As of December 31, 1975, the automated tally carries a cumulative amount of $547 million. This shows cumulative errors recorded for the full 2-year period from January 1974 through December 1975, of which $419 million remains unsettled and/or uncollected. As previously reported to the Congress, recovery of this amount is expected to be limited, based on AFDC experience.

IMPROVEMENTS AND CURRENT PROBLEMS

Two significant corrective actions taken since these QA results, but not reflected in the results, include:

1. Automated systems were put in operation on June 1, 1975, which will correct regular social security benefits on to the SSI records. Analysis indicates that this action should reduce the number of errors resulting from incorrect social security benefits being used in the SSI benefit computation. It should be noted that this factor was a major cause of error when the aged, blind, and disabled program was administered by the States.

2. Steps have been taken to improve the redetermination process through more training of personnel and improved interviewing.

The major problems that still exist which we must correct are:

1. We know that federally taken cases—many of which were taken during the early months of the program-are showing a higher than expected error rate due in part to unreported changes. We have begun to redetermine these cases and are attempting to step up that process, especially with regard to claims taken at the beginning of the program. We know that early start-up problems are involved in the erroneous payments appearing in these cases.

2. There is a significant amount of error in unreported income and resource changes. We need to make beneficiaries more aware of their responsibilities, and, if possible, we need to see people more often than once a year, at least in high risk areas. We are taking steps to try to do this.

3. Non-SSA pension income continues to be a major payment deficiency. Work on an automated exchange with other agencies, primarily the VA, needs to move ahead as quickly as possible. I would note, however, that this is likely to still require a good deal of further time and effort, perhaps many more months.

We believe that progress toward improved payment accuracy has been made and will continue to be made. We will continue to keep you informed.

A similar letter has been sent to the Honorable Russell Long, to the Committees on Appropriations, and others in Congress.

Enclosed is information on a State-by-State basis and other details about the QA results.

sincerely yours,

Enclosures.

JAMES B. CARDWELL, Commissioner of Social Security.

For purposes of tables I-A and I-B, a case error is recorded only if that portion of the SSI payment attributable to the State supplement is incorrect. These rates will be used in determining Federal Fiscal Liability (FFL).

Only converted recipients (those on the State welfare rolls in December 1973) are eligible for mandatory State supplemental payments while all recipients (new as well as converted) are eligible for optional State supplemental payments. Relatively few converted recipients resident in a State which pays an optional payment qualify for a mandatory payment because of the high level of the optional payment. Mandatory payments are complex to determine and thus such cases are much more error prone than the optional payment case. It is for these reasons that the table has been separated into an "A" and "B" table in order to differentiate between the two types of supplements. In addition, the number of recipients eligible for mandatory payments has been declining steadily and at an accelerated rate due to at least three factors: Termination of SSI eligibility (primarily because of death); rise in the SSI benefit level because of the cost-of-living increases; and increases in the optional payment level.

Mandatory payment errors as a factor of overall FFL payment accuracy should play a decreasing part in future reporting periods, thus resulting in improved payment accuracy.

TABLE 1.-A.-FFL CASE ERROR RATES FOR STATES WITH FEDERAL ADMINISTRATION OF OPTIONAL AND

TABLE 1.-B.-FFL CASE ERROR RATES FOR STATES WITH FEDERAL ADMINISTRATION OF MANDATORY

SUPPLEMENTS ONLY

6.0

Mr. CARDWELL. We are now waiting for the results for the 6-month period ending December 31, and so far, the early returns show that we will show an improvement for the first time.

I would point out that the error rates that have been reported so far are essentially the same rates that the States experienced when they administered the program.

Mr. FLOOD. What are you doing specifically about the overpayment problem?

Mr. CARDWELL. There are a number of actions that we are taking to try to cut down overpayments, payments to ineligibles and underpayments. They are laid out in summary in the statement that we will file for the record. I will be glad to review some of them with you at the moment, if you like.

To get to the point as quickly as possible, what we have done is set a target to run the error rate down from 24.4 percent as it existed in July of 1975 down to about 19 percent for this next July. Our ultimate target is to get the rate down to about 15 percent.

That includes all kinds of so-called errors. It would include errors of omission and lack of reporting on the part of the individual beneficiary. We hold ourselves accountable for those errors under our reporting system. Yet, very often, and in probably the vast majority of cases, that particular matter is beyond our control. We also include in our statistics, underpayments as well as overpayments.

Many people will believe that the Social Security Administration. should be able to achieve the same payment efficiency levels for SSI that it experienced through the years for regular social security, and we have been making a special point to emphasize that that is an expectation that we ourselves could never fulfill. This is a different program, with different processes.

Mr. FLOOD. You referred to the quality assurance system.
Mr. CARDWELL. Yes, sir.

Mr. FLOOD. Based upon the quality assurance system how much in overpayments have been made?

Mr. CARDWELL. The system as reported to you in January shows that for the last measurement period, which was the period that ended June 30, 1975, the overall case error rate was running 24.4 percent. Overpayments and payments to ineligibles were 18.7 percent; underpayments were 5.7 percent.

Mr. FLOOD. What does the HEW audit system show?

Mr. CARDWELL. HEW audits were conducted for a different purpose. They were conducted to examine, on behalf of 31 States for whom we administered State supplements at that time, the extent to which errors might have occurred in the first 6 months of the program,

under our contractual agreements with the States. We originally provided for no Federal fiscal liability for any error committed during that period, except for individual, specifically identified cases recognizing it was to be a transition period. About a year ago the States came to us and said they thought that was inherently unfair to them and we said, "Well, our quality assurance system was set up to test our performance beginning in the second 6 months, because that was the original agreement." But we would cooperate with them and ask the HEW audit agency to do an arms-length audit of the first 6 months' activity, and that we would use as a basis for negotiating settlement with them for excessive errors, extraordinarily high rates of errors for that first 6 months.

Those audits have just now been completed and we are just in the midst of developing a dialog with those 31 States.

Mr. FLOOD. When can we expect the most recent data?

Mr. CARDWELL. We will be reporting to the Congress in April the results of the 6-month period ending December 1975. I hope that that will show some improvement.

Mr. FLOOD. How does that compare to the State figures, when they ran the whole program?

Mr. CARDWELL. Just about the same.

Mr. FLOOD. How does it compare with any other social security programs?

Mr. CARDWELL. It is about three times what it is in the other social security programs.

If you compare SSI with the overall AFDC program, it is significantly lower.

Mr. FLOOD. What is the lowest error rate that you feel could be achieved in the SSI program?

Mr. CARDWELL. Taking the law as we find it, and with no major legislative change to simplify the program and to eliminate its variables, and this has to be an approximation-we think that that rate, overall rate, including all kinds of so-called errors, would be about 15 percent. We wouldn't reach that until the end of 1977.

POTENTIAL ELIGIBLE POPULATION

Mr. FLOOD. How many individuals are currently eligible in the program?

Mr. CARDWELL. We have in payment status now something in excess of 4.3 million people including those people who only get a federally administered State supplementation payment. As I said earlier, we cannot identify with any certainty how many people in the total population are really eligible.

Mr. FLOOD. How many participants, then are estimated for 1977? Mr. CARDWELL. We would see the number as going from the present 4.3 to about 5 million.

Mr. FLOOD. Why aren't all of the eligibles participating?

Mr. CARDWELL. Well, it may be that a very high degree of them are. As I say, I think we are working against an estimate that was made about 4 years ago that was basically wrong. I think it was an overstatement of the population. The analysis of the population characteristics that make up this universe has to be very rough. We know a good

bit about people by age. We know a little less about them, but still a good bit by income. We can compare an age and get a fairly accurate picture. Then when you start to run in disability, which we know very little about relative to income and when you start running in resources, who owns a home, by age, who owns a car, by age, who has money in the bank, by age, who has an insurance policy, by age, all of which can determine eligibility, then the estimates start to get very fuzzy, and I think that the people who did the original estimate, they made the best guess they could. And I think they made a very high guess.

Mr. FLOOD. The original estimate though indicated about one-fourth of the participants would consist of the blind and the disabled. Now, the current figures show that this group comprises about 50 percentMr. CARDWELL. That's right. That seems to be a permanent characteristic of the program. That holds steady.

Mr. FLOOD. Is there any reason for that particular one?

Mr. CARDWELL. There, again, I think it is the fact that in making the original estimate we didn't know as much as we thought about people in the total population among the lower age groups who might be eligible for this program. We used the experience of the States and of our regular title II program-and that experience is not holding

true.

As you point out, what is happening is that roughly half of the persons who turn out to be eligible are eligible for reasons of being diasbled.

VOCATIONAL REHABILITATION

Mr. FLOOD. One aspect of the program is to return the blind and disabled to work by providing vocational rehabilitation services. The results have been pretty disappointing. Is there a problem? Can you do any thing about it?

Mr. CARDWELL. The GAO thinks there is a problem, not just SSI, but in the entire arrangement between the Social Security Administration and the State rehabilitation agencies. GAO thinks we could do something more about it then we have done. Let me describe to you how the arrangement works.

The Social Security Administration has really turned over to the States the responsibility for determining who might best be served by rehabilitation services, and we pay over to the States the cost of those services.

GAO recently examined this question for all disabled persons eligible for regular social security and came to the conclusion that when you looked at the States as a whole, they were tending to take the easy cases and bypassing the cases where the program itself could receive the most by way of cost/benefit result, and they said that it seemed to them that the Social Security Administration should assume a larger role and should take greater responsibility for determing who goes on and who doesn't go on. The same situation may exist in the SSI program.

We are examining that question now.

REDETERMINATIONS

Mr. FLOOD. Redeterminations must be made at least once a year. That certainly poses quite a workload for your office.