Millions of dollars in disability fraud may go undetected due to Social Security Administration policies that discourage staff from reporting suspicious claims, according to a government watchdog.

The policies aren't suited to detecting fraud in complex schemes in which physicians, disability applicants and even former SSA employees team up to secure insurance payments, the Government Accountability Office said.

The medical records SSA uses to approve applicants for disability insurance have come under “intense scrutiny” as cases of alleged fraud have surfaced, the report said.

The agency accepts medical claims from doctors who are barred from participating in Medicare and Medicaid because they have been convicted of federal healthcare fraud or have had their medical license suspended, GAO said.

A provision in the Social Security Act requires agency staff to ignore the criminal history of doctors who treat disability applicants unless they have a reason to suspect “similar fault” in the claim at hand.

Instead of using data analytics to identify potential fraud in medical records, SSA simply instructs its staff to identify “suspicious patterns” on their own by recognizing similar language on multiple claims from the same doctor, the report said.

But most offices charged with screening medical records assign claims randomly, so staff have to wait for the “coincidence” of receiving consecutive claims from the same doctor to catch fraud manually, according to the report.

That approach is flawed by the sheer volume of records that staff must review every day. The volume makes recognizing potentially false claims difficult, “irrespective of how claims are distributed amongst staff,” GAO said.

What’s more, the agency’s emphasis on processing claims quickly creates “disincentives” for staff to take the time to report potential fraud, GAO said.

SSA measures employee performance based on speed because “disability applicants file at vulnerable times in their lives,” so “timely” decisions have become the agency’s top goal, according to the report.

Some staff told GAO they don’t report suspicious doctors or potentially fake records because the time it would take them to investigate the suspected fraud could be counted against their performance, the report said.

Four of the five offices reviewed for the report counted time spent looking into suspicious claims against their employees’ performance.

Despite the fact that agency staff are tasked with detecting fraud by hand, most employees said their anti-fraud training was “infrequent” and “insufficient,” according to the report.

SSA has estimated its disability insurance trust fund will run out of money by 2016 if nothing is done. Without legislative intervention, disability recipients will see automatic cuts to their payments by late 2016, the agency said.

Go here to read the full GAO report.