Department  of  Health  and  Human  Services 
OFFICE  OF 
INSPECTOR  GENERAL 
REFORMS  ARE  NEEDED  IN  STATE 
INCOME  AND  ELIGIBILITY  VERIFICATION 
SYSTEMS  OFFICE  OF  INSPECTOR  GENERAL 
The mission of the Office of Inspector  General  (OIG), as mandated  by Public Law !X-
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 progmms  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 HI-IS programs  or to HHS beneficiaries  and 
of unjust enrichment  by providers.  The investigative  efforts  of 01 lead to criminal 
convictions,  administmtive  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  progmms.  This report  was 
prepared  in the Dallas  regional  office under the direction  of Ralph Tunnell,  Regional 
Inspector  General  and Chester  Slaughter,  Deputy Regional  Inspector  General.  Project 
staff include  (humes lirted alphobetiudly and by region): 
DALLAS REGION  HEADQUARTERS 
Leah Bostick  Alan Levine 
Kevin Golladay 
Forjiather  tifotmation  contact:  Kiwin GoR&zy  at 214/767-3310  or l/8@-848-8960.  EXECUTIVE  SUMMARY 
PURPOSE 
The purpose  of this study was to assess the current  status of State Income  Eligibility 
Verification  Systems (IEVS). 
BACKGROUND 
Verifying  information  supplied by Aid to Families  with Dependent  Children  (AFDC), 
Medicaid,  or Food Stamp applicants  and recipients  with other  sources through  computer 
matching  helps States better  identify  individuals  not eligible  for public  assistance  or 
receiving  incorrect  benefit payments.  Congress  enacted the Deficit  Reduction  Act of 1984 
which expanded  matching  requirements  by requiring  State Income  and Eligibility 
Veritlcation  Systems (IEVS).  Under IEVS,  States are required  to routinely  match AFDC, 
Food Stamp,  and Medicaid  applicant  and recipient-supplied  information  against  several 
data sources:  1) Internal  Revenue  Service  (IRS) data on interest,  dividends,  and other 
types of unearned  income;  2) Social Security Administmtion  (SSA) data (Retirement, 
Survivors,  and Disability  Insurance  benefits,  Supplemental  Security Insurance  Benefits 
(SS1), and annual earnings);  and 3) State quarterly  wage reports  and unemployment 
insurance  benefits.  States must complete  follow up within 45 days on at least 80 percent 
of all IEVS information  received  on applicants  and information  targeted  (selected)  for 
review  on recipients. 
This review  of IEVS consisted  of interviews  and surveys with State officials 
knowledgeable  about their  States IEVS process.  To supplement  our interviews,  we 
conducted  onsite visits to five States and one local ofllce  in each of these States. 
Additionally,  we reviewed  State documentation  of IEVS procedures,  State supplied IEVS 
statistics,  and Federal  IEVS regulations. 
FINDINGS 
This examination  of IEVS reaffms  findings from prior  reviews  and substantiates 
continued  operational  weaknesses  with IEVS.  The IEVS remains  a controversial 
requirement  for States.  This controversy  is especially  acute because  of State budgetary 
restraints,  resource  limitations,  and program  growth. 
State Implementation 
Sevend  St&es are not utilizing all required IEVS sources.  During  1992 and/or  1993,  12 
States did not conduct  recipient  matching  against one or mom IEVS data sources or failed 
to follow up on resulting  information.  Additionally,  17 States did not match applicants 
against one or more IEVS data sources.  Finally,  as many as 46 States missed one or 
more monthly  applicant  matches  with IRS. 
i  Of 39 States responding  (all states  were surveyed  with 39 providing  follow up statistics), 
only six States report  success meeting prescribed  follow up timeframes.  14 States report 
not meeting  follow up timeframes  and 19 report  not having a tracking  system in place to 
know.  Several States commented  that workers  give low priority  to working IEVS match 
results and documenting  actions.  Worker  failure  to timely work IEVS match results was 
typically  due to competing  time pressures  and a perceived  lack of benefit to doing so. 
Most States could utilize IEVS sources in a more timely manner.  For example,  during the 
1991-92 IRS processing  cycle,  19 States delayed  matching  recipients  against IRS for 
several  months after the IRS data was fust  available.  Additionally,  only  11 States are 
actively using the Social Security Administrations  (SSA) State Veritlcation  and Exchange 
System (SVES) to query SSA ffles.  (An explanation  of SVES is provided  in Appendix 
A.) 
Cost Effectiveness 
The majority  of States repoti  one or more IEVS matches  are not cost effective.  States 
most often report  the Beneficiary  Earnings  Exchange  Record  (EEER) and IRS matches  as 
not cost effective.  Most State conclusions  about cost effectiveness  are based not on cost-
benefit  studies but on program  experience  or speculation.  To date,  little guidance  has 
been provided  States on how to conduct a cost-benefit  analysis. 
@inevaluation of IEVS cost e~ectiveness recently completedfor  the U.S. Department of 
Agricultures Food and Nutrition Senice  (FNS), but not yet releasedformally by FNS, 
may he~  to answer the cost e~ectiveness controversyfor IEVS matches.) 
Match  Data Accuracy 
While the majority  of Stties  (32) repoti  reliabil@  and accurucy problems  with the data 
Jmm  one or more IEVS mtiches,  no specific  match  was consistently perceived  as a 
problem  area by a mqjority  of States.  However,  States have few or no mechanisms  to 
monitor  and assess problems  with the accuracy  of data supplied by the various  IEVS data 
sources. 
Flexibility 
States  want more flexibility  implementing  IEVS requirements.  In many States,  IEVS is 
not a dynamic process  that can adjust for internal  pressures  such as changing  workloads, 
staffing,  and program  priorities.  The IEVS regulations  am considered  by States to be 
overly prescriptive  concerning  which IEVS matches to conduct,  when to conduct  those 
matches,  and how quickly to follow up on match results.  Most States (76 percent)  want 
to discontinue  one or more IEVS matches.  Nearly  all States (46) are using targeting 
strategies  to limit IEVS information  provided  workers. 
Variations  in waiver  authority  among progmms  and application  of authority  fimther limit 
State flexibility  and weaken coordination  among  Fedeml  programs. 
ii  Match  Efficiency  and Effectiveness 
While 37 States repoti  IEVS could be made more efficient  and effective,  28 States report 
they Lzck the resources  to support these effotis.  This efficiency  and effectiveness  can be 
achieved through  a variety  of systems changes and training  initiatives.  Some of these 
initiatives  will require  changes  in IEVS regulations  to allow States more flexibility. 
Additional  Federal  Data 
States want additional  Federal data.  However,  States have yet to be given access to 
additional  Federal  data they report  would be helpful (e.g.,  Veterans  Administration 
benefits,  Federal  employee  salaries and pensions,  U.S.  Savings Bond holdings,  and State 
death records  maintained  by SSA).  While  we suspect access to these data sources could 
be helpful if utilized,  we are reserved  about requiring  access when many States are failing 
to adequately  utilize those data sources already  required  by IEVS regulations. 
RECOMMENDATIONS 
Independently  verifying  client circumstances  through  computer  matching  with IEVS data 
sources helps to ensure  the integrity  of the eligibility  determination  process.  Although 
IEVS matching  is mandated  by Fedeml  law and regulation,  our interviews  with State and 
local users indicate  the practicality  and cost effectiveness  of IEVS under  current 
regulations  is uncertain.  The uncertainty  and resulting  controversy  have resulted  in IEVS 
implementation  and monitoring  problems  which need to be addressed  at many levels of 
government,  from Federal  oversight  agencies to State and local welfare  offkes. 
Recommendation  #1:  The Administration  for Children and Families  (ACF)  and the 
Health  Care Financing  Administration  (HCFA) should use appropriate  mechanisms  to 
address IEVS issues by: 
	 examining  existing  IEVS requirements  in each agency,  at both the central  and 
regional  office levels; 
	 addressing  the need for and degree  of flexibility  to be afforded  States 
concerning  IEVS; 
	 identifying  spedc  areas in which coordination  between  oversight  agencies  can 
be improved,  resources  can be consolidated  or more effectively  utilized  to 
monitor  IEVS,  and procedures  can be streamlined  to minhize  duplication  of 
effort  and contradictions  among Federal  agencies  IEVS policies  (e.g.,  waiver 
approval,  targeting  approval);  and 
	 engaging  outside,  involved parties  (e.g.,  the States,  the Department  of 
Agriculture,  the Office of Management  and Budget) to the fullest extent 
possible  as IEVS issues (e.g.,  flexibility)  and requirements  are debated. 
...
111  Recommendation  #2:  The ACF should continue to seek a rule change  which would 
allow the AFDC program  an equivalent  degree  of flexibility  currently  available to the 
Food Stamp program  with regards to IEVS (e.g.,  waiver of 45 day  follow Up 
timeframe).  Since the AFDC,  Food Stamp,  and Medicaid  pro-s  are highly integrated, 
State flexibility  is limited  when each program  is not able to allow the same degree  of 
flexibility.  States report  it is unrealistic  to implement  an IEVS waiver for one progmm 
without being able to implement  the same waiver for the other programs. 
Recommendation  #3:  The HCFA should seek regulatory  changes for the Medicaid 
program  which provide  for IEVS flexibility  equivalent to those sought by ACF for the 
AFDC program.  As mentioned  above,  IEVS flexibility  must be consistent  between 
programs  to be implemented  effectively  by States. 
Recommendation  #4:  The ACF and HCFA should inform  State public assistance 
agencies  of their willingness  to work with them to strengthen  automated  eligibility 
verifkation  activity. 
COMMENTS 
comments  on the draft report  received  from ACF,  the Assistant  Secretary  for Management 
and Budget  (ASMB), the Assistant  Secretary  for Planning  and Evaluation  (ASPE),  SSA, and 
HCFA  concur  with both the findings  and the general  thrust of our recommendations. 
However,  ACF,  HCFA,  and ASMB disagree  with the need for the departmental  governing 
council recommended  in the draft report  and the need for addressing  IEVS issues prior  to 
healthcare  and welfare  reform.  Additiondly,  HCFA  does not concur  with the 
recommendation  to seek a regulatory  change to allow for IEVS flexibility  consistent  with that 
sought by ACF. 
The need for a governing  council  stemmed from our view of the complexity  of the issues 
involved  and the need for intemgency  coordination  and consensus  regarding  IEVS policy  and 
compliance.  The governing  council  was envisioned  as a framework  to promote  and expedite 
leadership  as broad policy  (e.g.,  welfare  reform)  and technological  (e.g.,  enhanced  systems 
or new databases)  changes  occur.  Both SSA and ASPE concurred  with this recommendation. 
The ACF,  HCFA,  and ASMB disagreed  with the governing  council  approach  primarily 
because  existing  interagency  coordination  and communication  mechanisms  were believed  to 
be adequate.  Based on the agencies  assurances  and to provide  them maximum  flexibility, 
we removed  the recommendation  of a governing  council tasked with addressing  IEVS issues; 
we modifkd  the recommendation  to place  the burden  of addressing  IEVS vt.dnerabilities with 
the appropriate  agencies  through  existing  communication  mechanisms. 
With regard  to the timing  for addressing  IEVS issues,  the ACF,  HCFA,  and ASMB 
questioned  the value of devoting  limited  staff resources  to addressing  IEVS at a time when 
welfare  and health care programs  are planning  signifkant  changes through  reforms.  While 
we recognize  change  will occur,  we cannot in good conscience  suggest that addressing  IEVS 
weaknesses  be postponed  until reforms  have run their course.  Our view is based primarily 
iv  on the Departments  role and responsibility  to CUrbfraud,  abuse,  and progmm  vulnerabilities 
and the realization  that these reforms  may take years to implement,  with nothing to suggest 
the importance  of IEVS will diminish. 
Additionally,  IEVS issues should be addressed  without delay because  consistent  requirements 
and flexibility  between  the major  welfare programs  is important  to those States which are in 
the midst of systems changes or planning  such changes  which may be constrained  by existing 
policy.  While  ACF agrees to seek regulatory  changes to provide  an equivalent  degree of 
flexibility  found in the Food Stamp program,  HCFAs  decision not to seek similar changes 
may burden  States with IEVS regulatory  requirements  for the Medicaid  population  that may 
not exist for the food stamps and AFDC populations.  Since most States automated  systems 
integrate  the IEVS process  for all three programs,  is limited if each progmm  does 
flexibility 
not provide  for similar matching  and follow up requirements.  The resulting  disparity 
between program  requirements  exempliiles  Federal  agencies  failure  to coordinate 
adequately. 
Our concern  and purpose  in recommending  that HCFA  pursue  regulatory  change was to 
ensure that ACFs  and FNSs efforts to provide  States expanded IEVS flexibility  would not 
be limited by the Medicaid  programs  restrictions.  We do agree  with HCFAS assertion  that 
many States could make better  use of targeting  to increase  the effectiveness  of IEVS 
matching  while decreasing  the burdens  of follow up.  Our belief  stems from  1) States 
admissions  that IEVS processes  could be made mom efllcient  and effective  by better use of 
targeting  and 2) initial results  from FNS S study of the cost effectiveness  of targeting  IEVS 
matches.  Although  we agree that targeting  affords  States considerable  flexibility,  targeting 
regulations  are restrictive  in several  respects  (e.g.,  targeting  rules require  follow up of all 
targeted  match  results  for recipients  within 45 days of the match and targeting  is not allowed 
for applicant  matches).  While  we did not directly  evaluate  the impact  of providing  States 
with added IEVS flexibility,  we found States wanting more flexibility  and both ACF and 
FNS supportive  of policy  changes to address  State desires. 
We believe  that HCFA  needs to work with ACF and the FNS to promulgate  consistent 
regulations  covering  IEVS matches.  The decision  should be based on interagency  discussion 
and consensus.  If the Medicaid  program  has limited options for flexibility  comparable  to the 
AFDC  or Food Stamp programs,  no interagency  discussion  and consensus is possible  and 
States may be unnecessarily  burdened. 
v  TABLE  OF  CONTENTS 
EXECUTIVE  SUMMARY

INTRODUCTION  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1

METHODOLOGY  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ...4

FINDINGS  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ...6


State Implementation.  . . . . . ..  O. . . . . . . . . . . . . . . . . . . . . . . . . . . ..6

 
CostEff@iveness  . . . .Oo...ao.+..+..+.  . . . . . . . . +........  ..13

Mat&Da~Accuracy..  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15


Flexibility  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ...17


Match Efficiency  andEffe&veness  . . . . . . . . . . . . . . . . . . . . . . . . . . ...23

 
AdditionalF~e~  Da@..  . . . . . ..  OO. OOOO. .O.O  .,  . . . 0 . . ..0....24

RECOMMENDATIONS  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  27

ENDNOTES  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  32

APPENDICES

A:  SSASFile Transfer  Management  System and SVES  . . . . . . . . . . . . . . . . .  A-1

B:  IRS Benefit Cost Analysis  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..B-1

C:  SSAs Statement  ofDataAccuracy  Provided  the Data Integrity  Board.  . . . . . . .C-l 
D:  Agency Comments  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..D-l  INTRODUCTION 
PURPOSE 
The purpose  of this study was to assess the current  status of State Income  Eligibility 
Verifkation  Systems (IEVS). 
BACKGROUND 
Welfare Program  Ovemght 
Three  of the Federal  governments  major welfare programs  are Aid to Families  with 
Dependent  Children  (AFDC),l  Medicaid,* and Food Stamps.3  The Department  of Health 
and Human  Services  (DHHS) oversees  the AFDC  and Medicaid  programs,  while the U.S. 
Department  of Agricultme  (USDA) oversees  the Food Stamp program.  Although DHHS and 
USDA have overall  responsibility  for administering  the programs,  States are responsible  for 
determining  participants  eligibility. 
Determining  eligibility  and the amount  of assistance  for AFDC,  Medicaid,  and Food Stamps 
involves  a myriad  of eligibility  factors  and program-specific  rules.  Many different  factors 
are used to determine  participant  eligibility,  including  earned  income,  unearned  income,  and 
amount  of assets.  Information  relating  to these factors must be obtained,  evaluated,  and 
verifkxl by the State for applicants  and recipients.  Manually  performing  these  steps is a 
time-consuming,  ineftlcient,  and error-prone  process.  For these reasons,  States rely heavily 
on automated  systems to facilitate  the eligibility  and verification  process. 
Federal Suppoti  of Staie Automation  Activities 
The Federal  government  plays a signitlcant  role in supporting  State automation  activities. 
For fiscal years  1981 to 1990, DHHS and USDA estimate that they provided  over $950 
million to States to develop  and operate  eligibility  systems for AFDC,  Medicaid,  and Food 
Stamps.i 
While all States use automated  systems of varying  capacity  and sophistication,  most are 
developing  or operating  automated  eligibility  systems which integrate  the AFDC,  Me&caid, 
and Food Stamp programs.  Such computer  systems are able to determine  eligibility  for all 
three  welfare progmms.  This is particularly  efilcient,  given that many of the clients from 
one program  are also clients in the other programs;  the interdependence  among these welfare 
programs  is high:5 
  Everyone  who receives  AFDC  is eligible  for Medicaid; 
  Nine out of 10 AFDC  recipients  receive  Food Stamps; 
  Two out of three Medicaid  recipients  receive  Food Stamps;  and 
  Three  out of four Food  Stamp recipients  receive  Medicaid. 
1  Futors  Influencing  Computer Matching 
Verifying  AFDC,  Medicaid,  or Food Stamp applicant  and recipient  supplied information 
with other  sources through  computer  matching  helps States to better  identify those who are 
not eligible  for public  assistance  or who are receiving  incorrect  benefits.  Although  welfare 
agencies  in a few States have conducted  earnings  matches and other forms of computer-aided 
matches  since the early  1970s, most matching  activity  is relatively  recent  in origin,  with 
rapid growth  during the  1980s. 
The rise in the use of computer-aided  matching  is largely  attributable  to the growth  and 
sophistication  of State welfare  automated  computer  systems.  Other factors  contributing  to the 
use of computers  to independently  verify  client-reported  information  include:  1) the 
increasing  public  concern  with fraud and abuse in the welfare  system,  2) the increasing  use 
of client Social Security  numbers  (SSN) for use as identitlers,  and 3) limited program 
resources  (e.g.,  staff, finding). 
Early Matching  Activity 
The earliest  matching  activity  by State welfare  agencies  was conducted  at the States 
initiative,  without Federal  enabling  legislation  and requirements.  However,  in 1977, 
Congress passed  legislation  mandating  wage matching  for the AFDC program.  The 
amendment  to the Social Security Act required  all States to begin matching  by October  of 
1979, using etiher  State earnings  records  or earnings  available  from the Social Security 
Administrations  (SSA) Beneficiary  Earnings  Exchange  Record  (13EER)b. The legislation 
also required  States to maintain  automated  ffles of clients  Social Security  numbers. 
Expansion  of wage matching  to the Food Stamp progm.m quickly followed  with passage  of 
the  1981 Omnibus Reconciliation  Act. 
Development  of IEVS 
While wage matching  progmms  were helpful in preventing  incorrect  eligibility  payments,

results  from the Grace  Commission  showed States were not doing enough to prevent

incorrect  payments.  Specifkally,  the Commission  estimated  $4.4 billion in Fedeml  and State

funds were misspent  annually  and recommended  States strengthen  eligibility  verification

procedures.  As a result,  Congress  enacted the Deficit  Reduction  Act (DEFRA)  of 1984

which expanded  matching  requirements  (Social Security  Act,  section  1137).  The DEFRA

requires  States to conduct  other types of matching  in addition to wage matching  and to use

matching  in the Medicaid  program,  as well as in the AFDC  and Food Stamp progmms.

Each  State must operate  an IEVS which routinely  matches  client-reported  income  information

against:

	 Internal Revenue  Service  (IRS) data on interest,  dividends,  and other types 
of unearned  income; 
	 Social Security  Administration  data via the Beneficiary  and Earnings  Data 
Exchange  (BENDEX)  which contains  both Retirement,  Survivors,  and 
2  Disability  Insurance  (RSDI, Title II) benefits and earnings  from the beneficiary 
earnings  record  fde  (ERF),  and the State Data Exchange  (SDX) which contains 
Supplemental  Security Income  (SS1) benefit information;  and 
  State  quarterly  wage reports and unemployment  insurance  benefits  (UIB). 
Follow  Up on IEVS Match Results 
States are required  to follow up on all DEWSinformation  related  to applicants.  However,  the 
Omnibus Reconciliation  Act of 1986 amended  the Social Security Act to clarify  that IEVS 
data received  on recipients  may be ta.rgeteds (selectively  applied) to those uses which are 
likely to be most productive.  Targeting  was intended  to increase  the efllciency  with which 
IEVS data are used to identify and prevent  ineligibility  and incorrect  benefit payments. 
Follow up on IEVS information  is required  within  45 &Jysof matching  with the IEVS 
source.  However,  follow up on up to 20 percent  of IEVS information  can be delayed 
beyond the 45 day targeting  rule for the purpose  of receiving  verit-lcation from third party 
sources  (e.g.,  banks). 
TYPICAL  IEVS PROCESS 
The IEVS process begins when a county or local caseworker forwards information collected from 
applicantsto the State.  Afterthe informationisentered intoa masterfile, the Stateexchangesa 
file with the appropriate Federal or State agencies for matching.  If, for example, an AFDC 
applicant earned interest in an unreported savings account, the account and interest should be 
detected when the file is matched with IRS information.  This is commonly referred to as a hit. 
IRS will return a tape to the State, with the individuals account number, the name and address of 
the financial institution paying the interest, and the year the income was reported. 
IEVS requires all match information returned prior to the applicant becoming a recipient to be 
resolved.  For information received after the eligibility determination is made, each State can 
either investigate all computer hits or screen (target) out those hits least likely to result in a 
change in a recipients eligibility.  The State then distributes  the information  (often referred to as 
alerts) which are targeted  for review to the appropriate  county or local offke  for follow up. 
Caseworker  follow up on the IRS example cited above would consist of 1) reviewing the 
information and comparing it with the case record, 2) contacting the applicant or recipient and/or 
other sources (e.g., banks) to verify new or previously unverified information, 3) resolving any 
significant discrepancies, 4) determining if the information affects eligibility or benefit amounts, 
and 5) noti&ing the applicant or recipient of any intended adverse action or entering in the case 
file that no further action is necessary.  The Computer Matching and Privacy Protection Act of 
1988provides that any adverseactionbased on informationreceivedthrough a computermatch 
can only be taken after the individual has been notified and given 30 days to respond.  However, 
a shorter notification is permissible if a fair hearing agreement exists. 
3
 Prior ZEVS Reviews 
Several reports  have been released  on the implementation  of IEVS.  Reports  by HCFA, 
FNS,  American  Public Welfare  Association  (APWA),  and others describe  much of this 
activity.  In 1991, we released  a report,  The Income  and Eligibility  Veritlcation  System 
(IEVS):  A Time For Reform?,  which synthesized  the findings and recommendations  of 
several reports  examining  States implementation  of IEVS.  Additionally,  the synthesis was 
supplemented  by discussions  with Federal  and State welfare  officials. 
The  1991 review  cited that major problems  existed with States implementation  of IEVS. 
For example,  reviewed  reports  indicated  that: 
	 information  in the Federal  data bases has been inaccumte,  duplicative, 
untimely,  or inaccessible; 
	 Federal  requirements,  in important  respects,  are highly prescriptive,  unclear, 
or inconsistent;  and 
	 the administmtive  capacity  of many States to implement  IEVS is limited by 
insufficient  staff and inadequate  computer  resources. 
Site visits to three  States confirmed  that problems  with Federal  data bases,  Federal 
requirements,  and sufficient  resources  hindered  State efforts to operate  IEVS.  We concluded 
that problems  appeared  substantial  enough to warrant  further  examination  of IEVS,  and we 
planned  to undertake  further  study in this area.  Additionally,  we suggested that the Federal 
oversight  agencies  consider  a basic reexamination  of IEVS which might address  ways in 
which: 
  the Federal  government  could give States more flexibility  in carrying  out IEVS 
matches and,  at the same time,  hold them more accountable  for results; 
  Fedem.1data bases used in IEVS matches  might be made more useful;  and 
  additional  Federal  data could be made available  to States. 
METHODOLOGY 
This examination  of IEVS began with a review  of the legislative  history  of IEVS,  IEVS 
regulations,  and other IEVS reviews  conducted  by Federal  and State agencies  not previously 
examined. 
To determine  current  State IEVS practices  and concerns,  we next surveyed  each State using 
interviews  and mail surveys with the State official  most knowledgeable  about the States 
IEVS process  (this person  was often designated  by the State as their IEVS coordinator). 
Depending  on the knowledge  of the State IEVS coordinator,  further  discussions  were 
conducted  with other  State staff to more fully understand  a States IEVS processes  and  experience.  ~eseadditiond  titemiews  were t~icWywith  automation  systems'  staff 
famihar  with IEVS. 
While most States were contacted  by phone  or mail,  five States (Arizona,  Arkansas,  Georgia, 
Maryland,  and Tennessee)  were visited for onsite interviews.  Selection  was purposive  and 
based on a variety  of factors: 
	 Arizona  was selected because of its participation  as a pilot State in a targeting 
study conducted  by FNS. 
	 Tennessee  was selected because  it 1) had implemented  SSAS File Transfer 
Management  System (FTMS)  and 2) was the pilot  State for the wire to wire 
data exchange  and query system (WTPY),  (See Appendix  A for an 
explanation  of FTMS and WTPY.) 
	 Arkansas,  Georgia,  and Maryland  were  selected to get a mix of States based 
on the differing  administration  of welfare  assistance programs.  Arkansas  (like 
Tennessee  and Arizona)  was State administered.  On the other hand,  Georgia 
and Maryland  were county administered  and State supervised. 
Within  each of these five States,  one county/local  office in the vicinity  of the State office was 
also visited to interview  the office manager,  a supervisor,  and three  eligibility  workers. 
Questions to local offke  staff provided  a perspective  on whether  and how IEVS impacts the 
case worker  and another  viewpoint  on IEVS problems.  Respondents  at both the local and 
State levels were asked to provide  documentation  of 1) any problems  such as timeliness  or 
accuracy  problems  and 2) the effects of such problems  on program  eligibility  or payment 
determinations. 
Along with State interviews  and surveys,  we reviewed  any available  IEVS statistics provided 
by States, present  State targeting  procedures,  and any written  State IEVS program  guidance 
or ~uirements  for local offkes. 
Our review  was conducted  in accordance  with the Quality Staruizrakfor Inspections issued 
by the Presidents  Council  on Integrity  and Efi3ciency. 
5
 FINDINGS

This examination  of IEVS reaffms  findings %m  prior  reviews  and substantiates 
continued  operational  weaknesses  with IEVS.  The IEVS remains  a controversial 
requirement  for States.  TMs controversy  is especially  acute because  of State budgetary 
restraints,  resource  limitations,  and program  growth. 
SeveraJ States are not utilizing all required IEVS sources. 
While  nearly all States are conducting  the required  IEVS matches,  several  States are not 
fully utilizing  match results or conducting  matches as often as required. 
	 Several States did not conduct recipient  matching or utilize the resulting 
infomtion  j?om one or more IEVS akztasources. 
During  1992 and/or  1993, we identifkd  12 States not performing  recipient  matching  or 
follow up on one or more IEVS sources.  The most often underutilized  match  was the 
BEER with  10 of the 12 States not matching  recipients  or following  up on information 
obtained  from BEER.  Six States had not fully utilized  IRS.  Three  States underutilized 
the State wage,  and one State did not use BENDEX  to obtain SSA benefit information. 
Examples  of State nonmatching  or failure to follow up are provided  in the chart  on the 
next page. 
  Several more States (17) do not match applicants 
against one or more IEVS duta sources. 
~ 
States
Regulations  require  matching  applicants  at the earliest 
available  opportunity  (e.g.,  IRS match is monthly).

x

However,  as many as 17 States report  not routinely  matching 
XKF

applicants.  Matching  is either  delayed until the applicant 
becomes  a recipient  or is not done.  (See Figure  1.)

While  a few States eligibility  systems may not be designed to

gather  information  on applicants  prior  to an eligibility

determination,  most States report  they are not matching  ~  Cwslfveyofstattw

applicants  because  of a perceived  lack of benefit to doing so.  Figure  1

States either  consider  the match to be not cost effective,  or

report  that matching  applicants  with the specified IEVS  source

is not productive  since resulting  information  from the IEVS match is not typically  returned

until after the eligibility  determination  has been made.

6
 Examples  of State Nonmatching  or Failure 
to Utilize IEVS Match Information 
In State A, BEER alerts are not being sent to local workers.  According to one State ofllcial, 
BEER alerts would just clutter up the alert screen of workers. 
State B only recently entered into a requisite matching agreement with IRS effective August 
7,  1993.  In prior years,  this State had no agreement and, consequently,  conducted no 
matches with IRS. 
During our site visit to a county offkx in State  C,  we found that IRS and BEER alerts had 
never been worked.  The alerts were simply stored in a locked room and never reviewed. 
In State  D, IEVS reports were not work~  from April  1991 to February  1993.  State 
officials report this decision was because they were in the process of converting to a new 
computer  system.  The IEVS subsystem which will monitor IEVS matches is not expected to 
be totally fictional  until January  1994. 
While State  E did not discontinue the BEER match,  in 1991 it stopped requiring  local offices 
to clear monthly discrepancy  reports/alerts.  State ofllcials reported this was done because of 
results from an internaJ 1991 cost-benefit analysis on the BEER match which showed the 
State was spending a lot of money trying to clear up discrepancies  from BEER,  but werent 
getting much in return.  
In State F, follow up for several matches was discontinue&  For example,  the State wage 
match was discontinued  in 1992 because of a reported information  overload to the county 
OffIces.  BEER was discontinued  in 1990 because the information  was considered  to be too 
old and unreliable  with most of the information available somewhere  else.   Additionally, 
IRS information  is not utilized.  Specifically,  since their Family Assistance Management 
Information  System (FAMIS) was installed approximately  two years ago, they no longer 
report having the ability to process and distribute IRS tapes without involving the corporation 
with whom they contract with to maintain and operate the system.  Since IRS does not rdlow 
contractor  access to IRS tapes, they had to stop processing  or distributing  the information to 
the county ofllces.  State Fs approved targeting plan specifically precludes  follow up on all 
BEER results. 
In State  G,  the BEER matches were suspended in 1991 and not resumed until  1993.  State 
ofllcirds reported  this resulted from 55As change in the record format of the BEER file.  It 
took a significant  amount of time for the State to make changes to its computer  system to 
accommodate the new file format.  Changes were not perceived  as a priority. 
Starting in 1993, State  H stopped distributing  BEER results to staff within 45 days of the 
match. 
In State  I, some local agencies shred IEVS reports upon receipt.  
In State  J, State ofilcials report  wage reports  are probably  not being worked in more than 
50 percent of the counties.  
7
   States are not matching wthIRS each month. 
Statistics from IRS show that as many as 46 States missed one or more applicant  matches 
with IRS during the 1992-93 processing  cycle.  (See Figure  2.)  Data provided  from IRS 
was insufficient  to determine  whether  the match tape from the State was received  late by 
IRS and processed  with the next months run or was never  submitted. 
Each Month Many States  Fail To Match 
Applicants With IRS 
States Not 
Matching
50 
40 
1 
30 
25 
20  19  18 18 
13  14 
10
lo- 8 
0- 1 1  1  , I 1
,9$$  Aug  Sep  Ott  Nov  Dec  Feb  Mar  Apr  May  Ju~993 
Month of Processing 
SoLKoatBaaad on Data SqWad  by RS 
RS does not #)fOCeWS h  JMLIiW 
Figure 2 
Regulations  clearly  state that the matching  of applicants  must be at the next available 
opportunity  after an application  has been fded.  The next available  opportunity  for IRS is 
monthly  except for January  when IRS does not process  requests. 
Of the States not matching  consistently  with IRS,  13 States report  they do not match 
applicants  with IRS.  Others not consistently  matching  applicants  report  systems problems 
or other delays generating  the IRS request  tape as reasons for missing an applicant  match. 
Some States considered  failure  to match an oversight  problem  and were not aware of the 
missed match  or matches. 
Processing  time-es  required by Fe&ml  regulations  are not met in most StaJes. 
Weare certainly  not meeting  the intent of the kzw concerning 
the 45 day timejiame for  IEVSmatches.  
- A State IEVS Coordinator 
	 Of 39 States surveyed, only six States report meeting the rule thut 80 percent of 
IEVS match results are followed up wthin45 duys. 
Most States are not meeting  the prescribed  follow up timeframe  for one or more IEVS 
matches  or do not know.  Of 39 States surveyed,  only six States report  that during the 
8
 frost three  quarters  of 1993, the percentage  of follow up completed  within 45 days equaled 
or exceeded  80 percent.  Of the remaining  33 States,  14 did not meet the 80 percent  rule 
and 19 reported  Dont Know because the State lacks a statewide tracking  system capable 
of monitoring  timely completion  of follow up. 
To illustrate  States inability  to complete  follow up timely,  of the five States in the 
southwest region  (Texas,  New Mexico,  Arkansas,  Louisiana,  and Oklahoma),  not one is 
able to meet the 45 day requirement  for processing  IEVS data as required  for all recipient 
matches.  Officials from these States believe timeframe  requirements  are  neither practical 
nor manageable.  
	 Several States commented that workers give low priority to working IEVS and 
documentingresults. 
The following  are typical  responses  from State and local welfare  officials  concerning 
workloads  and the priority  workers  or State oversight  agencies place  on IEVS follow up: 
We can barely  issue benefits  in a timely manner,  let alone do things like 
IEVS matches  which are real nice but impractical.   
A lot of IEVS follow  up fin t getting  done because  99 out of lCW times 
the worker already  knows the information.  We are just  spinning  our 
wheels.  
There is just  so much workers have to check,  and they alreudy  don t 
huve the time to do their al.zily work as it is.  
lhere  mght be something  worthwhilejiom  the BEER match,  but given 
the high caselbazk  and low priority  of BEER alerts,  these alerts just 
clutter  up the workers  alert screens. R 
Its a joke  here because  of the caseload%.  We are going to have to hire 
alert  workers  on top of eligibility  workers just  to keep the alerts  anywhere 
close to current.  
According  to one States IEVS coordinator,  State IEVS follow up statistics  emphasize  the 
lack of priority  workers  place on completing  IEVS alerts.  Due to staff shortages,  workers 
have a considerable  amount  of work to complete  regarding  eligibility  determinations  and 
recertifkat.ions  of recipients.  As a result,  IEVS is very low on their  list of duties,  and 
workers  are  simply too busy to provide  more than a quick and dirty  review  of IEVS 
information. 
This sentiment  was echoed by another  States XEVScoordinator  who reported  that because 
of the 45 day follow up timeframe,  workers  are  pencil whipping their IEVS nxponses  to 
get them back  to the State agency more quickly. 
In a county  welfare  office we visited,  one of the suggestions from a county Food  Stamp 
Management  Evaluation  report  (dated April  1992) was that processing  of IEVS and claims 
9  should not be done unless or until all on-going changes  which would affect eligibility  or 
benefits  are completed.  Officials believed placing  IEVS lowest on a workers  list of 
priorities  would  work to assure correct  benefits to clients and prevent  quality control 
errors.   However,  officials recognized  that a backlog of IEVS reports  would be 
created.  
o	 i%e adequacy of a workers resolution or documentation of alert resolution is 
suspect or nonexistent in many States. 
Virtually  all (12 of 15) of the local welfare  office workers  interviewed  stated they lacked 
enough time to do more than a cursory  review  and resolution  of IEVS information. 
According  to State officials from the southwest region,  stringent timeframes  for follow up 
negatively  impact  the quality of review  done by workers.  Officials report  that in a futile 
attempt  to meet follow up timeframes,  eligibility  staff fmd themselves  in the dilemma  of 
performing  a quality analysis  of the match data versus performing  a cursory  assessment  of 
the data to meet a monitored  timeframe.  
A lack of training  and management  controls  over workers  can result in resolutions  being 
conducted  in a cursory  fashion,  ultimately  resulting  in incorrect  statistics.  In one State, 
workers  are  pencil whipping  IEVS responses.  According  to State officials,  this only 
serves to force the recording  of many responses  as current benefits  correct,  referred  for 
investigation,  a coding which also showed no savings.   The consequence  of such coding 
is to seriously  under-report  effectiveness  and savings due to IEVS. 
While most States (39) require  workers  to speci@ how information  received  from a match 
is resolved,  8 do not require  documentation  of resolution.  The four remaining  States 
failed to respond  to our question.  It should be noted that,  in some cases,  States may only 
require  workers  to specify the outcome  of selected matches. 
In addition to impacting  the quality of follow up review  conducted  by workers,  work 
pressures  negatively  impact the accuracy  and completeness  of tracking  reports. 
Considering  it unfortunate,  one States officials reported  experiencing  workloads  which 
prevented  the accurate  completion  of tracking  reports.  As a consequence,  the State 
discontinued  use of its State-wide tracking  reports  on alerts.  Tracking  of completed 
resolution  activities  is now a fimction of the local offices.  Ofiicials  readily  admit that 
without an adequate  tracking  system,  management  is unable to properly  assess the 
adequacy  of follow up or to maintain  statistics  needed to assess the costs and benefits  of 
matches.  They  stated counties  do the follow up reports  when they have the time and,  in 
some cases,  counties  may never have the time -- We know that! 
Another  State provides  an example  of flawed IEVS S savings reports.  According  to State 
officials,  savings calculations  are considered  an inappropriate  measure  of the savings that 
have resulted  from IEVS,  as workers  often fail to complete,  or to accurately  complete  the 
savings calculation  screen  of its IEVS alert resolution  computer  system.  Officials 
consider  this a training  issue and plan to address the problem  in the  near fhture.  
10
 Most States couili utiliz  IEVS sources in a more timely manner. 
Several State respondents  express~  concern  with their States inability  to meet timeframe 
requirements  for all matches.  In an effort to be more timely in making match data 
available  to workers,  most States (43) provide  online access to data resulting  from one or 
more IEVS matches.  However,  States are not always timely in accessing  the data source. 
	 During the 1991-92 IRS processing cycle, 19 States delayed matching recipients 
againstIRSfor several monthsafier the IRS alztawasjirst avmlable. 
Many States fail to access IRS information  when it is first available.  Specillcally,  many 
States matching  their recipient  population  once a year delay matching  with IRS beyond the 
months when the data fnst  becomes  available  (July)and the month when the IRS fde of 
unearned income  is typically  99 percent  complete  (September).9  (See Figure  3.) 
Many  States  Delay  Annual Recipient  Matches  With  iRS 
States  States 
lo-
1990 Tax Year  1991 Tax Year  10
9. C#a Fkst Available  l)ata First Available  9 
8-   8 
Best  tjm8tomafchwlfh/RS  """'" "`""y """""""""""""`"""""""""""'`"``"``"`""""""-"""`"" 
7.  7 
6- 6 
5.  5 
4- 4 
3.  3 
2- . 2 
1.  1 
0 
JUL AUG SEP OCT NOV DEC FEB MAR APR MAY JUN  Jt,JL AIJG SEP OCT NOV DEC FEB  MAR APR MAY JUN  -
1991  Month State  Submitted  Recipients  for Annual Match  1993 
sOUfCtI  Oats  supplled by IRS,  tex  years  1990 and  1991.  NO IRS matching In January.  St8tea  not conducting 
annual raclplant  matches  or Sta tee submitting all recipients  every  month are  not lnoluded.  Although  July 
Is when new  tax year  data  Is first  avsllable,  we did not Ilst It as  the a best  time to match because  of IRS 
concerns.  IRS recognlzea  the potential  for start  up ~roblems  durlrsg the flrat month of provldlng new  data. 
J 
Figure 3 
  Most States are rwtfilly  utilizing SSAs File TransferManagement System. 
While most States have implemented  SSAs wire-to-wire  File Transfer  Management 
System (FTMS),  its usage by States is still limited.  (See Appendix  A for a description  of 
the FTMS.)  For example,  the State Verit%ation  and Exchange  Systems  (SVES) wire 
third party  query  (WTPY) is presently  used routinely  by only  11 States.  Additionally, 
many States-us~g  the FTMS still continue  to use ta&s for s~me fde transfers.  Part of the 
delay in States using the query option resulted  from delays by SSA (i.e.,  SSA did not add 
States to WTPY  for much of 1993 while it implemented  SVES).  However,  the most 
signifkant  delay reported  by StateS is the result  of a lack of systems resourees  and the low 
priority  placed  on WTPY  development.  Of 12 States contacted  and actively  using FTMS, 
seven reported  resouree  limitations  and the low priority  placed  on WTPY  development 
accounted  for delays implementing  WTPY.  Other State reasons varied.  One State was 
11
 still experiencing  problems  with FTMS and did not want to develop WTPY until problems 
were resolved  with SSA.  Another  State was waiting for documentation  about WTPY  from 
SSA and the names of contact personnel  concerning  WTPY before  doing anything to 
implement  WTPY.  Remaining  States reported  they did not know why WTPY  had not 
been implemented. 
The FTMS and SVES systems represent  an effort by SSA to improve  the timeliness  md 
efficiency  of data exchange  with States.  By using the FTMS to exchange  fdes with SSA, 
States eliminate  many of the hassles of sending and receiving  tapes.  Although use of 
SVES to query BENDEX,  SDX, or BEER results in the normal  output from those 
exchanges  to the State and the output ffles retain their independent  nature,  the delays 
caused by waiting for tapes will not exist.  Files will be sent by SSA as they are created. 
With FTMS,  if fdes are damaged  or not received,  it is a simple matter  to ask SSA to 
resubmit  the appropriate  fdes.  States often have tight timeframes  during  which to process 
data.  Thus,  the reliability  of FTMS  ensures processing  is not missed because  of a lost or 
delayed  SSA tape. 
Additionally,  with use of SVES to query  SSA, a State can accomplish  any or all of the 
following  queries  with a single input:  1) SSN verifkation,  2) WTPY  query,  3) BENDEX 
accretion/deletion,  4) SDX welfare  number  transactions,  5) SDX Interim  Assistance 
Reimbursement  (IAR) transactions,  and 6) BEER requests.  One big advantage  of the new 
SVES query process  is an improved  method  of SSN veritlcation.  In the past (or by not 
using SVES),  the method  of locating  or veri@ng  a persons  record  varied  from exchange 
to exchange  (e.g.,  BENDEX,  SDX, or Enumeration  Verillcation  System (EVS)).  While a 
persons  record  might be verifkd  through  one exchange,  it might not be verii%d through 
another.  Each exchange  has slightly different  verifhtion  procahues. 
With SVES,  the veritlcation  process  has been standardized  and improved.  The SSN 
veritlcation  process  of SVES differs  from other exchange veri.tlcation procedures  by: 
1.	 utilizing  all of the SSA databases  (NuMIDENT,  Master  Beneficiary  Record 
(MBR),  and Supplemental  Security  Record  (SSR)) to determine  identity, 
thereby,  permitting  a positive  verifkation  against any of the three  databases; 
2.	 allowing for surname  differences  between  State input data and SSA data 
when fnst  name and date of birth  agree.  This primarily  affects records  for 
females  where maiden  and married  names diffeq  and 
3.	 searching for a better  number  when the State input data does not agree 
with SSA records. 
Through  this verifkation  process,  any transaction  for a verified  SSN will be accepted  by 
the independent  exchange  (BENDEX,  SDX) without the need for further  verifkation. 
Because of the improved  verifkation  process,  SSA estimates  SVES will return 
approximately  12 percent  more verified  social security  numbers  (SSNS) than the current 
Enumeration  Verifkation  System (EVS). 
12
 l%e majority  of States report one or more IEVS matches  are not cost effective. 
Although IEVS has been operating  in each State for many years,  the cost effectiveness  of 
IEVS is still an issue.  While  six States report  all IEVS matches are cost effective,  the 
majority  of States (35) report  one or more IEVS matches are not cost effeetive. 10 
  Most States believe the BEER and IRS mutches are not cost eflective. 
A majority  of States (29) report  that,  overall,  IEVS is a cost effective program.

However,  with regard  to specific matches,  the applicant  and recipient  BEER and IRS

matches  are typically perceived  as not cost effective.  State conclusions  of cost

effectiveness  are typicaUy based not on cost-benefit  studies, but on program  experience

and perception.  Only 20 States conclusions  were based partially  or wholly on some type

of cost effectiveness  study.  Further,  only  11 of these States evaluated  one or more

matches using protectable  sampling techniques.

Figure  4 presents  State perceptions  of the cost effectiveness  of various  IEVS matches.

States responses  concerning  perceived  cost effectiveness  of the IEVS matches  did not

include  deterrence  as a factor in the indicated  conclusions.

State  Perceptions  of  IEVS  Cost  Effectiveness 
Percentot  APPLICAiUl_  @ECIPKhfTlUlATCt+l$K3  (IVH3ALL 
states  i?y  MA7CMNG 
Match 
lN=51~  YES  NO  DK/NA  YES  NO  DK/NA  YES  NO  DKINA 
AU  41%  25%  33?40  59%  20A  22%  57%  2070  24h 
MATCHES 
WE  73%  10%  18%  82%  10%  8%  75%  12%  14% 
SW  71%  6%  24%  82%  6%  12%  76%  6h  18% 
BENEFITS: 
STATE  61%  20%0  20%  80%  14h  6%  75%  140~  12?40 
WAGE 
SSA  59%  16h  25%  78%  12h  10%  67%  16%  18% 
BENEFITS 
m  33%  39%  27  41%  47 Yo  12%  39%  41 y  20% 
I  y 
BEER  33h  16%  63%  22%  18%  57%  25 yO 
DK=Dont  Khow  NA=Not  matching  Source:  St@  Survey Responses 
Figure 4 
13
 The Computer  Matching  and Privacy  Protection  Act of 1988, enacted  to regulate  computer 
matching  with Federal  agencies,  requires  participating  agencies  to provide  cost and benefit 
figures  when matching  agreements  are renewed.  Affected IBVS matches  are the 
BENDEX  (SSA benefits  and earnings),  SDX (SS1 benefits),  and IRS matches.  Thus far, 
States have submitted cost and benefit  statements  for the last two matching  agreements 
signed.  Appendix B shows data submitted  by States for the IRS agreement  covering 
release  of 1990 tax year data.  Based on the figures provided,  cost and benefit  numbers 
for 22 States show the IRS match to be cost effective,  17 show the match was not cost 
effective,  and  12 show either  no data or incomplete  data. 
(cid:1) A recent evaluation conductedfor the Food and Nutrition Service (FNS), but not 
yet released by FNS, may help to answer the cost e~ectiveness controversyfor 
IEVS matches. 
According  to FNS ofilcials,  a contractor  to FNS has completed  (June 1993) an extensive 
evaluation  of IEVS cost effectiveness  using various  targeting  methodologies.ll  However, 
the results  of this study have not,  yet, been formally  released  by FNS.  Two States 
participated  in the study (Arizona and Michigan).  The matches  studied in Arizona  were 
the recipient  match  with State wage,  BEER,  and IRS.  In Michigan,  the matches  studied 
were for applicant  matching  with State wage,  UI,  SSA benefits  and earnings,  SS1 benefits, 
and IRS.  AU matches  were targeted  except Michigans  state wage match. 
Arizona  and Michigan  participated  in this evaluation,  in part,  to prove their contention 
that IEVS matching  is not cost effective  for certain  matches.  Each State reported  having 
conducted  studies in the past which supported  their  contention.  The study conducted  by 
Arizona  was far less rigorous  and Michigans  study relied on different  assumptions,  than 
those used for the FNS targeting  study.  Michigans  study uses a higher  estimate  of the 
time to complete  follow up by workers  (34 minutes)  and a lower estimated  time  span until 
inappropriate  payments  or eligibility  is typically  detected.  Because FNS has not yet 
released  its cost effectiveness  study,  we were unable to assess the validity  of FNSs use of 
lower  estimates  than used by Michigan. 
(cid:1) Little guidunce has been provided States on how to conduct a cost-bengjit analysis 
for IEVS matching. 
According  to a recently  released  U.S.  General  Accounting  Office (GAO) review  of

computer  matching  agreements  and the quality of the cost-benefit  analyses provided  with

the matching  agrwments,  the quality of analyses  is poor.  The GAO points  out that little

guidance  has been provided  States on how the costs and benefits  of matching  should be

determined. 12 The GAO notes SSAS cost and benefit  worksheet13 as a notable

exception  and recommends  that the Director  of the Offke  of Management  and Budget

(OMB) 1) expedite  the publication  of minimum  standard  criteria  for cost-benefit  analyses,

and 2) direct agencies  to establish procedures  to track  costs concurrently  and measure

costs and benefits  retrospectively  to determine  whether  estimated  benefits  are actually

achieved.  GAO stated,  in their  report,  that OMB generally  agreed  with the

recommendations  and indicated  guidance  on conducting  cost-benefit  analysis  would be forthcoming. 

14
 The major@  of States  (32) repoti  Ma  reliability  and accunzcy pmbkms  with one or 
more IEVS matches;  however,  no specific  match  was conszstentlyperceived  as a problem 
area. 
During  a recent  12 month period  (April  1992 to May  1993), a majority  (32) of States 
report  having experienced  data reliability  or accuracy  problems  which undermined  the 
usefidness  of one or more IEVS matches.  However,  none of the individual  matches  were 
consistently  reported  to be a problem  by a majority  of States.  (See Figure  5.) 
No  IEVS  Match  is Consistently  Perceived  by  States  As  Having

Significant  Data  Reliability  or  Accuracy  Problems

States

50 
40 
30 
20 
10 
0 
IRS  State  SSA  BEER  (JIB  Ssl 
Wage  Benefits  Benefits 
IEVS MATCH 
Source:Basedo nOIGSu+eoyfStates
I

.
I!lgure 5 
Follow up discussions  with States indicate  the number  of States reporting  problems  may 
be inflated.  For example,  some States referenced  problems  related  only to the age of the 
data.  As one State respondent  said,  the data is simply too old to be reliable.  Data 
sources which accumulate  data over time,  through  various  reporting  mechanisms  (e.g., 
IRS),  will always provide  dated information.  There  is little argument  that the older the 
data,  the less value the data has as a reflection  of a clients present  economic  situation. 
However,  this does not mean the data is necessarily  inaccurate  and unreliable. 
The most often encountered  problem  with IEVS matches  is matching  with the wrong 
persons  record. 14 This occurs  most often with matches  relying  on reporting  from third 
ptiy  SOU~S (e.g.,  banks,  employem).  Typically,  an employer  has submitted  the income 
of a worker  under the wrong  SSN.  The source of the error  can be due to the worker 
giving the wrong  SSN, the employer  incorrectly  recording  the SSN given by the worker, 
or the agency inputing  the received  wage ~rts  SSN incorrectly. 
15
 States have few  or no mechanisms  to monitor and assess problems  with the accumcy  of 
&la  supplied  by the various IEVS &da sources. 
While  many States report  experiencing  problems  with various  IEVS matches,  no State has

monitored,  studied,  or quantified  the types or extent of problems.  Claims of data source

problems  continue  to be based on anecdotal  cases.

Since the majority  of States are not experiencing  consistent problems  with any one match,

it could be argued that problems,  if they exist,  are not systematic or signifkant.

However,  it is also possible  that workers  and match coordinators  have simply accepted

certain  problems  as a part  of the matching process  or receive  so few IEVS alerts that the

scope of data accuracy  problems  is not recognized.  As one eligibility  worker  stated,  I

see reports  so infrequently  that I just  cant remember  if a problem  is significant.  I knOW

they happen,  but how often I cant say. 

State Ls experience  provides  one indication  of why States need to actively  monitor

problems  with the accuracy  of match information.  State L implemented  IEVS in 1986.

Yet,  ever  since then,  the incorrect  BBNDEX  amount was being calculated  for clients with

the resultant  problem  of generating  incorrect  alerts on all BENDBX  matches.  Only

recently  was it discovered  that a design flaw in the States computer  system caused the

errors,  not the source information  provided  in the match.  A BENDEX  amount was

inadvertently  shown with the decimal place  moved one position  to the right.  Thus,  a

BBNDEX  amount  for $100 would appear  as $1000.

The IRS  Unearned Income  and SSA Wage dkta systems  were not &signed  to meet the 
timeliness  requirements  of entitlement  pmgmrns. 
Virtually  all States report  the IRS and BEER matches are not timely for use in the 
eligibility  determination  process.  As seveml respondents  stated,  the information  is just 
too old by the time workers  get it.  Unfortunately,  no other more current  data source is 
available  for IRS information.  While State quarterly  wage data matches provide  a more 
current  source of State wages,  BEER is the only source of earnings  from out-of-state 
employers,  self-employment,  agricultural  jobs,  and Federal  employees. 
The IRS maintains  computerized  fdes of information  on unearned  income paid  LO 
taxpayers.  Payers  of this income  (e.g.,  banks) are required  to report  the payments  by 
filing annual information  returns.  The IRS information  has timeliness  limitations  which 
are not likely to be overcome  without  signifkant  changes to current  IRS reporting  and 
processing  procedures  (e.g.,  running  matches  more often than the current  monthly process 
or requiring  earlier  reporting).  Typically,  IRS does not receive  unearned  income  reports 
for a tax year before  the end of February  of the following  year.  Thus,  this information 
may be anywhere  from  2 to 14 months old when reported.  Moreover,  IRS processing 
does not result  in a relatively  complete  master  ffle until September  following  the tax year 
for which the information  returns  are applicable.  In other words,  by the time the master 
fde is complete,  the unearned  income  information  has aged an additional  seven months. 
16
 Obviously,  IRS system for collecting  and processing  unearned  income was not designed 
to meet the timeliness  requirements  of entitlement  progm.ms. 
The SSA maintains  centralized  ffles of wages,  self-employment  earnings,  and pension 
payment  data.  Employers  annually  report  wages directly  to SSA, while self-employed 
individuals  report  their earning  to IRS, which provides  the data to SSA.  The SSAs 
earnings  data are comprehensive  in that they include virtually  all employees,  the military, 
Federal  civilian  employees,  and the self-employed.  Since employers  and self-employed 
individuals  are required  to report  earnings  information  only annually,  the data suffers from 
the same timeliness  problems  as the IRS data. 
In many Stties,  IEVS is not a dynamic process  thti  cam be tijusted  for  internal 
pressures  such as chan~ng workloads,  staffing,  and program  priorities. 
One of the things we as a system have to constantly  balance  is the 
workload,  which is increasing for  our staff, and the ability  to do all the 
IEVS matches,  whtkh may be good  in and of thenwelves.  Somebody  has 
to make decisiom  on importance  and priority.  These shl~ over time.  Its 
not a one-timz  questwn  with only onesetofanswers.lke IEVSisa 
dynamic  decision process.   
-A StatIeEVS Coordinator 
Welfare  agencies  are victims  of demographics  and the economy  with levels of service

varying  from place to place and often shrinking with down turns in the economy. 15 The

GAO report  entitled  Some Jurisdictions  Confronted  by Short- and Long-Term

Problems lb discusses how State and local government  spending and revenue  pressures

between  1985 and  1991 forced  many government  entities to control program  growth,  cut

services,  and raise revenues.

Because  of the fiscal constraints,  State and local budgets  have tightened,  hiring freezes

have occurred,  and layoffs have sometimes been necessary.  Consequently,  welfare

progmms  are typically  understaffed.  In many States, the number  of eligibility  workers

has not increased  to keep pace  with the burgeoning  caseloads.  The ratio of cases to

workers  can be several  hundred  to one with typical  caseloads  ranging  from a low of 123

AFDC  cases in California  per  worker  to as many as 509 cases for a typical  West Virginia

worker.

The follow up process  to reconcile  data received  from  an IEVS match takes worker  time.

With higher  caseloads  for a worker  comes the potential  for higher  numbers  of IEVS

discrepancy  alerts  to work.  Since IBVS regulations  do not allow more than 20 percent  of

IEVS follow up to exceed  the 45 day completion  timefmme,  States unable  to process

IEVS alerts  timely must do one or more of the following:  1) hire more  staff to handle the

increased  workload  of follow up, 2) reduce  the number  of alerts  workers  have to

17
 complete,  or 3) improve  the efficiency  of alert resolution  through  systems or procedural 
changes. 
  Most Stales employ targeting smategies to limit IEVS alerts to workers. 
Recognizing  the impact of follow up on workers,  nearly all States have implemented 
targeting  strategies  to limit the generation  of alerts to those most likely to impact the 
eligibility  status or benefit amount.  In many cases,  targeting  schemes function more to 
limit the follow up workload  of workers  than to focus review  on those most likely to 
affect the case.  Federal  agencies  approve targeting  plans  submitted  by States with limited 
justification  provided  by States.  In a few cases,  States have been allowed  to not follow Up 
on any information  provided  by an IEVS source (e.g.,  Montanas  approved  targeting  plan 
for the BEER match  specifically  precludes  follow up of any BEER match information.) 
According  to State responses,  most States have implemented  a targeting  strategy for at 
least one IEVS  source with most States targeting  the BEER,  IRS,  and State wage 
databases.  Five States reported  they do not target  any IEVS match. 
The types and extent of targeting  strategies  implemented  by the States vary.  Typically, 
the strategies  involve  one or more of the following: 
1.	 Use of Discrepancy  Thresholds.  Individuals  or cases are selected for 
review  if a difference  exists between information  (e.g.,  dollar  amount of 
resource)  provided  by the client and the income information  reported  on the 
external  source database. 
2.	 Use of Tolemnce  Z7zreshoZds. TM  strategy looks to see if the reported 
amount on the external  database  exceeds  a specifki  threshold  or limit (e.g., 
all earned  income  greater  than $500 for a given time period). 
3.	 EXclusion of Dupli~ve  Information from  Follow up.  If a certain  type of 
information  duplicates  information  from another  data source already 
matched  against,  the information  is dropped. 
4.	 Exclusion  of Repetitive  Infonu@on fmm  Follow up.  If information  has 
already  been reported,  this strategy  would limit further  reports  to the 
worker  from this source  (e.g.,  wage from this employer  is not reported  to 
the worker  beyond the fust  alert and in subsequent quarters). 
5.	 Exclusion  of Cetiain  Infonna%ionBased on the Chanzcteritics of the 
Individual  Mdched.  Examples  of this type of targeting  include  following 
up on information  only if the person  is active when the information 
becomes  available  or if the person  is between  a certain  age (e.g.,  not less 
than  18 and a student or over 65). 
18
 If a State targets  information  items,  a targeting  plan for each data source must be 
submitted  to the appropriate  regional  office of HCFA,  ACF,  and FNS.  Justii3cations are 
to be based on the experience  of the program  in following Up on specific categories  of 
information.  Additionally,  States are allowed to use other  sources of data as alternatives 
to the IEVS data if the State demonstrates  that the alternative  source is as timely, 
complete,  and useful for verifying  eligibility  and benefit  amounts as the required  source. 
While greater  levels of automation  and targeting  can help to keep the IEVS alerts  more 
manageable,  follow up timeframe  requirements  may limit the ability of the worker  to 
adjust for peak  workload periods  throughout  the year.  The IEVS regulations  only allow 
workers  to exceed  the 45 day follow up timeframe  for 20 percent  of alerts  and only for 
the explicit purpose  of receiving  verification  from third party  sources.  Such pnXSUreS 
have negative  consequences  on a workers  view of IEVS matching  according  to the 
Southwest IEVS Task Force. 17 Task force members  believe IEVS  breaks the spirit of 
many with its impossible  disposal timeframes  and nonproductive  outcomes.  
To address  timeframe  concerns,  many States want the timing of IEVS reports  to be 
flexible  so that varying  methods  of match follow up cart be employed,  depending  on the 
staff resources  available.  For example,  some would use this flexibility  to delay reports 
from various  IEVS  sources  so they can be compiled  into a single document  which could 
be viewed and resolved  at redetermination. 
,,,
States want mom j%?xibility implementing  IEVS requirements. 
After many years of experience  operating  I 
Most States  Want  More Flexibility 
IEVS,  States are virtually  unanimous 
E
about the need for more flexibility  in  HowOften to Conduct Matches 
IEVS regulations.  Recipient  targeting  is  What Matches to ti~t  ,  ,  , 
not considered  by States to offer enough  Targeting Flexibility 
Follow-up Timeframes 
flexibility.  As figure  6 shows,  States want 
other  ; : ; 
,..
the flexibility  to choose the matches  they 
020408080100% 
conduct,  when to conduct  those matches, 
Percent of States 
the targeting  methodology  to use,  and the 
~  1S9O3@ SuveyofStetes 
follow up timefmmes  to meet. 
Figure 6 
Additionally,  several  States want some

relief  from IRS security  and contldentiality  safeguards  for match information  and

flexibility  during  one-time  events  such as times of national  disaster  (e.g.,  hurricanes,

floods) or implementation  of new computer  systems.

States want flexibility  from the current  IEVS regulations  for many reasons.  The most

often mentioned  reasons  are because  information  from certain  matches  is considered  to be

rarely  usefid and some matches  are not cost effective  to follow up.  Other reasons  cited by

States (particularly  for the BEER and IRS matches)  am that match results  are not returned

timely by the match  source,  match results  reflect  aged information,  and workers  do not

have the time to work IEVS information  because  of high workloads.

19
 Most States want to discontinue  one or more IEVS matches. 
Most  States (76 percent)  would discontinue  routine use of one or more IEVS matches if 
IEVS matching  were at the States discretion.  States are unconvinced  that all required 
IEVS matches are beneficial. 
As figure 7 shows,  States would most like to discontinue  the BEER and IRS match for 
appli&s  and/or  recipients. 
Most  States  Would  Like  To  Discontinue 
the  BEER  and  IRS  Match 
States

100y.a.w .......................  ..................................

-iii...(j-j 
60 1---------------- ----------- -- --
50 
40  ------ 
30 
2() ............  .........  .........  ........  .
r 
10 
State  Ssl  SSA  IRS  SSA 
Wage  Benefits  Benefits  Unearned  Wages 
Income  (BEER) 
Source:1993OIGSurveyofStates

Figure 7 
The IEVS was initiated,  in part,  because  of the Grace Commissions  conclusion  that the 
Federal  and State governments  had made  several billion  dollars in inappropriate  payments 
in 1982 for assistance programs  such as AFDC  and Food Stamps.  In establishing  IBVS, 
the Congress  intended  that IEVS  should augment  existing  State verifkation  activities. 
However,  some States (e.g.,  Texas,  Arkansas,  Louisiana,  New Mexico,  and Oklahoma) 
question the validity  of the Grace  Commissions  conclusions  and the true impact IEVS has 
had on reducing  inappropriate  payments. 
Based on what representatives  from the Southwest regions  I13VSTask Force  consider 
were false assumptions  made by the Grace  Commission,  State agencies  have b=n  paying 
the price  since IEVS implementation  by having to conduct IEVS matches  they perceive 
m  not cost effective  or must be conducted  in a manner  which is too prescriptive. 
Variations in waiver authority  among progmms  and application  of autho~  jixtiher 
limd  State flexibility  and weaken cooniindon  among Fedeml pmgmzns. 
While  it is clear that States want flexibility,  neither  the AFDC  nor the Medicaid  programs 
are able to provide  much of this flexibility  except under very restrictive  conditions.  For 
20  example,  the AFDC program  can only grant a waiver for demonstration  projects  or as 
speciilcally  defined  in IEVS regulations  (e.g.,  targeting  approval,  alternate  IEVS sources). 
Since demonstmtion  projects  require  a rigorous  evaluation,  few States elect to seek 
demonstration  project  waivers.  Unlike  AFDC  and Medicaid,  the Food Stamp program 
has the broad administmtive  authority  to grant  waivers of regulations  if the actions are 
expected  to result in a more efficient  and effective  administmtion  of the program  (7 CFR 
272. 3(c)(l) (ii)) and if doing so would not be in direct conflict with the law. 
Because of the differences  in waiver  authority  between the three programs,  States 
experience  different  treatment  by Federal  oversight  agencies.  For example,  a State may 
receive  a waiver  from the Food Stamp program  extending  the 45 day follow up timeframe 
for IEVS matches.  Yet,  this same State may not receive  the same waiver  from the AFDC 
program.  This inhibits State flexibility  because  State programs  are typically  integrated  by 
process  or system.  Consequently,  treating  Food Stamp recipients  differently  from AFDC 
recipients  would be difficult. 
Alabamas  experience  serves to illustrate  the impact  of waiver  approval  authority 
differences  on a States flexibility,  Alabama  received  a waiver  for the Food Stamps 
program  to not match certain  categories  of ap@cants  and recipients  (household  members 
above and below certain  ages were not to be matched);  it did not receive  AFDC  approval 
for the same request.  The AFDC program  could not approve  the waiver  request because 
it lacked the authority  to waive the IEVS regulatory  requirement  that all applicants  and 
recipients  must be matched  with prescribed  data sources.  Alabama  ofilcia.ls reported  they 
were unaware  that the AFDC program  did not have the same waiver  authority  as the Food 
Stamp program.  Because it was unrealistic  to differentiate  between  AFDC  and Food 
Stamps clients,  Alabama  did not exercise  the Food Stamps waiver.  This lack of consistent 
authority  not only inhibited  Alabamas  flexibility  to achieve a perceived  cost-efilcient 
match,  it also reinforced  the States belief that Federal  agencies  do not adequately 
coordinate  with each other. 
Further,  even with waiver  availability  for Food Stamps,  responses  suggest that not all 
States are aware  certain  IEVS regulatory  requirements  can be waived.  To date,  few States 
have sought waivers  from the Food Stamp program.  The only Food Stamp program 
IEVS-related  administrative  waivers  granted,  thus far,  are for the following  six States to 
extend the 45 day time limit for d  or part  of IEVS follow up actions: 
Arkansas  - waiver  expired  September  1992

Texas  - expi.mxlMay  1993

New Mexico  - expired  April  1993

Ohio  - expires  April  1994

Virginia  - expires  June  1995

Louisiana  - effective  October  1, 1993

(Severalof these States did not utilize the waiverfiom  FNS to extend the 45 allyfollow up 
for  the Food Stamp program, because no waiver was receivedfor  the Al?DCprogram). 
21
 Another  means of providing  flexibility  to a States IEVS is also permissible  under current 
IEVS regulations;  two States have approval  allowing usage of alternate  sources of IEVS 
information: 
California  - expires  L~tober  1994 
Georgia  - expires  December  1995 
Californias  waiver  allows matching  with its Franchise  Tax Boards  (IWB) interest  and 
dividend  fde rather  than the routine  IRS match.  California  does match with IRS once a 
year to supplement  the FTB match.  Approved  for the Food Stamp program,  Georgias 
waiver  allows use of its Clearinghouse  to access State wage,  unemployment  insumnce 
benefits,  and SS1.  The Clearinghouse  provides  online access to the worker.  Provisions  of 
the waiver  require  workers  to access this information  at certflcation,  recertiilcation,  and 
when changes  are made to the case. 
Given States desires  for increased  flexibility,  it is likely that a lack of awareness  of the 
waiver process  and the lack of authority  of the AFDC  and Medicaid  progmms  to grant 
administrative  waivers  have caused  some States not to seek waivers for the Food  Stamp 
program.  As States become  more aware of the Food Stamp pmgmms  IEVS waiver 
authority  and if AFDC  and Medicaid  obtain the authority  to waive IEVS regulations,  more 
States may seek waivers. 
We note that ACF has proposed  two rule changes  which,  if accepted,  will allow for more 
IEVS flexibility  in the AFDC program.  One rule proposes  to modify the IEVS 
regulations  to allow States the opportunity  to present  a plan for opting out of ineffective 
IEVS requirements.  This rule change would permit  a State to request  a waiver  of any one 
or more of the requirements  for IEVS matching  if the State is able to explain  why the 
information  from an IEVS match is not useful or cost effective  in determining  eligibility 
or payment  for either  applicants  or recipients.  The waiver  request  must include  a plan 
which clearly  demonstrates  that an alternative  to IEVS exists which would achieve the 
same or better  results  (either  in whole or in part)  as the IEVS pmgmm.  The plan must 
also include  a cost-benefit  analysis  or a request  to use cost-beneficial  alternative 
procedures,  such as improved  automation  techniques  and other practices,  which would 
achieve  similar results  at lower costs. 
This rule overlaps policy proposed  in another,  broader  rule allowing  AFDC  administrative 
waivers.  The former  rule was submitted  for approval  by ACF in case the AFDC 
Administrative  Waiver  regulation  was delayed.  Although both rules were proposed  on 
May 21,  1992 for the Departments  clearance,  neither  have been acted upon.  According 
to ACF oftlcials,  the destiny of the rules is intertwined  with welfare  reform;  thus,  a 
timeframe  for acceptance  of the rule changes is unclear. 
The HCFA  has not proposed  any rule changes  which mirror  ACFS proposed  rule 
changes.  According  to HCFA  oftlcials,  HCFA  is waiting  for the outcome  of ACFS 
proposal  before  taking action. 
22
 While most States can make their IEVS processes  more efficient  and effective,  many 
report they lack the resources and management  commitment  to do so. 
You have to understanodurIEVS system.  While certain things 
were visualized  to work,  they may never have gotten done.  If 
they ran into a problem,  it never got jixed.  Its like we just 
threw up our hunak, and it skays broken.  
- A State IEVS Coordinator 
Virtually  all State IEVS coordinators  (37) report  IEVS could be made more efficient  and 
effective  in their State.  However,  most coordinators  (28 of 37 responding)  report  a lack 
of data processing  resources  (e.g.,  systems programmers)  to support many of these 
efforts.  As one respondent  stated,  our  hearts are in the right place,  but not our pocket 
books.   Another  stated,  because of the time spent making  systems changes to adhere to 
new or changed  Federal  mandates,  we have difficulty finding the resources  to make 
systems changes that would help workers  with IEVS.  
Several States remarked  that IEVS was implemented  with haste,  which resulted  in system 
weaknesses.  One States computer  programmer  reported  that IEVS was implemented 
under  such time pressures  that the State had to acquire  the appropriate  software from 
another  State in order  to meet the IEVS implementation  deadlines.  The result  was an 
IEVS system which is poorly documented,  riddled with inefficiency,  and one which 
has never  worked the way it was supposed to.   As an example,  a ffle is created  as 
program  clients  are added to eligibility  roles;  however,  the program  to remove  them once 
participation  has ceased does not operate.  IM leaves many inactive  clients on the fde 
which results  in a degradation  in the systems performance  and needlessly  takes up 
valuable  disk space storing old client information.  Given the time and resources,  this 
programmer  would like to see the IEVS  system redone.  This same sentiment  was 
reported  by a programmer  in another  State.  However,  in his State,  management 
supported  efforts  to modify  or remove known  deficiencies  in its IEVS system. 
In addition  to targeting,  States can do more to reduce  the volume  of inconsequential  alerts 
to workers.  One way of doing this is to use computer  systems to falter out information 
which has already  been reported  to the worker  or which the worker  should already  be 
aware.  As many as 19 States report  they do not do enough in this area.  SpecifkaUy, 
they do not maintain  a historical  IEVS database  of information  already  sent to workers  in 
order  to check all new alerts to ensure  that duplicative  information  is not sent to the 
worker. 
Ohio presents  a good example  of a State creatively  using its computer  system to limit 
production  of alerts  caused by inconsequential  data.  Speci.fkally,  falters have been applied 
to keep bad match information  from  generating  alerts to workers.  A bad match  is defined 
as invalid information  attributed  to the clients  SSN.  This is the frost falter Ohio applies to 
any match.  For  all sources,  if the worker  has pnwiously  determined  and reported  that 
23  information  from an employer  or account  is a bad match,  the system will not send new 
data from the same employer  or account as an alert.  For technical  reasons,  however,  this 
new data is available  when accessed  directly  through the data exchange. 
Another  way to make IEVS more efficient  is to resolve  information  using a computer, 
rather  than requiring  a worker  to resolve  it.  Specifka.lly,  data which does not rquire 
independent  vedlcation  can be directly  applied to a clients record  and a recalculation  of 
benefits  made without ever having to involve the worker.  Presently,  34 States = 
automatically  updating  case records  based on BENDEX  (SSA benefits  and Cost of Living 
Allowance  (COLA)) and the data from SDX (SS1 benefits).  Remaining  States could 
reduce the workload  of workers  by implementing  the necessary  systems changes to 
automatically  update  client eligibility  fdes with BENDEX  and SDX data. 
The Computer  Matching  and Privacy  Act permits  agencies  to directly  apply information 
developed  from a computer  match  (without independently  verifying  the resulting  datas 
accuracy)  if the Data Integrity  Board  (DIB) for the Federal  agency providing  the data 
finds a high degree  of conildence  that the information  provided  to the recipient  agency 
(e.g.,  States) is accurate.  Such a ruling  was made by the DHHS Data Integrity  Board in 
1990 and 1991 certifying  that SDX and BENDEX  data is accurate.  Thus,  States are not 
required  to independently  verify  data provided  by SSA concerning  the identification  of 
individuals  and the amount  of benefits  SSA pays.  The DIE decision  was based on an 
accuracy  certifkation  provided  by SSA.  (See Appendix  C.) 
States have yet to be ~ven access to adiiitional  Fe&ml  &a  they repoti  would be 
helpful. 
In our  1991 report,  The Income  and Eligibility  Verifkation  System (IEVS):  A Time for 
Reform?,  we suggested  additional  Federal  data could be made available  to States such as 
Veterans  Administration  (VA) data,  Federd  employee  salary and pensions,  U.S.  Savings 
Bonds,  and State death records  maintained  by SSA.  We made this suggestion based on 
State input that other Federal  data could be useful in their  eligibility  determination 
processes. 
To date,  no additional  Federal  data sources have been provided  States.  While  we suspect 
access to these data sources could be helpful if utilized,  we am reserved  about requiring 
access when many States are failing to adequately  utilize  those data sources already 
required  by IEVS regulations. 
Veterans  Administration  Benefits 
Some progress  is being made in assessing the utility  of providing  States with greater 
access to VA data.  Specifkally,  ACF has been studying this issue.  In  1991, ACF 
conducted  a preliminary  match using Tennessees  and South Dakotas  welfare  rolls and 
matched  them against  VA benefit  data.  The results  were encouraging  but limited  because 
24  the data could not be provided  to States for follow Up and a determination  of the impact 
on client eligibility.  This was because  the match was conducted  for statistical purposes 
only, as provided  for under the Computer  Matching  and Privacy  Act.  To allow States to 
follow up on the results of the match,  the Computer  Matching  and Privacy  Act requires  a 
signed matching  agreement  between the involved agencies.  It took over a year,  but the 
requisite  agreement  was finally approved  allowing ACFS match using State and VA data. 
The VA provided  ACF  with a fde of its current  VA active beneficiary  records  as of 
August  1993.  At the same time,  the States of New York,  South Dakota,  and Tennessee 
provided  ACF  with fdes of their current public  welfare  clients for this same time period. 
The match was completed  and the results provided  each of these States.  Presently,  these 
States are reviewing  the information  to determine  the impact of the VA information  on 
client benefits  or eligibility. 
If the results  show that access to the VA data would be helpful to States,  ACF officials 
report  they will likely  seek legislation  to require  VA to process  requests  for information 
from States. 
Federal  En@ovee  Salary and Pensions 
Although  the annual BEER record  maintains  wage and pension  data for Federal 
employees,  more current  data on Federal  employees  and retirees  is available.  The USDA 
OIG in 1991 conducted  a review  by matching  Federal  employee  records  with Food Stamp 
recipient  records  in 15 States. 18 Based on the findings,  the USDA OIG recommended 
that FNS determine  which Federal  information  sources would be the most effective  and 
efllcient  for verif@g  Fedeml  employee  and retiree  income.  The OIG suggested one 
alternative  to BEER was data on Federal  employees  maintained  by the Defense Manpower 
Data Center  (DMDC).  This organization  receives  income  data on both active 
(semiannually)  and retired  (annually)  Federal  employees  and military  personnel  for 
purposes  of identifying  Federal  personnel  who owe delinquent  debts to the U.S. 
Government  as required  by the Deficit Reduction  Act of 1982. 
The FNS Administrator  agreed  to examine  the sources available  and identify those most 
efilcient  and effective  for verifying  Federal  income and committed  to work with DHHS in 
this pursuit.  However,  we were unable  to determine  if any action by FNS has taken place 
thus far. 
Asked about the utility  of expanding  State access to Federal  employee  data,  ACF ofilcials 
expressed  a desire to do a pdimimry  statistical  match as was done with VA data to 
determine  if Federal  employee  salary and pension  data looks promising  and worthy  of 
further  evaluation.  To date,  no fm  commitments  have been made by ACF to test the 
utility  of such data. 
25
 U.S.  Savinm  Bonds 
While  IEVS regulations  require  that the income veritlcation  process  include  comparisons 
with income  data from IRS and SSA, information  available  from these agencies  does not 
include the value of U. S. savings bond holdings.  Information  available  through  IRS and 
SSA includes  only data on the interest  earned  on redeemed  savings bonds and on bonds 
paying periodic  interest.  Information  on U.S.  savings bond holdings  is only maintained 
by the Department  of the Treasury  and is not currently  available  to the States. 
Without  savings bond data fdes,  States cannot determine  whether  applicants  for public 
assistance progmms  have unreported  savings bond holdings.  In 1989, GAO released  a 
report  entitled  Some Recipients  Neglect to Report U.S.  Savings Bond Holdings.   The 
GAO conducted  work in Massachusetts  and showed the potential  exists for individuals 
with extensive  bond holdings  to improperly  establish Medicaid  eligibility.  Further,  in the 
course  of this and previous  IEVS reviews,  States expressed  an interest  in having access to 
this data.  The Texas State Medicaid  Director  went as far as to send a letter to HCFAs 
Medicaid  Bureau urging  that access be granted.  In response  to Texass  letter,  the regional 
Medicaid  office reported  that a proposal  was submitted by the Medkaid  Bureau for 
inclusion  in HCFAS legislative  package  for fiscal year  @Y) 1992.  The proposal  was 
approved  by the Department  and was slated for inclusion  in the Administrations  FY  1992 
technical  amendments  package.  However,  according  to HCFA  oftlcials,  the proposal  was 
never  acted upon and was not reintroduced  at a later date. 
State Death Records  via BENDEX 
Although  SSA maintains  information  reported  by States on the death of individuals,  this 
information  is not presently  shared with other States because  many State contracts  with 
SSA19do not allow  SSA to redisclose  death information  to other  States.  Anticipating  a 
reversal  of this situation,  the SSA has tidy  built into its SVES query,  a module  which 
would provide  death information  on individuals  States submit for verifkation.  However, 
death information  will continue  to be suppressed  until barriers  (State redisclosure 
restrictions)  are removed. 
The necessary  authority  to allow SSA to redisclose  death data from States is contained  in 
Section 5201 of the Presidents  Government  Reform  and Savings Act of 1993.  It was 
introduced  as H.R.  3400 in the House of Representatives  and speci.fles that the Secretary 
may redisclose  death data provided  to the Secretary  by the States or any subdivision 
thereof  to any Federal  agency  or any agency of a State or political  subdivision  in 
accordance  with the Social Security  Act. 
Two reports  completed  by GAO and our Office of Audit Services  support the utility  of 
providing  death data to States.20 
26
 RECOMMENDATIONS 
Independently  verifying  client circumstances  through  computer  matching  with IEVS data 
sources helps to ensure  the integrity  of the eligibility  determination  process.  Although 
IEVS matching  is mandated  by Federal  law and regulation,  our interviews  with State and 
local users indicate  the pmcticality  and cost effectiveness  of IEVS under current 
regulations  is uncertain.  The uncertainty  and resulting  controversy  have resulted  in IEVS 
implementation  and monitoring  problems  which need to be addressed  at many levels of 
government,  from Federal  oversight  agencies  to State and local welfare  ofilces. 
This report  reflects  many of the problems  which exist with IEVS  (constraints  on State IEVS 
flexibility  and lack of coordination  between oversight  agencies  to set consistent policy).  The 
solutions to these and other IEVS-related  problems  are not as easily identifkd  nor resolved 
because  of 
1)  the complexity  of the issues; 
2)	 the involvement  and interdependence  of so many different  Federal  and State 
agencies  and programs; 
3)  the fiscal pressures  and resource  limitations  impacting  States;  and 
4)  the uncertainty  and impact  of welfare reform  initiatives. 
As a consequence,  it is important  that Federal  and State agencies  assess the current  status 
of IEVS and define the policy  and operational  changes needed to accomplish  congressional 
intent.  Critical  to the deliberation  process  is the need for consensus  and the full 
participation  of both Federal  and State agencies.  Toward  this end,  we recommend  the 
following: 
Recommendation  #1:  The Administration  for Children and Families  (ACF) and the 
Health  Care Financing  Administration  (HCFA) should use appropriate  mechanisms  to 
address IEVS issues by: 
	 examining  existing IEVS requirements  in each agency,  at both the central 
and regional  offke  levels; 
	 addressing  the need for and deg~  of flexibility  to be afforded  States 
concerning  IEVS; 
	 identifying  spedlc  areas in which coordination  between  oversight  agencies 
can be improved,  resources  can be consolidated  or more effectively  utilized 
to monitor  IEVS,  and procedures  can be streamlined  to minimize 
duplication  of effort  and contradictions  among Federal  agencies  IEVS 
policies  (e.g.,  waiver approval,  targeting  approval);  and 
27  	 engaging  outside,  involved parties  (e.g.,  the States, the Department  of 
Agriculture,  the OffIce of Management  and Budget) to the fullest extent 
possible as IEVS issues (e.g.,  flexibility)  and requirements  are debated. 
Additions  to HCFAS and ACFs deliberations  should include,  but is not limited to: 
1)	 Deftig,  clarifying,  and communicating  to States the extent of flexibility 
afforded  by regulations.  Without knowledge  of the available  options,  States 
are unable to fully consider  alternatives  to improve  the efficiency  and 
effectiveness  of their IEVS processes.  A determination  of the appmPriate 
level of flexibility  should reflect  consideration  of the results from  FNSs 
IEVS cost effectiveness  study. 
2)	 Requiring  States to monitor  IEVS activity  and submit periodic  reports 
summarizing  IEVS match activity,  benefits,  and success meeting  Federally 
defined performance. 
3)	 Requiring  States to match all recipients  with IRS by September  of each year 
and to ensure  applicants  are matched  monthly. 
4)	 Reviewing  the intent of targeting  and determining  whether  a minimum  level 
of follow-up  is required.  If so, what is that level?  Should applicant 
targeting  be allowed? 
5)	 Coordinating  with Data Integrity  Boards to monitor  and influence  computer 
matching  for eligibility  verifkation  puqxxes. 
6)	 Establishing  performance  indicators  to be used by Federal  oversight 
agencies  to assess State compliance  with IEVS requirements  and the 
effectiveness  of IEVS matching. 
7)  Developing  a standard IEVS waiverhargeting  approval  process. 
8)	 Coordinating  the establishment  of a timeframe  and action plan for assessing 
the utility  of providing  States with access to other Federal  data sources.  If 
the assessment  shows promise,  coordinate  agency pursuit  of legislative 
changes to allow State access. 
9)	 Acting as a forum or clearinghouse  to gather  and disseminate  IEVS 
experience  and best practices  to the States. 
10)	 Encouraging  States to periodically  reexamine  IEVS processes  to ensure  they 
are running  as effectively  and efficiently  as possible.  From  our interviews, 
it was clear that real worker  commitment  to resolve IEVS matches  within 
prescribed  guidelines  is more likely when the States IEVS system is 
perceived  as accurate,  reliable,  and easy to use.  The goal for any Stite  is 
28  todo  everything  possible,  within budget limitations,  toensurethequtity 
and effectiveness  of its IEVS and the acceptance  of its users.  Towmd  this 
end, there  are many aspects of IEVS States should be encouraged  to review. 
Examples  include: 
	 Where  electronic  interfaces  are used,  the system should ensure they 
are user friendly  and understandable.  Some areas to consider 
include the: 
ease of navigating  alert/IEVS  information  screens,

clarity  of alert,

clarity  of error  messages,

inclusion  of sufficient information  on data exchange  screens

to avoid (to the greatest  extent possible)  workers  having to

review  case records  or other reports  to resolve  an alert,  and

adequacy  of help screens.

	 Policy,  performance,  training,  and management  feedback  areas 
including: 
cla.riilcation of policies  and performance  indicators  (e.g.,

expectations  for matching,  reporting  of systems problems).

routine  notilcation  of field offkdusers  of the results  of their

efforts  (matches resolved,  dollar  savings identifkxi,

percentage  done within 45 days,  etc.),  and

IEVS training  initiatives  (extent of IEVS training  and

frequency  of updates).

  Systems enhancements  including: 
use of automatic  updating  of eligibility  files from external

data sources,

better  use of targeting,

use of falters (to remove  bad data,  duplicated  data,  redundant

data,  etc.),

use of priorities  in the preparation  of alerts for follow up,

inclusion  of system generated  notices to clients,

automatic  system generation  of IEVS information

automatically  based on a scheduled  client visit,  and

use of SSAS File Transfer  Management  System (FTMS) and

State Verifkation  Exchange  System (SVES).

Recommendation  #2:  The ACF should continue to seek a rule change  which would 
allow the AFDC program  an equivalent  degree of flexibility  currently  available  to the 
Food Stamp program  with regards to IEVS (e.g.,  waiver of 45 day follow up 
timeframe).  Since the AFDC,  Food Stamp,  and Medicaid  programs  are highly 
29 
  integrated,  State flexibility  is limited when each program  is not able to allow the same 
degree  of flexibility.  States report  it is unrealistic  to implement  an IEVS waiver  for one 
program  without being able to implement  the same waiver  for the other programs. 
Recommendation  #3:  The HCFA should seek regulatory  changes for the Medicaid 
programwhich provide for IEVS flexibility  equivalent  to those sought by ACF for the 
AFDC program.  As mentioned  above,  IEVS flexibility  must be consistent  between 
programs  to be implemented  effectively  by States. 
Recommendation  #4:  The ACF and HCFA should inform State public assistance 
agencies  of their willingness  to work with them to strengthen  automated  eligibility 
verifkation  activity. 
COMMENTS 
Comments  on the draft report  received  from ACF,  the Assistant  Secretary  for 
Management  and Budget  (ASMB), the Assistant  Secretary  for Planning  and Evaluation 
(ASPE),  SSA, and HCFA  concur  with both the findings and the general  thrust  of our 
recommendations.  However,  ACF,  HCFA,  and ASMB disagree  with the need for the 
departmental  governing  council  recommended  in the draft report  and the need for 
addressing  IEVS issues prior  to healthcare  and welfare  reform.  Additionally,  HCFA  does 
not concur  with the recommendation  to seek a regulatory  change to allow for IEVS 
flexibility  consistent  with that sought by ACF. 
The need for a governing  council  stemmed  from our view of the complexity  of the issues 
involved  and the need for interzigency coordination  and consensus regarding  IEVS policy 
and compliance.  The governing  council  was envisioned  as a framework  to promote  and 
expedite  leadership  as broad policy  (e.g.,  welfare  reform)  and technological 
(e.g.,  enhanced  systems or new databases)zl changes occur.  Both SSA and ASPE 
concurred  with this nxommendation. 
The ACF,  HCFA,  and ASMB disagreed  with the governing  council  approach  primarily 
because  existing  interagency  coordination  and communication  mechanisms  were believed 
to be adequate.  Based on the agencies  assurances  and to provide  them maximum 
flexibility,  we removed  the recommendation  of a governing  council tasked with addressing 
IEVS issues;  we modi.tied the recommendation  to place the burden  of addressing  IEVS 
vulnerabilities  with the appropriate  agencies  through  existing  communication  mechanisms. 
With regard  to the timing for addressing  IEVS issues,  the ACF,  HCFA,  and ASMB 
questioned  the value of devoting  limited  staff resources  to addressing  IEVS at a time when 
welfare  and health  care programs  are planning  signifkant  changes through  reforms. 
While  we recognize  change will occur,  we cannot in good conscience  suggest that 
addressing  IEVS weaknesses  be postponed  until reforms  have run their  course.  Our view 
is based primarily  on the Departments  role and responsibility  to curb fraud,  abuse,  and 
program  vulnerabilities  and the realization  that these reforms  may take years to 
30  implement,  with nothing to suggest the importance  of IEVS will diminish.  In fact, IEVS 
activity  may become  even more critical.  According  to the Presidents  welfare  reform 
propos~,  eligibility  vetilcation  will take on a greater  role since computer  matching  of 
records  and sharing of data among  State programs  and at a national  level would be 
increased.  
Additionally,  IEVS issues should be addressed  without delay because  consistent 
requirements  and flexibility  between the major  welfare programs  is important  to those 
States which are in the midst of systems changes  or planning  such changes  which may be 
constrained  by existing policy.  While  ACF agrees to seek regulatory  changes  to provide 
an equivalent  degree  of flexibility  found in the Food Stamp program,  HCFAs  decision 
not to seek similar changes  may burden  States with IEVS regulatory  requirements  for the 
Medicaid  population  that may not exist for the food stamps and AFDC populations.  Since 
most States automated  systems integrate  the IEVS process  for all three programs, 
flexibility  is limited  if each progmm  does not provide  for similar matching  and follow up 
requirements.  The resulting  disparity  between program  requirements  exemplMes  Federal 
agencies  failure  to coordinate  adequately. 
Our concern  and purpose  in recommending  that HCFA pursue  regulatory  change was to 
ensure  that ACFs  and FNSs efforts to provide  States expanded  IEVS flexibility  would 
not be limited  by the Medicaid  programs  restrictions.  We do agree with HCFAs 
assertion  that many States could make better use of targeting  to increase  the effectiveness 
of IEVS matching  while decreasing  the burdens  of follow up.  Our belief  stems from  1) 
States admissions  that IEVS processes  could be made more efficient  and effective  by 
better use of targeting  and 2) results  from FNSS study of the cost effectiveness  of 
targeting  IEVS matches.  Although  we agree that targeting  affords  States considerable 
flexibility,  targeting  regulations  are restrictive  in several respects  (e.g.,  targeting  rules 
require  follow up of all targeted  match results  for recipients  within 45 days of the match 
and targeting  is not allowed for applicant  matches).  While  we did not directly  evaluate 
the impact  of providing  States with added IEVS flexibility,  we found States wanting more 
flexibility  and both ACF and FNS supportive  of policy  changes to address  State desires. 
We believe  that HCFA  needs to work with ACF and the FNS to promulgate  consistent 
regulations  covering  IEVS matches.  The decision  should be based on interagency 
discussion  and consensus.  If the Medicaid  program  has limited  options for flexibility 
comparable  to the AFDC  or Food Stamp programs,  no interagency  discussion  and 
consensus  is possible  and States may be unnecessarily  burdened. 
The full text of agencies  responses  are in Appendix  D. 
31
 ENDNOTES

1.  The AFDC progmm  began in 1935 under Title IV of the Social Security  Act as a 
way to assist orphans  and widows with small children.  Today,  operating  under 
broad guidelines  from the Administration  for Children  and Families  (ACI?), the 
program  provides  cash assistance  to families  with dependent  children.  The AFDC 
prog~  is funded jointly  by the Federal  and State governments  through  a 
matching  formula  that varies according  to each States px  capita income.  In fiscd 
year  1992, progmm  expenditures  reached  almost $22 billion,  an increase  of more 
than 70 percent  from  1982.  During  this time,  more than  13.6 million people 
participated  - almost 25 percent  more than in 1989. 
2.	 Enacted in 1965 as Title XIX of the Social Security Act, Medicaid  is a Fedemlly 
aided,  State-administered  medical  assistance program.  Within a broad legal 
framework,  each State designs and administers  its own Medicaid  program  and sets 
eligibility  standards  and coverage  policies.  Medicaid  essentiy  =vices  four 
populations:  low-income  families  that lack health insurance,  elderly people  who 
need help with medical  care,  disabled elderly  individuals  who need long-term  care, 
and nonelderly  disabled  individuals  who need critical  and long-term  care.  At the 
Federal  level,  the progmrn  is administered  by the Health  Care Financing 
Administration  (HCFA),  which is part of the Department  of Health  and Human 
Services.  Since  1982 Medicaid  expenditures  have grown nearly four-fold  to total 
an estimated  $120 billion in 1992.  Participation  in the Medicaid  Progmrn  has 
grown by over 40 percent  since 1982 to reach  30 million  recipients  in fiscal year 
1992. 
3.	 The Food  Stamp program  exists to ensure that Americans  have the means to 
purchase  nutritionally  sound diets.  The program  is administered  by the Food and 
Nutrition  Service  (FNS) of the Department  of Agricultme,  FNS is responsible  for 
giving direction  to States through  regulations  that define eligibility  nqdrements, 
benefit  levels,  and administrative  rules.  The program  has financial,  work related, 
and categorical  tests for eligibility.  The Federal  government  provides  full funding 
for Food  Stamp benefits,  and the cost of administering  the program  is shared 
equally  between  the States and the Federal  Government.  Since  1982, Fede~ 
expenditures  for the Food Stamp program  have increased  by more than  100 percent 
from $10.2  billion in 1982 to over $22 billion in 1992.  Since  1989, participation 
has grown by an average  of 2.2 million  individuals  annually,  and in fiscal year 
1992, benefits  were dMributed  to more than 25 million  individuals. 
4.	 According  to the Government  Accounting  Offke  (GAO) as reported  in a 1992 
report  entitled  Ineffective  Federal  Oversight  Permits  Costly Automated  System 
Problems,  GAO/IMTEC-92-29,  May  1992. 
32
 5.	 Time for a Change:  Remaking  the Nations Welfare  System.   Report of the WelfUe 
Simplifkation  and Coordination  Advisory  Committee,  June  1993. 
6.  BENDEX  is an automated  data exchange  system.  Through  it, the SSA provides  State 
public  welfare  agencies  with benefits  and earnings  information  concerning  applicants 
for or recipients  of needs-based  programs,  mainly AFDC,  Medicaid,  and Food 
Stamps.  Established  in 1968, BBNDBX was intended  to reduce  State reliance  on the 
manual  system then being used to obtain information  through  the SSA district  ofllces. 
At that time,  the system had grown to the point where on an annual basis it was 
producing  about  1,600,000  requests  for information  via SSA 1610 forms.  The new 
automated  approach  was expected  to be more economical  and accurate. 
Through  BENDEX,  States make monthly or semimonthly  requests  for benefits 
information  from SSA and,  via computer  tape or electronic  exchange  (wire-to-w&), 
receive  it on a semimonthly  basis within 2 to 4 we&s.  The benefits  information 
made available  is drawn from  SSAs Master  Beneficiary  Record  (MBR).  For SSA 
Retirement,  Survivors,  and Disability  Insurance  (RSDI) beneficiaries,  the benefits 
information  indicates  their SSA claim number  and Social Security  number,  name,  date 
of birth,  payment  status,  and monthly benefit amount.  It also indicatm  whether  or not 
an individual  is eligible  for benefits  under the Medicare,  Supplemental  Security 
Income  (SSI), Black Lung,  and/or  Railroad  Retirement  programs.  However,  in these 
instances,  it does not provide  the benefit amount. 
SSA maintains  a control  record  of all the individual  BENDEX  submissions 
(accretions)  made by the States and informs  them of any changes  affecting  a 
beneficiarys  payment  status,  entitlement  date,  monthly benefit  amount,  State or 
county location,  or Medicare  coverage.  Information  on such changes  is automatically 
incorporated  with other BENDEX  data being  sent to the States. 
BENDEX  also serves as a mechanism  for States to acquire  yearly  earnings  data from 
SSAS Ea.mings Refenmce  File  @RF).  Received  through  the IRS, BEER provides  all 
reported  earned  income  for individuals  and indicates  the name and address  of their 
employers. 
7.	 Presidents  Private  Sector Survey on Cost Control,  Task Force  Report  on Low 
Income  Standards  and Benefits,  dated May 6,  1983. 
8.	 The Food and Nutrition  Service  (FNS) of USDA published  targeting  regulations  for 
the Food Stamps program  in February  1988; the Administmt.ion for Children  and 
Families  (ACF) of DHHS published  targeting  regulations  for the AFDC program  in 
December  1988 (Federal  Register,  volume  53, No. 250);  and Health  Care Financing 
Administration  (HCFA)  of DHHS published  regulations  for the Medicaid  program  in 
March  1989 (Federal  Register,  volume  54, No.  40). 
9.  Although July is the fust  month when previous  tax year data is available,  there are 
limitations.  According  to IRS, the tax year data available  in July is only about 60 
percent  complete;  August is about  80 percent;  and not until September  is the fde 
33  typically  99 percent  complete.  As a consequence,  States have to balance  the

advantage  (timeliness)  of matching  in July against the disadvantages  of matching  in

September  (may miss unearned  income  not available  in July).

10.  The remaining  10 States were uncertain  about the cost effectiveness  of one or more

matches.

11.  Prepared  and conducted  for FNS by Mathematical Policy Research,  Inc.  (MPR) under

contract  No.  FNS 53-3198-8-95,  Task Order 7.  FNS contracted  with MPR to

estimate  the cost effectiveness  of conducting  IEVS matches using a targeting  strategy

compared  to the situation in which the match is not conducted  at all.  All but one of

the IEVS matches in the demonstration  used a targeting  strategy.

12.  COMPUTER  MATCHING:  Quality of Decisions  and Supporting  Analyses Little

Affected by 1988 Act,  October  1993.  GAO/PEMD-94-2.

13.  Guide for Cost/Benefit  Analysis of SSA Computer  Matches.   Prepared  by the

Operations  Research  and Match Evaluation  Staff of the OffIce of Program  and

Integrity  Reviews,  released  March  1990.

14.  Two reports  released  by the OIG discuss problems  with the accumcy  of SSNS in

welfare programs  and organizations  (public and private).  The report  entitled,  Extent

of Social Security Number  Discrepancies  (OAI-06-89-01 120) was releiised in 1990

and found sign&ant  SSN discrepancies  in the ffles of public  and private

organizations  (e.g.,  banks,  prisons).  The other report  entitled,  Effect of Unverified

Social Security  Numbers  on Public Assistance  Programs  (OAI-09-86-00068)  revealed

weaknesses  in the SSN verifkation  process  administered  by SSA.  Based in part  on

findings from this inspection,  the SSA has made signifkant  improvements  in the SSA

verifkation  process  through  implementation  of SVES.

15.  Rising costs and enrollment  are severely  straining Medicaid,  the largest  government

program  financing  health care for the poor.  During  most of the  1980s, Medicaid

costs grew up to 10 percent  a year and,  in 1989, began to rise even more mpidly.  In

Fiscal  Year  1992, Federal  and State spending on Medicaid  totaled  $120 billion  - a 29

percent  incnase  over the previous  years total.  In addition,  the number  of

beneficiaries  fkom 1991 to 1992 increased  an estimated  10 percent  to about 30

million.

16.  Some Jurisdictions  Confronted  by Short- and Long-Term  Problems  (GAO/T-HRD-94-

1).

17.  Representatives  from the five States in the southwest region  (Texas,  Oklahoma,

Arkansas,  Louisiana,  and New Mexico)  met in 1992 to discuss IEVS concerns.  The

group prepared  an issue paper  which they submitted  to Federal  program  ofllcials.

18.  Audit Report  No.  27006-1-Te  prepared  by the USDA Offke  of Inspector  General,

March  1991.

34
 19.  Section 205(r) of the Social Security Act established  a program  in 1984, under which 
States voluntarily  contract  with SSA to furnish death certificate  information 
periodically  at reasonable  costs.  SSA shares this information  with other Federal  and 
State agencies  administering  Federally  fimded benefits.  Similar  SSA-State agreements 
allow SSA to provide  information  for use in State funded progmms.  Some State 
contracts  will allow SSA to redisclose  death information  only with the written  consent 
of the State.  In an attempt to discourage  such restrictions,  OBRA 1993 amended the 
Internal  Revenue  Code to deny access to Federal  tax returns  or tax return  information 
to States that continue  their restrictions,  effective  1994.  (States may restrict 
redisclosure  to Federal  agencies  only.) 
The proposed  NPR legislation  would require  States to send death information  to SSA 
and for SSA to make it available  to other Federal  and State agencies.  SSA would 
make its technical  expertise  available  at reasonable  cost to other agencies paying 
Federal  and Federally-assisted  benefits  so they can prevent  erroneous  payments. 
20.	 GAOs Report  was entitled  States Need Social Securitys  Death Data to Avoid 
Payment  Error  or Freud  (GAO/HRD-91-73,  April  1991).  The OIG Audit Services 
report  was issued in 1992 and entitled  The Social Security  Administration  Needs to 
Improve  Procedures  in Its Death Match  Operations  (A-13-90-00046). 
21.	 The presidents  welfare  reform  proposal  contains a provision  setting up several  new 
databases.  One of these databases  is composed  of employment  information  from 
required  employer  reporting  of new hires.  Such a database  may drastically  alter the 
importance  of the State wage and BEER matches. 
Unrelated  to welfare  reform,  SSA is proposing  a Simpli&.d  Wage Reporting  System 
(STAWRS) which could impact IEVS.  The proposed  STAWRS would provide  both 
State and Federal  agencies  with a single repository  of timely and accurate 
wage/income  information.  Also,  it would include  data on Federal  employees  and 
reflect  the most current  death information. 
35
 APPENDIX  A 
SSAS Ftie Transfer Management  System and SVES 
Over the years,  SSA has made efforts  to modernize  the process  of exchanging  information 
with States.  Historically,  the only method  for a State to exchange  files with  SSA was through 
the sending  and receiving  of tapes  by mail.  Recognizing  the possibility  of using  modems  and 
phone  lines  (wire-to-wire)  to pass data to and from  SSA,  SSA instituted  in 1974 (in 6 States) 
the use of the Batch Data  Transmission  System  (BDTS)  which  used  Programmable  Magnetic 
Tape Transfer  Terminals  (PMTTs).  The PMTT  was a piece  of computer  equipment  which 
facilitated  transfer  of files.  When  a State had a file to transfer,  the State would  produce  a tape 
and,  rather  than  send the tape in the mail,  would  load the tape on the PMTT  and transmit  the 
files over  phone  lines.  In 1982,  the number  of States using  PMTTs  was increased  to  10.  By 
1990,  15 States  were using  PMTTs. 
Instituted  by SSA in 1989,  the Wire  Third  Party  Query  (WTPY)  system  provided  the same 
kind of information  as the third  party  query  (TPQY)  requested  from  local  SSA field offices, 
except  the request  went  directly  to SSA centrally  using  a tape to tape transfer  or a computer  to 
computer  transfer.  WTPY  usually  returns  Old Age  Survivors  and Disability  Insurance  (RSDI) 
and the Supplemental  Security  Income  (SS1) information  back to the State in 24 to 48 hours 
through  a batch  process.  This  is a significant  improvement  over  TPQY  response  time  which 
can be from  one to several  weeks  depending  on SSA field office workload.  Tennessee  and 
California  were the  first  States to use WTPY.  WTPY  was a system  intended  to lessen  use of 
the manual  TPQY  process.  Draft  guidelines  on WTPY  were  issued by SSA in 1989. 
In May  of  1990, the PMTTs  were  discontinued  and replaced  with modems  and a data transfer 
software  product  called  National  Data Mover.  PMTTs  were  replaced  because  they  were  not 
adequate  to meet the anticipated  data exchange  needs  of SSA (e.g.,  expected  data transfer 
traffic  to be caused  by use of WTPY  by all States).  SSA refers  to the new system  of data 
transfer  as the File  Transfer  Management  System  (FTMS).  SSA began  purchasing  and 
providing  the necessary  equipment  and software,  along  with dedicated  phone  lines,  to all 
States as funding  allowed.  The first  twelve  States to receive  the FTMS  were  Arizona, 
California,  Florida,  Louisiana,  Nebraska,  New  Mexico,  New York,  North  Carolina, 
Pennsylvania,  Tennessee,  Texas,  and Wisconsin. 
In an effort  to address  State concerns  that  inconsistent  responses  are sometimes  provided 
depending  on what  exchange  process  and data base  is queried,  SSA has developed  and 
implemented  the State Verification  and Exchange  System  (SVES).  WTPY  was a precursor  of 
SVES  and became  an integral  part  of the new transfer  system.  Prior  to October  1993, if a 
State wanted  BENDEX  information,  a special  file had to be prepared.  If the State wanted  a 
WTPY  response,  a special  file had to be created.  SVES  lessens  the workload  of producing 
multiple  files by allowing  the State to send only one tile to get information  from  all of the 
various  exchanges.  All that is required  is a code or codes  indicating  which  exchange(s)  is to 
be accessed  for each individual  record.  These  codes  can vary by record.  By using  SVES,  a 
State can accomplish  any or all of the following  queries  with  a single  input:  1) SSN 
verification,  2) WTPY  query,  3) BENDEX  accretion/deletion,  4) SDX welfare  number 
transactions,  5) SDX  Interim  Assistance  Reimbursement  (JAR) transactions,  and 6) BEER 
requests. 
A -1
 APPENDIX  B 
IRS BENEFIT  COS  I ANALYSIS 
07/01 /90  - 06/30/91 
FOR  MATCH  AGREEMENTS  07/01 /91  - 06/30/92 
cOST 
BENEFIT 
COSTS 
SAVINGS 
$58,199  $179,3% 
$237,523 
AL  $175,976  ($103,048~ 
AK  $22,928  ($83,512) 
$13,859  $97,371 
AZ  ($91,562~ 
$7,219  $98,781 
AR  ($53,362) 
c~~o   $206,132 #  $~2$6s~M9o,,,140195247   ~,4~,,#,,~,.,#.,. #...~.~#~~16.5 ,.5. ....1....3....$-...  
p,.%:,,%,.,%,,,..%.,.....,.%, ..,%.,,%, ~. %.. m 
$458,599 
II  ($198,760) 
GA  $32,078  $230,838  $28,480

$37,565  $9,085

HI  ($115,21)5
 

ID  $51,488  $167,60
 3

IIILNA    $2$$,8972622342,,22,0249 6 1   $$1$9,411654,,6821608,


0
1
3
 $(1$$$,9638122064-90,,09,5678
)92
. ,1 zE~8

  6
CNNOOOSTT  D ACETOFASFT E oCErTFIFVEECTIVE
$7,551


KS  $6325,73  
$35,344   $3821,83

 ($3468,48)
  INCOMPLETE  DATA
KY 
$6007,59


$7165,23 	 $1157,73


($14856,6
 )

$2118,5
0

---.-,.

B=--.$l,w~,lll  I  ,p*, , .!a,.r/- 1 $226,300

$23,700

v-.-
,---

($6,962)

L..  $12,147
 $19,109

$35,877
 $3,575
 $32,302

NH 
$2,230,732

NJ  $3,154,083
 $923,351

NY  $13,071,000  $1,755,000  $11,316,000 
$55,732 
NC  $98,883  $43,151 
ND  $155,643  $18,557  $137,086 
OH  $426,889
 $307,493  $119,396

$184,586

OK  $249,337
 $64,751 
OR  $276,450
 $60,01 5 $216,02
 0

RI  $32,28
3
 $77,08 0
 ($44,89)6
 

($1174,)7
7

Sc  $5,844 
 $123,86
1

$3,238  $17,06 0
 ($14,317) 
SD 
($965,736) 
TN  $2,193,980  $3,159,716 
$1631,24


$4507,25
 $2876,01


TX 
VT  $84,301 
 $32,650  $51,480 
($53,224) 
v A  $4,000  $57,224 
w A  $650,544  $427,062  $223,482 
$489,882 
W  $639,162  $149,280 
WY  $90,609  $41,319  $49,290 
$31,710,406  $15,700,210  $16,010,196 
SOURCEIRS 
B-1
 APPENDIX  C 
SSAS Statement  of Data Accuracy  Provided the DHHS Data 
Integrity  Board for Its Ruling 
Statemenotf
 theAccuracyofSDX/BENDEX  Files

Eachyearinmid-November,t heSociaSle curitAyd ministrati(oSnS A)providecso
 mputer

filetso Statea gencietsh atindicatteh eamountofthecostoflivinagl lowance(sC
OLA) for

TitlIeI beneficiarainedsT itlXeV I recipientSst.a teuss ethisinformatitoona djustth
 e

paymentsofindividuailnst heAFDC, Medicaida,n
 dfoodstampsprograms.TheseCOLA

filetsh
 atSSA provides to States are covered under the SDX/BENDEX  computer matching 
act agreement that was approved by the HHS Data Integrity Board and was effective on 
January  1, 1990. 
OMB issued temporary  guidance on evaluating the reliability  of data provided to States for 
COLA determinations.  The following provides the pertinent  information that OMB 
suggested would be needed for the Boards analysis. 
o	 Descriptions  of the SDX and BENDEX  files follow.  They describe how SSA 
acquires and maintains the data in these files, along with a description  of the COLA 
files.  The information provided  to the States in the COLA files is limited to 
identification  of the individual recipient and the amount of benefits SSA pays. 
o	 Therehave been no audits or risk assessments of the COLA files.  However,  in 
recent testimony to Congressional  staff SSA stated that the BENDEX  files are 
accurate. 
o	 No materiawle aknessehsa vebeenidentifiiende ithetrh eSDX/BENDEX  systemso r

theCOLA files. 
o  ThecomputerprogramsusedtoperformtheCOLA adjustmentasr ehighlyr
eliable.

Theseprogramshavebeenoperationfaolr anumberofyearsanddonotrequiraen
 

annualchangetothecomputerlogic.Theonlychangerequireids
achangetothe

paymentamountandthisisvalidatebdo thmanuallya ndbyanautomatevda
 lidation

process.

o  TheSSA PersonneSle curitpyr ogramiseffectivEem.p loyeeaccessi
srestricted

throught heuseofPersonaIld entificatNiuomnb erstoonlythosefilense
 ededby

employeest operformtheijro bdutiesA.n  auditt raisly stemmaintainisn
 formation

aboutemployeesw ho haveaccessefdi
 les.

o  TheSSA SecuritPyl anisinplaceforSSA Systems.Theassociatseedc uritryi
skis

low.As stateadb ove,employeeaccesst odataisrestricteTdh.e possibiliotfyn
on

employeeaccessi sremote.Physicaalc cesst othebuildinhgo usingthecentradla
ta

processinfga ciliftoyr SSA isalsorestricteEdm.p loyeeswithaccesst othisb
uilding

arerestrictteodc ertaianr
 eas.

c-1  o	 It is SSA managementpso sitiotnh atboththeSDX andBENDEX  COLA filerse flect

ahighdegreeofdataintegriatnyd aredeliveretdo theStateisn atimelymanner.

SSA estimatetsh atbothCOLA fileasr einexcesso
f99 percent accurate.  Most of 
the inaccuracy is related to the differences in timing between when the COLA tapes 
are produced and when the January payment tapes are sent to the Treasury 
Department.  Statesare informedof subsequentpaymentchangesby later 
SDX/BENDEXfiles. 
Following is additional information about the SDX and BENDEX systems and the COLA 
files that are produced. 
BENDEX 
The Beneficiary and Earnings Data Exchange (BENDEX)file is extracted from SSASmaster 
beneficiary record (MBR). The MBR data base is the source for determining Title II benefit 
payments to which individuals are entitled.  Information to establish entitlement is received 
directly by field ofllces from the claimant or his or her authorized representative and verified 
with documentary evidence. 
The data base is maintained through beneficiary reporting and numerous postentitlement 
operations such as earnings and student enforcement, death match and accountability reviews. 
These operations are an additional measure for monitoring continuing beneficiary entitlement. 
Debit and credit actions are maintained in the data base to update the records. 
The BENDEX computer system operates without personal intervention.  BENDEX 
information is released to States in response to requests by the State agencies for information 
on individuals who are receiving payments under the AFDC, Medicaid, food stamps, or 
other State administered programs.  Personal identifying information is submitted by States, 
and SSA employs a matching criteria which must be met before data are released.  States are 
required to disclose the information only to those with a need to know. 
Regular BENDEX files are released twice a month to States; any changes occurring are 
reported automatically in the next monthly BENDEX run.  The BENDEX files are either 
electronically transmitted or sent via an express mail carrier. 
The cost-of-livingadjustmentfile iselectronicallyproducedby SSAin mid-Novembereach 
year.  This file provides the amount of increase to be paid on January 3 to Title 11 
,
beneficiaries who are also receiving payments under a State administered program. 
In 1990, the COLA fde was provided to States on November 19.  With the manual and 
systems checks built into the BENDEX system, SSA believes the COLA fde to be highly 
accurate. 
c-2  The  State  Data Exchange  (SDX) data that are sent to the States are extracted from the 
Supplemental  Security Record (SSR) data base.  The information on the SSR data base is 
manually input by SSAS district oftlces with managerial/supervisory  checks.  Before data are 
input to the SSR, the district of!lces are required to verify and maintain the verification  (e.g., 
marriage/birth  certificates,  pay stubs, etc.) in the claimants folder that is retained in the 
servicing district ol%ce.  A periodic reverification  (the frequency depends on the particular 
case) of the information  on the SSR data base is required.  This requires direct contact with 
the Supplemental  Security Income claimant. 
Once the district oftlce transmits the data to the central SSR data base, there is an extensive 
computer edit process that verifies the accuracy and integrity of the input.  Various input 
fieldsare cross-checkedwitheachotherto ensureconsistencyof the data,  Shouidthe input 
fail the edit process, the case is referred back to the district ofilce for correction. 
Whenever a change in computer program  logic is made to the SSR or to the SDX, a 
validation plan must accompany the change.  This plan ensures that any changes are 
thoroughly  validated before the change is actually made to the live computer system. 
Changes tothecomputerprogramlogicf orboththeSSR andtheSDX areprohibitsehdo
 rtly
beforet hecostoflivincgh ange,t herebya,d dingassurancteo theintegriotfyt
 hecostof

livinpgr
 ocess.

The cost of living change does not involve a change to the computer logic.  It basically 
involves a change to the money amount.  Even though this change is not as extensive as a 
change in the logic, it is validated both manually and by an automated validation process 
before the change is made to the live system. 
The SDX cost-of-living  adjustment file is electronically  produced by SSA in mid-November 
each year.  This file provides the amount of increase to be paid on December  31 to Title 
XVI recipients  who are also receiving payments under AFDC,  Medicaid,  or food stamps.  In 
1990, the SDX COLA file is to be provided to States on November 27.  SSA believes this 
file to be highly accurate. 
Prior to the cost of living process,  each SSA regional ofilce is alerted to the cost of living 
schedule and, in turn,  alerts the States.  This is to detect any non-receipt problem  at the 
earliest possible date. 
c-3  APPENDIX  D

TO:	 June Gibbs 
DLUWII 
Inspector  General 
SUBJECT :	 OIG Draft  Report:  Reforms Are Needed In State  Income 
apndEligibility  Verification  Systems,  OEI-06-92-0008Q 
FROM :  *&e&

Assistant  Secretary 
for  Children  and  Families 
We have reviewed the subject draft and consider the Income

Eligibility verification System (IEVS) process de*riPtion  to be

a comprehensive presentation which captures the essence of the

issues States have regarding use of the system in their efforts

to address income and verification activities for the entitlement

programs.  As the OIG Study points out, there are operational 
weaknesses  in the IEVS.  Similarly, the study correctly 
identifies several of the major problems confronting the States 
in their administration of welfare programs such as fiscal

pressures, resource limitations, and the complexity of the =Y

policy issues that prevail in the States.  Additio-llY~  states

are contending  with  the impact  of welfare  reform  initiatives.  We 
will continue  to assist  States  as they  Confxmnt  the IEVS issues 
highlighted  in the study and emphasize  the importance  of the 
required  matches  (or alternative  matches  approved  under  the 
regulatory  waiver authority) .  Furthermore, we will maintain our

hteragenCy  working relationship with the Food and Nutrition

Se-ice  (FNS).

In  response  to OIG recommendations  1, 2, and 4  (we have not 
addressed  recommendation  3 which  pertains  to  HCFA)  we  offer  the 
following  comuents: 
~ATIOXW  #1:  The Assistant  Secretary  for Management  and

Budget  (Mm)  should  establish,  with  the Administration for

Children  and Families (ACF), the Health Care Fi~nC~n9

Mm.inistration  (HCFA), and the Social Security Administration, a

departmental IBVS Governing Council.

ACF RBSPONS~:  We do  not  concur.  We believe  the  relevant  Federal 
agencies,  including  FNS,  should  address  IEVS  issues  through
existing  interagency  coorciination  mechanisms  rather  than  through 
the creation  of  a  Department  level  council.  Although  the 
recommendation  considers  welfare  reform  and  acknowledges  that 
changesi  will  be  occurring,  we  believe  that  it  is  premature  to 
D-1
 Page 2 - June Gibbs  Brown

devote  substantial  resources  to tackle IEVS issues while  myriad

welfare  reform  options  are being  evaluated.  We need not place

additional  burdens  upon States  or the affected  Federal  agencies

during  this period  of transition  to a new system.

RECOMMENDATION  #2:  ACF should  continue  to seek a rule change 
which would  allow  the AFDC program  an  equivalent  degree  of 
flexibility  currently  available  to the  Stamp  program with 
Food 
regards to IEVS (e.g., waiver of 45 day follow up timeframe). 
ACF RESPONSE:  We concur and will pursue  options  to accomplish

this change.  An equal degree  of flexibility  will  enable  the

States  to coordinate  data exchange  activities  for all programs  in

a consistent  fashion.

R.EC~ATION  #4:  ACF and HCFA should inform State public

assistance  agencies  of their willingness  to work with  them to

strengthen  automated  eligibility  verification  activity.

ACF RESPONSE:  We concur.  Staff  from ACF, HCFA, and FNS have

worked with States in the past on IEVS issues and will continue

to do so in the future.

We appreciate  the opportunity  to review  and comment  on the draft

report.  If you have any questions  or wish  to discuss  these

conments  further,  please  contact  Robert  Laue on  (202)401-5040.

D-2
 I  DEPARTMENT  OF HEALTH  & HUMAN  SERVICES  JiLe  d  me Seaeku# I

MEMORANDUM TO THE INSPECTOR GENERAL

From  :	 Kenneth S. Apfel 
&

Assistant Secretary for Management and Budget

Subject:	 OIG Draft Report:  Reforms  Are  Needed  in State  Income 
and Eligibility  Verification  Systems--OEI-06-92-OO080--
Comments 
In response to your request for comments we have reviewed the

draft inspection report, Reforms  Are Needed  in State  Income  and

Eligibility  Verification  Systems  (IEVS).

We concur  with the reports  second and third recommendations,

that ACF and HCFA should seek regulatory changes to provide IEVS

for the AFDC and Medicaid programs, a degree of flexibility which

is equivalent to that currently available to the Food Stamps

program.  This flexibility will allow these programs to decide

which matches to run, as well as the timing on when  to conduct

the matches.  Our understanding  is that ACF has already begun the

process of drafting such regulations for the AFDC program.

We also agree with the reports  final recommendation,  that ACF

and HCFA should inform State public assistance agencies of their

willingness to work with them to strengthen automated eligibility

verification activity.

However, we are troubled by the report~s focus given the change

that  is transpiring  in the context of welfare  reform.  Rather

than serving  as a forum  for discussing  old paradigms,  this report

could  be far more useful  if it sought to direct  attention  towards

new opportunities  and solutions  to problems  of eligibility

verification.

Rather  than  simply  accepting  as valid all of the existing  data

matches,  and suggesting  that States  should simply  better  use

existing  matches,  the report  could  recommend  using  States  as

laboratories,  by having  States  request  and participate  in

demonstrations  to evaluate:

	 whether  IEVS should  remain  the preferred  approach,  or 
whether  other  approaches  exist to better  accomplish  the same 
goals,  especially  in the context  of proposed  welfare  reform 
changes; 
	 under  IEVS, what matches  are or arent  effective,  and why 
some  States,  like Califomia.i.fipd matches  like IRS and BEER 
effective when  the majorlcy  vi-~iates rate  them as 
ineffective;  and,

D-3
 	 whether  statistical  techniques  could be used to improve  the 
utility  of data from matches  that States now find 
ineffective. 
What  is also needed  but not provided  by the report,  is empirical

evidence  about  the cost effectiveness  of the different  IEVS

matches.  We understand  that this was what ACF had in mind when

they originally  requestea  that OIG examine  IEVS.  Such data,

which may need to be the subject of a subsequent  study, would

allow an evaluation  in terms of dollars  and outcomes,  to

determine  whether  we should propose  legislation  to no longer

require  those matches  found to be ineffective.  Unfortunately,

the current  report  only provides  State perceptions  of IEVS cost

effectiveness,  making  objective  decisions  difficult.

Lastly,  we would  like to state our opposition  to the reports  .

initial  recommendation,  that the Assistant  Secretary  for

Management  and Budget  (ASMB) should establish,  with ACF, HCFA,

and SSA, a departmental  IEVS Governing  Council.  Creation  of such

a council:

	 Does  not  address  the kev issue for States.  Specifically, 
the States  (and the Department)  would  like to increase 
States  flexibility  to match against  those data bases which 
produce  maximum  results  (and not to have to match  against 
data bases viewed  as producing  little or no result),  and to 
tailor  the verification  process  to account  for variability 
in workload.  All that is needed  to address  this  issue,  as 
noted  above,  is to change existing  regulations; 
	 Is unnecessary  and the Council would  lack the authoritv  to 
reuuire the OPDIVS to actuallv do anvthinq.  The Federal 
programs affected by IEVS already communicate with each 
other.  Creation of a governing council may or may not 
increase such communication,  but unless  ASMB  is vested  with

authority  to require  the OPDIVS  to adopt certain  pOliCieS,

which  is not the case under the recommendation,  the Council

is unlikely  to be any more or less effective  than are

existing  communication  channels;  and,

	 A~sd venvisioned  lavers w o are alr 
part  of the debate  on  issues in this area.  We expect that 
in the near.future  the Social  Security  Administration  will 
become  an independent  agency,  which would  leave only ACF and 
HCFA on the Council.  In addition,  the Council  does  not 
include  as members  other key players,  such as the Department 
of Agriculture. 
In addition,  IEVS is also under  study as part of welfare  reform.

Until the Administrations  package  is finalized,  any

recommendation  for a governing  council  would  be premature.,  For

this and the reasons  above, we believe  that creation  of yet

another  coordinating  body, to guide  IEVS policy,  should  not be

pursued.

D-4
 On a technical  note, we suggest dropping  from the first

recommendation  the bullet which  suggests  the Governing  Council

should take a proactive  role by acting  in an advisory  capacity  to

the welfare  reform  task force concerning  eligibility  verification

issues.  As the task force is nearing  the end of its mission  to

draft a welfare  reform package,  this role will shortly  be

overtaken  by events.

D-5
 Date  .17.%&q 
BruceC.Vlade

From 
Administrator

Subject  Office of Inspector General  (OIG)  Draft Report  Reforms Are Needed  in State 
Income and Eligibility Verification Systems, OEI-M-92-00080 
To 
June  Gibbs  Brown 
Inspector General 
We reviewed  the abc)ve-referenced  rept  in which OIG  found continued  Income ant 
Eligibility  Verification  Systems  (JEWS) operational  whichdirectlyimpact 
weaknesses 
the degree  to which  states  are pe~mming da~ ma~hes and the utili~ of IW@ed 
IEVSSOUr@s. 
We agree  with rmmmendations  1 and 4, defer ~mment  to the Administration  for 
Children  and Families  regarding  recommendation  2, and nonconcur  with 
recommendation  3. 
Our detaikd  eanrnents  on the reprts  findings  and recommendations  are attached 
for your consideration.  Thank you for the opportunity  to review and comment  on 
this draft report  Please  contact  us if you would  like to discuss our eanments. 
Attachments 
D-6  Office  of Insuector General (OIG) Draft Rewm 
ReformsAre Ye.ededin State Income 
and Eli~ibilitvVerificationSvstems 
(OEI-06-92-00080) 
OIG  Recommendation  1 
The  Assistant  Seaetmy  for Management  and Budget  (ASMJ3) should  establish,  with the 
Administration  for Children  and Families  (ACF),  the Health  Care Financ~g 
Administration  (HCFA),  and the socia]  security  Administration,  a departmental  Income 
and Eligibility  Verification  Systems  (IEVS)  Governing  Council. 
HCFA  Rewmnse 
HCFA  SUppOrtSthe recommendation  mat we take a proa~e  role in streamlhing  the 
welfare  eligibility  determination  pr~  by offering  to act in an advisory capai5ty  to the 
welfare  reform  task force  concerning  eligibility  verification  issues.  However,  we donot 
concur  with the need  for a new mncd.  We beheve  tie  issues concerning  IEVS  can be 
reaokd  by working  with the existing  IEVS interagency  work group which ACF 
coordinates. 
While  this report  reaffirms  findings  from prior OIG and HCFA  review  we believe 
many of the current  problems  with State  IEVS have ~]ated  because  of serious  State 
budgetrestraintsresourcelimitationsandprogram growth.  We believe  thatestablishing 
a full-fledged  council  would  further strain States resmurcq  especially  with the ongo~g 
effort  dedicated  to heakh  care refo~.  ne  report affirms our concerns  regarding  the 
strain on limited  State  resou~.  For e~ple,  it includes a quote from a State worker 
=Ying,We can barely  issue  benefits  in a t,imelYmanner,  let alone  do things like  IEVS 
match+ whichare real nice but impractical.n 
QIG  Recommendation  2 
ACF  should  continue  to seek  a ~le  change  which wou]d wow  the Ad  to Families  with 
Dependent  Children  (AFDC)  program  an equivalent  degree  of flexibility  currendy 
available  to the Food  Stamp  program with regards to IEVS (e.g., waiver of 45-*% 
followuptimeframe). 
WF  A Resuonse 
HCFA  defers  comment  to ACF,  the action  agency for this recommendation. 
D-7
 OIG  Recommendation 3 
HCFA  should  seek  regulato~  changes  for the Medicaid  program whichprovidefor 
IEVS flexibilityequivalent to those sought by ACF for the AFDC program. 
HCFA Response 
We do not concur.  In 1989, we amended  the IEVS regulations  and provided  the States 
more  flexibility  through  targeting  (or selective  use of data).  We continue  to believe  that 
these  regulations  provide  sufficient  flexibility  for States  to make  IEVS cost-effective. 
States  are authorized  to sekxt  the most useful  IEVS data sources  and only follow  up on 
those  match  results  that have proven  to be effective. 
We reconsidered  revising the regulations  to provide  States  further flexibility  and 
discussed  it with  the interagency  work group.  We considered  permitting  a waiver  of the 
Beneficiary  Earnings  Exchange  Rewrd  match.  We decided  not to pursue  this change 
because  we believe  that many of the State/Federal  ~nclusions  of cost-effectivi%ness were 
based  on program  experience  and perception  rather than cost-benefit  studies.  We 
waited  for the results  of a Food  and Nutrition  SeMce  (FNS)  study of targeting 
methodologies  before  making  a decision.  The FNS  study found  that IEVS  is wst
effective  if States  target the uses of the data appropriately.  We also believe  that we 
should  defer  initiatives  for new regulation  changes  at this time because  of the current 
discussionof health  care reform.  Decisions  on health  care reform may fundamentiw 
changeMedicaids  role in IEVS. 
We believe  that we should  wntinue  to work with States  to implement  targeting  strategies 
that make  IEVS  less resource  intensive.  With the proper strategy, States  can use  the 
program  in a cost-effective  manner.  Wewill be flexiile  in approving  State  targeting 
plans. 
91G Recommendation  4 
ACF  and HCFA  should  inform State  public  assistance  agencies  of their willingness  to 
work with them  to strengthen  automated  eligibility  verification  activity. 
HCF A resoonse 
We wncur.  We will send  a wpy  of this report to our regional  offices  (ROS)  and ask 
themto share it with the IEVS coordinators  in each State.  Our RO  staffs have  made 
themselves  available  to work with the States  on automation  issues  and eligibility 
verification  in the past and will continue  these  efforts.  Further,  our Central  Office  staff 
in the Division  of Payment  System& Medicaid  Bureau,  works closely  with the States  to 
improve  State  use of automated  eligibility  systems.  nere  is also  a Systems  Technical 
Advisory  Group  devoted  to automationissues. 
D-8
 MAY27  1~ 
Date: 
Shirley S. Chater 
From:  Commissioner of Social+b~om.  we  ~eeded 
Office of Inspector General  Draft Report, 
subjeCt:  In State  Income  and Eligibility  Verification  Systems 
(OEI-06-92-00080) --INFO~TION 
To:  June  Gibbs  Brown 
Inspector  General 
If we can be

Attached  is  Our  response  to  the  SUbje::o:POrt
of further  assistance,  please  let us  .

Attachment:

SSA Response

I

D-9  1~?
  AL SECURI  E OFFICE  OF 
PEC!TORGENERAL  DRAFT  REPORT.  nREFORXS  ARE NEEDED  IN STATE 
~  0EI-06-92-OO080 
We appreciate  the efforts  of the Office  of Inspector  General

(OIG) in assessing  the current  status  of State  Income  and 
Eligibility Verification Systems (IEvS)- We concur with the four 
recommendations for the assessment and improvement  of IEVS.  The 
findings  and conclusions  in the report  substantially  mirror  the 
Social  Security  Administrations  (SSA) experience  in dealing  with 
States  users  of IEVS.  The following  comments  offer  some 
suggestions  for improving  the focus of the report.

We believe  that the outcome  ox the Wage Reporting  Simplification 
Project,  specifically  the proposed  Simplified  Tax and Wage
Reporting  System  (STAWRS),  could have a significant  impaCt  On 
IEVS and suggest  that the final OIG report  reflect  this point.

The report  indicates  that many States  are not taking  advantage  of 
various Federal  and State  data sources  (computer  matching 
opportunities)  because  they believe  it is not cost-effective  to 
do SO.  Some  States  claim  that the IEVS process  provides 
inaccurate  or untimely  data,  does not include  certain  Federal 
data,  and lacks  the flexibility  necessary  to effectively  and 
efficiently  implement  IEVS requirements.  It should  be noted  that 
the proposed STAWRS would provide both State and Federal agencies 
with a single repository  of timely  and accurate  wage/income 
information.  It would  also include  data  on Federal  employees  and 
reflect  the most  current  death  informational  By maintaining  this 
information  in one place,  State  and Federal  agencies  could  avoid

having  to perform  multiple  computer  matches  that are costly and

time-consuming.

In addition,STAWRS  is expected  to provide  users  with  Social

Security  number  (SSN) verification  services  (validation  of name

and SSN combinations)  which  is expected  to result  in improved

record  keeping.  In short,  we believe  that STAWRS  could  help

alleviate  many of the IEVS problems  cited  in the report.

There  seems  to be an inconsistency  in the situation  described

with respect  to State  use of IEVS data,  and the suggestion  that

more data  from additional  sources  should  be made  available  to 
States.  If the States  are unable  to use the data  they are given 
now,  it seems  anomalous  to suggest  that they  be given  even more 
data.  We  believe  this  apparent  discrepancy  needs  to be further 
clarified. 
km? State5 do not permit SSAto redi sclose the death data they give SSA to other States.  me 
Inteml  Revewe Cedewas animdedby the LlsrsibusBudgetReconciliation Act of 1993. P.L.  103-66. to preclude 
disclosureof Federatalx  data to States that restrict  redl sclosure of their  death data to othefrederal 
agencies.  Hwever. the law does  not  require States to authorize redlsclosure by SSAto other States.  A 
pendingbill.  H.R.  3400.  if  enacted, wuld  remedy this. 
D-10
 L 
OIG Recommendation

The Assistant  Secretary  for Management  and  Budget  (ASMB)  should

establish,  with  the Administration  for  Children  and  Families

(ACF) , the  Health  Care Financing  Administration  (HCFA),  and  SSA,

a departmental  IEVS  Governing  Council.

SSA  Comment

We  concur.  The  problems  delineated  in the  report  are  well  known

to SSAS  match  coordinators.  In our  efforts  to comply  with  the

Deficit  Reduction  Act  of  1984  and  the  Computer  Matching  Act  of

1988,  we  work  closely  with  the  States  to maintain  matching

agreements  and  operations,  as prescribed  by  each  Act.  For

example,  we recently  sent a third annual  request  to all SSA

Regional  Commissioners  for updated  cost/benefit  data and analyses 
from States  on  matching  programs  subject  to  IEVS  regulations.  We 
also  raised  issues  about  State  priorities  and  resources  and the 
need to be proactive  in seeking  solutions  to under-utilization  of 
computer  matching  at the State level.  A helping  hand to the

States  at the staff  level, however,  has had limited  effect.

Accordingly,  we believe  the establishment  of an IEVS Governing

Council  is an essential  first step to focus attention  on State

solutions.

SSA took this top-down  approach  to the organization  and

management  of its own automated  data exchange  and matching

activities  in 1984.  Some results  include  the current  SSA Cost

Benefit  Guide  and relative  state-of-the-art  systems  technologies

and methodologies  for planning,  implementing  and evaluating  IEVS

type matches.  ,IJnderthe aegis of the Governing  Counsel,  SSAS

experience  could  be replicated  in the States.  SSA can share  its

methodol~qies  for developing  a standard  IEVS waiver/targeting

approval  process  with the Governing  Counsel,  including  computer

screening  techniques  and related  systems  enhancements.

We believe  SSA should have primary  responsibility  for providing

necessary  security  consultation  to the Governing  Council.  SSA

already  has the major  security  responsibility  in this area,  and

as such, possesses  the experience  necessary  to ensure  that IEVS

security  requirements  are not made more complicated,  but rather

consolidated  and simplified.

OIG Recommendation

ACF should  continue  to seek a rule change  which  would  allow  the 
Aid to Families  with Dependent  Children  (AFDC) pro9ram  an 
equivalent  degree  of flexibility  currently  available  to the Food 
Stamp program  with regards  to IEVS  (e.g., waiver  of 4S day follow 
up timeframe) . 
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~-12

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