Report to the Ranking Minority

Member, Committee on Governmental

Affairs, U.S. Senate

United States General Accounting Office

GAO

September 2001 PUBLIC ASSISTANCE

PARIS Project Can

Help States Reduce

Improper Benefit

Payments

GAO-01-935
Page i GAO-01-935 PARIS Project Can Help States

Letter 1

Results in Brief 3

Background 4

PARIS: A Potentially Cost-Beneficial Means of Controlling

Improper Payments 7

Limitations of PARIS 15

Conclusions 22

Recommendations for Executive Action 22

Agency Comments and Our Evaluation 23

Appendix I Data and Assumptions Used in Our Analysis 26

Appendix II Comments From the Department of Health and Human

Services 31

Appendix III Comments From the Food and Nutrition Service 36

Tables

Table 1: Programs We Examined That Are Covered by PARIS 7

Table 2: Number of Potential Improper Payments for Selected

States, February 2001 10

Table 3: Estimated Net Savings Given Varying Valid Hit Rates 14

Table 4: Estimated Net Savings Given a Varying Number of Future

Benefit Payment Months Avoided 14

Table 5: Scenario With Assumptions Used in Report 26

Table 6: Estimated Net Savings Given Varying Valid Hit Rates 29

Table 7: Estimated Net Savings Given a Varying Number of Future

Benefit Payment Months Avoided 30

Figure

Figure 1: States Participating in Recent PARIS Matches 9

Contents
Page ii GAO-01-935 PARIS Project Can Help States

Abbreviations

ACF Administration for Children and Families

CMS Centers for Medicare & Medicaid Services

DMDC Defense Manpower Data Center

FNS Food and Nutrition Service

HHS Department of Health and Human Services

MCO managed care organization

OMB Office of Management and Budget

PARIS Public Assistance Reporting Information System

SSA Social Security Administration

SSI Supplemental Security Income

SSN social security number

TANF Temporary Assistance for Needy Families

USDA Department of Agriculture
Page 1 GAO-01-935 PARIS Project Can Help States

September 6, 2001

The Honorable Fred Thompson

Ranking Minority Member

Committee on Governmental Affairs

United States Senate

Dear Senator Thompson:

Every year, public assistance programs make millions of dollars in

improper payments.1 Some of these improper payments are made because

state and local agencies that administer the programs lack adequate,

timely information to determine recipients’ eligibility for assistance. For

example, in a report prepared for the Senate Committee on Governmental

Affairs in September 2000, we noted that state agencies responsible for

administering Temporary Assistance for Needy Families (TANF) lacked a

comprehensive mechanism to share vital eligibility information with their

counterparts in other states.2

 This inability to share information can result

in both federal and state tax dollars being needlessly spent on benefits for

the same individuals and families in more than one state.

In 1997, staff at the Administration for Children and Families (ACF) within

the Department of Health and Human Services (HHS) initiated a project to

help states share eligibility information with one another. The Public

Assistance Reporting Information System interstate match (hereafter

referred to as PARIS) helps states share information on public assistance

programs, such as TANF and Food Stamps, to identify individuals or

families who may be receiving benefit payments in more than one state

simultaneously.3

 PARIS also allows states to share eligibility information

 1

See Financial Management: Billions in Improper Payments Continue to Require

Attention (GAO-01-44, October 27, 2000) and Financial Management: Increased

Attention Needed to Prevent Billions in Improper Payments (GAO/AIMD-00-10, Oct. 29,

1999). Improper payments include payments that should not have been made or were made

for incorrect amounts irrespective of whether the agency had effective controls in place.

Specifically, improper payments would include inadvertent errors, such as duplicate

payments and calculation errors; payments for unsupported or inadquately supported

claims; payments for services not rendered or to ineligible beneficiaries; and payments

resulting from outright fraud and abuse.

2

See Benefit and Loan Programs: Improved Data Sharing Could Enhance Program

Integrity (GAO/HEHS-00-119, Sept. 13, 2000).

3

PARIS also includes information-sharing efforts between states and federal agencies, such

as the Department of Veterans Affairs.

United States General Accounting Office

Washington, DC 20548
Page 2 GAO-01-935 PARIS Project Can Help States

about Medicaid, the federal-state health financing program for certain lowincome individuals, which may become more important as states continue

to enroll more beneficiaries in managed care organizations (MCOs). In a

Medicaid capitated managed care environment, states make prospective

monthly payments to MCOs for each beneficiary enrolled to provide or

arrange for all needed health services. Thus, if a Medicaid beneficiary

moved out of state and the state did not register the change, it would

continue to make the MCO monthly payment until the discrepancy was

discovered.4

PARIS is a voluntary project in which the participating states sign a

uniform agreement that governs the interstate exchange of data. Recipient

lists for all participating states are matched (compared) with one another

quarterly at a central location, using individuals’ social security numbers

(SSN). Each state subsequently receives a list of individuals who may be

receiving duplicate TANF, Medicaid, and Food Stamp benefits in another

state. All participating states are expected to verify whether individuals

identified in the match are eligible for benefits in their state and remove

them from the rolls if they are not eligible. Some states use their local

benefit office staff to follow up on the matches, while others use fraud

investigators or some combination of the two.

Because of its potential for identifying improper benefit payments, you

asked us to review the PARIS project to determine (1) how effective

PARIS has been in identifying improper payments and (2) the limitations

of PARIS. You also asked us to identify what, if any, improvements can be

made to PARIS.

To answer these questions, we interviewed and collected data from

federal, state, and local officials responsible for administering the TANF,

Medicaid, and Food Stamp programs. At the federal level, ACF administers

TANF, and HHS’ Centers for Medicare & Medicaid Services (CMS)

administers Medicaid, while the Department of Agriculture’s (USDA) Food

and Nutrition Service (FNS) administers the Food Stamp program.5

 Our

interviews included officials from the 16 states and the District of

Columbia that had participated in PARIS at least once since August 2000.

 4

Under a traditional fee-for-service environment, payments in two states for the same

beneficiary would occur if a beneficiary intentionally used medical services in two different

states.

5

Until June 2001, CMS was known as the Health Care Financing Administration. Other

federal agencies we contacted included the Office of Management and Budget (OMB) and

the Social Security Administration (SSA).
Page 3 GAO-01-935 PARIS Project Can Help States

We also conducted site visits to seven jurisdictions.6 In addition, we spoke

with officials from seven states that were not participating in the project at

the time of our review and visited two jurisdictions in one of these states.7

Finally, we performed our own analysis using available data from five

states to identify key factors that can influence the extent to which

participation in PARIS can result in program savings.8

 Our analysis is

based on a limited number of states, and thus, the results are not

generalizable to other states. Nonetheless, the results may provide useful

insights to other states that are considering participating in PARIS.

Officials in almost all of the 16 states and the District of Columbia that

participated in PARIS reported that the project has helped identify

improper TANF, Medicaid, or Food Stamp payments in more than one

state. However, few states have collected data on the actual savings

resulting from their participation in PARIS. Four states and the District of

Columbia documented about $16 million in savings, attributed mostly to

the prevention of future improper payments. In particular, these states

reported significant savings in the Medicaid program. In addition, three of

these states collected data on costs as well as savings from their

participation in PARIS, and all three reported that their savings were

greater than the costs they incurred to participate in the project.

Moreover, our own analysis also suggests that PARIS could help other

states save program funds by identifying and preventing future improper

payments.

Despite the success that some states have reported with PARIS, the

project has several limitations. First, the opportunity to detect improper

duplicate payments is not as great as it could be because only one-third of

the states participate in the project, and thus, a substantial portion of the

national public assistance recipient population is not included in the

PARIS matching process. This is partly because the federal agencies

responsible for these programs have done little to encourage state

participation in PARIS through outreach efforts or to systematically

address state concerns that have contributed to limited participation.

 6

We visited the following jurisdictions participating in PARIS: Tallahassee and Miami, FL;

Baltimore, MD; Harrisburg and Philadelphia, PA; New York City, NY; and Washington, D.C.

7

We interviewed officials from Arkansas, California, Colorado, Louisiana, Nevada, Texas,

and Utah, and conducted site visits to Sacramento and San Francisco.

8

The following states provided us with data for our analysis: Kansas, Maryland, New York,

Pennsylvania, and Texas.

Results in Brief
Page 4 GAO-01-935 PARIS Project Can Help States

Second, participating states do not have adequate protocols or guidelines

to facilitate critical interstate communication. As a result, some states

have reported problems that compromise the effectiveness of the project,

such as difficulty determining whether an individual identified in a match

is actually receiving benefits in another state. Third, state administrators

for the TANF, Medicaid, and Food Stamp programs have not always

placed adequate priority on using PARIS matches to identify recipients

who are residing in other states. As a result, individuals may continue to

receive or have benefits paid on their behalf in more than one state even

after they were identified through the matching process. Finally, because

the PARIS match is only designed to identify people after they are already

on the rolls, it does not enable the states to prevent improper payments

from being made in the first place.

Several actions could improve PARIS and help the project save additional

federal and state program funds. Although these actions would require the

states to carry the primary responsibility for improving the day-to-day

operations of the project, the federal government could take a greater

leadership role in helping facilitate their efforts. This leadership role

would have to balance the need for adequate state flexibility to administer

the programs with the need for accountability to ensure that federal and

state program funds are spent only on eligible individuals. We are making

recommendations to the Secretary of HHS that will improve the PARIS

project while taking these needs into account.

In commenting on a draft of this report, HHS officials agreed with the

overall intent of our recommendations, but consistently stressed the need

for additional funding and staff resources to increase their PARIS

activities. FNS officials noted that the report is a balanced and fair

description of the PARIS project, but they expressed concern that several

passages suggest that FNS should have a more formal role in PARIS.

The PARIS interstate match program was initiated to help state public

assistance agencies share information with one another. Its primary

objective is to identify individuals or families who may be receiving or

having duplicate payments improperly made on their behalf in more than

one state. In this voluntary project, the participating states agree to share

eligibility data on individuals who are receiving TANF, Food Stamps,

Medicaid, or benefits from other state assistance programs. The

participating states are primarily responsible for the day-to-day

administration of PARIS, and each state designates a coordinator for the

project.

Background
Page 5 GAO-01-935 PARIS Project Can Help States

PARIS uses computer matching to identify improper benefit payments

involving more than one state. This process entails comparing

participating states’ benefit recipient lists with one another, using

individuals’ SSNs. Other items of information are included in the files that

the states share, such as the individual’s name, date of birth, address, case

number, public assistance benefits being received, and dates that benefits

were received. Matches are conducted by the Defense Manpower Data

Center (DMDC) in February, May, August, and November of each year.9

DMDC produces a file of all the SSNs on the list submitted by the

participating state that are the same as the SSNs appearing on the list of

some other state and provides the matched records, known as match hits,

to ACF, who forwards them to the appropriate states. To be considered a

working member of PARIS, states agree to participate in at least the

August match each year.

Once the participating states receive the file of matched SSNs from DMDC,

they are expected to send the match hits to the appropriate staff for

follow-up or investigation. The staff may take a number of steps to verify

information that affects individuals’ eligibility for benefits. These steps

include requiring an individual to come into the office to show proof of

residency and contacting other states to verify whether the individual is

still receiving benefits from those states. Improper benefit payments may

be made because of client error, agency administrative error, or fraud and

abuse. A client error might occur when an individual receiving program

benefits in one state moves to another state but fails to report the move to

program authorities. An administrative error could occur when a local

benefit worker is informed that the recipient is moving out of the state but

fails to update the record. Without PARIS matching, such errors might not

be detected until the individual is asked to reverify program eligibility,

which could occur as much as a year later. Additionally, the reverification

of eligibility might not detect fraud or abuse when a person deliberately

obtains benefits in more than one state by providing false information to

program authorities.

If after investigating the match hit, state or local officials determine that an

individual is improperly receiving public assistance benefits in their state,

they may initiate action to cut off benefits. In general, to protect the rights

of the recipients, administrative due process requirements must be

followed before benefits can be cut off. For example, an individual may be

given up to 30 days to respond to a formal notice that benefits will be

 9

DMDC acts as an independent contractor for ACF and the states, and it provides computer

matching services free of charge.

How PARIS Operates
Page 6 GAO-01-935 PARIS Project Can Help States

stopped. Moreover, if the recipient can demonstrate that he or she is

residing in the state and is eligible for assistance, then benefits may be

continued or reinstated.

To ensure the confidentiality of the records that are identified in a match,

states must agree to the terms specified in the uniform computer matching

agreement that all states sign as a condition of their participation in

PARIS. Section three of this agreement requires that the states

“...will ensure that confidential recipient information received pursuant to this Agreement

shall, as required by law, remain confidential and be used only for the purpose of the above

described match and for verifying eligibility and detecting and preventing fraud, error and

abuse in [their] respective Programs.”

10

Our review focuses on three benefit programs covered by PARIS interstate

matches: TANF, Medicaid, and Food Stamps. Benefits for TANF and Food

Stamps are provided directly to recipients; however, Medicaid payments

are made directly to those who provide health care services, such as MCOs

and other health care providers. All three programs are generally

administered at the state and local level, but are funded with federal

money or a combination of federal and state money. Depending on the

state, the same staff in local offices may determine eligibility and benefit

levels for all three programs. However, some states administer the TANF

and Food Stamp programs separately from the Medicaid program. Table 1

provides a brief description of the three programs.

 10The agreement also requires the states to take reasonable steps to ensure the security and

confidentiality of information obtained under the agreement, including having “...locked

files or other devices reasonably calculated to prevent unauthorized copying or removal of

manually held data; passwords, access logs, badges or other methods of safeguarding

electronically or mechanically held data; limited physical access; limited access to input

documents and output documents; and design provisions which avoid unnecessary use of

names or other personal identifiers of data subjects.”

About the Three Programs

We Examined
Page 7 GAO-01-935 PARIS Project Can Help States

Table 1: Programs We Examined That Are Covered by PARIS

Federal program

Implementation TANFa Medicaid Food Stamps

Authorizing law Personal Responsibility and Work

Opportunity Reconciliation Act (1996)

Title XIX of the Social Security Act (1965) Food Stamp Act (1964)

Purpose Assistance to needy families and to

end dependence on government

benefits by promoting job preparation,

work, and marriage.

Medical assistance for certain categories of

needy individuals, including families with

low incomes and resources.

Monthly allotments of

coupons or electronic

benefits for low-income

households redeemable for

food at retail stores.

Funding In fiscal year 2000, the program was

funded by a total of $23.5 billion in

federal and state expenditures,

including 12.5 billion in federal block

grants, and $11.1 billion in state funds.

The program served about 5.8 million

individuals as of September 2000.

Funded jointly by the states and the federal

government. State expenditures trigger

federal matching funds at a rate, that is

based on a statutory formula, that varies by

state. The federal matching rate averages

57 percent nationally. In 2000, the program

covered health services for 34 million

persons at a cost of about $190 billion.

Funded by the federal

government. In 2000,

about 17 million individuals

received Food Stamps at a

cost of $17.1 billion.b

Administration States have flexibility over the

administration and design of their

welfare programs, but must impose

several federal requirements, including

time limits on aid.

The Centers for Medicare & Medicaid

Services (CMS) provides broad oversight

of Medicaid at the federal level; however,

each state is responsible for managing its

own program. Many states contract with

managed care organizations to provide

primary care and sometimes other services

to beneficiaries for a set monthly payment.

USDA’s Food and Nutrition

Service manages the

program through

agreements with state

agencies. The states

administer the program

through local benefit

offices.

a

Temporary Assistance for Needy Families.

b

These figures are preliminary and subject to change.

Source: GAO.

A fourth program—the SSI Program administered at the federal level by

SSA—is indirectly related to the PARIS interstate matches. In many states,

SSI recipients are automatically qualified to receive Medicaid and are

therefore included in PARIS matches.

PARIS coordinators in most of the 16 participating states and the District

of Columbia told us they believe the interstate match is effective in

identifying improper TANF, Medicaid, and Food Stamps benefit payments

in more than one state. By eliminating these duplicate recipients from the

rolls, states can prevent future improper payments and save program

dollars. However, few states tracked the actual savings realized from the

PARIS match. Four states and the District of Columbia reported a total of

about $16 million in estimated savings from various PARIS matches

PARIS: A Potentially

Cost-Beneficial Means

of Controlling

Improper Payments
Page 8 GAO-01-935 PARIS Project Can Help States

conducted in 1997, 1999, and 2000.11 A substantial proportion of the

estimated savings was attributed to the Medicaid program.12 While officials

in only three states have compared the costs to the benefits that result,

their studies indicate that the matching is cost-beneficial. We prepared our

own analysis, which also suggests that PARIS may help states save

program funds by identifying and preventing future improper payments.

PARIS helps to identify improper benefit payments in bordering and

nonbordering states according to most of the PARIS coordinators we

spoke with. The February 2001 match identified almost 33,000 instances in

which improper payments were potentially made on behalf of individuals

who appeared to reside in more than one state. Of these, 46 percent of the

potential hits involved Medicaid benefits alone, while the remaining 54

percent involved some combination of TANF, Medicaid, and Food Stamps.

However, most of the states did not maintain detailed records on the

number of potential match hits that were, in fact, found to be instances of

improper payments. Nor were they able to tell us what proportion of

improper TANF and Food Stamp payments were due to client error,

administrative error, or fraud and abuse.13

Some PARIS coordinators believe that fraud and abuse may be more

common in areas where two states share an urban border. For example,

one coordinator told us that individuals living in the District of Columbia

metropolitan area could travel in minutes to Maryland and Virginia and

apply for benefits in each place. Figure 1 depicts participating states and

the District of Columbia and their shared borders.

Independent of PARIS, some states conduct interstate matches with

bordering states to prevent improper payments caused by either error or

potential fraud and abuse. Many of these states now participate in the

PARIS match. PARIS coordinators told us that the PARIS approach offers

significant advantages over single state-to-state matches.

 11All estimated savings attributed to matches conducted in 1999 and 2000, except for the

District of Columbia, which reflects savings from one match in 1997.

12Duplicate Medicaid payments may occur because recipients who are covered by MCOs do

not notify a state that they are moving to another state. The state may continue to pay

premiums to the MCO because it is unaware the recipient has moved. Savings can be

realized by identifying recipients who move and stopping future payments.

13It appears that most Medicaid improper payments were due to administrative error.

PARIS Detects Improper

Payments in Bordering and

Nonbordering States
Page 9 GAO-01-935 PARIS Project Can Help States

Figure 1: States Participating in Recent PARIS Matches

Source: DMDC records of states that participated in at least one PARIS interstate match from August

2000 through February 2001.

For example, PARIS makes it possible for a state to match with numerous

other states by simply submitting a file to a central agency. In addition, a

uniform data-sharing agreement covers the exchange, and the DMDC

adjusts for incompatibilities between different computer systems. This

unified approach can be more efficient than individual state-to-state

matches and can help to reduce the expense of matching.

In addition to simplifying matches with bordering states, PARIS also

facilitates data sharing with nonbordering states. This is important

because even when two states do not share a border, improper payments

can still be made, whether due to error or deliberate deception, such as

fraud and abuse. For example, PARIS officials in New York discovered a

woman receiving TANF benefits in New York for five children who were

actually living with relatives and receiving benefits in Illinois. Table 2

States participating in recent PARIS interstate matches

AZ

WA

OR

CA

NV

NM

TX LA

OK

CO

UT

ID

MT

WY

ND

SD

NE

KS

MN

IA

MO

AR

MS

TN

KY

IL

WI

MI

IN OH

WV

VA

NC

SC

GA AL

FL

AK HI

PA

NY

VT

NH

ME

NJ

RI

DE

DC

MA

CT

MD
Page 10 GAO-01-935 PARIS Project Can Help States

shows the results from the February 2001 PARIS match for selected states,

including nonbordering states.14

Table 2: Number of Potential Improper Payments for Selected States, February 2001

Matching states (and D.C.) District of Columbia Florida Illinois Maryland New York North Carolina Pennsylvania

District of Columbia 30 18 778 88 179 37

Connecticut 4 48 42 22 369 97 19

Florida 30 883 246 1,097 752 220

Illinois 18 883 170 539 409 144

Kansas 2 38 106 3 23 22 5

Maryland 778 246 170 498 477 235

Massachusetts 9 91 93 44 616 90 67

Missouri 16 138 985 26 62 72 42

Nebraska 5 34 146 8 13 10 5

New York 88 1,097 539 498 1,268 651

North Carolina 179 752 409 477 1,268 218

Pennsylvania 37 220 144 235 651 218

Rhode Island 2 40 43 25 312 30 22

Tennessee 2 67 198 13 46 71 10

Virginia 160 158 115 336 482 583 95

Total 1,330 3,842 3,891 2,881 6,064 4,278 1,770

Note 1: This table represents the initial match hits for selected states that were returned by DMDC for

follow up. The totals for the table do not add up to 33,000 because not all states that participated in

the match are included here. In addition, not all the match hits identify actual incidences of duplicate

benefits, and therefore, not all match hits will yield savings in the three programs.

Note 2: Shaded blocks indicate matches between bordering states.

Source: GAO analysis of DMDC records.

About 80 percent of the match hits listed in table 2 are between states that

do not border one another. For example, North Carolina has more match

hits with Florida and New York than it does with neighboring Virginia. In

addition, in New York and Pennsylvania, match hits with nonbordering

states represented 73 percent and 50 percent of their total match hits,

respectively. Although both of these states have matched recipient data

with bordering states for years, the PARIS match identified numerous

instances of potential duplicate benefits in nonbordering states that might

not otherwise have been detected.

 14The numbers reflect the total number of matches reported by DMDC, not the proportion

of those matches that actually produced program savings.
Page 11 GAO-01-935 PARIS Project Can Help States

While most states do not track the savings they have achieved or the costs

they incurred because of the PARIS match, a small number of states were

able to document the results of participating in the project. Four states

and the District of Columbia provided us with their estimated savings from

participating in PARIS. Three of the states also performed cost-benefit

analyses, demonstrating that they found PARIS to be cost-beneficial.15

• Pennsylvania estimated that two quarterly matches in 2000 produced more

than $2.8 million dollars in annual savings in the TANF, Medicaid, and

Food Stamp programs and achieved a savings-to-cost ratio of almost 12 to

1. About $2.5 million (87 percent) of the total estimated savings are

attributed to the Medicaid program.

• Maryland estimated that its first PARIS match in 1997 produced savings of

$7.3 million in the Medicaid program alone. The match identified

numerous individuals who were originally enrolled in Medicaid due to

their SSI eligibility, but at the time of the match no longer lived in the

state. Subsequent matches conducted between November 1999 and August

2000 have produced savings of about $144,000 in the TANF, Medicaid, and

Food Stamp programs, with a savings-to-cost ratio of about 6 to 1.

• Kansas estimated that two PARIS matches in 1999 and 2000 resulted in

savings of about $51,000 in the TANF, Medicaid and Food Stamp

programs, with a savings-to-cost ratio of about 27 to 1.

• New York reported that improper payments identified in four matches

conducted in 1999 and 2000 produced estimated savings of $5.6 million;

however, the state did not collect data on the costs associated with

investigating these matches.

• The District of Columbia estimated that one PARIS match conducted in

1997 resulted in savings of about $311,000 in the TANF and Food Stamp

programs; however, officials did not collect savings data for the Medicaid

program, nor did they collect cost data.

Our discussions with numerous state and federal officials have led us to

conclude that the substantial variation in the estimated program savings

and savings-to-cost ratios across these states is attributable to a number of

factors. These factors, which could also apply to any participating state,

include differences in

• the extent to which state and local officials follow up on (or fail to pursue)

match hits and take action to cut off benefits where appropriate;

• the methods and assumptions states use to estimate their savings;

 15We did not independently verify the validity or reliability of the states’ data.

PARIS Helped Several

States Avoid Millions in

Improper Payments
Page 12 GAO-01-935 PARIS Project Can Help States

• the proportion of match hits that are valid in that they are found to reflect

actual improper benefits being paid in more than one state (a higher

proportion of valid match hits will generally yield more program savings

than a lower rate, and is more likely to be cost-beneficial);16

• the estimated number of months of avoided benefit payments;

• the size of the recipient population and the monthly benefits provided in

each state under the TANF, Medicaid, and Food Stamp programs;

• how long it takes local office staff or fraud investigators to follow up on

match hits;

• the salary costs of state and local staff involved with PARIS; and

• the cost to create an automated list of recipients at the state level to be

sent to DMDC.

Because so few states had analyzed their savings and costs from

participating in PARIS, we performed an independent analysis to assess

how certain factors might influence the extent to which participating in

PARIS could achieve program savings. We studied how certain key

variables, such as the number of programs included, the proportion of

match hits that are valid, and the estimated number of months of avoided

benefit payments could affect the overall savings a state might achieve by

participating in PARIS. We used national data where available (such as

average benefits paid to recipients for each program). When national data

were not available, we used the experiences of five states for our

analysis.17 We used professional judgment to determine the values for

several key assumptions in our analysis. Specifically, using a hypothetical

example in which 100 match hits are sent to local benefit offices for staff

to investigate, we assumed that

• each match hit requires 2 hours to determine whether benefits are

improperly being paid in more than one state and costs $68.97 on average,

resulting in a total of $6,897 in salaries and related expenses to follow up

on all 100 match hits;

 16The proportion of valid match hits depends, in part, on the extent to which states filter

their raw match data. For example, many states check for and filter out cases that have

been recently closed. The cases that are filtered out are not sent to local benefit workers

for follow-up, thereby reducing the number of match hits requiring action and ultimately

lowering the costs (and potentially the savings) of participating in PARIS.

17We used national data for the benefits paid to individuals and families in the TANF,

Medicaid, and Food Stamp programs. Other cost and savings figures we used are based on

data provided by Kansas, Maryland, New York, Pennsylvania, and Texas. Texas was not

participating in PARIS at the time our analysis was performed. However, we included data

from this state because we determined that a current border state match it conducts with

three neighboring states is similar to the PARIS match.
Page 13 GAO-01-935 PARIS Project Can Help States

• the average state cost is about $440 to generate the automated list;

• 20 percent of the match hits investigated are found to be valid; and

• program savings come entirely from the future benefit payments that are

avoided.

(See app. I for a more detailed description of the data and assumptions

used in our analysis.)

Our analysis suggests that PARIS, as it currently operates, could help save

both federal and state program funds.18 In particular, our analysis indicates

that if states include the TANF, Medicaid, and Food Stamp programs in

their matching activities, the net savings could outweigh the costs of

participation.19 Using our hypothetical example in which 100 match hits

are sent to local benefit office staff for follow-up, we illustrate in table 3

how the savings to a state from participating in one PARIS match could

vary depending on (1) the number of programs included in the match and

(2) differences in the valid hit rate. The table assumes that the savings for

each program accrue for 3 months.

If 20 percent of the match hits are valid (they accurately identify 20 out of

100 instances in which improper benefits are being paid in more than one

state) and the individuals identified are enrolled in all three programs, the

match would produce gross savings of almost $42,000, yielding a savingsto-cost ratio of about 5 to 1. Ultimately, the match would result in net

savings of more than $34,000, as shown in table 3, taking into account total

match costs of about $7,000. Conversely, costs exceed savings under only

one scenario in this example. A valid hit rate of 10 percent, in which the

match only includes the Food Stamp program—a rate substantially below

what participating states have reported—would result in a net cost to the

state of about $3,300.

 18Savings from improper payments that are avoided in the TANF program would accrue to

the states, savings from the Medicaid program would accrue to both the states and the

federal government, and savings from the Food Stamp program would generally accrue to

the federal government. The proportion of the savings in the Medicaid program accruing to

the states and federal government would vary depending on the percentage of program

funds that individual states contribute toward their Medicaid programs.

19The figures we discuss here are net savings or costs. These figures represent the final cost

or savings a state could experience once the costs of conducting the match have been

subtracted.
Page 14 GAO-01-935 PARIS Project Can Help States

Table 3: Estimated Net Savings Given Varying Valid Hit Rates

Valid match hits and net savings

Program 10% 20% 30%

TANF only $912 $9,161 $17,409

Medicaid only 1,225 9,787 18,349

Food Stamps only -3,266a 804 4,875

TANF and Food Stamps 4,983 17,302 29,622

TANF and Medicaid 9,474 26,285 43,095

Food Stamps and Medicaid 5,296 17,928 30,561

All three $13,545 $34,426 $55,308

Note: The table assumes that 3 months of benefit payments are avoided as a result of the match.

Savings in program expenditures are in nominal 1999 and 2000 dollars.

a

Represents net costs rather than savings.

Source: GAO analysis.

The number of months that future benefit payments are avoided can also

influence the amount of savings that result from a PARIS match. Table 4

illustrates the variation in program savings that could result depending on

the number of months of future benefits that are avoided and the number

of programs matched, given a 20-percent valid hit rate.20

Table 4: Estimated Net Savings Given a Varying Number of Future Benefit Payment

Months Avoided

Benefit months avoided and net savings

Program 1 month 3 months 6 months

TANF only -1,838a9,161 25,658

Medicaid only -1,629a9,787 26,911

Food Stamps only -4,623a804 8,946

TANF and Food Stamps 876 17,302 41,941

TANF and Medicaid 3,870 26,285 59,906

Food Stamps and Medicaid 1,085 17,928 43,194

All three 6,584 34,426 76,189

Note: The table assumes a valid match hit rate of 20 percent. Savings in program expenditures are in

nominal 1999 and 2000 dollars.

a

Represents net costs rather than savings.

Source: GAO analysis.

 20The average valid hit rate reported by five states was 32.4 percent.
Page 15 GAO-01-935 PARIS Project Can Help States

As the table shows, there are three scenarios under which a state in our

analysis would experience a net loss from participating in PARIS. One

month’s worth of TANF, Medicaid, or Food Stamp benefits avoided would

yield a net cost to the state of between approximately $2,000 and $5,000.

However, the match would produce savings in all other possible scenarios.

For example, it would yield over $83,000 in gross savings if 6 months of

benefits are avoided and the match was performed for all three programs

(a savings-to-cost ratio of about 11 to 1). The net savings would be about

$76,000.

Our analysis assumes that only a small number of match hits are sent for

follow-up (100), which results in a small number of valid hits (20). A larger

number of valid hits would likely result in greater savings as well. For

example, while some states, such as Kansas, with smaller recipient

populations have reported relatively small numbers of valid hits and lower

levels of savings, other states, such as Pennsylvania and New York, with

larger recipient populations have had much higher numbers of valid hits

and much greater levels of savings.

Although the information provided by states and our analysis indicate that

participating in PARIS interstate matches can save federal and state funds,

savings are not the only benefit of participating in PARIS. Interstate

matches are an important internal control to help states meet their

responsibility for ensuring that public assistance payments are only made

to or on behalf of people who are eligible for them. In addition, PARIS

officials in eight states told us they believe the PARIS interstate matches

can help deter people from applying for duplicate public assistance

payments.

The PARIS project’s interstate matching has helped identify cases of

duplicate benefits that otherwise would likely have gone undetected;

however, PARIS has been limited by several factors. First, only one-third

of the states are participating in the matches, and a large portion of the

public assistance population is not covered by the matching. Second, the

project has some problems with coordination and communication among

project participants. Third, some states are giving inadequate attention to

the project. As a result, match hits are not being resolved, and in

particular, duplicate payments made for Medicaid beneficiaries receive

low priority. Finally, the project cannot help prevent duplicate benefits

from occurring in the first place, but can only identify and help stop them

after they have started.

Limitations of PARIS
Page 16 GAO-01-935 PARIS Project Can Help States

Only one-third of the states are participating in the PARIS interstate

matches. At the time of our review, 16 states and the District of Columbia

were participating. As a result, the public assistance records of the other

34 states were not being shared with participating states.21 These

nonparticipating states contain 64 percent of the population that is likely

to be eligible for public assistance.22

We spoke to officials in seven nonparticipating states to learn their

reasons for not participating. They noted the state’s preoccupation with

more urgent matters, such as implementing new programs or systems, and

the fact that information about the project had not reached someone with

the interest and authority to get the state involved. They also cited some

concerns about the project. These include

• lack of data showing that participating would produce savings for their

state;

• nonparticipation of bordering states, which are perceived as the most

likely sources of valid match hits;

• lack of written guidance on coordinating the resolution of match hits with

other states; and

• inadequate federal sponsorship of PARIS and the resulting lack of

assurance that the project will continue.

Efforts by federal agencies to increase participation in the project have

been minimal. ACF, the lead agency on the project, has not officially

recognized PARIS and devotes very little resources to it.23 ACF

management has not taken actions, such as sending letters to state TANF

directors to inform them about the project and encourage them to

participate. Also, ACF management has not asked other federal agencies

to work with ACF on the project and help get more states involved. CMS,

the federal agency that stands to reap the greatest savings from the

project, has made no effort to encourage state Medicaid agencies to

 21Some states run separate matches with other states not participating in the PARIS

project. However, these matches are usually with just a few neighboring states, and many

states do not do any interstate matching.

22The nonparticipating states contain 62 percent of the total U.S. population and 64 percent

of the U.S. population in poverty, according to 1999 data from the U.S. Census. However,

since we completed our work, California participated in one interstate match on a trial

basis, and Louisiana, Nevada, Puerto Rico, Texas, and Utah were considering joining.

23For example, ACF has not taken actions, such as allocating funds to the project and

including the project in its performance plan, that would indicate official management

recognition of the project.

One-Third of the States

Participate
Page 17 GAO-01-935 PARIS Project Can Help States

participate. In 1999, FNS sent a letter to state Food Stamp agencies

encouraging them to participate in PARIS interstate matches; otherwise,

FNS has had little involvement in the project. This lack of official support

for the PARIS project may contribute to the low participation rate. For

example, the TANF officials that we spoke with in one of the

nonparticipating states who were relatively new to their positions said

they had never heard of PARIS. In another nonparticipating state, a

Medicaid official told us the state would be much more likely to

participate in PARIS if CMS encouraged it to do so.

The PARIS project has had various problems with coordination and

communication that limit the project’s effectiveness. The problems include

the following.

• Difficulties contacting other states. Benefit workers in four of the five

participating states that we visited said they have had difficulties

contacting benefit workers in some other states to obtain information to

resolve match hits or to get the evidence needed to take action against

clients. Problems making contacts occur because the telephone numbers

that states provide for obtaining information on individual cases are

sometimes inaccurate or never answered or are central numbers that are

just the starting point for finding the right person.

• Submission of incomplete and incompatible data. We noted that some of

the states submit data for matching that are likely to increase the number

of invalid match hits and the amount of work other states will have to do

to determine if match hits are valid. For example, we found that some

states include closed cases among the active cases submitted for

matching, cases with improper SSNs, or cases that omit the dates clients

started receiving benefits.

• Uncertainties concerning responsibilities for collecting overpayments

from individuals. PARIS officials from three states said it is not clear

which state should assess and collect an overpayment when it is found

that a client has been receiving TANF or Food Stamp benefits from two or

more states. For example, it is not clear if the state where the client does

not reside should assess an overpayment because, as a nonresident, the

client was not eligible to receive benefits from the state or if the state

where the client does reside should assess the overpayment because it is

much more likely to be able to collect the overpayment.24 Also, it is not

 24According to PARIS officials in two states, collecting overpayments from nonresidents is

difficult because the state cannot use one of its most effective means of collection—

recouping overpayments from current benefits.

Participating States Have

Difficulty With

Coordination and

Communication
Page 18 GAO-01-935 PARIS Project Can Help States

clear how to determine which state should assess an overpayment when

the client claims two residences very near each other but in different

states, and it is not known where the client actually lives.

Although some coordination and communication problems are likely to

occur in any project that involves multiple states and different federal

agencies, the project’s lack of formal guidance and processes makes these

problems more likely to occur. Currently, the formal guidance for the

program only includes the file format the states need to provide for the

match. However, it does not address matters such as the type of case

information other states’ benefit workers should be able to get when they

call the telephone number provided for a case. Also, the guidance does not

have written definitions of some key terms, such as “active case,” or

explanations of how the various data fields are to be used by states to

investigate match hits. Further, the project has no guidance or protocols

for coordinating the assessment and collection of overpayments. However,

ACF, CMS, and FNS have not provided the management or administrative

support—such as a formal focal point at the federal level—that would be

needed to coordinate the project more effectively and help develop such

guidance and protocols.25

In some states, management has given little or no attention to the PARIS

interstate matches and has allowed match hits to go unresolved. This

problem is more pronounced with Medicaid match hits because, in some

states, they are given a lower priority than match hits involving TANF or

Food Stamps.

We found evidence that in at least three states that have participated in the

PARIS project since August 1999, match hits for the entire state or for

some densely populated areas were not being resolved. The PARIS

coordinator in one state told us that match hits in his state have never

been sent out to workers to be resolved. In a second state, a large

metropolitan area had not received any match hits from its district office

until shortly before our visit in February 2001. The PARIS coordinator in a

third state told us that a large county sometimes ignored the PARIS match

hits sent to it for resolution.

The problem of not resolving match hits appears to be most pronounced in

the Medicaid program. Information we received from DMDC indicates that

 25Currently, one individual at ACF handles most PARIS administrative activities on a parttime, informal basis.

Management Attention Is

Inadequate in Some States
Page 19 GAO-01-935 PARIS Project Can Help States

some states may not be focusing sufficient attention on their Medicaid

match hits. Because DMDC does not retain state data used for the PARIS

matches, we were not able to determine how many match hits involving

Medicaid are not resolved and thus recur each quarter. However, data

provided by DMDC for the February 2001 PARIS matches show that some

states have a relatively large percentage of match hits involving Medicaid.

For example, if 40 percent of the records a state submitted for matching

were for clients receiving benefits in a particular program, then one might

reasonably expect to find that about 40 percent of the match hits involved

that program. Thus, finding a disproportionately higher rate of match hits

involving that program could suggest a possible problem. Such is the case

with six states that have participated in PARIS since February 2000 or

before. For each of the six states, the February 2001 PARIS match resulted

in a proportionately higher percentage of match hits involving Medicaid

than would generally be expected. For example, in one state, 60 percent of

the records submitted for matching were cases involving only Medicaid

benefits (not TANF or Food Stamps), but 78 percent of the resulting match

hits were for such cases. In another state, 31 percent of the records

submitted were for cases involving Medicaid received due to eligibility for

SSI, but 69 percent of the resulting match hits were for such cases.

Match hits involving duplicate Medicaid benefits frequently occur, not

because of fraud or abuse, but because Medicaid beneficiaries often do

not notify the state when they move out of state. Therefore, a state will

keep beneficiaries on the rolls until it discovers that they have moved. The

state may make this discovery during a routine reverification of eligibility,

which is generally performed once a year or less often. However, officials

from several states have told us that their states never reverify the

eligibility of a certain type of Medicaid beneficiary, such as one who is

eligible based on his or her receipt of SSI.26 Therefore, the PARIS matches

often involve this type of beneficiary. Although a state receives

notifications from SSA when SSI clients move out of the state, states often

do not remove Medicaid beneficiaries from their rolls based on these

notifications, according to an SSA official.

The PARIS coordinators for two states told us this problem came to light

after they examined their first PARIS interstate match results and found a

 26In 32 states and the District of Columbia, people receiving SSI are automatically eligible to

receive Medicaid; that is, they are considered to have met the states’ eligibility

requirements because they are receiving SSI. Officials in some states told us they do not

periodically reverify the Medicaid eligibility of people who are automatically eligible for

Medicaid.
Page 20 GAO-01-935 PARIS Project Can Help States

startling number of match hits involving SSI recipients who were on the

state’s Medicaid rolls. One state compared the Medicaid match hits from

its first PARIS run with SSA files and found 5,000 SSI recipients on the

state’s Medicaid rolls who, according to SSA records, were not residing in

the state. This prompted the state to do a similar match with SSA records

using all the state’s Medicaid beneficiaries. The state then followed up

with letters to Medicaid enrollees who the matches indicated no longer

lived in the state. As a result of the PARIS and subsequent SSA matches,

the state identified 17,000 people on its Medicaid rolls who were no longer

eligible for Medicaid in the state.27 We heard a similar story from another

state. Both states, we were told, had been making monthly payments to

MCOs for the Medicaid beneficiaries, who would have stayed on the states’

rolls indefinitely if the state had not participated in the PARIS matches.

Yet even after receiving large numbers of Medicaid match hits, some states

appear not to be resolving them or addressing the problems with their

Medicaid rolls. We have been told by some PARIS coordinators that the

departments administering Medicaid are focusing their efforts on getting

people on the Medicaid rolls rather than removing people who are no

longer eligible. PARIS officials in two states said that they believe the local

benefit workers or the offices responsible for Medicaid have not adjusted

their thinking to recognize the shift from a fee-for-service to a managed

care environment. In the past, when Medicaid services were provided on a

fee-for-service basis, costs were incurred only if beneficiaries sought

medical treatment and providers submitted bills for the treatment.

Therefore, if a beneficiary moved out of state but remained on the state’s

Medicaid rolls, medical expenses were not incurred for the beneficiary if

he or she did not seek treatment in the state. However, when the state

makes a fixed monthly payment to an MCO for each Medicaid beneficiary,

as is done under some managed care arrangements, the state makes

payments to the MCO regardless of whether the beneficiary ever seeks

medical treatment.

The PARIS project was designed to identify duplicate benefits after they

have been provided, not to prevent the duplicate benefits from occurring

in the first place. Therefore, the PARIS matches are part of what has been

described as a “pay and chase” process, in which states pay benefits to

clients and then try to recover overpayments when they discover the

 27The 17,000 people were no longer eligible because they no longer lived in the state; they

were deceased; or they were no longer eligible for SSI, which was the basis for their

Medicaid eligibility.

PARIS Identifies Duplicate

Benefits After They Are

Provided
Page 21 GAO-01-935 PARIS Project Can Help States

clients were not eligible for the benefits.28 Preventing an improper payment

in the first place is preferable to “pay and chase” because overpayments

are often difficult to collect from low-income clients who no longer live in

the state. Also, when states make payments to MCOs for beneficiaries who

should no longer be on their Medicaid rolls, these funds are wasted unless

they can be recouped. According to a Medicaid official, it may be difficult

for states to recoup overpayments to MCOs caused by errors in states’

Medicaid rolls.

Officials from most states we spoke with said they would like a datasharing process that could be used before benefits are provided—that is, a

process that would allow state caseworkers to check other states’ data to

see if an applicant was already receiving benefits elsewhere before the

state approved an application for benefits. Such a process would have to

provide prompt responses (probably within 24 hours) to inquiries—

something very different from the quarterly PARIS matches. One option

for this process includes a national database of clients receiving public

assistance in any state. Such a database would be maintained by the

federal government and would consist of records submitted and regularly

updated by the states.29

Implementing such an option would require federal leadership and funding

to address programming and operating expenses and potentially the

standardization of data and information systems among participating

states.30 Also, while implementing this option could help prevent duplicate

payments, it must be balanced against the additional privacy concerns that

might arise.31

 28See OMB Benefit Systems Review Team, Strategies for Efficiency: Improving the

Coordination of Government Information Resources (Washington, D.C.: Jan. 1997).

29An example of a national database that uses records submitted by the states is the

National Directory of New Hires, which is used to locate parents who fail to provide child

support payments.

30For more information on options for enhanced data sharing, see OMB, Strategies for

Efficiency, and FNS, Options for a National Database to Track Participation in Federal

Means-Tested Public Assistance Programs: Report to Congress (Nov. 1999).

31Creation of a new database to be accessed by states could potentially increase the risk of

unauthorized access to, and use of, personal information about public assistance

recipients.
Page 22 GAO-01-935 PARIS Project Can Help States

The PARIS project offers states a potentially powerful tool for improving

the financial integrity of their TANF, Medicaid, and Food Stamp programs.

However, the project has fallen short of realizing its full potential, as is

most clearly evidenced by relatively low state participation. While PARIS’

success ultimately rests in the hands of the states, key federal players have

not done enough to provide a formal structure to the project that

encourages and facilitates state participation. More specifically, ACF,

CMS, and FNS have not taken the lead in establishing a focal point in the

federal government for coordinating the project. This is crucial given the

complicated relationships among the three programs and among the

federal, state, and local government entities responsible for implementing

them. Additionally, the three federal agencies have not worked together to

develop guidance and protocols that are key for helping states share

information and best practices. Finally, these agencies have not formally

recognized, nor devoted sufficient resources to, the project, despite its

potential to identify improper payments and save program funds.

Importantly, this lack of formal federal recognition might signal to some

states that the project should not be taken seriously.

To help states improve the effectiveness of PARIS and prevent duplicate

benefit payments to TANF and Medicaid recipients, we recommend that

the Secretary of HHS direct the Administrators of ACF and CMS to

formally support PARIS and provide guidance to participating states. Such

support and guidance should include the following actions:

• Create a focal point charged with helping states more effectively

coordinate and communicate with one another. An existing entity, such as

the Interagency Working Group, could provide the mechanism for such a

focal point. This entity could also serve as a clearinghouse for sharing best

practices information that all states could use to improve their procedures,

such as comparisons of match filtering systems.

• Take the lead to help the PARIS states develop a more formal set of

protocols or guidelines for coordinating their match follow-up activities

and communicating with one another.

• Develop a plan to reach out to nonparticipating states and encourage them

to become involved in PARIS. At a minimum, all states should be

encouraged to provide their TANF and Medicaid recipient data for other

states to match, even if they choose not to fully participate in PARIS. This

would help to ensure that all recipients nationally are included in PARIS

matches.

• Coordinate with the USDA/FNS Food Stamp program to encourage their

participation in PARIS at the federal level as well as their working more

Conclusions

Recommendations for

Executive Action
Page 23 GAO-01-935 PARIS Project Can Help States

closely with individual states to improve the effectiveness of PARIS and

helping more states to participate.

Officials from the Department of Health and Human Services and the Food

and Nutrition Service provided comments on our report, the full text of

which appear in appendixes II and III, respectively. The agencies also

included some technical comments, which we have incorporated where

appropriate.

In general, HHS agreed with the overall intent of our recommendations,

but consistently stressed the need for additional funding and staff

resources to increase their PARIS activities. With regard to our first

recommendation, HHS commented that it had created a PARIS work

group composed of representatives from ACF and DMDC and has

encouraged other agencies, such as CMS and FNS, to participate more

actively in PARIS. HHS also stated that additional funding and staff

resources from all involved agencies could help the work group to

improve its services. We believe that while the PARIS workgroup provides

useful guidance to participating states, to date it has been unable to

resolve the problems and limitations we identified during our review. As

we note in the report, this is due in part to ACF, CMS, and FNS not

providing the management or administrative support necessary to correct

these problems. Our recommendation is intended to encourage greater

leadership by ACF, CMS, and FNS and a more coordinated proactive

approach among the agencies to working together and with the states to

address the limitations in PARIS.

With regard to our second recommendation, HHS cautioned that it is not

appropriate for a federal agency to dictate or appear to dictate the

protocol states use in their interaction with other states. HHS also argued

that states are best able to determine the necessary procedures for PARIS.

However, HHS acknowledged that with additional resources, ACF could

help states develop such procedures and disseminate them to other states

as necessary. We continue to believe that active federal leadership is

needed to solve the communication and coordination problems discussed

in the report. Consequently, we believe that ACF should act as a facilitator

at the federal level to help states overcome some of the challenges they

have reported communicating and coordinating with one another.

Moreover, such facilitation can and should occur without impinging on the

states’ ability to administer the TANF, Medicaid, and Food Stamp

programs in a manner that best fits their needs.

Agency Comments

and Our Evaluation
Page 24 GAO-01-935 PARIS Project Can Help States

With respect to our third recommendation, HHS generally agreed that ACF

could do a better job to reach out to additional states to persuade them to

participate in PARIS. However, HHS did not agree with our statement that

states could, at a minimum, provide their data for others to use, even if

they do not directly participate in PARIS themselves. We believe that while

full participation by all the states is clearly the preferred outcome, the

inclusion of nonparticipating states’ public assistance data for use by

states participating in PARIS could help save additional benefit funds in

the TANF, Medicaid, and Food Stamp programs.

Finally, with regard to our fourth recommendation, HHS noted that ACF

has consistently coordinated with FNS in all PARIS activities, but agrees

that a closer working relationship with FNS would add to the effectiveness

of PARIS. We concur with HHS’ assessment that ACF and FNS should

work more closely together to improve existing PARIS operations and

persuade additional states to participate.

FNS noted that the report is a balanced and fair description of the PARIS

project, but they expressed a concern that certain passages in the report

suggest that FNS should have a more formal role in PARIS, despite the fact

that PARIS is primarily an ACF project. They also identified several

reasons why PARIS is not used more by the Food Stamp program. They

emphasized that FNS is not required by statute to track interstate receipt

of Food Stamp benefits and that many states are already engaging in such

activity on their own.

Although we recognize that FNS is not the lead agency responsible for

PARIS, we do believe that FNS could take a more proactive stance to help

coordinate the program at the federal level and persuade additional states

to participate in PARIS. Moreover, we believe that although FNS is not

mandated by statute to participate in PARIS, the benefits of PARIS in

terms of potential program savings and enhanced program integrity

warrant a more active role for the agency. Our analysis suggests that

federal leadership from each of the involved federal agencies is critical to

the success of PARIS, particularly with regard to expanding the number of

states that participate in the project. In addition, while some states engage

in interstate matching as noted in the report, we believe a more structured,

far-reaching approach like that offered by PARIS is more effective.

FNS also commented that PARIS cannot prevent the initial duplicate

payment of benefits and that the matching activity may not be costeffective. We believe that although PARIS cannot prevent duplicate

benefits from being provided when states initially determine individuals’
Page 25 GAO-01-935 PARIS Project Can Help States

eligibility for benefits, using PARIS is preferable to not matching at all.

Finally, the report notes that matching for the Food Stamp program alone

may not be cost-effective and emphasizes the advantage of matching for

multiple programs simultaneously.

As agreed with your office, unless you publicly announce its contents

earlier, we plan no further distribution of this report until 30 days after its

date. At that time, we will send copies to the Chairman, Senate Committee

on Governmental Affairs; Secretary of HHS; Administrator for CMS;

Administrator for FNS; and to other interested parties. Copies will also be

made available to those who request them.

Please contact me or Kay Brown at (202) 512-7215 if you have any

questions concerning this report or need additional information. Jeremy

Cox, Kathleen Peyman, James Wright, and Jill Yost made key

contributions to this report.

Sincerely yours,

Robert E. Robertson

Director, Education, Workforce,

 and Income Security Issues
Appendix I: Data and Assumptions Used in Our Analysis

Page 26 GAO-01-935 PARIS Project Can Help States

In the table below, we describe the data and assumptions used to support

our discussion on pages 12-15.

Our analysis incorporated data from five states (Kansas, Maryland, New

York, Pennsylvania, and Texas), two federal agencies (Centers for

Medicare & Medicaid Services and Food and Nutrition Service), and

selected research studies.

Table 5: Scenario With Assumptions Used in Report

Variable Value used Basis Details

Savings

New York 34.0

Maryland 62.0

Pennsylvania 19.0a

Texas 21.0

Kansas 28.0

Proportion of valid match hits 20% The estimate contained in a cost-benefit

analysis by the Administration for Children

and Families.

Average 32.8%

New York 65.0

Pennsylvania 95.0

Texas 97.0

Closure (71%) Average for the 4 states providing data.

Kansas 28.0

New York 35.0

Pennsylvania 5.0

Texas 3.0

Proportion of valid match hits that

result in case closure or benefit

reduction

Benefit reduction

(29%)

Average for the 4 states providing data.

Kansas 72.0

Monthly benefit for

Household Existing research and calculation.

TANF $357.27 HHS Third Annual Report to Congress, 2000

Medicaid 349.16 GAO calculation based on Urban Institute,

1999c

Food Stamps 162.00 USDA Office of Analysis, Nutrition and

Evaluation, Statistics, FY1999

Individual

TANF 73.47bHHS Third Annual Report to Congress, 2000.

Medicaid 129.32 Urban Institute, 1999c

Food Stamps 71.27 GAO/RCED-99-180d

Kansas 6

Maryland 12

New York 3

Pennsylvania 12

Monthly benefit

payments avoided

3 States can participate in 4 quarterly PARIS

matches per year, thus, the number of benefit

months a state could expect to save in each

program may be closer to 3 months than the

average (7 months) based on data reported

by 5 states. Texas 2.4

Appendix I: Data and Assumptions Used in

Our Analysis
Appendix I: Data and Assumptions Used in Our Analysis

Page 27 GAO-01-935 PARIS Project Can Help States

Variable Value used Basis Details

Costs

Pennsylvania 150 minutes2.5 hours

New York 60 minutes

Maryland 30 minutes

Time to follow up or resolve one

match hit

120 minutes Because of the wide variation in the time 4

states reported an average match hit requires

to resolve, we selected a figure closer to the

longest estimate.

Average time based on data from 4 states is

67.5 minutes. Kansas 30 minutes

New York $27.20

Maryland 23.91

Pennsylvania 68.97

Kansas 7.00

Salary cost to resolve one match 68.97 Pennsylvania’s figure is used because it

includes state personnel, and local office staff

costs of PARIS follow-up.

Average based on data from 5 states is

$31.77.

California 63.21

Maryland 757.00

Pennsylvania 375.00

State costs to generate automated

list of recipients for matching

$440 per match Average based on data from 3 states.

Kansas 189.45

Other

Average case or household size 2.7 individuals Monthly Labor Review, May 2000e

Note: Figures are in nominal 1999 and 2000 dollars.

a

The match hit rate reported by Pennsylvania is the hit rate based on “raw” (unfiltered) data. The hit

rate based on filtered data is likely to be higher.

b

Figure represents average amount that a household’s monthly TANF benefit would change if one

person was removed from the case, based on data from HHS Third Annual Report to Congress,

2000.

C

Medicaid Managed Care Payment Methods and Capitation Rates: Results of a National Survey,

1999.

D

Food Stamp Program: Households Collect Benefits for Persons Disqualified for Intentional Program

Violations (GAO/RCED-99-180, July 8, 1999).

e

Spending Patterns of Public-Assisted Families, Monthly Labor Review, May 2000.

Source: GAO analysis.

S= (A x F + B x I) x X

where

S = Savings per benefit case avoided,

A = Proportion of match hits in which entire case is closed,

F = Family (case) monthly benefit,

B = Proportion of match hits where household members are removed from

the case,

Formulas Used in Analysis

Savings
Appendix I: Data and Assumptions Used in Our Analysis

Page 28 GAO-01-935 PARIS Project Can Help States

I = Monthly benefit for that number of individuals, and

X = Months of future benefit payments avoided.

This calculation was performed for each of the three programs (TANF,

Food Stamps, and Medicaid) separately to demonstrate how the costeffectiveness of a “good” PARIS match hit could change depending on the

number of programs that are included in a match.

C = (N x W) + L

where

C = Costs the state incurs for each case sent to field office staff for

followup,

N = Number of hours required to work an average case,

W = Average hourly wage of individuals following up on match hits, and

L = Average cost per case that the state incurs to create the automated list

of recipients each time it participates in the PARIS matches.

R = S / C

where

R = Ratio of savings to costs,

S = Savings, and

C = Costs.

The savings that a state might experience from participating in PARIS

could differ from those we have reported in the report, depending on

which assumptions are used. Tables 6 and 7 illustrate the possible savings

a state could realize if we use the averages reported by each state instead

of the more conservative assumptions cited in the report. The assumptions

used in these tables, where they vary from the values used in the report,

are as follows:

• Number of benefit months avoided per valid match hit: 7 months;

• Valid hit rate: 30 percent;

• Each match hit requires 60 minutes (1 hour) to resolve;

• Cost to follow up on 1 match hit: $31.77; and

• Cost to follow up on all 100 match hits: $31.77 x 100 hits = $3,177 + $440

(cost of creating file of recipients for matching each time the PARIS match

is performed) = $3,617 total cost.

Costs

Savings/Cost Ratio

Alternative Scenario
Appendix I: Data and Assumptions Used in Our Analysis

Page 29 GAO-01-935 PARIS Project Can Help States

Using our hypothetical example in which 100 match hits are sent to local

benefit office staff for follow up, table 6 illustrates how the savings to a

state from participating in one PARIS match could vary depending on the

number of programs included in the match and differences in the valid hit

rate. The table assumes that the savings for each program accrue for 7

months.

Table 6: Estimated Net Savings Given Varying Valid Hit Rates

Valid match hits and net savings

Program 10% 30% 50%

TANF only $15,630 $54,125 $92,619

Medicaid only 16,361 56,317 96,273

Food Stamps only 5,881 24,878 43,875

TANF and Food Stamps 25,129 82,620 140,111

TANF and Medicaid 35,608 114,059 192,509

Food Stamps and Medicaid 25,859 84,812 143,765

All three programs $45,107 $142,554 $240,001

Notes: The table assumes that 7 months of benefit payments are avoided as a result of the match.

Figures are in nominal 1999 and 2000 dollars.

Source: GAO analysis.

If 30 percent of the match hits are valid (they accurately identify 30

instances of duplicate benefits being paid) and the individuals identified

are enrolled in all three programs, the match would produce gross savings

of more than $146,000 yielding a savings-to-cost ratio of about 40 to 1.

After factoring in total costs of $3,617 to participate and follow up on the

match hits, the net savings are more than $142,000. A valid hit rate of 10

percent—a rate substantially below what participating states have

reported—in which the match only includes the Food Stamp program

would still result in gross savings of about $9,500 (a savings-to-cost ratio of

almost 3 to 1).

The number of months that future benefit payments are avoided can also

influence the amount of savings that result from a PARIS match. Table 7

illustrates the variation in program savings that could result depending on

the number of months of future benefits that are avoided and the number

of programs matched, given a 30 percent valid hit rate (30 match hits out

of the 100 match hits sent for follow up result in some savings).
Appendix I: Data and Assumptions Used in Our Analysis

Page 30 GAO-01-935 PARIS Project Can Help States

Table 7: Estimated Net Savings Given a Varying Number of Future Benefit Payment

Months Avoided

Benefit months avoided and net savings

Program 3 months 9 months 15 months

TANF only $21,129 $70,622 $120,115

Medicaid only 22,069 73,441 124,813

Food Stamps only 8,595 33,019 57,444

TANF and Food Stamps 33,342 107,259 181,176

TANF and Medicaid 46,815 147,680 248,545

Food Stamps and Medicaid 34,281 110,077 185,874

All three $59,028 $184,317 $309,606

Notes: The table assumes a valid match hit rate of 30 percent. The average hit rate reported by the

five states is 32.4 percent.

Figures are nominal 1999 and 2000 dollars.

Source: GAO analysis.

As the table shows, the state would experience net savings from

participating in PARIS under each scenario, although the range of

potential savings varies considerably. Three months’ worth of Food Stamp

benefits avoided would yield gross savings of more than $12,000, (a

savings-to-cost ratio of about 3 to 1). The net savings would be about

$8,600. However, the match could produce gross savings of about $313,000

if 15 months of benefits were avoided and the match was performed for all

three programs (a savings-to-cost ratio of about 87 to 1). Net savings

would be about $309,600.
Appendix II: Comments From the Department

of Health and Human Services

Page 31 GAO-01-935 PARIS Project Can Help States

Appendix II: Comments From the

Department of Health and Human Services

Note: GAO comments

supplementing those in

the report text appear at

the end of this appendix.
Appendix II: Comments From the Department

of Health and Human Services

Page 32 GAO-01-935 PARIS Project Can Help States

See GAO comment on

p. 35.
Appendix II: Comments From the Department

of Health and Human Services

Page 33 GAO-01-935 PARIS Project Can Help States
Appendix II: Comments From the Department

of Health and Human Services

Page 34 GAO-01-935 PARIS Project Can Help States
Appendix II: Comments From the Department

of Health and Human Services

Page 35 GAO-01-935 PARIS Project Can Help States

The following is GAO’s comment on the Department of Health and Human

Services’ letter dated August 17, 2001.

The HHS comment concerning “the stated need for a real-time, GAO online system” is inaccurate. Although we discuss a national database as

one option for providing prompt responses to interstate inquiries about

public assistance applicants’ eligibility for benefits, the report does not

state that we or any other agency should develop or operate such a

system.

GAO Comment
Appendix III: Comments From the Food and

Nutrition Service

Page 36 GAO-01-935 PARIS Project Can Help States

Appendix III: Comments From the Food and

Nutrition Service

The USDA Food and Nutrition

Service did not provide a formal

comment letter. However, as we

agreed with Food Stamp

Program officials, we are

reprinting the comments faxed to

us on July 24, 2001.

Now on p. 17.
Appendix III: Comments From the Food and

Nutrition Service

Page 37 GAO-01-935 PARIS Project Can Help States (207117)

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