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SSDI Assessment

United States Senate Committee on Finance "The Social Security Administration: Is it Meeting its Responsibilities to Save Taxpayer Dollars and Serve the Public?"

Statement of James F. Allsup, Belleville, Ill.
President, CEO and Founder of Allsup

Chairman Baucus and Members of the Committee, thank you for considering my written testimony regarding the Social Security Administration's important work and the steps that can be taken to increase the value of the vital services it provides to the American people.

My name is James Allsup, and I am a former employee of the Social Security Administration and the founder and CEO of Allsup, a national non-attorney Social Security Disability Insurance (SSDI) representation company. Since 1984, we have helped more than 170,000 eligible individuals obtain disability benefits.

Along the way, we have obtained unique insights into the challenges of those with disabilities and how they navigate the SSDI process. And in recent years, we've looked more closely at how we-and all third-party representatives-could support the SSA as it strives for efficiencies.

The Allsup Disability Study: Income at Risk found that in the first quarter of 2012, the unemployment rate for people with disabilities was more than 74 percent higher than the rate for people without disabilities. While 8.4 percent of Americans overall were considered unemployed, 14.6 percent of Americans with disabilities could not find work. The financial strain on SSDI claimants - the vast majority of whom have never before used a government assistance program - is clear. One-third of Allsup claimants waiting to hear if they will be awarded SSDI benefits missed, or expect to miss, a mortgage payment. One in five has filed or expects to file for bankruptcy. One-third expect to lose their healthcare insurance, according to our research.

The incredible challenges facing Americans who can no longer work because of a disability make it vital for Congress to equip the SSA to continue providing quality services with maximum efficiency. In his testimony before the Committee, Commissioner Astrue referenced the enormous burden currently being placed on the SSA due to lower-than-requested budgets. He also outlined the cuts in service, speed and program integrity work that the SSA can handle as a result of the budget restrictions.

In spite of this burden, the SSA has had success in recent years in reversing some of these trends, as Commissioner Astrue noted. However, our experiences at Allsup provide insight into further efforts the SSA could take to reduce costs and improve efficiency. Specifically, efforts that better incorporate and improve interactions with third-party representatives could yield efficiencies for the Social Security disability program, including for government workers, beneficiaries and the Trust Funds.

One component of this is reducing the burden on the SSA by allowing third-party representatives electronic access to SSDI claim files at earlier levels of the process. The agency has made some progress in its use of new technology, such as iClaims for online retirement and disability applications, which is now used in about a third of cases. Other services also are extremely beneficial, such as the Appointed Representative Suite of Services (ARSS), the Representative Video Project (RVP) and other technology applications that support claimant representatives, and video conferencing for hearings.

Commissioner Astrue indicated in his discussion with the committee that third-party representatives do not support the use of disability video hearings. With all due respect to Mr. Astrue, this isn't true with regard to Allsup. Allsup recognizes the potential benefits of allowing claimants to participate in video hearings from hearing sites nationwide, including on-site at representatives' locations, and is working with SSA to advance this option. This option allows claimants the opportunity to reduce travel, and it provides cost-savings potential for the SSA and other parties in the disability adjudication process.

While the SSA has made progress in some areas, advancements to support claimants and their representatives most effectively have lagged behind those of another large, federal agency serving most Americans - the Internal Revenue Service (IRS). The IRS has adopted an interdependent model under which it co-exists with taxpayers and approved providers of tax services and tax software - to the benefit of everyone. Nearly 80 percent of 2011 tax returns were filed electronically, almost two-thirds of which were submitted by a professional tax preparer, according to IRS data. Pursuing electronic access as aggressively as the IRS would benefit the SSA and the people it serves.

Allsup is a proponent of electronic processes. Our organization has participated in SSA pilot programs and digital initiatives to ensure compliance and participation, as well as to improve efficiencies in serving the public and qualified disability applicants. In the current system, third-party representatives have electronic access to SSA records at the hearing level, which reduces the administrative workload on SSA staff and speeds up the process of preparing documents relevant to a claim. Enhancing electronic access using secure methods throughout the process, including the earliest stages, will improve and streamline interactions for all parties, reducing the administrative workload on SSA while also providing faster decisions for the millions of Americans waiting to learn if they will be found eligible for SSDI benefits.

In his testimony before the Committee, Commissioner Astrue also referenced the fact that SSA handles roughly 2 million requests each year from claimant representatives asking for information SSA maintains, about two-thirds of which come from representatives handling Social Security cases. I'd like to elaborate on this information by explaining that third-party representatives do not exacerbate the burden on SSA. Instead, as is Allsup's case, our professionals facilitate numerous administrative tasks, provide answers and information, and educate thousands of individuals about the SSDI process, including helping them realize when they are not eligible and keeping those claims out of the program. In fact, the SSA itself has found that third-party representatives play an important role in reducing costs and minimizing the time between a claimant's application and decision.

The SSA's Office of Inspector General (OIG) reported[1] that third-party representatives have a larger and more important role to play in obtaining SSDI benefits earlier in the disability review process for those clearly eligible and qualified, saving claimants time and the SSA money. It advocated a closer look at the value representatives provide when they assist with the SSDI claim application.

There are two additional steps the SSA can take that would create rapid cost savings for the agency. First, by notifying all applicants that representation is an option when they apply for benefits and encouraging early representation, SSA could help reduce ineligible initial applications and maximize efficiency in the claims process.

Sixty-six percent of initial claims are rejected by the SSA, for a range of reasons, including lack of medical severity. But hundreds of thousands of initial claims are rejected because they do not meet SSA's technical requirements. For example, the individual lacks sufficient work history or is not a legal resident entitled to benefits. Still the SSA must expend the resources to handle each and every claim submitted. Allsup rigorously pre-screens potential applicants to determine whether they meet technical as well as medical standards for eligibility before submitting an application to SSA for consideration. Encouraging representative involvement earlier in the process could shift the burden caused by ineligible applicants and reduce unnecessary claims that stress SSA's limited resources and slow legitimate claimants in obtaining their award.

Still others are rejected unnecessarily because applicants applied without professional help - the OIG reported that representation at the DDS level is "infrequent." A 2009 Allsup survey found that 78 percent of awarded claimants experienced barriers to handling the disability process on their own, including reading, understanding and completing forms. An experienced representative can help claimants develop the medical and work history documentation for their case and complete the forms correctly so they are processed more efficiently.

In spite of the clear benefits of involving representatives early in the SSDI claim process, Allsup found that half of the claimants we surveyed didn't know that a third-party representative could help them apply for SSDI benefits. Thirty-five percent of claimants we surveyed said SSA did not inform them that they had the right to representation at the appeal level, even though SSA's policy is to inform claimants of their right to representation.

The OIG found that for the impairments it evaluated, involving representatives earlier in the process would have saved the claimants time - some as many as 500 days - and the SSA money. If the SSA broadened its existing policy and took steps to notify SSDI applicants consistently at both the early and appeal levels, use of the third-party representatives would likely increase, giving claimants more choice and appropriate guidance. Almost nine in 10 Allsup survey respondents said they would have found it useful for the SSA to inform them in advance of their options for receiving help with their SSDI application. Another 83 percent would have found it helpful if the SSA had provided them with a list of authorized third-party representatives from which to choose.

National organizations such as Allsup have demonstrated success in guiding eligible claimants through the SSDI system and reducing the number of ineligible claimants who tax the program. They also offer streamlined processes for keeping accurate and thorough claims that speed benefits to those who are eligible. In addition, they absorb the cost of educating and providing customer service to claimants - many of whom struggle with disabilities that affect their cognitive abilities, requiring significant levels of personalized support.

Recently Allsup undertook an exercise to determine the level of impact the third-party representative model could have on the SSA administrative costs if it was utilized to its full potential. This third-party model of representing claimants at DDS or initial application level could generate $2.1 billion in administrative cost-savings for the SSA over a three-year period. This projection includes savings of $22.6 million to handle technical denials, $210.8 million in reduced initial application costs, $179 million in ODAR appeal costs and $100 million for in-person hearing costs.

The potential success of the activities Allsup has outlined above highlight the value and potential savings for the SSA, government workers, claimants and the American people. Several other simple steps can be taken to work toward a common goal. They include:

  • moving forward with SSA's proposed change to include organizations in the definition of "representative;"
  • accelerating programs to provide representatives with online access and related initiatives, including ARSS, data access and retrieval, application submission and more;
  • adopting wider use of electronic signatures for claimants;
  • posting approved providers of Social Security disability representation on the SSA website and in field offices so claimants can be assured their national provider is reputable, properly trained and approved by the SSA; and
  • notifying all applicants of their right to representation when they first apply for SSDI benefits.

Chairman Baucus and Members of the Committee, the challenges facing SSA are large, but under the leadership of Commissioner Astrue and partnership between SSA, claimants and third-party representatives, we can tackle them together. By shifting some of the burden to claimant representatives, SSA staff could be freed to address other agency priorities, such as the backlog of Continuing Disability Reviews (CDR) and improving core services upon which so many Americans rely.

[1] Social Security Administration, Office of The Inspector General, Disability Impairments On Cases Most Frequently Denied By Disability Determination Services and Subsequently Allowed by Administrative Law Judges, August 2010.