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7/5/2004
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Social Security Spends Money To Save Money

The Social Security Administration is undertaking a $900 million project to reduce paperwork and re-engineer business processes, an overhaul that promises $1.3 billion in savings over seven years.

The Social Security Administration is undertaking a $900 million project to reduce paperwork and re-engineer business processes, an overhaul that promises $1.3 billion in savings over seven years. But some experts are about as confident in that ROI projection as they are that Social Security will survive long enough to fund their retirements.

The SSA's Accelerated Electronic Disability (AeDib) system is designed to speed processing of the more than 2 million disability claims filed each year. The system is being rolled out nationwide, and it's expected to reach all 1,700 SSA locations by next June.

"A good deal of our projected savings has to do with the advantages of working with electronic documents over paper," says William Gray, SSA's deputy commissioner for systems. "We expect to reduce clerical, mail and physical-storage costs."

But there's reason to wonder if the SSA can pull it off. At the very least, expect delays and cost overruns, some analysts say. "It's a huge expenditure, and in any system that large there are bound to be some high-risk applications," says Gartner analyst Ken Chin.

What's more, the SSA skirted common best practices in the testing phase of AeDib. The General Accounting Office (GAO) has criticized the SSA for not doing enough end-to-end testing. The SSA's defense: "We estimate [end-to-end testing] would have delayed the project by at least three years — and, of course, that is three years of benefits that would have been missed."

AeDib is the SSA's second attempt at an electronic disability-claims processing. In 1992, the agency launched the Reengineered Disability System, but it was abandoned after seven years and $71 million in expenditures.

"Technology has advanced tremendously since that first effort," says Roger Markham, a Forrester Research analyst who helped SSA with the AeDib review. "At that time there was no good way to support distributed capture, for example. The biggest problem was that SSA had trouble integrating its first system with its regional case-management systems."

For AeDib, SSA says it has solved the integration problem by replacing the case-management systems in several states over the past year and a half. "We had several states running their systems on Wang processors," Gray says. "We replaced all those with AS400-based applications. We are also installing new case-management systems at 142 hearings offices, so they can access the electronic folders."

The SSA paid out $86 billion in disability benefits to 10 million people in 2002. The claims process involves the initial filing, subsequent investigations and approvals as well as hearings and reviews associated with rejected claims.

Electronic case folders are built on IBM DB2 Content Manager running on AS400 mainframes. These case folders will contain structured claimant information as well as document and medical images. There are also plans to incorporate audio files from deposition hearings.

Claims-processing times have been reduced already, thanks in large part to an Electronic Disability Collection System (EDCS) implemented last year. The system lets citizens file claims electronically, either online or with the aid of an SSA employee over the phone or in person. Ninety-five percent of new claims are now taken through EDCS, Gray says. In 2003, the SSA saw a seven-day improvement in claims-processing time, to 97 days, down from 104 days in 2002, and Gray believes five of those days are attributable to EDCS.

To review a claim, the SSA requests medical evidence from health-care providers. That information can be returned by EDI, the Web, fax or conventional mail. Most of the paper documents are scanned centrally by Dallas-based services giant ACS, whose contract is up for review next year. The images are routed to the regional office where the claims decisions are made.

Medical documents and other records brought into SSA offices by claimants will be scanned locally. SSA will spend up to $20.9 million in a five-year contract to use Kofax Ascent capture software to support this low-volume distributed scanning and indexing.

Once AeDib is fully operational, it will manage more than 3 billion documents and process up to 250,000 documents per day, Markham says, a project scale he has only seen matched in a massive imaging project at the U.S. Patent Office.

Over the next seven years, the SSA will invest $300 million in hardware, software and technology support and maintenance, Gray estimates. The remaining $600 million will be spent on training, outsourced scanning and other expenses.

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