Depafiment of Health and Human Services 

OFFICE OF 

INSPECTOR GENERAL 

VULNERABILITIES IN MEDICAID ASSET 

VERIFICATION 
OFFICE OF INSPECTOR GEIW3W 

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 ne~ork of audits, investigations, and 

inspections conducted by three OIG operating components: the Office of Audit Semic=, 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 OIG’S 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 efficienq 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, a civil money penalties. The 01 afso oversees State Medicaid fraud 

control units which investigate and prosecute fraud and patient abuse in the Medicaid program. 

OFFICE OF EVALUA~ON AND INSPECTIONS 

The OIG’S 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 efllciency, vulnerability, 

and effectiveness of departmental programs. The report was prepared in the Kansas City 

regional office under the direction of Jim Wolf, Regional Inspector General. Project staff 

include: 

KansasCity 

Dennis Tharp, Project Leader


Tim DoId, Team Leader


Perry Seaton, Team Leader


Linda Paddock, Program Assistant


Headquarters 

Penny Thompson, Branch Chief 

Jennifer btico, Program Specialist 

To obtain a copy of this repo~ call the Kansas City Regional Offi= at (816) 426-3697. 
EXECUTIVE SUMMARY 

PURPOSE 

To describe States’ Medicaid long term care eligibility systems, asset verification 

processes and their fraud referral techniques, and identify potential vulnerabilities in 

these systems. 

BACKGROUND 

Within the Health Care Financing Administration (HCFA) guidelines, each State has


its own Medicaid rules and provisions governing Medicaid long term care eligibility.


The States submit a State Plan that, when approved by HCF~ provides the basis for


payment of Federal funds to cover at least half of the expenditures incurred by the


State in providing medical assistance and administering programs.


Medicaid coverage of long term care costs is based upon a needs test where an


individual has limited assets. Some individuals may be motivated to transfer their


assets to other family members to avoid the requirement to use them to finance their


long term care expenses.


To determine what States are doing to determine eligibility and detect fraud regarding


assets, we conducted a mail survey of the 50 State Medicaid agencies in late 1993. We


also selected five States in the spring of 1994 to visit based on information and


materials received from the mail survey and our analysis of that information. At these


States we intemiewed Medicaid policy staff and State fraud investigators to


supplement information from the surveys.


FINDINGS 

Most States Rely Only on Readily Available Sources for Asset Verification 

We found nearly all States veri~ checking and savings accounts, pay stubs and 

insurance policies of the Medicaid long term care applicant, but States vary on 

requesting income tax returns and other types of financial information. Medicaid 

eligibility staff allege they do not have adequate time to effectively ascertain the extent 

of all potential assets of Medicaid applicants. 

Thirty of 50 States have Medicaid fraud hotlines. Although most States do not 

routinely check applications against hot line complaints, half the States who have them 

believe that they may facilitate an initial investigation to verfi the validity of a 

possible transfer or concealment. 

Thirty-eight States have specific Medicaid long term care fraud penalties for the nonreporting of resources. In general, we found that prosecution of medical assistance 

, 
fraud is a low priority for States, and that Medicaid applicant/beneficiary fraud is 

identified in less than 1 percent of cases. This is due to consideration of the 

applicant’s age, the difficulty of proving intent, and the low dollar amounts involved. 

HCFA Has Worked in Partnership with State Medicaid Agencies to Improve Asset 

Verification 

The HCFA has assisted States in improving asset verification. The HCFA has actively 

monitored States’ activities and progress in identifying assets and sharing best practices 

of asset verification. 

RECOMMENDATIONS 

HCFA should continue to work in partnership with States to promote: 

Comprehensive Asset Verification Techniques 

States should enhance investigative skills and request more detailed applicant 

information. Information which paints an inconsistent picture of the applicant’s 

financial past or which appears questionable, should be investigated further. 

Identification and Sharing of Useful Best Practices among States 

HCFA should continue to promote the sharing of technical assistance among States, 

especially asset verification processes, fraud identification techniques, and other 

effective procedures that have proven to be predictable and reliable indicators for 

States in identi&ing undisclosed, concealed or transferred assets. 

AGENCY COMMENTS 

The HCFA concurs with our recommendations to promote better asset verification 

among State Medicaid agencies. At the same time, the agency notes the limitations of 

the study, including lack of information on what practices are most effective, limited 

discussion of the Income Eligibility Verification System, and timing of data collection. 

We generally agree with HCFAS comments. Our goal was to obtain a preliminary 

description of what States were doing to come to grips with what is essentially a very 

complex administrative problem. It ~eems to us, though, that some States were doing 

more than others and that they could well learn from one another how to approach 

this situation. The HCFA also provides suggestions and ideas about practical 

problems that are likely to be encountered in implementing the recommendations. 

We encourage the reader to carefully review all of HCFAS comments which are 

included in their entirety in Appendix A. We have made several revisions to our 

report in response to them. 

ii 
TABLE OF CONTENTS


PAGE


EXECUTIVE SUMMARY


INTRODLK7’H0 N. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1


FINDINGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3


Readily Available Asset Verification Sources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3


HCFAin Partnership with States . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ...5


RECOMMENDATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6


APPENDI.X A AGENCY COMMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . .. A-1

INTRODUCTION


PURPOSE 

To describe States’ Medicaid long term care eligibility systems, asset verification 

processes and their fraud referral techniques, and identify potential vulnerabilities in 

these systems. 

BACKGROUND 

Eli@ili~ for Medicaid Long Term Care 

Each State has its own Medicaid rules and provisions governing Medicaid long term 

care eligibility. These include the guidelines and limitations established by Part 430 of 

“Grants to States for Medical Assistance Programs” in Title XIX of the Social Security 

Act and implementing Medicaid eligibility regulations (42 Code of Federal Regulations 

430). 

Medicaid coverage of long term care is intended for those individuals with inadequate 

resources to provide for themselves. As such, persons with substantial assets are not 

eligible. However, in determining eligibility for Medicaid long term care, States may 

count only income and assets that are available to the applicant or beneficiary, i.e., 

those funds under the applicant’s control. Certain assets and resources (which can 

often be of any value) are exempt, including the home (in many cases), burial policies, 

small savings accounts, and funds to maintain the spouse in the home. There is also a 

provision for coverage of persons with a higher dollar amount of assets who have 

incurred long term care expenses. Once these individuals have depleted their excess 

resources, they may qualify for Medicaid. In addition, they must also reduce their 

excess income each month in order to remain eligible. 

Because of these rules, some individuals may be motivated to transfer their assets to 

other family members to avoid the requirement to use them to finance their long term 

care needs. 

METHODOLOGY 

Mail Survey 

The inspection was conducted in two phases. In phase one, we conducted a mail 

survey of the 50 State Medicaid agencies. Topics addressed include eligibility policy, 

asset verification, Medicaid beneficiary fraud referrals, estate recoveries by type and 

amount, Medicaid liens, death and spousal information, and trusts and other influences 

on estate recovery. While the survey was comprised of many closed-ended questions, 

we also used some open-ended questions that provided more in-depth information to 

explain and expand upon close-ended responses. 

1

Thesumeys were submitted to State Medicaid agencies in October 1993. We received 

our final State responses in late May 1994. 

Five State Sample 

In phase two, we selected a judgmental sample of five States based on the information 

obtained from phase one. We chose Massachusetts, Minnesota, Missouri, Oregon and 

Wisconsin because of information completed on their surveys. We visited each State 

to conduct intetiews with State Medicaid agency staff and State Medicaid fraud 

investigators. We used questionnaires to follow up on responses reported in the 

surveys. 

Anazysis 

The inspection team summarized and tabulated the responses to all the survey 

questions. The responses were quantified to determine such issues as how many State 

Medicaid agencies have eligibility verification programs to identify and prevent 

transfers of assets, the outcomes from these identification systems, how many States 

make Medicaid fraud referrals, what those referrals entail, and whether States have 

fraud penalties and hotlines. 

Stop 

This report is one of two related national reports. An earlier companion repofi 

described States’ efforts in implementing Medicaid long term care estate recovery 

programs. 

We conducted our review in accordance with the Standar& for Inspections issued by 

the President’s Council on Integrity and Efficiency. 

2

FINDINGS


Most States Rely Only on Readily Available Sources for Asset Verification 

We found that nearly all States verify checking and savings account amounts, pay 

stubs, and insurance policies of the Medicaid applicant. Most States also verify 

Certificates of Deposit, Individual Retirement Accounts and other investments by 

directly contacting banks and other financial institutions. Some States, however, use a 

variety of methods to verify financial information (See chart below for States’ 

self-reported techniques.) 

When inquiring why State techniques vary, a major reason given by Medicaid eligibility 

staff (often referred to as Medicaid caseworkers) was that workloads do not permit 

adequate time to effectively ascertain the extent of all potential assets of a Medicaid 

applicant. Types of hidden or unreported assets or resources include bank accounts, 

Certificates of Deposit, or stocks and other financial investments. 

While there is a Federal mandate for States to implement and operate IEVS, whereby 

States are required to conduct computer matches with State and federal agencies to 

verify reported income and resource (asset) information, States vary in abilities and 

3 
commitment to match with all of the required data sources. States often do not use 

all of the data match information because of State perception of the ineffectiveness of 

some IEVS data matches and shrinking State budgets and resources. These findings 

corroborate our July 1994 report “Reforms Are Needed in State Income and Eligibility 

Verification Systems, ” 0EI-06-92-OO080. That report addresses issues with State IEVS 

and makes recommendations for improving the efficiency of the IEVS requirements. 

A Federal IEVS interagency work group is working with the OIG and States to 

implement these recommendations. 

In addition, 44 States utilize the IRS tape match. Five,&~,t@&e States say that it’s 

effective, 27 say that it’s somewhat effective or of limitei$l%$he, while 9 States say it’s 

ineffective. Three States did not respond. At least one-fburth of the States report 

that the information is too old to be useful. 

Thirty States have Medicaid or general fraud hotlines at the State or county level 

which individuals may call to report an applicant who may have transferred, hidden or 

sheltered assets. Although only two States routinely check applications against hotline 

complaints, these hotlines may facilitate an initial investigation to verify the validity of 

a possible transfer or concealment. Almost one-half of the States said that leads and 

tips from relatives or neighbors are sometimes effective in discovering unreported 

property or assets of a Medicaid long term care applicant. 

State Medicaid applications usually have a generic fraud statement explaining possible 

penalties for intentional concealment or misreporting of resources. An example is 

shown below. 

“Section 1128 of the Social Securi~ Act (as amended by Public Law 100-93) 

provides Federal penalties for jiaudulent acts and false reporting in connection 

with my application for or receipt of Medicaid benefits. I may be prosecuted in 

Federal Court for deliberate statements which I know to be false and which affect 

my eligibility for any benefit or payment under the Medicaid program. I may also 

be prosecuted for concealing or failing to disclose any event of which I have 

knowledge which affects my right to any benefit or payment... ” 

Caseworkers explain penalty provisions during the standard applicant intewiew


process. Thirty-eight States have Medicaid long term care fraud penalties for the non-


reporting of resources; 12 do not. All States have general statutory penalties for theft.


h. 

Prosecution of medical assistance fraud on the part of the applicant/beneficiary occurs 

in less than one percent of cases. During our onsite visits, we learned that prosecuting 

a Medicaid beneficia~’s fraudulent activity is a very low priority. This is due in part 

to consideration of the applicant’s age, the difficulty of proving intent, and the low 

dollar amounts involved. 

4

HCFA Has Worked in Partnership with State Medicaid Agencies to Improve Asset 

Verification 

The HCFA has taken responsibility to assist States in improving asset verification. In 

November 1994, HCFA released a resource guide for States in collaboration with the 

American Public Welfare Association. The HCFA has also conducted numerous 

training conferences with Medicaid State representatives. 

The HCFA has actively monitored States’ activities and progress in identifying assets 

and improving asset verification. The HCFA plans to continue to survey States and 

identify and share best practices of asset verification. 

5

RECOMMENDATIONS


HCFA should continue to work in partnership with States to promote: 

Comprehensive Asset Verification Techniques 

Although most States verify checking and savings account information, some States are 

not going beyond this basic analysis. States should enhance investigative skills and 

request more detailed applicant information. For example, Departments of Motor 

Vehicles, employer identification numbers, Veteran’s Affairs offices and other local 

avenues are excellent resources. 

During the intake process, eligibility staff should always ask long term care applicants 

about the existence of any trusts, annuities, burial policies, funeral plans and business 

partnerships. Gathering a more comprehensive synopsis of an applicant’s financial 

background is beneficial. Information which paints an inconsistent picture of the 

applicant’s financial past or which appears questionable should be investigated further. 

Identification and Sharing of Useful Best Practices Among States 

HCFA should continue to promote the sharing of technical assistance among States, 

especially asset verification processes, fraud identification techniques, and other 

effective procedures that have proven to be predictable and reliable indicators for 

States in identifying undisclosed, concealed, or transferred assets. 

Asset verification, at its best, should be exhaustive. The process of identifying possible 

hidden or illegal transfers of assets is a critical step in preventing Medicaid long term 

care eligibility fraud. Although asset verification can be an arduous task for Medicaid 

caseworkers, it is an essential part of the eligibility process that should not be 

overlooked. 

The HCFA should ensure that States utilize the most efficient and practical methods 

when performing asset verification. To uncover undisclosed, concealed or transferred 

assets requires considerable attention to minute details of a Medicaid applicant’s 

financial and property holdings. 

AGENCY COMMENTS 

The HCFA concurs with our recommendations to promote better asset verification 

among State Medicaid agencies. At the same time, the agency notes the limitations of 

the study, including lack of information on what practices are most effective, limited 

discussion of the Income Eligibility Verification System, and timing of data collection. 

6

We generally agree with HCFA’S comments. Our goal was to obtain a preliminary 

description of what States were doing to come to grips with what is essentially a very 

complex administrative problem. It seems to us, though, that some States were doing 

more than others and that they could well learn from one another how to approach 

this situation. The HCFA also provides suggestions and ideas about practical 

problems that are likely to be encountered in implementing the recommendations. 

We encourage the reader to carefully review all of HCFA’S comments which are 

included in their entirety in Appendix A. We have made several revisions to our 

report in response to them. 

7

APPENDIX A 

AGENCY COMMENTS 

A-1 
,JE?A.i:”,}IEAT OF IiE.lL~H & HUMAN SERVICES 

Health Care Financing Admini ‘Jg . 

-. 

“b%“,,a >

Office of the Administrator 

Washington, D.C. 20201 

DATE 

FROM 

SUBJECr 

TO 

Bruce C V’ladec 

Administrator 

‘“’‘“’W.*

Office of Inspector General (OIG) Draft Report: “Vulnerabilities in 

Medicaid Asset Verification,” (OEI-07-92-00882) 

June Gibbs Brown 

Inspector General 

We reviewed the above-referenced report which describes States’ Medicaid 

long-term care eligibility systems, asset verification processes and their 

fraud referral techniques, and identifies potential vulnerabilities in these 

systems. Attached are our com.ment.s on the report findings. 

Thank you for the opportunity to review and comment on this report. 

Attachment 

A-2 
Comments of the Health Care Financing Administration (HCFA}


on Office of Inspector General (OIGj


Draft Repofi “Vulnerabilities in Medicaid Asset Verification,”


[OEI-07-92-00882~


OIG Recommendation


HCFA should continue to work in partnership with States to promote comprehensive


asset verification techniques; establishment of Medicaid fraud hotlines and penalties; and


identification and sharing of useful best practices among States.


HCFA Res~onse


We concur with the report recommendation as it offers very basic suggestions for


improvingthe efficiency of State Medicaid programs.


HCFA has continued to work with States to encourage asset verification by pointing out


that good verification at the time of Medicaid application results in Medicaid coverage


for those who are tn.dy eligible. In addition, some asset verification is required by


legislation such as the Lncome and Eligibility Verification System (lEVS) which requires


States to conduct matches with the Lptemal Revenue Semite (IRS), the Social Security


Administration (SSA), and State wage and unemployment compensation agencies.


Even with Federal mandates for asset verification, when State budgets and staffs are


shi-inking, States often cut comers in the eligibility verification process. For example, if


a State conducts IEVS matches, but fails to verify the leads. identified in the match, an


incorrect eligibility dete~ination could result. Pmother obstacle to resource verification


is that Federal regulations require that States process a Medicaid application within


45 days. Bank verification often takes more than”45 days so States will often put the


applicant on the Medicaid rolls at the end of 45 days and not utilize the bank’s


infofiation when it arrives. lvfany States also limit the number of asset verifications


because financial institutions require reimbursement.


Data based on Medicaid Eligibility Quality Control reviews indicate that incorrect


resource development continues to be the major cause of dollar error. However, the


number of transfers of resource case errors that effect the error rates is very small. So,


while transfer cases continue to be a slight problem, they do not significantly effect the


total number of resource errors.


We also note that one of the most effective techniques for asset verification of ap#cants


for long-term care is the use of eligibility staff who specialize in long-term care cases.


Some States find it very cost-effective to provide special training and even higher salaries


for workers who can become knowledgeable about the kinds of assets likely to be owned


but not reported by long-term care applicants.


A-3


. 
--

--

Page 2 

In general, the report fails to distinguish between two distinct aspects of the Medicaid 

program: State asset verification activities, which affect all Medicaid applicants/ -

recipients; and asset policies affecting only persons seeking Medicaid for their long-term 

care expenses (specifically, m ies regarding uncompensated transfers of assets and 

recoveries from estates of deceased long-term care recipients). 

Activities that the report recommends for all States establishing Medicaid fraud 

hotlines, and more extensive data matching with other information sources typically 

apply across the board, not just to persons seeking assistance for long-texm care. 1%e 

recommendations are not persuasive because they are not accompanied by any detailed 

descriptions beyond the number of States that use the techniques, nor is any evidence 

given as to the effectiveness for either all Medicaid applicants or the subset of people 

seeking long-term care assistance. In fact, the report notes that while three in five States 

have a fraud hotline (page 4), only two States identified hotlines as a source that they 

actually use (page 3), strongly suggesting that hotlines are not very effective. If, on the 

other hand, hotlines are inexpensive, they may nevertheless be cost-effective even if they 

provide leads in just a few cases. If this is the case, the report would be more effective 

by saying SO. 

The report also recommends that HCFA work to ensure that all States establish 

penalties for false reporting in connection with a Medicaid application. We note several 

problems with this recommendation. Firs~ the statntory citation provided in the report 

is no longer valid. Section 1909 was amended and redesignated as section 1128 of the 

Social Securi~ Act by public Law 100-93, the 1987 antifraud amendments. Second, this 

statite provides for Federal prosecution of people who misrepresent information about 

themselves. State penalties are permitted at the option of the State but only to persons 

who have been convicted under these provisions. Nothing in this Ianguage suggests that 

such penalties may be applied only against long-term care applicants. Third, as the 

report notes, such cases are seldom pursued because of the expense of prosecution 

relative to the dollars involved. me report should note whether the States that have 

such penalties think they are worth having because of the detement effect. Finally, the 

report would be clearer if it included a brief description of how fraud penalties and 

Medicaid rules on transferred assets and estate recoveries differ from, and cornplemen$ 

each other. 

Finally, we note that the sumey of States was conducted shortly after the effective date 

of the Omnibus Budget Reconciliation Act of 1993 provisions effecting transfers of 

assets and estite recoveries. ~is causes us to question whether State responses from 

this unstable, transitional period of ttie accurately reflect today’s circumstances. 

A-4


.-. .-

Page 3 

Technical Comments 

Page i - Background - This section includes a synopsis of the procedures for transferring 

assets in order to meet the Medicaid income and resource requirements. However, the 

synopsis fails to point out that individuals who transfer assets for less than fair market 

value may be subject to certain penalties in the form of denied Medicaid coverage for a 

certain period of time (i.e., a penalty period). 

The penalty period is determined by first ensuring that the transfer of assets for less than 

fair market value took place within the look-back period. The look-back period is the 

period of time. during which a penalty for transferring assets for less than fair market 

value can be asseised and can range from 36 to 60 months. Penalties cannot be assessed 

for transfers tald.ng place before this period. 

Provided a transfer of assets took place during an individual’s look-back period, a 

penal~ period is calculated by taking the value of all assets transferred for Iess than fair 

market value and dividing it by the average monthly cost to a private patient for care in 

a nursing facili~ in the State. 

The above comment also applies to the background section on page 1. 

Page ii - Last Findin g - There should be a reference in this section to the Federal 

mandate for States to use IEVS for veri&ing reported assets. Suggested language: 

While there is a Federal mandate for States to implement and operate Income 

and Eligibility Verification Systems (IEVS), whereby States are required to 

conduct computer matches with State and Federal agencies to veri& reported 

income and resource (asset) information, States vary in abilities and commitment 

to match with all of the required data sources. States often do not use all of the 

data match information because of State perception of the effectiveness of the 

IEVS data matches and shrinking State budgets and resources. An earlier OIG 

repo~ released in July 1994, addresses the issues with State IEVS and makes 

recommendations for improving the efficiency of the IEVS requirements. A 

Federal IEVS interagency work group is working with the OIG and States to 

implement these recommendations. 

Page ii - First Recommendation - There should be a reference to the Federal 

requirement to conduct data matches under the IEVS requirements. It should be 

stressed that States have the flefibility to design IEVS to target, or selectively use, the 

most productive leads for identi~ng unreported assets. 

A-5

Page 4 

Page 1- Income Verification - This section is misleading because it seems to indicate 

that a State IEVS is for the purpose of identifying beneficiary fraud rather than a tool to 

assist States in making more accurate eligibility determinations for all categories of -

applicants and recipients of benefit assistance programs. The requirement that a 

beneficiary be terminated from receiving assistance if he/she fails to report all income 

and/or resources is a very broad requirement, and not one that is tied to the IEVS 

requirements. As with any violation of reporting assetsdresources, if a beneficiary fails to 

report information, benefits will be terminated. 

We also believe it would be helpful to include more detailed information about the 

IEVS, some of which is included in the July 1994 IEVS report. For example, States.are 

required to match with SSA to obtain benefit information with the IRS for unearned 

income information, and with the State wage and unemployment agencies for wage and 

compensation information. Some of the data matches are indeed found to be mg,re 

useful than others, particularly for different categories of beneficiaries. For. example, the 

Aid to Families with Dependent Children program would find the wage and 

unemployment benefit data matches more effective, while the Medicaid program would 

find the IRS and SSA data matches more effective. 

‘Through the targeting (selective use) option offered States in the JEVS regulations, 

States can focus the data matches to the most effective matches. While the IRS data 

might be a year old, it is often found useful as simply a “lead” to possible unearned 

income (bank accounts, dividends, real estate sales, etc:}. 

Further, the July 1994 IEVS report made recommendations for the I%l!ler!!!!agencies 

responsl%le for the lEVS regulations to make adjustments to the requirem@.s that 

would enhance State flexibility and efficiency of the IEV!3. 

Pazes 3-4- We agree that States’ techniques vary widely for asset and resource 

verification because of workload constraints and priorities. States have to adjust 

workload priorities to address verification techniques that have proved to be effective. 

States have the experience and knowledge to base any priorities established to the most 

productive methods. States are given the flexibility by the FederaI I13VS regulations to 

target followup efforts to the most productive sources. We strongly believe if States use 

the flexibility currently offered under the IEVS requirements to focus on productive 

folIowup infor&ation, more errors can be prevented. 

States need to analyze and target the use of information obtained through the IEVS, 

particularly leads from the IRS and SSA for long-term care. Our contact with States, in 

the majority of cases, indicates these leads are useful and that States want more access 

to Federal data sources. The statements made on page 4 are too vague to be useful. 

A-6

Page 5 

While there is some question about the usefulness of some of the IEVS data sources; 

e.g., the Beneficiary Earnings and Data Exchange with the SSA and the IRS data match 

for some categories of beneficiaries, other data matches are routine, required data 

matches for the States; e.g., the SSA benefit match and the wage and unemplopnent 

compensation matches. 

This report seems to imply that States do not conduct routine data matches with the 

lEVS components. We do not believe that the fiidings and recommendations of the 

July 1994 OIG report on 155VSreflect this. Those findings and recommendations were 

directed to making the existing data match requirements more useful and efficient for 

States. 

We also want to add that the IEVS interagency work group, with the Administration for 

Children and Families as the lead componen4 is currentIy working with the OIG and 

%tates in assessing the modifications needed to make the INS more cost-effective and 

efficient. The work group has also been worting with five pilot States to access and 

analyze the usefulness of Veterans’ Administration benefit data. States seem encouraged 

by the pilot results, and these data should be especially helpful for eligibfity 

determinations for long-texm care beneficiaries. 

A-7