THE MISSISSIPPI LEGISLATURE

In response to a legislative request prompted by citizens’ complaints of disability claims being unfairly denied, the PEER Committee conducted this review of the Public Employees’ Retirement System’s (PERS’s) disability determination process. The purpose of the review was to determine:

• the legal authority and rationale for PERS’s disability determinations;


• costs associated with PERS’s disability determination process;


• how PERS’s disability determination criteria and process compare to that used by the federal Social Security Administration (SSA) in making its disability determinations; and,


• whether it would be advisable for the state to rely on the Social Security Administration’s determination of disability as the sole and final determinant of disability for members of PERS (as permitted under MISS. CODE ANN. Section 25-11-113 [1] [a] [1972]) in lieu of PERS making its own disability determinations.

The Mississippi Public Employees’ Retirement System is the retirement system for nearly all non-federal public employees in the state. Regular service retirement benefits are available to members with at least four years of membership service.

There is no length of service requirement for PERS members applying for duty-related disability. PERS members applying for a non-duty-related disability must have four years of credit in the state retirement system. For non-duty-related disability, applicants (that were approved for benefits) are under the age-limited plan or the tiered plan. The plans differ in that mainly the age-limited plan applicants must be fifty-nine or younger to apply, and with the tiered plan there is no age limit.

Also, inactive applicants (i.e., those individuals who are no longer employed by the state) are eligible for disability benefits provided they have four years of credit in the system and can prove that the disability occurred within six months of termination of active service. The applicant must also have medical evidence to prove that the disability was the reason for withdrawal from state service.

State law provides three mechanisms for PERS in making initial disability determinations: determination by a medical board, determination by the Social Security Administration, or contracting with another governmental agency or non-governmental disability determination service to make disability determinations. The PERS Board currently requires all of its disability determinations to be made by a medical board composed of three physicians whose terms are not limited by state law or board policy.

Prior to 1995, PERS frequently accepted SSA certifications of disability in awarding disability benefits under PERS. According to PERS’s Executive Director, PERS no longer accepts SSA certifications because PERS is not confident that SSA uses sufficient expertise of medical professionals in making its disability determinations. The PERS Executive Director also disagreed with SSA’s inclusion of non-medically documented information in the decision making process (e.g., an applicant’s description of pain).

For the period 1990 through 1994, when PERS accepted SSA certifications of disability as automatic proof for disability at PERS, the costs averaged $38,266 per year. From 1995 through 2000, after PERS decided to no longer accept SSA certifications as automatic proof for the allowance of PERS disability, PERS spent an average of $269,904 per year on disability determinations.

According to PERS, the cost to administer the disability program has increased because of increases in full-time staffing, the change in the number of physicians that review the disability cases, and the number of appeals that have been filed.

The federal government provides benefits to disabled workers through the Social Security Administration. To become eligible for SSA disability benefits, the applicant must have worked a certain amount of time in a recent time frame and earned a specified minimum level of covered earnings.

Responsibility for SSA disability determinations is divided between the Social Security Administration, and under contract, the Office of Disability Determination Services (DDS) of Mississippi’s Department of Rehabilitation Services.

The national average cost of processing an SSA disability case in FY 2000 was $383. According to the Social Security Advisory Board, Mississippi’s DDS has the lowest reported cost in the nation for processing a case ($244 per case).

The Exhibit below compares basic elements of PERS’s and SSA’s disability determination criteria and processes. Overall, SSA’s process for making disability determinations is the more objective of the two processes because it is based on detailed written criteria, procedures, and policy interpretations governing case disposition, whereas PERS’s process has no written criteria, policies, or procedures governing how its physicians make disability determination decisions.

PERS and SSA differ in terms of how “inability to work” and permanence of the disability are defined. PERS has a less stringent “inability to work” requirement than SSA (i.e., inability to perform a similar job at similar pay under PERS versus inability to perform any job paying at least $740 per month under SSA), but has a more stringent requirement regarding the permanence of the condition (i.e., permanent under PERS, versus ongoing for at least twelve months under SSA).

With respect to evidence, PERS and SSA use similar medical evidence in reaching their determinations, but differ in that SSA allows the admission of non-medical evidence--e.g., an applicant’s statement of pain that is not substantiated by objective medical evidence. The SSA adjudicator then makes a finding on the credibility of the applicant’s statements based on a consideration of the entire case record.

With regard to qualifications of adjudicators, PERS uses physicians to make its initial determinations and uses physicians to review all of its appeals. In contrast, under the SSA system, trained non-medical disability examiners initially review each applicant’s file using detailed criteria. In complex cases, physicians assist in the initial review and in all cases, a physician reviews the work of the disability examiner before the initial determination decision is finalized.

Exhibit: Comparison of Determination Processes of PERS and SSA

SOURCE: PEER

Both PERS’s and SSA’s processes consist of the initial determination, re-examination, and appeals phases. However, in the second phase, frequency of re-exams differs between PERS and SSA. PERS requires disability recipients under the age of sixty to be re-examined each year during the first five years and once every three years thereafter. SSA requires disability recipients to be re-examined at least once every three years, unless the disabling condition is permanent. In the appeals phase, PERS provides one level of review before the appeals route to the court system, while SSA provides three levels of internal review of the decision.

In considering whether to rely on SSA determinations to establish eligibility for disability under PERS, the Legislature should consider several important issues, summarized below in question and answer format.

• Would all PERS members applying for disability benefits under PERS qualify to apply for disability benefits under SSA?

  No.

• Do all PERS members applying for disability benefits also apply for disability benefits under SSA?

  No.

• For those cases that have been considered by both PERS and SSA over the past eleven years, have the outcomes been similar?

  No.

• How much would PERS save if SSA handled the disability determination function?

  PERS would recognize minimal savings.

• Would determinations under SSA be more fair and uniform than under PERS?

  Some subjectivity is inherent in the process of making disability determinations. The SSA’s Advisory Board, in a recent report on its own disability program, stated that “the perception is that determinations of eligibility are not being made in a uniform and consistent manner.” However, the SSA system does have written criteria and formal rules and regulations.

• What changes would have to be made in state law in order to require PERS to accept SSA determinations?

  The Legislature would have to amend state law to abolish adjudicatory and reexamining functions within PERS’s disability program and delete references to interaction between the PERS Board, the Disability Appeals Committee, and the medical board. The Legislature would have to adopt the SSA’s definition of “disability” and require that PERS disability applicants first apply with the SSA and that SSA’s rules, policies, and procedures govern determinations for PERS.

• What would be the advantages of PERS’s reliance on SSA disability determinations?

  The advantages would be that PERS applicants would be adjudicated by written criteria, applicants would have access to more appeal stages, and that the duplication of having both state and federal determination processes would be eliminated.

• What would be the disadvantages of PERS’s reliance on SSA disability determinations?

  The primary disadvantage would be that the disability determination process could take longer than it presently does.

Because both PERS’s and SSA’s disability determination processes have weaknesses, neither option (leaving the determination process at PERS or moving it to SSA) emerges as clearly superior in terms of yielding consistent, objective, and fair disability determinations. However, one could make an argument to leave the determination process at PERS because the Legislature can mandate and oversee implementation of improvements to PERS’s process, while it cannot mandate and oversee changes to SSA’s process. Further, moving the process to SSA would require adoption in state law of SSA’s definition of disability, which is on paper a tougher standard to meet than the current definition of disability contained in state law.

The following options outline steps that should be taken under either option. Under Option 1, keeping the determination process at PERS, PEER has listed recommended steps that PERS should take to increase the objectivity, fairness, and consistency of its disability determination process.

Under Option 2, moving the process to SSA, PEER recommends changes that the Legislature would have to make in state law to accomplish the move. Under this option, while PERS would discontinue its function of making disability determinations, it would continue to ensure that the applicant qualified to apply for disability benefits under state law and calculate and pay out the benefits due to the PERS member following a certification of disability by SSA.

If the Legislature chooses to keep the disability determination process at PERS, the agency should take the following actions.

1. PERS should develop written criteria for what constitutes a disabling condition, similar in detail to SSA’s Listing of Impairments.

2. PERS should issue formal, written policy interpretations in response to questions/issues arising from implementation of the written criteria developed in response to Recommendation 1.

3. For each case that it considers, PERS should require its medical board to explain in writing the reason for its determination, in sufficient detail that an outside reviewer could understand the rationale for the decision.

4. PERS should develop a checklist of required medical tests for the types of disabling conditions contained in the listing discussed in Recommendation 1. PERS should require that results from the tests be placed in the applicant’s file prior to the PERS medical board’s consideration of the case.

5. PERS should provide ongoing training to its physicians on implementing specific policies and procedures for the disability determination process.

6. PERS should cease its practice of disclosing the estimated amount of an applicant’s disability benefits to those who are making the disability determinations, as this information is irrelevant to a determination of disability and by its presence in the file could influence the outcome of the determination.

If the Legislature chooses to rely on the SSA’s disability determinations, the Legislature should make the following changes in state law to reflect such.

7. The Legislature should amend MISSISSIPPI CODE ANNOTATED Sections 25-11-113, 25-11-119, and 25-11-120 to:

   • require that SSA disability determinations be accepted as the only form of proof of disability at PERS;

   • delete PERS’s definition of disability and substitute SSA’s definition of disability;

   • reflect that all policies, procedures, rules, and regulations of SSA will govern PERS’s disability determinations;

   • require that all PERS disability applicants first apply for disability benefits at the SSA;

   • delete the adjudicatory functions of PERS (e.g., abolish the medical board and the Disability Appeals Committee, PERS Board of Trustees’ powers relating to disability determinations);

   • have all reexaminations made by SSA rather than by PERS; and,

   • require that all administrative functions (e.g., determining PERS eligibility) relating to PERS’s disability benefits program remain a responsibility of PERS.

8. In cases where applicants do not have Social Security coverage, PERS should contract with Disability Determination Services (DDS) to secure its services to perform disability determinations for PERS using DDS’s criteria. Furthermore, the Legislature should enact legislation that provides that when any individual who is not a participant in Social Security coverage and seeks disability benefits from PERS through any procedure established by law and rule, that applicant should have a right to appeal any adverse administrative decision made by the SSA to the First Judicial District of Hinds County Circuit Court.

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