Department  of Health  and Human  Services 
OFFICE  OF 
INSPECTOR  GENERAL 
INCORRECT  DISTRIBUTION  OF  CHILD

SUPPORT  COLLECTED  ON  BEHALF  OF

CHILDREN  IN  NON-IV-E  FOSTER  CARE

Management  Advisory  Report 
@ SE RVICE$ 
J&  Q,*V 
*+  GIBBS  BROWN 
g JUNE 
<  Inspector  General
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OEI-04-91-00981  OFFICE  OF  INSPECTOR  GENERAL 
The  mission of the  Office of Inspector  General  (OIG),  as mandated  by Public  Law 95-452, as 
amended,  is to protect  the integrity  of the Department  of Health  and Human  Services (HHS) 
programs  as well as the  health  and welfare  of beneficiaries  served by those  programs.  This 
statutory  mission  is carried  out  through  a nationwide  network  of audits,  investigations,  and 
inspections  conducted  by three  OIG  operating  components:  the  Office of Audit  Services,  the 
Office of Investigations,  and the  Office of Evaluation  and Inspections.  The  OIG  also informs 
the Secretary  of HHS  of program  and management  problems  and recommends  courses  to 
correct  them. 
OFFICE  OF  AUDIT  SERVICES 
The  OIGS  Office of Audit  Services  (OAS)  provides  all auditing  services  for HHS,  either  by 
conducting  audits with its own audit  resources  or by overseeing  audit work done  by others. 
Audits  examine  the  performance  of HHS  programs  and/or  its grantees  and contractors  in 
carrying out  their  respective  responsibilities  and are intended  to provide  independent 
assessments  of HHS  programs  and operations  in order  to reduce  waste,  abuse,  and 
mismanagement  and to promote  economy  and efficiency throughout  the  Department. 
OFFICE  OF  INVESTIGATIONS 
The  OIGS Office of Investigations  (01)  conducts  criminal,  civil, and administrative 
investigations  of allegations  of wrongdoing  in HHS  programs  or to HHS  beneficiaries  and of 
unjust  enrichment  by providers.  The  investigative  efforts  of 01  lead to criminal  convictions, 
administrative  sanctions,  or civil money  penalties.  The  01  also oversees  State  Medicaid  fraud 
control  units which investigate  and prosecute  fraud  and patient  abuse  in the  Medicaid  program. 
OFFICE  OF  EVALUATION  AND  INSPECTIONS 
The  OIGS Office of Evaluation  and Inspections  (OEI)  conducts  short-term  management  and

program  evaluations  (called  inspections)  that  focus on issues of concern  to the  Department,

the  Congress,  and the public.  The  findings  and recommendations  contained  in these  inspection

reports  generate  rapid,  accurate,  and up-to-date  information  on the  efficiency, vulnerability,

and effectiveness  of departmental  programs.

OEIS Atlanta  Regional  Office staff prepared  this report  under  the  direction  of Jesse  J.

Flowers,  Regional  Inspector  General  and Christopher  Koehler,  Deputy  Regional  Inspector

General.  Principal  OEI  staff included:

Atlanta  Region  Headquarters

Maureen  Wilce, Project  Leader  David Wright

Ron  Kalil, Team  Leader  W. Mark  Krushat

Ruth  Reiser

Paula  Bowker

For additional  copies of thk repti,  please  contact the Atlanta  Reponal Ofjice by telephone, at 
(404) 331-4108,  or by F&  at (404) 730-2308.  Purpose

To  describe  incorrect  distribution  of child  support  collected  on  behalf  of  children  in

State  foster  care  programs  which  are  not  funded  under  Title  IV-E  of the  Social

Security  Act.

Background

Foster  care  children  that  have  been  removed  from  homes  where  income  is below  Aid

to  Families  with  Dependent  Children  (AFDC)  standards  is financed  through  Federal

and  State  funds  under  Title  IV-E  of the  Social  Security  Act.  Those  from  families

whose  incomes  are  higher  or who  for  other  reasons  are  not  covered  by  Title  IV-E,  we

call  non-IV-E  foster  care  children.  More  than  260,000  children  nationwide  are  in

non-IV-E  foster  care.  Non-IV-E  foster  care  is funded  partially  through  Title  IV-B  of

the  Social  Security  Act  and  through  State  monies.  Federal  law  requires  foster  care

agencies  to  refer  low-income  biological  parents  of foster  care  children  to  child  support

enforcement  agencies  for  semices.  However,  no  such  requirement  exists  for  higher-

income  parents  of non-IV-E  foster  care  children.

We  recently  reported  on  the  potential  for  collecting  child  support  for  children  in non-

IV-E  foster  care  (OEI-04-91-00980).  That  report  showed  that  child  support  collections

could  be  increased  if States  actively  pursued  child  support  on  behalf  of children  in

non-IV-E  foster  care.  For  example,  during  1991,  child  support  payments  were

collected  on  behalf  of  7 percent  of our  non-weighted  sample  of non-IV-E  foster  care

children.  This  collection  rate  reflects  a low  emphasis  by  States  on  collecting  child

support.  State  foster  care  agencies  do  not  routinely  and  systematically  record  basic

information  on  biological  parents  of non-IV-E  foster  care  children.  Further  they

referred  only  29 percent  of parents  of sampled  children  to  child  support  enforcement

agencies  for  possible  collections.  Since  few  referrals  are  made,  and  information  on  the

parents  is often  inadequate,  child  support  orders  are  established  for  only  11 percent  of

sampled  non-IV-E  foster  care  children.  Although  many  parents  of children  in

non-IV-E  foster  care  have  financial  resources  to  pay  child  support  on  behalf  of their

child,  States  are  not  taking  full  advantage  of this  potential  source  of funds.

When  child  support  collections  are  made,  the  money  is intended  to  benefit  non-IV-E

foster  care  children  and  defray  costs  of non-IV-E  foster  care  programs.  While

performing  our  study  on  the  potential  for  collecting  child  support  from  biological

parents  of  children  in  non-IV-E  foster  care  programs,  we  observed  that  some  child

support  collected  from  biological  parents  of a foster  care  child  is not  distributed  to  the

foster  care  agency  which  has  custody  of the  child.

Methodology

We  randomly  selected  nine  States  with  probability  proportional  to  size.  We  then

asked  each  non-IV-E  foster  care  agency  to  furnish  us  a random  sample  of  70 children

1  in  non-IV-E  foster  care.  Thereafter,  using  a structured  questionnaire,  we  surveyed 
State  child  support  agencies  to  determine  (1)  extent  of child  support  collected  from 
biological  parents  of sampled  children,  and  (2)  distribution  of any  collections.  Because 
of the  small  number  of collections  reported,  we  did  not  project  to  the  universe. 
Finding 
Child Support  Payments  Collected  From  17 Percent  Of  The  Parents  Of  Sampled  Non-
IV-E Foster  Care Children Were Incorrectly Distributed 
Fifty-two  parents  in  our  sample  made  child  support  payments  in  1991  to  help 
financially  support  their  children  in non-IV-E  foster  care.  Payments  from  nineof the 
parents  (17  percent)  were  not  distributed  correctly.  Child  support  collected  from 
three  of the  nine  parents  was  incorrectly  distributed  to  biological  mothers  of the  foster 
care  children,  even  though  they  had  lost  custody  of their  children.  Likewise,  child 
support  collected  from  six parents  was  incorrectly  distributed  to  the  AFDC  program. 
As  shown  by  the  figure  below,  child  support  paid  by the  remaining  43 parents  (83 
percent)  was  correctly  distributed  to  foster  care  agencies. 
Distribution  Of Child Support  Payments 
Recipients  Of Payments 
The  distribution  errors  are  partly  caused  by the  recording  system.  This  system, 
required  by the  federal  Office  of Child  Support  Enforcement,  does  not  adequately 
record  collections  made  on  behalf  of children  in non-IV-E  foster  care.  Also,  current 
procedures  and  reporting  mechanisms  are  confusing,  adding  to  the  problem  of 
incorrect  distribution.  States  which  are  making  child  support  collections  report  that 
they  must  operate  dual  recording  systems  to  adequately  track  and  distribute 
collections.  When  the  dual  systems  fail,  foster  care  agencies  do  not  receive  needed 
funds.  Finally,  the  dual  systems  fail  to  reflect  that  collections  are  intended  to  offset 
government  expenses. 
The  lack  of  adequate  tracking  and  reporting  hinders  pursuit  of child  support  on  behalf 
of children  in non-IV-E  foster  care.  Perhaps  more  importantly,  it limits  potential  for 
building  parental  responsibility.  Other  States  may  choose  not  to  pursue  child  support 
2
 on  behalf  of non-IV-E  foster  care  children  because  of the  difficulties  in the 
distribution  system. 
Recommendation 
The  Administration  for  Children  and  Families  (ACF)  should  develop  asystemtohelp

States  accurately  record  and  distribute  collections  to  an  appropriate  foster  care 
agency.  That  system  should  include  guidance  to  States  for  designating  (or 
redesignating)  payees. 
Agency Comments 
ACF  agreed  with  our  recommendation  but  clarified  that  the  problem  of incorrectly 
distributed  collections  may  also  be  attributed  to  correctly  designating  (or 
redesignating)  payees.  We  accept  this  explanation  and  have  revised  our 
recommendation  accordingly.  The  full  text  of their  comments  are  attached. 
3
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DEPARTMENT  OF HEALTH&  HUMAN  SERVICES

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ADMINISTRATION  FOR CHILDREN  AND FAMILIE 
Office  of the Assistant  Secretary,  Suite 600 
370 LEnfant  Promenade,  S.W. 
Washington,  D.C.  20447 
Date:  March  29,  1994 
.yj
To:  June Gibbs  Brown  -....,.>. 
Inspector General 
From:  Mary Jo Bane  =

Assistant Secretary for

Children and Families 
Umm  5 ~.

Subject:	 Comments on Office of Inspector General Draft 
Management Advisory Re~ort, Incorrect Distribution 
&J+ 
Chil& Support Coll&cte~ on-Behalf of Children in Non-

IV-E Foster Care, OEI-04-91-00981

Thank  for the opportunity to comment on our recent meetin9 
YOU 
and di~cussion of d~>ft findkgs  and options  for  recommendations 
on  the above-named  Office  of  Inspector  General  (OIG)  study. 
OIG Recommendation

The Administration for Children and Families (ACF)
 should develop

a system to enable States to accurately distribute
 collections to

an appropriate foster care agency.

ACF Comments

The ACF agrees with this recommendation.  The State child support

enforcement automated systems are now accurately distributing

collections to the appropriate foster care agency when that

agency has been designated as the payee for collected child

support.  The problem of incorrectly distributed collections is

not a system problem; it is a problem of correctly designating

(or redesignating) the payee.

If the State (non-IV-E) foster care agency wishes the state IV-D

agency to be its agent for the collection of child support, there

are two possible payers--the non-custodial biological parent and

the ex-custodial biological parent from whom the child or

children were taken.  How the State IV-D agency takes action

depends on which of these two prospective payers is pursued.

In the case of the non-custodial parent, the foster care agency

and the IV-D agency could request a modification of the support

order (if it exists) to designate the foster care agency as the

recipient rather than the ex-custodial parent.  AS long as the

order specifies the ex-custodial parent (or under different

circumstances the AFDC agency) as the payee, the IV-D agency

cannot distribute the child support collections elsewhere, unless

and until there is a reassignment of support rights to the State

foster care agency.
 .,
,,  .,+ 
..i.. 
Page 2 - June Gibbs Brown

In the case  of  the  ex-custodial  parent,  the  foster  care  agency  in 
its  application  to the IV-D agency for child support enforcement 
services, can designate the foster care agency as the payee.  The 
child support award is determined by  the appropriate  State  or 
local  authority  using  the  established  State  guidelines  for  the 
determination  of  the  amount  of  the  award.  In instances where the 
children are placed in foster care  on  a  temporary basis (because 
of short-term hospitalization or incarceration of the biological 
custodial parent, for example), the pursuit of child support from

the parent may be inappropriate.

Thank you again for giving us the opportunity to comment on this

draft report.
 approximately $1,200 per device for devices consisting of nothing more than a $50 piece 
of foam rubber. 
After reviewing a sample of claims for body jackets, it was determined that 95 percent of 
the devices claimed under code L0430 did not meet either the construction requirements 
or the medical purpose of a Medicare-coveredbody jacket.  In many cases, the devices 
billed were provided primarily for the purpose of keeping patients upright in a wheelchair. 
The significance of the finding suggests that more than $7 million in 1991 and, perhaps, 
as much as $13.7 million in 1992 were inappropriately paid for non-legitimate devices 
billed as L0430. 
Although the study did not focus solely on body jackets received by SNF residents, the 
findings are equally pertinent to the SNF population.  The billing of 14430 for SNF 
residents amounted to $129,668 in 1991 and $384,795 in 1992.  Assuming 95 percent 
were for non-legitimate devices, approximately half a million dollars were incorrectly paid 
for SNF residents ($123,185 im 1991 and $365,555 in 1992).  Significantly, claims for the 
non-legitimate devices are increasing dramatically by triple digit rates (190 percent from 
1991 to 1992 after adjusting for medical cost inflation). 
l  Misrepresenting the place of service. 
Durable medical equipment (DME) is a noncovered item for beneficiaries, unless the 
DME is provided in the beneficiarys residence.  A SNF, like a hospital, is not considered 
a residence.  Based on data from this database and presented in a separate report, 
Payment for Durable Medical Equipment Billed During Skilled Nursing Facility Stays, 
the combined Medicare and resident cost for DME was approximately $10 million in 1992 
and over $8 million in 1991.14 Significantly, 99 percent of the 1991 DME claims 
imxmectly showed (intentionally or unintentionally)the residents location when the item 
was provided.  Suppliers stated the place of service was the home or other; however, 
at the time of the senice,  the beneficiary was actually residing in a SNF.  Had the 
supplier indicated that the beneficiary resided in a SNF, the carrier would have known to 
disallow the claim. 
. 
22
 In a 1993 survey, we askal  carriers to list their concerns  about possible abuses  in 
utilization and payment for durable medical equipment and supplies in nursing homes. 
Some of these concerns reflect suspected or known abuse in areas discussed previously in 
this report.  Others reflect concerns about false billing, improper handling of certificates 
of medical necessity, and financial arrangements. 
We note that some of the problems listed are being, or have been addressed by the new 
Durable Medical Equipment Regional Carriers (DMERCS)15.Carriers were not asked to 
provide details on the source or extent of their reports of possible fraud and abuse or 
whetherthey had referred any cases to the Offi& of InspectorGeneral. 
. 
23