Department  of Health  and Human  Services 
OFFICE  OF 
INSPECTOR  GENERAL 
COST-EFFECTIVENESS  OF  SAVE  OFFICE  OF INSPECTOR  GENERAL 
The  mission  of the  Office of Inspector  General  (OIG),  as mandated  by Public  Law 95-452, as 
amended,  is to protect  the  integrity  of the  Department  of Health  and Human  Services (HHS) 
programs  as well as the  health  and welfare  of beneficiaries  served by those  programs.  This 
statutory  mission  is carried  out  through  a nationwide  network  of audits,  investigations,  and 
inspections  conducted  by three  OIG  operating  components:  the  Office of Audit  Services,  the 
Office of Investigations,  and the  Office of Evaluation  and Inspections.  The  OIG  also informs 
the  Secreta~  of HHS  of program  and management  problems  and recommends  courses  to 
correct  them. 
OFFICE  OF AUDIT  SERVICES 
The  OIGS  Office of Audit  Services  (OAS)  provides  all auditing  services for HHS,  either  by 
conducting  audits with its own audit  resources  or by overseeing  audit work  done  by others. 
Audits  examine  the  performance  of HHS  programs  and/or  its grantees  and contractors  in 
carrying out  their  respective  responsibilities  and are intended  to provide  independent 
assessments  of HHS  programs  and operations  in order  to reduce  waste,  abuse,  and 
mismanagement  and to promote  economy  and efficiency throughout  the  Department. 
OFFICE  OF INVESTIGATIONS 
The  OIGS  Office of Investigations  (01)  conducts  criminal,  civil, and administrative 
investigations  of allegations  of wrongdoing  in HHS  programs  or to HHS  beneficiaries  and of 
unjust  enrichment  by providers.  The  investigative  efforts  of 01  lead to criminal  convictions, 
administrative  sanctions,  or civil money penalties.  The  01  also oversees  State  Medicaid  fraud 
control  units which investigate  and prosecute  fraud  and patient  abuse  in the  Medicaid  program. 
OFFICE  OF EVALUATION  AND INSPECTIONS 
The  OIGS Office of Evaluation  and Inspections  (OEI)  conducts  short-term  management  and 
program  evaluations  (called inspections)  that  focus on issues of concern  to the  Department, 
the  Congress,  and the  public.  The  findings and recommendations  contained  in these  inspection 
reports  generate  rapid,  accurate,  and up-to-date  information  on the  efficiency, vulnerability, 
and effectiveness  of departmental  programs.  This report  was prepared  in the  Kansas  City 
Regional  Office under  the  direction  of James  H. Wolf, Regional  Inspector  General.  Project 
staff included: 
REGION  HEADQUARTERS 
Hugh  Owens,  Project  Leader  Alan  S. Levine,  Program  Specialist

Jennifer  E. Collins,  Program  Analyst  Barbara  R. Tedesco,  Mathematical  Statistician

Perry A. Seaton,  Program  Analyst

Dennis  E. Samworth,  OAS,

Statistical  Specialist 
For  additional  copies  of this report,  please  contact  the  Kansas  City Regional  Office  at 
(816) 426-3697.  Depatiment  01 JIGZW~~- ____ 
OFFICE  OF

INSPECTOR  GENERAL

COST-EFFECTIVENESS  OF  SAVE 
~fE+RO  V*ICES
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GIBBS BROWN 
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Inspector  General
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++ 
OEI-07-91-01230
%>dl a  EXECUTIVE  SUMMARY

PURPOSE 
To  determine  if the  Systematic  Alien  Verification  for Entitlements  (SAVE)  is 
cost-effective  in verifying  the  immigration  status  of aliens  applying  for Aid to Families 
with Dependent  Children  (AFDC)  and  Medicaid. 
BACKGROUND 
The  Immigration  Reform  and  Control  Act  of 1986 (Public  Law 99-603)  established  the 
SAVE  program.  SAVE  is designed  to assist eligibility workers  in preventing  illegal 
aliens  (noncitizens  who are  in the  United  States  illegally or by reason  of their 
immigration  status)  from  receiving  federally  subsidized  cash  and  medical  benefits. 
However,  this legislation  permits  States  to request  a waiver  if they  can  demonstrate 
that  either  SAVE  is not  cost-effective  for them  or their  alternative  verification  system 
is as effective. 
The  Administration  for Children  and  Families  (ACF)  requested  this study.  According 
to ACF,  very few guidelines  or criteria  must  be  met  to be  granted  a waiver.  Since  the 
inception  of SAVE,  nine  States  have  been  granted  either  full or partial  waivers  by 
ACF  and  the  Health  Care  Financing  Administration  (HCFA).  As part  of our  analysis, 
we reviewed  these  waiver  requests. 
We  selected  statistically  valid  samples  of case files that  had  been  matched  between  the 
Immigration  and  Naturalization  Service  (INS)  and  States  records.  We  then  did a case 
file review  in the  four  sample  States  (California,  Florida,  Illinois,  and  Texas)  on those 
records  the  States  were  able  to locate.  These  States  represented  almost  70 percent  of 
the  estimated  2.06 million  undocumented  alien  population  in the  1980 census,  which 
was the  last year  aliens  were  identified  in the  survey.  The  Census  Bureau  estimates 
this population  was between  3.5 and  4.0 million  in  1994.  In addition,  we interviewed 
States  staff  on how they use SAVE  and  reviewed  their  SAVE  procedures  and 
administrative  costs.  A companion  report  Rewewof the SAVE SJWenzsPKXXWS 
(OEI-07-91-01231)  addresses  deficiencies  in INS and  States  systems. 
FINDINGS 
We Are Unable  To Determine  The Cost-Effectiveness  Of The SAVE  Program. 
.	 The  INS could  not  isolate  those  records  that  apply  only to the  AFDC  and 
Medicaid  alien  populations. 
.  States  could  not  locate  all sample  beneficiary  case  files. 
	 Case  file documentation  was not  adequate  to determine  if SAVE  was 
instrumental  in States  determination  of eligibility based  upon  immigration 
status. 
i  .	 States  lack  consistency  andcompleteness  indocumenting  SAVE  administrative 
costs. 
However,  the SAVE  Program Has Value in Identifying Ineligible Aliens. 
.  Cost  avoidance  cases were  identified  in each  State. 
	 SAVE  assisted  eligibility workers  not  trained  in reviewing  INS documents  as 
review  of documents  is required  to determine  the  aliens immigration  status. 
Further,  eligibility workers  cannot  establish  the  authenticity  of all documents 
without  INS verification. 
.	 State  and  county  officials cited  deterrence  as a factor  in illegal  aliens  not 
applying  for benefits.  However,  it was difficult  to determine  the  overall 
deterrent  effect  of SAVE. 
GUIDELINES  FOR  EVALUATING  WAIVER  REQUESTS 
Based  on the  data  we found  and  the  results  of our  review, we cannot  complete 
a cost benefit  analysis  and  believe  that  until  INS  and  States  address  weaknesses  in the 
systems,  such  a cost  benefit  analysis  will not  be  possible.  (See  companion  report 
Review  of the  SAVE  Systems  Processes  which  addresses  the  systems  weaknesses 
and  recommendations  for  improvements.)  In  the  meantime  we  believe  there  may  be 
more  requests  from  States  to  obtain  waivers.  Based  on  our  review,  we  believe  there 
are  a number  of areas  ACF  and  HCFA  should  be  especially  attentive  to in reviewing 
those  waivers, 
Completeness of Systems 
Review  each  States  plan  to ensure  that  the  proposed  alternative  covers  all 
steps  of the  process,  including  verification  of involvement  with  INS for at least 
the  secondary  verification  process,  and  the  hearings  and  appeals  process. 
l+hnary  Verification 
If the  SAVE  primary  verification  process  is eliminated,  review  the  individual 
States  plan  for reviewing  and verifying  alien  documentation  and  staff  changes 
to  accomplish  this objective. 
Documentation  Suppo&g  the State-kEstbnated Savings 
Review  each  States  definition  of savings, how calculated,  and  method  of 
projecting  these  savings. 
Costs of Adminktetig  the SAVE and Alternative Systems 
Assure  that  agency  instructions  are  followed  in documenting  SAVE  (and 
alternative  systems)  administrative  costs. 
ii  AGENCY  COMMENTS  AND  OIG RESPONSE 
The  ACF  commented  that  they  hoped  the  OIG  could  have  provided  a more  definitive 
response  concerning  the  cost-effectiveness  of SAVE.  They  recognized,  however,  that 
this was not  possible  because  of the  reasons  stated  in the  report. 
The  INS did not  provide  written  comments  to the  report,  but  verbally  indicated 
concurrence  with the  findings  and  recommendations. 
The  ACFS comments  in their  entirety  are  included  in Appendix  C. 
111  TABLE  OF  CONTENTS

PAGE

EXECUTIVE  SUMMARY

INTRODU(XION,  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  1

FINDINGS  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  5

  Cost-Effectiveness  of SAVE  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  5

  The  Value  of SAVE  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  8

GUIDELINES  FOR  EVALUATING  WAIVER  REQUESIS  . . . . . . . . . . . . . . ..11

APPENDICES

A
 Criteria  Usedin  Selecting  the  Four  Sample  States
 . . . . . . . . . . . . . . . . . . . .  A-1 
B:
 Methodology  Used  to Calculate  Cost Avoidance  .
 . . . . . . . . . . . . . . . . . . . . .  B-1 
c  Agency  Comments  . . . . . . . . . . . . . . . . . . . . . . .
 . . . . . . . . . . . . . . . . . . . . .  c-1  INTRODUCTION

PURPOSE 
To  determine  if the  Systematic  Alien  Verification  for Entitlements  (SAVE)  system  is 
cost-effective  in verifying  the  immigration  status  of aliens  applying  for Aid to Families 
with Dependent  Children  (AFDC)  and  Medicaid. 
BACKGROUND 
The  Immigration  Reform  and  Control  Act  of 1986 (Public  Law 99-603),  hereafter

referred  to as the  Act,  provides  for the  establishment  and  implementation  of a

cost-effective  system  to verify the  status  of aliens  applying  for federally  funded

benefits.  The  SAVE  system  is designed  to assist eligibility workers  in preventing  illegal

aliens  (noncitizens  who are  in the  United  States  illegally or by reason  of their

immigration  status)  from  receiving  federally  subsidized  cash  and  medical  benefits.  The

Immigration  and  Naturalization  Service  (INS)  administers  SAVE  as an information

service  for States  and  does  not  make  determinations  on any aliens eligibility  for  a

specific  federal  benefit.  The  Act  mandates  the  following  programs  use SAVE  in

verifying  alien  documentation:  Food  Stamp  Program;  Housing  Assistance  Programs;

Unemployment  Compensation;  Title  IV Educational  Assistance;  AFDC;  the  Medicaid

Program;  and  certain  Territorial  Assistance  Programs.

Federal  Regulations,  45 CFR  233.50, speci~  that  to be  eligible  for federal  cash  or

medical  assistance  an individual  must  be  a United  States  citizen,  an  alien  lawfully

admitted  for permanent  residence,  or an alien  otherwise  permanently  residing  in the

U.S. under  color  of law (PRUCOL).  PRUCOL  refers  to aliens  residing  in the  U.S.

whose  presence  is known  and  tolerated  by authorities,  although  they  have  not  become

permanent  resident  aliens.

The  Martin  Marietta  Corporation  contracts  with INS to store  and  provide  electronic

access  to the  SAVE  Alien  Status  Verification  Index,  a data  base  containing  more  than

28 million  records  representing  aliens.  When  an alien  applies  for the  federally  funded

programs  listed  above,  an eligibility worker  is required  to verify the  aliens  status  by

initially  querying  the  automated  SAVE  system  (primary  verification).  This  process  is

used  to  authenticate  the  alien  registration  number  listed  on the  applicants

immigration  documents.  When  accessed  by the  user  through  a touch-tone  or

computerized  system,  the  INS, through  the  Alien  Status  Verification  Index,  will

respond  within  three  to five seconds  of the  query  providing  the  aliens  status.

If the  INS is unable  to establish  the  aliens immigration  status,  an Institute  Secondary

Verification  message  is sent  to the  State.  Also, if there  is missing information  or a

problem  is identified  on INSs data  base,  then  an Institute  message  is sent  to the

State.  These  messages  can indicate  a potential  problem  in the  identification  of alien

immigration  status  which may signify that  the  alien  is ineligible  to receive  benefits.

The  eligibility worker  is then  required  to send  copies  of immigration  documents  and  a

Document  Verification  Request  (Form  G-845)  to an INS District  Office  for manual  review  of the  immigration  status  (secondary  verification).  The  INS staff  examines  the

document  and  conducts  automated  and  manual  validation  searches  to determine  the

immigration  status  of the  alien.  The  INS procedures  indicate  that  it will respond  to

the  submitting  agency  within  10 working  days.  Results  from  the  primary  and

secondary  verifications  are  used  by eligibility workers  to determine  whether  an alien  is

eligible  to receive  benefits.

The  INS maintains  records  of disclosure  on all alien  registration  numbers  checked

through  the  SAVE  data  base.  The  INS maintains  and  discloses  these  records  in

accordance  with the  Privacy Act  and  the  Freedom  of Information  Act.

The  INS issued  a public  notice  in the  Federal  Register  in September  1987 (amended

in February  1989) concerning  INS procedures  for verifying  an aliens immigration

status  for various  federal  benefit  programs.  This notice  also stated  that  each

overseeing  agency, which  is the  Department  of Health  and  Human  Services  (HHS)  for

AFDC  and  Medicaid,  must  develop  its own regulations.  Due  to disagreement  between

ACF  and  the  Health  Care  Financing  Administration  (HCFA),  regulations  were  never

issued.  In lieu  of regulations,  ACF  and  HCFA  are  using the  statute  and  guideline

instructions  to the  States  to administer  the  SAVE  program.

INS hjected  Savings Due to SAK?Z 
The  INS operating  instructions  to the  States  (September  1989) estimated  that  between 
$2.5 and  $3 billion  in claims from  unentitled  aliens  could  be  avoided  each  year  as a 
result  of SAVE.  While  INS maintains  projected  savings provided  by the  States,  this 
information  is not  published  since States  use various  definitions  of cost  avoidance. 
HHSl~e  of ImpectorGeneral(OIG) andDepa*ent  of AgricultureOIG Studies 
A study  conducted  by the  HHS/OIG,  Alien Verification  for Entitlements,  February 
1988 (OAI-86-02-OOO03) and  a Department  of Agriculture  OIG  study, 
Cost-Effectiveness  of the  Food  Stamp  Program,  September  1992 (Audit  No.  27013-
47-Te)  found  that  State  officials believed  SAVE  was not  cost-effective.  In both  studies 
conclusions  were  largely  based  on perceptions,  however,  and  actual  case  files were  not 
reviewed  to determine  savings that  could  be identified  to SAVE. 
Waiver Requests 
While  all States,  the  District  of Columbia,  and  territories  are  required  by the  Act  to 
participate  in SAVE  for the  AFDC  and  Medicaid  programs,  section  121(c)(4)(B)  of 
the  Act  permits  a State  to apply  for a waiver  if it can  demonstrate  that  the  costs  of 
administering  SAVE  exceed  estimated  savings.  The  Secretary  of HHS  may  also grant 
a waiver  if the  State  has  an alternative,  equally  effective,  and  timely  system  for 
verification  of immigration  status  with comparable  hearing  and  appeal  rights  as those 
provided  under  the  Act.  Nine  States  have  been  granted  full or partial  waivers  (See 
Table  1 on the  following  page.)  However,  other  than  the  statutory  requirements, 
there  are  very few requirements  or guidelines  that  must  be  met  for a State  to be 
granted  a waiver. 
2
 STATES  PARTIAL  DATE 
WAIVER 
APPROVED 
California
 I  X2 I
 08-30-94 
~ 
I 
District  of Columbia
 I  X3  I  11-07-91 
I

Hawaii
 lx  I  11-23-93 
Maine
 1X1  I  12-28-94 
Michigan
 1X1  I  03-04-92 
Minnesota
 I  x  I  I  08-11-92 
Washington
 x  11-04-93 
1  I  1 
Mississippi
 x  Not  Available 
I 
I  I 
Montana
 x  04-10-90 
Partial  waivers  can  also be granted  to States  whose  small volume  of SAVE  primary 
queries  would  not  make  it [ost-effective.  In this case,  States  bypass  the  primary  query 
and  all contacts  with  INS are  for secondary  verifications.  --
New York  State  has previously  sought  a waiver  from  HHS  based  on the  results  of the 
Department  of Agricultures  OIG  study.  The  HHS  did not  grant  a waiver  based  on 
that  study because  the  State  had  not  furnished  information  which  showed  SAVE  was 
not  cost-effective  or that  the  State  had  an alternate  system which was as effective  and 
timely  as SAVE. 
METHODOI_XIGY 
We  selected  a purposive  sample  of four  States  for review  (California,  Florida,  Illinois, 
and  Texas).  For  details  on how we selected  the  sample,  see Appendix  A.  These 
States  represent  almost  70 percent  of the  estimated  2.06 million  undocumented  alien 
population  in the  1980 census, which was the  last year  aliens  were  identified  in the 
survey.  The  Census  Bureau  estimates  this population  was between  3.5 and  4.0 million 
3  in 1994.  We  also obtained  SAVE  program  administrative  costs for AFDC  and 
Medicaid  in Fiscal  Year  (FY)  1992, and  the volume  of primary  verifications  and 
secondary  referrals.  The  sample  States  rank  above  other  States  in one  or more 
categories  of undocumented  aliens,  costs, and verification  activity. 
We  requested  INS to provide  all record  information  on their  SAVE  data  base  with  an 
Institute  Secondary  Verification  message  during  the  study period  (September  1 
through  November  30, 1993) for aliens who applied  for AFDC  and  Medicaid  benefits. 
From  these  records,  we selected  a statistically  valid  sample  and  requested  each  State 
to match  them  against  their  records.  Since  California  is county-administered,  we 
selected  a statistically  valid  sample  of six counties  based  on the  volume  of queries  to 
the  SAVE  system  during  our  study period.  The  sample  counties  selected  were  Fresno, 
Los Angeles,  Orange,  Riverside,  San Bernardino,  and  San Francisco.  Alien  records 
were  then  selected  from  each  county. 
We  reviewed  the  case  file documentation  to determine  if SAVE  identified  aliens  who 
were  not  eligible  for benefits.  We  also discussed  SAVE  program  policy and  operation, 
financial  information,  and  case  files with  75 State  and  county  staff in the  four  sample 
States.  Staff  at the  State  level included  program  supervisors  and  analysts,  systems  and 
fiscal analysts,  eligibility  specialists,  finance  and  accounting  managers,  field  operations 
staff, quality  control  program  managers,  budget  analysts,  and  program  policy 
specialists.  County  staff included  program  managers  and  analysts,  social  service 
program  managers,  program  specialists,  an auditing  chief,  a quality  review  supervisor, 
and  a program  coordinator. 
We  conducted  our  review  in accordance  with the  QuaZ@ Standardsfor Impactions 
issued  by the  Presidents  Council  on Integrity  and  Efficiency. 
4 FINDINGS

WE ARE  UNABLE  TO DETERMINE  THE COST-EFFECHVENESS  OF THE 
SAVE  PROGRAM. 
We  could  not  determine  the  estimated  savings generated  by SAVE  for the  following 
reasons: 
.(cid:31) %  INS could not isolhte those recordk that apply only to the AFDC  and 
Medicaid alien populiulons. 
We  had  requested  that  INS furnish  us records  only for AFDC  and  Medicaid 
applicants.  However,  we received  a large  number  of Food  Stamp  records  as 
part  of this request. 
  States could not locate all sample benejiciq  case jik. 
Of the  935 cases  in our  sample,  States  could  locate  only 698 (75 percent)  of the 
sample, 
As noted  in our  companion  report  Revzkw of the SXK!3 system% Bocesses 
(OEI-07-91-01231), States  were  unable  to consistently  match  and  locate  sample 
cases when  an Institute  Secondary  Verification  message  was sent  by INS. 
States  had  insufficient  data  available  to reconcile  their  files with  INSs data  files 
as a result  of inconsistent  methods  of designing  and  storing  data  information  in 
their  computer  systems.  States  also lack sufficient  matching  points  within  their 
data  records  to identify  alien  case  files in matches  with the  INS/SAVE  data 
base. 
Out  of the  698 case  files that  the  States  did locate,  we had  to eliminate  430 
cases,  or 46 percent  of the  sample,  because  they were  not  AFDC  or Medicaid 
eligible  cases, which  left us with just  29 percent  of the  cases  (268)  from  which 
to identify  potential  cost savings cases. 
Table  2 on the  following page  provides  a breakdown  of the  sample  and  details 
the  various  categories  where  it was necessary  to exclude  cases. 
	 Casejiled ocumentation  was not adequate to determine if MlL?? was instrumental 
in States determination of eiljjbility based upon immigration status. 
Of the  268 cases  reviewed,  in most  instances  we were  unable  to determine  if 
SAVE  was instrumental  in the  decision  made  by the  State  or county  regarding 
immigration  status  due  to lack of documentation  in the  case  files. 
5 Table 2 
Original  number  in samde  I  335  I  200 I 200  I 200 I  935 
Less Cases not  found  69  20  47  101  237 
I  I I  I I 
Less Denied  - alien had too much income  or 
resources  or failed to cooperate  26  37  10  25  98 
Less Food  Stamps  13212110  \45198 
Less Emergency  Restricted  2  53  15  29  3  100 
1  1 1  1 I 
Less Refugee  Cases  20 19 0  0  39 
I I  I , 
Less Reference  Only 2- payment  on 
another  case, but  used  as reference  to the 
file  27 25  1  1  54 
Less Cases not  in Study Period  151181012125 
I 
Less U.S. Citizens  2  3  I o I o  I  2  I  5 
Medicaid  Only  42  22  59  7  130 
.  Stateslizckconsistency and completeness ih documenting &lKE  admiruktrative 
costs. 
Both  ACF  and  HCFA  have  issued  instructions  to the  States  as to the  types  of 
SAVE  activities  that  qualify for Federal  reimbursement.1  (Effective  April  1, 
1994 the  100 percent  reimbursement  for AFDC  was reduced  to 50 percent.2 
Medicaid  reimbursement  remains  at  100 percent.)  In addition  to direct  costs, 
indirect  costs must  be  documented  through  the  use of an  approved  cost 
allocation  method. 
1	 AFDC  Instructions:  FSA-IM-87-16,  November  3, 1987, and  FSA-AT-91-22, 
July 22, 1991, and  HCFA  Instructions:  Program  Memorandum  - Medicaid  State 
Agencies,  December  1987. 
2  Budget  Reconciliation  Act  of 1993 (Public  Law  103-66). 
6 We  found  that  States  lack uniformity  in the  manner  in which  they  document  SAVE 
administrative  costs. 
California  uses  a cost allocation  plan  to designate  costs for SAVE.  Each  county 
applies  a time  study to identify  costs applicable  to SAVE.  Although  staff from  the 
State  told  us that  all counties  use SAVE,  not  all of them  specifically  report  these  costs. 
They  also stated  that  one  countys costs are  greatly  understated  because  of their  use  of 
time  study methods  to report  costs.  A State  official told  us, We only claim  these  costs 
even  though  we know  that  actual  SAVE  costs are  higher. 
Florida  includes  salaries  as direct  costs, identified  through  random  moment  sampling. 
These  costs are  allocated  between  the  various  programs  served  by these  workers. 
Indirect  costs are  allocated  to SAVE  through  an allocation  formula  used  by the  State. 
Illinois reported  only contract  costs for telecommunication  services.  No personnel 
expenses  are  included  in these  administrative  costs. 
Texas  uses random  moment  sampling  time  studies  to determine  allocable  costs to 
SAVE  and  other  programs  administered  by its Department  of Human  Services.  Most 
of the  costs  are  allocated  for the  time  that  eligibility workers  spend  on SAVE  since 
they  are  the  biggest  users  of the  system.  Once  the  time  has been  identified,  costs  are 
allocated  on the  basis  of object  codes  which identi@ the  cost categories.  Costs  include 
such items  as salaries,  travel,  building  rental  and  upkeep,  telephones,  professional 
services,  lease/purchase  of furniture  and  equipment,  supplies,  computer  software  and 
equipment,  and  employee  benefits. 
Table  3 shows the  documented  SAVE  administrative  costs for both  the  AFDC  and 
Medicaid  programs  for each  of the  four  States  for our  study period. 
Table 3 
II  California  I  $1,258,664  II 
II  Florida  I  41.405  II 
II  Illinois  I  488 II 
II  Texas  I  214,973  II 
For  FY  1993, 29 States  documented  AFDC/SAVE  administrative  costs and  17 States 
documented  Medicaid/SAVE  administrative  costs.  Documented  administrative  costs 
included  $1,771,101 for AFDC/SAVE  and  $7,337,334 for Medicaid/SAVE  for a total 
of $9,108,435. 
7 HOWEVER  THE  SAVE  PROGRAM  HAS VALUE  IN IDENTIFYING 
INELIGIBLE  ALIENS 
our  case  file reviews  and  discussions  with State  and  county  officials  indicated  that  the 
use  of SAVE  has value  for accurately  processing  AFDC  and  Medicaid  cases.  Specific 
benefits  include: 
  Cost avokkmcecases were iden@kd  in each State. 
Cost  avoidance  is defined,  for the  purpose  of this inspection,  as program  funds 
saved  during  the  period  of time  an ineligible  alien  could  have  received  benefits. 
Based  on this definition,  11 sample  cases were  identified  out  of 268 case  files; 
SAVE  permitted  States  to determine  seven  cases were  illegal  aliens  filing for 
benefits,  with  an additional  four  cases  recognized  when  they  completed  the 
process  of developing  the  cases  at our  request.  These  cases  resulted  in benefit 
savings of $56,199 for 5 AFDC  cases  and  6 Medicaid  cases.  Table  4 identifies 
the  11 cost  avoidance  cases for ineligible  aliens  who  applied  for AFDC  or 
Medicaid  benefits. 
The  INS instructions  require  that  a secondary  verification  be  completed  prior  to 
the  delay,  denial,  reduction,  or termination  of a benefit  to any alien  applicant 
for reasons  of immigration  status.  Therefore,  we did not  include  cost  savings 
unless  a secondary  verification  had  been  completed.  In some  instances  the 
States  had  not  followed  this procedure  so we asked  them  to request  a 
secondary  verification  in all instances  where  it appeared  payment  of benefits 
was questionable. 
Appendix  B gives the  methodology  used  to calculate  savings. 
FR  x  $3,361  Counterfeit  document  I 
1 
1  1  1 
bRllx  I  3.361  I  Counterfeit  document  II 
RI  x  13,150  Expired  document 
SF  x  3,361  Expired  document 
Totak  I  1  3  $23,233 
1 CA Countiwx  FR  =  Fresno  RI  =  Riverside  SF  =  San Francisco 
8 x  $1,924  Expired  document 
x  4,173  Counterfeit  document 
Total:  1  1  $6,097
k 
ILLINOIS  CASES  REVIEWED  =  112 
/ AFDc  M131XC!AID  SAVINGS  ERROR 
x  $8,941  Expired  document 
1  1 
I 
1X1  8.941  ExDired & Altered  Document 
x  1,087  Expired  document 
Total:  2  1  $18,%9 
Grand

Total:  5  6  $56,199

  SAVE asskted eliility  woken  not trained in reviewing INS documenk% 
In all four  States  the  majority  of staff who we interviewed  in AFDC  and 
Medicaid  commented  on the  utility or intangible  benefits  of using SAVE. 
In California,  staff said that  SAVE is useful  in detecting  altered,  forged 
documents.  It is a security  device  to validate  documents. 
Staff  in Florida  stated  that  SAVE is better  than  the  prior  process  of verifying 
documents  to INS. 
Illinois  staff responded  that  SAVE identifies  (alien)  registration  cards  that 
were  fake  before  the  case went  to pay.  Prior  to SAVE  the  case went  to pay 
before  the  card  could be  authenticated. 
9 In Texas  staff told  us that  SAVE provides  a certain  amount  of protection,  by 
using  INS on all queries.  Things  have  changed  since  1988 (when  SAVE  was 
implemented).  Now there  are  more  cards;  it is more  complicated  now. 
  Detemmce  a Factor in Aliens Not App&ng  for Benejik 
our  review  identified  two cases  in which  aliens voluntarily  revealed  that  their 
alien  documents  (Resident  Alien  Cards)  were  forgeries  when  the  eligibility 
workers  queried  SAVE.  One  official stated  that  SAVE  is criticized  as being 
ineffective  because  few if any misrepresentations  are  found  through  this 
process.  To the  contrary,  the  official believes  that  such an outcome  proves  that 
SAVE  works  as a deterrent  and  that  eliminating  SAVE  would  be  like  a person 
saying they  are  going to stop  locking  their  home  as no one  has  ever  tried  to get 
in. 
States  generally  responded  that  deterrence  cannot  be  accurately  determined 
because  aliens  do not volunteer  this information.  Three  of the  four  States  also 
noted  that  it is difficult  to determine  because  of the  number  of illegal  aliens 
who  are  entitled  to emergency  restricted  Medicaid  benefits. 
10
 GUIDELINES  FOR  EVALUATING 
WAIVER  REQUESTS 
Based  on the  data  we found  and  the  results  of our  review, we cannot  complete 
a cost benefit  analysis  and  believe  that  until  INS and  States  address  weaknesses  in the 
systems,  such  a cost benefit  analysis will not be  possible.  (See  companion  report 
Review  of the  SAVE  Systems Processes  which  addresses  the  systems weaknesses 
and  recommendations  for improvements.)  In the  meantime,  we believe  there  may be 
more  requests  from  States  to obtain  waivers.  In our  review, we came  across  a number 
of areas  we believe  ACF  and  HCFA  should  be  aware  of in reviewing  those  waivers. 
Instead  of making  recommendations,  we offer  the  following guidelines. 
These  guidelines  address  the  major  factors  of cost-effectiveness  and  efficiency  of 
SAVE  and  the  States  alternative  system.  These  guidelines  cover: 
Completeness  of Systems 
The  ACF  and  HCFA  should  review  the  description  of each  States  proposal  of an 
alternative  system  to SAVE  to ensure  that  it includes  every  element  essential  to its 
success.  The  waiver  request  must  detail  how the  State  plans  to verify  alien  status,  and 
its involvement  with  INS through  at least  the  secondary  verification  and  hearings  and 
appeals  processes. 
primary  Verification 
The  State  may not  have  considered  all areas  when  submitting  a proposal  for  an 
alternative  to SAVE.  The  ACF  and  HCFA  should  review  the  proposal  to determine: 
If the  SAVE  automated  primary  verification  process  is replaced,  what  process

will then  exist?  Will the  alternative  system be  equally  effective?

If the  SAVE  primary  verification  process  is eliminated,  will every  alien

applicant  have  to be processed  through  the  relatively  costly and  time  consuming

secondary  verification  process?

Will the  State  need  to decrease  or increase  staff?  This  should  be  fully

explained.

Will identification  of counterfeit  and  forged  documents  be  less effective?  How

will staff identi@ these  documents?

Will eligibility workers  spend  more  time  reviewing  INS documents  and  the

codes  used  to determine  the  aliens immigration  status?

11
 Documentation  Supporting the States Estimated  Savings 
The  State  should  present  documentation  showing benefit  payment  savings.  This 
material  should  be  reviewed  carefully  to determine  how the  estimated  savings were 
calculated.  This  review  should  include: 
 Assuring  that  the  estimated  savings are  counted  for Medicaid  as well as for 
AFDC  when  a savings amount  is submitted  by the  State.  If beneficiaries  are 
eligible  for AFDC,  they would  also be  eligible  for Medicaid. 
 Reviewing  the  definition  used  by the  State  to determine  what  should  be 
included  as savings.  Is the  State  counting  savings that  are  based  on submitted 
documentation  only (at  the  time  the  primary  verification  is made)  without 
submitting  these  documents  for review  through  the  INS district  office  and  the 
secondary  verification  process? 
 Assuring  that  the  State  is only counting  savings due  to alien  immigration  status, 
and  not  for denial  because  of excess income  and  resources  or failure  to 
cooperate. 
 Reviewing  the  methodology  the  State  presents  to estimate  projected  savings. 
Determine  if the  State  us~d a statistic~lly valid  sample,  how the  projection-was 
calculated,  and  the  resulting  confidence  level of the  reported  savings. 
Costs  of Administering the SAVE  and Alternative  Systems 
The  State  should  submit  full documentation  that  shows SAVE  administrative 
expenditures. 
  Assure  that  the  time  period  over which the  costs are  being  reported  matches 
the  same  time  period  over which  estimated  savings have  been  identified. 
 Determine  if SAVE  administrative  costs include  staff direct  and  indirect  costs, 
and  that  agency  instructions  were  followed  in determining  whether  only SAVE 
authorized  expenditures  are  being  documented. 
 If the  State  presents  administrative  costs beyond  that  being  reported  as claimed 
for AFDC  and  Medicaid  reimbursement,  review  the  cost data  to determine  how 
the  State  arrived  at these  cost figures. 
12
 AGENCY  COMMENTS  AND  OIG RESPONSE 
The  ACF  commented  that  they hoped  the  OIG  could  have  provided  a more  definitive 
response  concerning  the  cost-effectiveness  of SAVE.  They  recognized,  however,  that 
this was not  possible  because  of the  reasons  stated  in the  report. 
The  INS did not  provide  written  comments  to the  report,  but  verbally  indicated 
concurrence  with the  findings  and  recommendations. 
The  ACFS comments  in their  entirety  are  included  in Appendix  C. 
13
 APPENDIX  A 
CRHZRIA
USED  IN SELECTING  THE  FOUR  SAMPLE  STATES 
U.umented  alkm population  in the 1980 census (in millions) 
California  1,024	 50 percent  (rounded)
04
Florida  80  1, 
Illinois  136  07   
og 
Texas  186  II 
70 
Total  1,426  ,, 
National  2,057  100   
AdrnihistrativCe OSBfor Al?DC  and Medicaid in Fiscal Year 1992 
AFDC  Medicaid  Total  Percent 
California  $1,234,098  $4,419,467  $5,653,565  93.0 
Florida  24,312  6,105  30,417  .5 
Illinois  7,903  17,974  25,877  .5 
Texas  59,179  84,911  144,090  2.0 
Total  $1,325,492  $4,528,457  $5,853,949  96 
National  $1,467,424  $4,623,758  $6,091,182  100 
Volume of Mrnary  and Secondmy  Verifications - October 1992-  March 1993 
Percent 
Primary  Secondary  Total  (rounded) 
California  354,185  13,389  367,574  55 
Florida  41,060  3,726  44,786  7 
Illinois  33,577  459  34,036  5 
Texas  108,217  1,475  109,692  16 
Total  83 
National  666,316  100 
A-1
 APPENDIX  B
METHODOLOGY  USED  TO CALCULA  TE COST AVOIDANCE 
States  provided  the  following information  needed  to calculate  savings.  (The  statute 
provides  that  AFDC  beneficiaries  are  also eligible  for Medicaid  benefits,  as they  are 
considered  categorically  needy) 
AFDC/Medicaid  cases 
  Average  monthly  AFDC  benefit  payment  for individuals

  Average  length  of time  an individual  receives  AFDC  benefits

  Average  monthly  Medicaid  payment  for individuals

  Average  length  of time  a Medicaid  beneficiary  receives  coverage  is the

same  as AFDC 
Medicaid  onlv cases  (medicallv  needv) 
  Average  monthly  Medicaid  payment  for individuals

.  Average  length  of time  an individual  receives  Medicaid  only coverage

The  methodology  used  to calculate  cost avoidance  savings is the  same  for the  four 
States.  Savings  are  based  on the  average  monthly  benefit  payment  multiplied  by the 
number  of months  in the  benefit  period. 
B-1
 APPENDIX  C 
AGENCY 
c-1  -,* c. 
,1*.*-** 
.+  4
DEPARTMENT C)FI-IEALTH& HUMAN SERVICES 
:: 
s
8
%
%(S,,m 
ADMINISTRATION  FOR CHILDREN  AND  FAMILIES
Office  of the  Assistant  Secretary,  Suite  600
370 LEnfant  Promenade,  S.W.
Washington,  D.C.  20447
DATE :  Aqgust  16,  1995 
TO:	 June  Gibbs  Brown 
Inspector  General 
FROM:	 Mary Jo Bane 
A~~is~ant  ~ec~~ta>~~  ~---
for Children and Families

SUBJECT  :  Comments  - OIG Report:  ?~Reviewof the SAVE System and 
Processes.  OEI-07-91-01231

As requested,  we  have  reviewed  the  subject  Report  and  founa  that 
from  an  overall  perspective,  we  would  have  liked  the  OIG  review 
to  have  resulted  in a more definitive  answer to the question  of

the Systematic  Alien Verification  for Entitlements  (SAVE)

programs  cost  effectiveness.  However,  we  understand  why  this

was  not  possible,  not only by virtue of the reasons  described  in

IfcostEffectiveness  of SAVE~l (oEI-07-91-01230) ,

the OIG Report, 
but also, under the approach the OIG used for conducting  the

analysis.

Also , the Review  and companion,  Cost-Effectiveness  Reports  find

fault with the way both the Immigration and Naturalization

Service  (INS) and the States operate and use the SAVE program.

However,  the tone of the reports and the study recommendations

appear to put much of the onus for this, and any corrective

actions,  on the States.  For example, the recommendation  to

improve the match points between State and SAVE data  is to us,

Our

Principally,  a responsibility  of the INS and not the States. 
comments  on the speci.fi.c  recommendations  made  in  the  Reports

reflect  our concern  in this regard. 
Regarding  the recommendations  contained  in the Review of the

SAVE Systems  Processes,  we have the following comments:

RECOMMENDATION :  The ACF and the Health Care Financing

Administration  (HCFA) should remind States of the SAVE

requirements  and suggest minimal documentation  to be included in

the State case files.

RESPONSE:  The Immigration  and Naturalization  Service  (INS) is 
responsible  for providing the States with the necessarY 
instructions  for operating the SAVE program to include  ~,n,rnal  Page 2 - June  Gibbs  Brown 
documentation  in the State case files.  The INS should be

aware that the States require the latest and best information  in

this regard  in order to properly use the SAVE program.

RECOMMENDATION :  The ACF and HCFA should coordinate with INS to

enhance the SAVE program to make it more timely and user

friendly.

RESPONSE:  We have in the past and will in the future work with

INS to improve the SAVE program.

RECOMMENDATION :  The ACF and HCFA should coordinate with the

States and the INS to identify the most efficient  and effective

way to designate  and implement matching points between their

respective  data base systems.

RESPONSE:  In our opinion, the best way of improving the ability

to match State files with the SAVE database is for the INS to

make every effort to capture and include the social security

number in SAVE records.  It is our understanding  that the SAVE

system is designed  to store this information, but the INS is not

diligent  in capturing  and maintaining  it.  We would  add that

making  it easier  in the future to determine the cost

effectiveness  of SAVE is probably  insufficient justification  for

compelling  the INS to do a better job of maintaining  this

information.

If you have any questions concerning these comments,  contact

Robert Shelbourne  at  (202) 401-5051 or Robert Laue at (202) 401-

5040.