Background RRB administers retirement, survivor, disability, unemployment, and  sickness benefits for railroad workers and their families under the  provisions of the Railroad Retirement Act of 1974, as amended (RRA)  and the Railroad Unemployment Insurance Act of 1938, as amended  (RUIA). Individuals who work for railroads engaged in interstate commerce, for railroad associations, and for railroad labor organizations  are among those covered by RRB’s benefits system instead of Social  Security or the federal-state unemployment insurance system. During  fiscal year 2016, RRB received approximately $12 billion in funding, about  half of which came from payroll taxes levied on railroad workers and their  employers. Almost all of the funding was used to pay benefits, including  unemployment benefits. In addition, RRB administers Medicare coverage  for railroad workers. The railroad retirement system and Social Security system are separate  but linked with regard to benefit payments and taxes. Railroad workers  and their employers pay the same payroll taxes as other workers covered  by Social Security for comparable retirement, disability, unemployment  insurance, and Medicare benefits. RRB also collects taxes to cover  additional benefits. A financial interchange between the two systems  allows funds to be transferred between RRB and Social Security accounts  based on the amount of Social Security benefits that workers would have  received if they were covered by Social Security, as well as the payroll  taxes that would have been collected if the railroad workers were covered  by Social Security instead of their own system. According to RRB data,  the railroad retirement, survivor, and disability system is projected to  remain solvent over at least the next 25 years. Railroad Retirement Act  Disability Benefits Under the RRA, RRB provides two distinct disability benefits for railroad  workers—total and permanent (T&P) disability and occupational disability.  For T&P disability, RRB makes determinations about railroad workers’  disability claims independent of but using the same general criteria that  the Social Security Administration (SSA) uses to administer its Disability  Insurance program. That is, a worker must have a medically determinable  physical or mental impairment that (1) has lasted (or is expected to last)  at least 1 year or is expected to result in death, and (2) prevents them  from engaging in substantial gainful activity, defined as work activity that  involves significant physical or mental activities performed for pay or  profit. In other words, these workers are essentially deemed unable to  engage in any regular employment. According to RRB’s 2017 Annual  Report, at the end of fiscal year 2016, the agency was paying 10,300 T&P  disability beneficiaries an average of $1,911 each per month for a total of  about $236 million annually. In fiscal year 2016, data provided by RRB  indicate that the agency approved about 78 percent of the 843  applications for T&P disability benefits it received. Occupational disability is a unique benefit for railroad workers. RRB  provides these benefits to workers who have physical or mental  impairments that prevent them from performing their specific railroad job,  even though they may be able to perform other kinds of work. For  example, a railroad engineer who cannot frequently climb, bend, or reach,  as required by the job, may be found to be occupationally disabled. To be  eligible for occupational disability benefits, workers must meet certain  labor- and management-negotiated disability criteria as well as certain  age and service requirements. Railroad workers age 60 and older with at  least 10 years of service are eligible to apply, as well as workers of any  age with at least 20 years of service. Workers determined to be eligible  for occupational disability benefits may be able to return to the workforce,  but generally not to their original occupation. According to RRB, at the  end of fiscal year 2016, the agency was paying 21,000 occupational  disability beneficiaries an average of $3,053 each per month for a total of  about $769 million annually. In fiscal year 2016, data provided by RRB  indicate that the agency approved about 98 percent of the 984  applications for occupational disability benefits it received. Continuing Disability  Reviews Federal law generally requires RRB to conduct CDRs to determine if  beneficiaries continue to meet the disability requirements of the law.  RRB conducts two overall types of CDRs: medical and earnings. In a  medical CDR, disability examiners review a beneficiary’s medical records  and may order additional examinations to determine whether the  individual’s medical condition has improved to the point where it is no  longer considered disabling. In an earnings CDR, disability examiners  review earnings to determine whether beneficiaries are earning income  that exceeds program limits, which could make them ineligible for  benefits. If the agency, while conducting an earnings review, obtains  information that indicates the beneficiary’s medical condition has  improved, RRB can initiate a medical CDR as well. Similarly, if RRB  discovers earnings above program limits while developing evidence for a  medical review, the agency may initiate an earnings CDR. Medical Continuing Disability  Reviews RRB generally conducts medical reviews with a frequency determined by  the beneficiary’s likelihood of medical improvement, which may fall into  one of three categories: medical improvement expected (MIE)—when a beneficiary’s  impairment demonstrates medical improvement, when improvement is  unpredictable, or when medical intervention may change the  impairment’s severity, among other reasons; medical improvement possible (MIP)—when a beneficiary’s disability  may improve, or the likelihood of medical improvement within 3 years  is not probable; or medical improvement not expected (MINE)—when a beneficiary’s  impairment meets certain listings such as blindness or hearing loss  and generally when a beneficiary has attained 54 ½ years of age. If a beneficiary’s disability is classified as MIE, RRB generally reviews the  beneficiary’s continuing eligibility for disability benefits at intervals from 6  months to 18 months. For MIP cases, RRB mails a questionnaire at least  once every 3 years that asks a beneficiary to update medical and  earnings information. If the self-reported information indicates medical  improvement or a return to work, RRB may conduct a CDR. For MINE  cases, RRB’s regulations state that it will not routinely review the  beneficiary’s continuing eligibility. (See fig. 1.) According to RRB’s  guidance, factors such as age and work experience may also affect how  and when RRB classifies a beneficiary as MINE, or whether it should  schedule (or “diary”) a CDR. RRB maintains a list of scheduled CDRs in  its CDR Call-Up program. It uses this program to both identify CDRs that  require completion and to schedule CDRs based on the likelihood of  medical improvement. RRB also started conducting CDRs in 2015 that target cases at high risk  of potential fraud and which officials said could result in the termination of  benefits. Earnings Continuing Disability  Reviews In addition to medical reviews, RRB conducts earnings CDRs for  beneficiaries detected with earnings that exceed disability program  limits. Most earnings CDRs are triggered by unreported earnings  detected through RRB’s policing operation. Policing for earnings involves  an annual data match by SSA in which it uses RRB’s disability beneficiary  database and Internal Revenue Service (IRS) earnings data to detect  unreported earnings. (See fig. 2.) In this process, RRB provides SSA with  a record of all disability beneficiaries, and SSA matches these  beneficiaries against IRS earnings data. For those cases in which  earnings are identified, RRB has an earnings reconciliation process to  determine which beneficiaries may be excluded from an earnings CDR  and which should receive one. For example, RRB considers whether a  beneficiary has any disability-related work expenses, such as the cost of  special transportation or medication, which are deducted from any  earnings, or if the beneficiary has reached full retirement age. (See fig.  2.) In addition, a beneficiary who returns to work or has earnings from  employment is required to report that information to RRB, and the agency  may initiate a CDR depending on the circumstances. If a potential  overpayment is identified as a result of a CDR, the Disability Benefits  Division refers the case to another division within RRB to calculate the  overpayment amount. Most Beneficiaries  Are Not Subject to  Medical CDRs, and  Data Used to Identify  Unreported Earnings  and Potential  Overpayments Are  Outdated RRB Completed CDRs for  Slightly More Than 1  Percent of Disability  Beneficiaries in Fiscal  Years 2014-2016 Over the 3 years for which RRB was able to provide us with complete  data, the agency completed 427 CDRs. This number represents CDRs  for slightly more than 1 percent of the railroad workers who received  disability benefits during that period, an average of about 35,000,  including both occupational and T&P beneficiaries. Most of the reviews it  completed from fiscal years 2014 through 2016 were medical CDRs, but  earnings CDRs identified most of the ineligible beneficiaries and  overpayments. Of the 427 CDRs completed, 209 were medical CDRs and  163 were earnings CDRs. In 55 cases, both a medical and an earnings  CDR were completed. Forty-three of the scheduled medical CDRs completed were based on  medical improvement criteria. Another 166 of the medical CDRs  completed were based on “high-risk” selection criteria that were  developed after fraudulent activities came to light among Long Island Rail  Road (LIRR) beneficiaries in the late 1990s through 2008. RRB uses the  high-risk selection criteria to target occupational disability beneficiaries  who share certain characteristics that are common to the employees who  participated in the LIRR fraud scheme. Overall, RRB determined that  about 86 percent of beneficiaries remained eligible for benefits as a result  of all of the CDRs completed in fiscal years 2014-2016. (See fig. 3.) Medical CDRs Identified  Few Ineligible  Beneficiaries and  Overpayments During fiscal years 2014-2016, RRB completed a total of 43 medical  CDRs for beneficiaries–about 0.1 percent of disability beneficiaries–that  were scheduled based on beneficiaries’ medical improvement category.  Our analysis of RRB’s data and policies suggests that RRB completes  few medical CDRs relative to the total number of disability beneficiaries  because it has a high percentage of older disability beneficiaries who may  not be subject to a medical CDR. According to the data provided by RRB,  about 90 percent of individuals who received a disability payment in fiscal  year 2016 were age 55 or older (see fig. 4), and RRB’s Disability Claims  Manual states that at age 54½, a combination of medical and vocational  factors, such as medical condition, age, and work experience, may  preclude a return to work. More specifically, the manual instructs  disability examiners to classify beneficiaries over age 54½ as “medical  improvement not expected” because of the remote likelihood that they will  be able to engage in medium or heavy work. Scheduled medical CDRs resulted in few terminations and identified few  overpayments. Data provided by RRB indicate that of the 43 medical  CDRs completed during fiscal years 2014-2016, 3 ineligible beneficiaries  were identified and 1 overpayment of $28,000 was identified and  calculated. RRB determined that 40 of the 43 beneficiaries (93 percent)  continued to meet the appropriate disability criteria for occupational or  T&P disability, as applicable, and qualify for benefits (see sidebar). These  results largely mirror RRB’s initial approval rates for disability benefits. In  fiscal year 2016, 89 percent of all disability applicants were approved for  benefits. RRB Developed Criteria  for Conducting Additional  Medical CDRs to Target  Cases at Risk for Fraud,  but These CDRs Identified  No Ineligible Beneficiaries  in Two Years In fiscal year 2015, RRB expanded the use of medical CDRs to include  certain high-risk occupational disability cases that would previously only  have been selected for a CDR if RRB received a report of medical  recovery or identified earnings that could affect entitlement to benefits. As  part of its Disability Program Improvement Plan, RRB developed selection  criteria to target cases at high risk for potential fraud that could result in  termination of benefits. According to RRB officials, the criteria for  targeting these cases are based on characteristics common to the  employees who participated in the LIRR fraud scheme. In order to fall  within the high-risk group, a beneficiary must (1) have an occupational  disability, (2) have an orthopedic or psychological impairment, (3) be  under age 55, and (4) not have a disability freeze. Despite these targeted criteria, the 166 high-risk CDRs completed in  fiscal years 2015 and 2016 identified no ineligible beneficiaries and no  overpayments. According to a senior RRB official, the agency is not yet  ready to abandon its high-risk CDR effort, and it continues to consider  these reviews as potentially effective. However, high-risk CDR outcomes  raise questions about the value and benefit of RRB dedicating resources  to conduct these additional reviews. Earnings CDRs Identified  the Greatest Number of  Ineligible Beneficiaries and  Overpayments, but  Outdated Earnings  Information Limits Their  Effectiveness Earnings CDRs resulted in a higher percentage of terminations and  identified more overpayments than scheduled and high-risk medical  CDRs combined. During fiscal years 2014-2016, RRB completed 163  earnings CDRs. Most of these earnings CDRs (127) were initiated as a  result of RRB’s annual earnings policing effort, in which RRB’s beneficiary  database is matched against Internal Revenue Service earnings data.  Other CDRs were initiated as a result of self-reported earnings  information from beneficiaries. Over this 3-year period, earnings CDRs  identified 47 ineligible beneficiaries and terminated their benefits. During  this same time period, earnings CDRs identified at least $970,550 in  overpayments that had been calculated for CDRs completed during fiscal  years 2014-2016. However, earnings CDRs that were conducted may identify additional  overpayments but RRB is slow to calculate overpayments. We  determined that the overpayment data RRB provided for CDRs completed  during 2014-2016 were incomplete. For example, a case file review of six  randomly selected earnings CDRs completed in fiscal year 2016 found  that in three of the cases, the Retirement and Survivor Benefits Division (RSBD), the office responsible for calculating overpayments, had not  calculated the overpayments identified by those 2016 reviews as of July  2017. RRB officials acknowledged delays of a year or more in calculating  overpayments for disability beneficiaries identified by CDRs, and that  RRB lacks a standard time frame for doing so. The officials attributed the  delays to competing priorities and staffing shortages within RSBD. RRB  has no plans to establish a standard time frame for processing  overpayments identified through CDRs. Identifying and calculating overpayments in a timely manner are important  to RRB’s long-term performance goal related to payment accuracy, as  outlined in its strategic plan. Further, federal internal control standards  state that transactions should be recorded promptly to maintain their  relevance and value to management in controlling operations. In addition, although RRB’s annual earnings policing effort has identified  numerous beneficiaries with earnings over program limits as well as  overpayments, the data RRB uses for its policing effort can be up to 2  years old. The data RRB uses to identify unreported earnings and  determine whether it should initiate a CDR are based on outdated IRS  earnings information. For example, income earned in calendar year 2014  that is filed with the IRS in 2015 would not become available for earnings  policing until 2016. Further, the earnings discovered during the course of a CDR may be  even older than 2 years. Our review of the six earnings CDRs completed  in fiscal year 2016 found the earned income in question ranged from 2011  through 2013. RRB officials acknowledged that the data it currently uses  for its policing effort cause delays in identifying earnings. When  overpayments are not identified in a timely manner, RRB’s ability to  detect when a beneficiary is not eligible for benefits is hindered, thereby  increasing the potential for lost federal dollars. In addition, the delay may  also cause larger overpayments since undetected overpayments can  accrue over several years. We previously recommended that RRB explore options to obtain more  timely earnings data for use in making disability benefit eligibility  determinations, which includes CDRs. In response, RRB officials said  one step they have recently taken is to use The Work Number, which  includes payroll data from over 5,500 employers nationwide, on a case- by-case basis for CDRs to obtain more recent earnings information from  employers for a specific beneficiary. In addition, RRB contacts  employers directly to obtain earnings information needed for CDRs.  However, according to a RRB official, IRS earnings data are currently the  only source to which RRB has access for earnings policing that includes  all of its disability beneficiaries. RRB has considered conducting earnings policing using the Department  of Health and Human Services’ quarterly earnings data from the National  Directory of New Hires, which includes the most recent eight quarters of  wages reported from all states. In its budget submissions for fiscal years  2017-2019, RRB included a legislative proposal seeking access to these  quarterly earnings data, since access is limited by statute. Several federal  agencies, including the Departments of the Treasury, Education, Housing  and Urban Development, and the Social Security Administration, are  currently authorized by law to use data from the National Directory of New  Hires to verify program eligibility and detect and prevent overpayments.  Providing RRB with similar access to more recent earnings data would  enable it to identify potential overpayments sooner than is currently  possible. SSA has legal authority to access quarterly wage data from the National  Directory of New Hires for the purpose of making disability benefit  eligibility determinations, which includes CDRs. In March 2017, SSA  implemented the Quarterly Earnings Project in which it matched certain  Social Security Disability Insurance beneficiaries against these earnings  data with the goal of reducing overpayments. According to SSA officials,  the project identified beneficiaries with substantial earnings, on average,  1 year earlier when using quarterly wage data instead of earnings data  from the IRS—the data RRB currently uses to conduct its annual earnings  match. SSA officials project that the Quarterly Earnings Project will  achieve an estimated $10.3 million in savings and benefit terminations in  22 percent of the roughly 10,000 cases selected for review in fiscal year  2017. RRB’s Oversight of Its  CDR Program Has  Focused on High- Risk Reviews Rather  Than Overall  Program Data RRB Has Reviewed High- Risk CDRs, but Outcomes  Call This Effort into  Question RRB’s Program Evaluation and Management Services (PEMS), which is  tasked with conducting reviews to ensure efficient program performance,  has conducted two internal reviews of the high-risk medical CDRs since  they were first implemented in 2015. PEMS concluded in its 2016 report  that conducting high-risk CDRs based solely on the likelihood of medical  improvement demonstrated no return on investment. PEMS officials  recommended that the Disability Benefits Division focus its resources on  investigating non-reported work and earnings rather than on developing  medical evidence; however, RRB continues to dedicate resources to  developing medical evidence for high-risk CDRs, and a senior RRB  official said the agency is not ready to abandon its high-risk CDR effort.  RRB officials said they plan to track certain annual measures for high-risk  CDRs, such as the number of cases referred to the OIG for potential  fraud, CDR outcomes (continuances, suspensions, and terminations),  and any overpayments identified. Our findings and PEMS’s 2016 conclusions indicate that these high-risk  medical CDRs have not been effective in identifying ineligible  beneficiaries, or identifying potential fraud. High initial approval rates for  occupational disability benefits—over 96 percent for fiscal years 2008- 2016—may be an indication that high-risk CDRs for occupational  beneficiaries would result in most beneficiaries continuing to qualify for  benefits, since the same disability criteria are used to evaluate medical  condition for initial decisions and CDRs. By continuing to conduct high- risk CDRs, RRB may be expending resources that could be used for  other purposes that are more effective in identifying ineligible  beneficiaries. RRB Does Not Routinely  Compile and Analyze CDR  Program Data for All  CDRs Aside from RRB’s efforts to oversee its high-risk medical reviews, it does  not routinely analyze program data for its CDR operations as a whole.  The lack of routine data collection and analysis limits its ability to identify  potential gaps in oversight and monitor program performance. RRB  officials said compiling comprehensive information for the CDR program  can be challenging because CDR data are housed in multiple systems,  some of which use outdated software and are not compatible with each  other. For example, information related to CDR overpayments is housed  in at least three separate systems. Further, according to RRB officials,  some case information is only available in paper files. RRB has taken some steps to improve its ability to access information,  such as converting its paper files to electronic images, but the information  in the images cannot easily be analyzed. RRB was able to compile data  for fiscal years 2014-2016 for our review that made it possible for us to  analyze different aspects of the CDR program, such as the number of  medical and earnings CDRs completed each year, the amount of  overpayments identified as a result of CDRs, and CDR outcomes.  However, RRB was unable to provide complete historical data for CDRs  completed before fiscal year 2014. If RRB routinely compiled and  analyzed these data for its own purposes, it could better monitor CDR  program performance. This would be consistent with federal internal  control standards, which state that management should use program data  for effective program monitoring. Routinely compiling and analyzing CDR program data would also allow  RRB to identify potential gaps in oversight. For example, our analysis of  the data provided by RRB indicated that 10 percent of the 427 cases for  which it completed a CDR during fiscal years 2014-2016 lacked a valid  initial medical improvement category—medical improvement expected,  possible, or not expected—which is assigned when beneficiaries are first  awarded benefits. Since RRB schedules medical CDRs based on medical  improvement category information, and we found that medical  improvement category data are incomplete for 10 percent of the CDRs  completed during fiscal years 2014-2016, this raises questions as to  whether RRB is scheduling and conducting medical CDRs for everyone it  should be. RRB officials said the only way to verify a beneficiary’s  medical improvement category is to perform an individual query in the  CDR Call-Up program or check the paper files, which could be very time- consuming and labor-intensive to do for all beneficiaries. RRB also lacks data on the total number of beneficiaries currently in each  medical improvement category. Without these data, RRB cannot  anticipate how many medical CDRs it should expect to conduct and  when. Federal internal control standards state that management should  use quality information to make informed decisions, and that quality  information is current, complete, and accurate. RRB’s ability to monitor the performance of its CDR program is also  limited because it does not track all costs or benefits of conducting CDRs.  For example, RRB officials told us they do not analyze certain program  data, such as administrative costs and recovered overpayments for  CDRs. Analyzing these program data would enable RRB to compare any  savings produced by CDRs against the cost of administering them. RRB’s  strategic plan states that the agency measures the efficiency of its  agency-wide program integrity efforts by comparing any savings they  produce against the cost of administering the activities. According to the  plan, program integrity efforts that can identify savings include computer  matching to prevent payments to deceased beneficiaries and referring  suspected fraud to the OIG. In its fiscal year 2017 Performance and  Accountability Report, RRB reported a return on investment of $4.18 for  each dollar spent on combined program integrity efforts in fiscal year  2016. However, we do not know how CDRs contributed to this return on  investment or the savings resulting from CDRs specifically. Conclusions As a steward of tax dollars, it is important that RRB take all necessary  steps to operate and manage its disability program effectively and  efficiently, while minimizing overpayments. RRB’s continued reliance on  outdated earnings information to identify beneficiaries who, at the time a  CDR is conducted, may no longer be eligible for benefits, increases the  likelihood of making improper benefit payments and having to try to  recover the money in the future. In addition, even for those overpayments  that RRB identifies, it lacks a standard for processing them in a timely  manner, which increases the potential loss of federal dollars.  Furthermore, despite a RRB report that high-risk medical CDRs have not  been effective, the agency expends resources on these reviews that  could be used for other purposes that are more effective in identifying  ineligible beneficiaries. RRB’s lack of routine data collection and analysis hampers its ability to  monitor program performance and determine what changes, if any,  should be made to improve the CDR program, including determining the  number of beneficiaries in each medical improvement category and the  costs and benefits of conducting the various types of reviews. While  paper files and disparate data systems present challenges to collecting  and analyzing program data and may hinder oversight efforts, RRB could  be doing more with the data it has to identify potential gaps in oversight. Matter for  Congressional  Consideration To improve RRB’s ability to make accurate disability benefit eligibility  determinations, including CDRs, and to decrease the potential for making  improper payments, Congress should consider granting RRB access to  the Department of Health and Human Services’ quarterly earnings  information from the National Directory of New Hires database. (Matter for  Consideration 1) Recommendations for  Executive Action To enhance RRB’s ability to manage and oversee its CDR program, we  are making the following three recommendations to the Railroad  Retirement Board:  RRB should develop a standard for the timely processing of disability  program overpayments identified through CDRs. (Recommendation 1) RRB should consider whether to reallocate resources used for high-risk  CDRs to other CDR efforts that produce more effective outcomes.  (Recommendation 2) RRB should routinely compile and analyze CDR program data, such as  the number of cases selected for review, the number of beneficiaries in  each medical improvement category, outcomes, and the costs and  benefits of conducting CDRs, to improve program oversight.  (Recommendation 3) Agency Comments  and Our Evaluation We provided a draft of this report to RRB for review and comment. RRB  provided written comments, which are reproduced in appendix II. The  agency also provided additional technical comments, which have been  incorporated as appropriate. RRB agreed with all three of the  recommendations and noted that it has already taken initial steps to  implement them. We are sending copies of this report to the appropriate congressional  committees, the Railroad Retirement Board, and other interested parties.  In addition, the report will be will be available at no charge on the GAO  website at http://www.gao.gov. If you or your staff have any questions about this report, please contact  me at (202) 512-7215 or curdae@gao.gov. Contact points for our Offices  of Congressional Relations and Public Affairs may be found on the last  page of this report. GAO staff who made key contributions to this report  are listed in appendix III. Appendix I: Railroad Retirement Board  Funding and Expenditures, Fiscal Years  2007 Through 2016 Railroad Retirement Board  (RRB) Funding In fiscal years 2007 through 2016, RRB received, on average,  approximately $11.6 billion annually from multiple sources to fund its  programs. RRB’s budget in fiscal year 2016, the most recent year for  which data are available, was $12.4 billion. (See table 1.) Railroad retirement, survivor, disability, unemployment, and sickness  benefit payroll taxes are the primary funding source for RRB and totaled  $5.9 billion in fiscal year 2016. In fiscal years 2007-2016, these taxes  averaged $5.2 billion annually. Railroad employers and employees pay  Tier I taxes, which are the same as taxes levied on Social Security- covered employers and workers. The taxes fund benefits similar to Social  Security retirement and disability. Employers and employees also pay  Tier II taxes to finance additional railroad retirement benefits. According to  RRB data, Tier I and Tier II taxes for fiscal year 2016 amounted to $2.8  billion and $3.1 billion, respectively. Railroad employers also paid  approximately $117.2 million in unemployment insurance taxes in fiscal  year 2016. The second major source of RRB funding consists of transfers from the  Social Security trust funds under a financial interchange between the two  systems. The financial interchange is intended to place the Social  Security Old-Age and Survivors Insurance Trust Fund and the federal  Hospital Insurance Trust Fund in the same condition they would have  been in had railroad employees been covered by the Social Security Act  and Federal Insurance Contributions Act, and the Railroad Retirement Act  had not been enacted. The financial interchange calculation involves  computing the amount of Social Security taxes that would have been  collected on railroad employment and computing the amount of benefits  which Social Security would have paid to railroad retirement beneficiaries  during the same fiscal year. When benefit reimbursements exceed payroll  taxes, the difference, with an allowance for interest and administrative  expenses, is transferred from the Social Security Trust Funds to RRB. If  taxes exceed benefit reimbursements, which has not happened since  1951, a transfer would be made in favor of the Social Security Trust  Funds. According to RRB data, the net financial transfer to the Social  Security Equivalent Benefit Account during fiscal year 2016 amounted to  about $4.1 billion; in fiscal years 2007-2016, these transfers averaged  $4.0 billion annually. The third major source of RRB funding is transfers from the National  Railroad Retirement Investment Trust, the trust fund that holds assets to  help pay a portion of RRB benefits. The Trust was established pursuant  to Section 105 of the Railroad Retirement and Survivors’ Improvement  Act of 2001, and is the vehicle for investing RRB retirement benefit  assets in non-government securities. Under the Trust’s investment  guidelines, assets are invested in both government securities and private  equities, unlike the Social Security Trust Funds, which are only invested  in government securities. The Trust also provided for the transfer of  excess RRB retirement, survivor, and disability benefit payroll taxes that  are not needed to pay benefits to the Trust for investment, and for  transfers from the Trust to the Treasury to assist the RRB in meeting its  benefit obligations. The Trust has not received transfers from the RRB  since the end of fiscal year 2004. During fiscal year 2016, however, the  Trust transferred a total of $1.4 billion to the Treasury for payment of RRB  benefit obligations; for fiscal years 2007-2016, these transfers averaged  $1.6 billion annually. According to RRB data, the value of Trust-managed  assets at the end of fiscal year 2016 was $25.1 billion. The fourth major source of RRB funding is appropriations. According to  RRB officials, most of these appropriations are derived from the taxation  of railroad retiree benefits and primarily fund benefit payments. These  appropriations also fund specific efforts such as administrative costs. In  fiscal year 2016, RRB received $790.6 million in federal appropriations;  for fiscal years 2007-2016, RRB’s annual appropriation averaged $655.4  million. Railroad Retirement Board  Expenditures In fiscal years 2007-2016, RRB expended, on average, approximately  $11.6 billion annually to fund its programs. (See table 2.) RRB’s expenditures in fiscal year 2016, the most recent year for which  data are available, were $12.8 billion, which included approximately $12.5  billion for benefit payments, $156.0 million for salaries and expenses, and  $98.0 million for interest expenses due to borrowing from Treasury for the  financial interchange. Railroad Retirement  System Solvency By law, RRB is required to prepare an annual report to the President and  Congress containing a 5-year projection on revenues to and payments  from the Railroad Retirement Account (RRA). In its June 2017 report,  RRB projected that cash flow problems would not occur during the 25- year projection period (calendar years 2017-2041). The report also  recommended no change in employer and employee tax rates and no  diversion of taxes from the RRA to the Railroad Unemployment Insurance  Account (RUIA). Appendix II: Comments from the Railroad  Retirement Board Appendix III: GAO Contact and Staff  Acknowledgments GAO Contact Staff  Acknowledgments In addition to the contact named above, Mark Glickman (Assistant  Director), Arthur T. Merriam Jr. (Analyst-In-Charge), Meredith Moore, and  Jill Yost made significant contributions to this report. Also contributing to  this report were Daniel Concepcion, Erin Godtland, Joel Green, Nicole  Jarvis, David Lehrer, Emei Li, Olivia Lopez, Sheila McCoy, Phillip  McIntyre, Jean McSween, Mimi Nguyen, James Rebbe, Anjali  Tekchandani, Frank Todisco, and Kathleen van Gelder. Related GAO Products Social Security Disability: SSA Could Increase Savings by Refining Its  Selection of Cases for Disability Review. GAO-16-250. Washington, D.C.:  February 11, 2016. Railroad Retirement Board: Actions Needed to Reduce Continued Risk of  Fraud and Improper Payments. GAO-15-535T. Washington, D.C.: May 1,  2015. Railroad Retirement Board: Total and Permanent Disability Program at  Risk of Improper Payments. GAO-14-418. Washington, D.C.: June 26,  2014. Use of the Railroad Retirement Board Occupational Disability Program  across the Rail Industry. GAO-10-351R. Washington, D.C.: February 4,  2010. Railroad Retirement Board: Review of Commuter Railroad Occupational  Disability Claims Reveals Potential Program Vulnerabilities.  GAO-09-821R. Washington, D.C.: September 9, 2009.
RRB is an independent agency that administers disability benefits for railroad workers. In fiscal year 2016, about 31,000 railroad workers with disabilities received $1.1 billion in disability benefits. RRB is generally required to periodically assess beneficiaries' medical condition or earnings through continuing disability reviews (CDRs) to verify that they remain eligible for disability benefits. This report examines the extent to which RRB (1) conducts medical and earnings CDRs to ensure the continued eligibility of disability beneficiaries, and (2) oversees the CDR program. GAO analyzed data provided by RRB for CDRs completed in fiscal years 2014-2016, the only years for which complete data were available. GAO also reviewed RRB's policies and procedures, a nongeneralizable random sample of 14 CDR cases that were completed in fiscal year 2016, and relevant federal laws and regulations; and interviewed RRB officials. In fiscal years 2014-2016, the Railroad Retirement Board (RRB) completed continuing disability reviews (CDRs) of various types for 427 beneficiaries (see figure below), covering slightly more than 1 percent of the railroad workers who received disability benefits during that period. These reviews included: Scheduled Medical Reviews –These are scheduled at different intervals depending on the likelihood of medical improvement. RRB data suggest that most beneficiaries are not subject to these CDRs because they are older than 54½, which RRB defines as the age at which they are unlikely to return to work. Of 43 medical CDRs that were scheduled, RRB identified 3 ineligible beneficiaries and 1 overpayment of about $28,000. High-Risk Reviews – In fiscal year 2015, RRB began conducting medical CDRs on cases it considered to be at high risk for fraud. It completed 166 of these reviews in fiscal years 2015 and 2016, but none identified any ineligible beneficiaries or overpayments. Earnings Reviews – During fiscal years 2014-2016, 163 earnings CDRs identified 47 ineligible beneficiaries and at least $970,550 in overpayments. However, RRB uses earnings information that can be up to 2 years old, thereby delaying the detection of ineligible beneficiaries and increasing the potential for lost federal dollars. Other federal agencies have access to a national federal database with more recent earnings data. Providing RRB access to these data would enable it to identify overpayments sooner. Medical + Earnings Reviews – In some cases, RRB conducts both a medical and earnings CDR. RRB's data do not allow GAO to attribute the outcome to either type of CDR. RRB oversight has primarily been limited to conducting two internal reviews of high-risk medical CDRs, one of which concluded, consistent with the above results, that these CDRs demonstrated no return on investment. Nevertheless, RRB continues to do them. RRB does not routinely compile and analyze data for all of the CDRs it conducts, which limits its ability to identify potential gaps in oversight and to monitor program performance. For example, RRB lacks data that would help it determine how many medical CDRs it should expect to conduct. RRB officials said compiling data can be challenging because it uses multiple data systems. However, by more efficiently collecting and compiling key CDR data, RRB could enhance its capability to routinely assess program performance.