DAA review at this time or currently had a DAA review in process by SSA. Specifically, we found that:

• In 17 cases, the benefits had been terminated.
• In 3 cases, the beneficiaries met the requirements for retirement benefits.
• In 3 cases, SSA was in the process of conducting DAA reviews.
• In 1 case, a DAA alert had not been worked since the beneficiary was in a non-pay status due to excess income since the alert was issued.

We found that SSA completed DAA reviews for 75 of our 100 sample cases. Specifically, we found documentation in either the beneficiaries’ case folder or one of SSA’s electronic systems showing that SSA staff had reviewed the individuals’ disabling condition to ascertain whether DAA was a contributing factor to its finding of disability. For example, one individual had a DIG code of 3030 (Alcohol Substance Addiction Disorder) on her SSR at the time of our original audit. In November 2000, SSA completed a CDR and determined that this individual’s benefits should continue based upon a disability of "Depressive Disorder." The DIG code on this individual’s SSR has been updated to reflect her new disabling condition.

For our 75 sample cases that were reviewed by SSA, we found that:

• in 71 cases, SSA determined that DAA was not material and benefits continued under a new disability; and
• in 4 cases, SSA determined that DAA was material and the beneficiaries have appealed their termination decisions. These 4 cases are currently being reviewed by SSA’s Office of Hearings and Appeals.

In their comments to our prior audit report, SSA stated that in August 1999, staff completed modifications to SSA’s systems to preclude primary DIG codes of 3030 and 3040 in all cases except denials. To test SSA’s systems changes, from a CY 2000 NDDSS file containing about 1.16 million initial decisions in which benefits were approved, we extracted all decisions with primary DIG codes of 3030, 3040 or 3050. This extract identified 17 beneficiaries who had received benefit payments.

In 14 of the 17 cases, the DIG codes on the MBR or SSR were not 3030, 3040 or 3050 even though the NDDSS showed these were the DIG codes initially input. Thus it appears SSA’s systems edits worked for these 14 cases. However, in 3 of the 17 cases the DIG codes on the MBR or SSR were 3040. SSA staff reviewed these 3 cases and determined current DAA edits allowed these cases to go into current pay status with DIG codes of 3040. As a result of this review, SSA staff wrote new systems edits to strengthen those already in place. These new edits are being reviewed by SSA systems staff, and, when implemented, should prevent individuals from receiving benefit payments with DIG codes of 3030, 3040 or 3050 in the future.

Overall, SSA effectively implemented our prior recommendations to ensure disability benefits are not paid based upon DAA. However, SSA still needs to improve its efforts for ensuring that records are updated to show the beneficiaries’ current disabling condition. Therefore, we recommend that, when conducting the next scheduled CDR, SSA ensure DIG codes are updated to show the proper diagnosis.

In response to our draft report, SSA agreed with our recommendation. Specifically, SSA agreed that the MBR and SSR should be updated to show the beneficiaries’ current disabling condition. SSA’s Office of Disability will discuss the ways in which this can be accomplished in November 2001. (See Appendix B for SSA’s comments.)

Sampling Methodology and Results

Agency Comments

Our comments on the subject report are attached. Staff questions may be referred to Odessa J. Woods on extension 50378.

Appendix C

OIG Contacts and Staff Acknowledgments

In addition to those named above:

David Mazzola, Auditor
Katie Hallock, Auditor