Departent of Health and Human Servces 

. OFFICE 

INSPECTOR GENERA 

TH INCOME AN ELIGffIL VERICATION SYSTE (lVS): TI FOR REFORM? 

($

'oaa 

Richard P. Kusserow 

INSPECfOR GENERA 

JUY 1991 
CE OF INSPECTOR GENRA 

The miion of the Offce of Inpector General (OIG); as mandated by Public Law 95-452 

as amended, is to protect the integrty of the Deparment of Health and Human Servce 

(HS) program as well as the health and welfare of beneficiaries served by those programs. Th statutory mision is caed out though a nationwide network of audits, investigations 

and inpetions conducted by three OIG operatig components: the Offce of Audit Servce, the Offce of Investigations, and the Offce of Evaluation and Inpections. The 

OIG also inorm the Secretary of HHS of program and management problems and 

recmmends courses to correct them. 

OFFCE OF AUDIT SERVICE 

The OIG's Offce of Audit Servce (OAS) provides all auditing servce for HHS, either by conducting audits with its own audit resource or by overseeing audit work done by others. 

Audits examie the performance of HHS programs and/or its grantee and contractors in 

carrg out their respective responsibilties and are intended to provide independent 

assesments of HHS programs and operations in order to reduce waste, abuse, and mimanagement and to promote ecnomy and effciency throughout the Department. 

OFFCE OF INTIGATIONS 

The OIG's Offce of Investigations (01) conducts crial, civi and admitrative 

investigations of allegations of wrongdoing in HHS programs or to HHS beneficiares and of 

unjust enrchment by providers. The investigative effort of 01 lead to crial convictions 

admitrative sanctions, or civi money penalties. The 01 also oversee State Medicaid fraud 

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

program. 

OFFICE OF EVALUATION AN INSPECTONS 

The OIG's Offce of Evaluation and Inpections (OEI) conducts short-term management and 

program evaluations (caed inspetions) that focus on issues of concern to the Deparment the Congres, and the public. The fidings and recmmendations contained in these 

inpection report generate rapid, accurate, and up-to-date information on the effciency, 

vulnerabilty, and effectivenes of deparmental programs. This report was prepared in the 

Boston Regional offce under the direction of Regional Inspector General 

Mark R. Yessian, Ph. , and Deputy Regional Inspector General Marta B. Kvaal. Project staff include: 

Theodore T. WaI Alan S. Levine Headqarters Barr C. McCoy 

David Schrag

Department of Health and Human Servces 

OFFICE OF 

INSPECTOR GENERAL 

TI INCOME AN EUGffILIT VERICATION SYSTE (IEVS): TI FOR REFORM? 

"CEs' 

"6 

..a 

Richard P. Kusserow 

INSPECTOR GENERA 

. OEI-Ol-9010 
EXECUTIVE SUMMAR Y


PUROSES 

The purposes of this study are to (1) synthesize the fidings and reco=endations of 

several recent reports examining the implementation of Income and Eligibilty 

Verication Systems (IEVS) by Ihe States, and (2) offer conclusions for Federal 

offcials and others considering fuure directions for IEVS. 

BACKGROUN 

Since the mid- 1980' , the Federal government has required each State to have an 

IEVS. The purpose of an IEVS is to reduce waste, abuse, and costs in the Aid 

Famiies with Dependent Children, Food Stamps, and Medicaid programs. An IEVS is a system, usually automated, for matching financial information received from 

public assistance clients with information in certain Federal and State data bases. It helps States identif those who are ineligible or who receive incorrect benefit 

payments because their incomes or resources exceed allowable liits. 

In recent years, several Federal agencies and a national organiztion representing 

State welfare agencies have exaed aspects of States' implementation of IEVS. At 

the request of the President's Council on Integrty and Effciency, we have analyzed 

the reports of these 10 studies. We supplemented this analysis with discussions with Federal and State welfare officias concerned with IEVS. Ths report provides a 

synthesis of the studies' findings and recommendations. A detailed summary of the 

studies appears as appendix A of this report. 

FIINGS 

Severl recent stu idti m.r proble wih the States ' impletatin of IEVS. Th inate that: 

information in the Federal data bases has been inaccurate, duplicative 

untimely, or inaccesible; 

Federal requirements, in important respects, are highly prescriptive, or unclear, or inconsilent; and 

the administrative capacity of many States to implement IEVS is 

limited by insuffcient staff and inadequate computer resources. 
Th stu make no recommtins concerg State' raures but th do ades 

Fedral data bases and Fed reqem. In part th inat tht: 

the usefulness of the Federal data bases should be improved; and 

Federal requirements of the States should be modied. One report calls for them to be made more flexible; othr reports urge that they 

be more specifc. Several reports urge they be better coordinated 

among the Federal agencies. 

In th thee State we visited,. proble wih Fed da b,.es Fed reem 

and in resoures st appe to hi efort to ope 

CONCLUSIONS 

The problems identified in this report appear to be substmtial enough to warrant 

further examination of IEVS. Toward that end, the Offce of Inspector General wil

undertake further study addressing the effectiveness of paIcular matches. In 

addition, the Department of Health and Human Servces and the Department of 

Agriculture might weII consider a basic reexamination of IEVS. That reexamination 

might address ways in which: 

the Federal government could give States more flexibility in carrng out IEVS matches and at the same time hold them more accountable 

for results;


Federal data bases used in IEVS matches mit be made more useful; 

and 

additional Federal data could be made available to States. 
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

TABLE OF CONTENTS


EXCU SUMY . . .. i


INODUCTON . . . . . . . . . . . 1


FIINGS. . . . . . . . . . . . . . . . 3 

CONCLUSIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 

APPENIX A .............................................. A-


Findings and Recommendations of 

Selected Studies Related to the


Implementation of IEVS 

APPENIX B............................................... B-1 

Endnotes 
INTRODUCTION€

PUROS€

The purposes of this study are to (1) synthesize the fidings and reco=endations of€

several rent reports examing the implementation of Income and Eligibilty€

Vericatin Systems (IEVS) by the States, and (2) offer conclusions for Federal 

offcials and others considerig future directions for IEVS. 

METHODOLOY€

We analyed reports of 10 studies related to the implementation of IEVS by the€

States. These reports have been issued since 1985 by the General Accounting Offce 

(GAO); the Offces of Inspector General (OIG) in the Deparment of Agrculture 

and the Department of Health and Human Servces (HHS); the Health Care 

Financing Administration (HcFA) and the Office of the Assistant Secretary for 

Management and Budget in HHS; and by the American Public Welfare Association (APWA). €

We supplemented this analysis with discussions with State welfare offcials 


visits to thre States, with Federal offcials associated with IEVS, and with staf from


the APWA.1


durig site€

BACKGROUN€

Since the mid- 1980' , the Federal government has required State agencies 

administering certain federaIly funded public assistance programs to operate an 

Income and Eligibilty Verication System. 

An IEVS is a matching system, usuaIly automated, involving Federal and State data 

bases. The States use IEVS to verify the accuracy of financial information provided 

by clients to the State public assistance agencies that administer the Aid to Famies 

with Dependent Children (AFDC), the Medicaid, and the Food Stamps programs. 

These programs, respectively, are funded in part by the Admistration for Chidren 

and Famiies (ACF) and HCFA in HHS and the Food and Nutrition Servce (FNS) 

of the Deartment of Agriculture. 

The Congress mandated IEVS in the Deficit Reduction Act (DEFR) of 1984 

(P.L. 96-369).2 This mandate was largely a response to a presidential commission 

which had concluded that the Federal and State governments had misspent more 

than $4 bilIon on inappropriate payments in these programs in 1982. In establishing€
IEVS, the Congress intended that it augment existing State verification systems 

through more comprehensive, systematic use of developing computer technology and 

computeried data bases. 

The purpose of IEVS is to reduce waste, abuse, and costs in these three assistance 

programs that are jointly fuded by the Federal and State governents. The State 

agencies must match financial information received from both applicats and

recipients with fiancial inormation about them contaied in the data bases of the 

Social Security Administration (SSA), the Internal Revenue Servce (IRS), and 

certain State agencies. The IEVS provides States with fiancial inormation that 

may not have been reported by applicats and recipients of these programs. Thus

States can better identif those who are not eligible for public assistance or who 

receive incorrect benefit payments because their incomes or resources exceed 

aIIowable limits. 

The IEVS process tyicaIIy begins when a State agency receives financial information 

on an applicant--say, for AFDC--from a local welfare offce. The State agency 

forwards the information, often on computer tape, to the appropriate Federal or 

State agency for matching against particular financial information about the applicant 

contained in its computerized data base. In return, a computer tape containg the

relevant information is sent back to the State agency for foIIowup. That agency 

usuaIIy forwards the information to the local welfare offce for caseworkers to veri 

and to correct eligibility and benefi determinations as appropriate. 

In this report, which was requested by the President s Council on Integrty and 

Effciency, we provide a detailed summary of 10 recent studies related to IEVS. 

This summary appears as appendix A. In the text, we provide a synthesis of the 

studies' major findings and recommendations. We do not make recommendations 

because our own inquiry was brief and our focus was primariy an analysis of the 

existing studies. Instead, we offer conclusions for Federal offcials and others 

considering future directions for IEVS. 
FINDINGS€

Severl rte st id major prble wi th State' imletin of IE. 

Al States have implemented IEVS, but several major problems have hidered their 

abilty to operate the system fuIly and effectively. The reports identif three tyes of problems: deficiencies in the Federal data bases, ineffciencies resulting from 

strigent or unclear Federal requirements, and the limited resources of State public€

assistance agencies.


Information in the Federal data bases has been inaccurate, duplicative untiely, or inaccessible. 

Eight of th 10 reports identified specific problems with the reliability of the Federal 

data bases Sometimes the information is inaccurate or inconsistent. Benefit 

amounts OF client identifiers such as Social Security numbers are incorrect, for example. Or information from one Federal data base may disagree with information from another. Approximately half of all States had experienced problems with 

unreliable data in the SSA and IRS data bases in 1988, accordmg to the APWA 

report, the most recent survey of all the States about IEVS. A year later, in 1989 60 percent of the States considered the SSA data unreliable, accordinR to the HHS 

GIG survey of welfare officials from all States about SSA' s data exchange systems. 

Sometimes the information is too old to be useful in verig the current financial 

status of clents, or it duplicates more current information available from other 

sources. This is particularly the case with certain data from SSA's Beneficiary Earnings EXchange Record (BEER) file, the data base on reported wages. These 

data in many respects duplicate more current information available from the State€

agencies collecting wage information. Information on unearned income from the IRS€

is also often too outdated to be useful, particularly for ongoing matches on recipients 

of these public assistance programs. 

Often, the Federal data are received by the States too late to be most useful--during the application process before any overpayments are made. This is the time when 

the potentil for savings is greatest. But the turnaround time for exchanging information is lengthy. Delays result because the schedules for runng the matches 

can be infrquent. Also, agencies exchange information primariy through a physical 

exchange (If computer tapes rather than through direct electronic transfer. 

These problems limit the usefulness of Federal data to the States and reduce the 

efficiency of the verification process. They can cost the States considerable time and 

effort to deal with them. Inaccuracies, in particular, can be very difficult, if not 
impossible, to correct. In some instances, States simply bypass the Federal data 

bases altogether. They seek information in other ways or do not perform all the 

required matches even though, by so doing, they may be out of compliance with 

Federal requirements. 

Finally, some Federal data are not now available for IEVS matchig, although many 

States would lie to use them for verig fiancial inormation on clients. These 

data include other inormation from SSA, such as overpayments and direct deposit 

data, data on benefits from the Veterans Administration, and inormation on U. savings bonds and on income for Federal Civi Servce employees. 

Federal requirements, in important respects, are highly prescriptive, or unclear, or inconsistent. 

The Federal requirements governing the matchig process are highly prescriptive and 

detailed. Agencies must match financial information from aI1 public assistance

applicants and recipients with particular information from specified Federal and State 

data bases. They must conduct these matches according to schedules mandated by 

Federal rules.3 They must complete foI1owup on the information received from the 

matches within 45 days in most instances. 

These requirements are so extensive and complex that many States were not 

complying with them all. The HCFA and FNS reviews of selected States, in Fiscal 

Years 1987, 1988, and 1989, revealed that the requirements forperforrng aI1 

matches, for timely foI1owup, or for safeguarding the data from the IRS were most 

consistently troublesome. 

The States have had diffculty satisfyg other IEVS requirements because they have 

been unclear, particularly so in the case of requirements for data coI1ection and 

reporting and for targeting match information for foI1oWUp. 

The origial IEVS regulations, published in 1986, required States to coI1ect and 

report data on actions taken and the savings realized from the IEVS matches. These 

requirements were very general. States were instructed not to develop their 

information systems until detailed instrctions were issued. But, durig the period

covered by these reports, the Federal agencies (FNS, ACF, and HCFA) had not 

issued fial and specific instructions. Their absence presented problems for the 

States and Federal agencies. For exaple, FNS, ACF, and HCFA have each 

required the States to submit cost-benefit data to justify their targeting of foI1owup on IEVS matches. Yet the States lacked the detailed guidance for implementing the 

data coI1ection and reporting systems essential for producing performance data. 

Further, most States have not produced performance data that are comprehensive 

reliable, and reported uniformly. This lack of solid performance data liits the 

ability of Federal and State agencies to assess the costs and benefits of IEVS 

matches. 
Finally, the lack of coordinated direction from the Federal agencies has created 

problems for State agencies. For example, the interim rules on targeting and cost- benefit justications for IEVS were issued separately by the three Federal agencies--

FNS (1988), AcF (1988), and HCFA (1989). They contained somewhat dierent 

requirements even though they were all concerned with IEVS and were directed to a 

single agency in most States. 

Also, the Federal agencies have not developed guidelines that are uniorm for 

collecting and reporting data. Thus, as pointed out in the 199 GAO report the potential exists for State public assistance agencies havig to develop separate systems for collecting and reporting cost and benefit data on the IEVS matches. The 

FNS, ACF, and HCF A each require these data to satisfy the requirements of IEVS. 

But, as a result of the Computer Matching and Privacy Protection Act of 1988, the IRS and SSA have been requesting from these State agencies other performance 

data on IEVS matches because these agencies are using Federal data bases in their 

computer matching programs. 

The admiistrative capacity of many States to implement IEVS is lited by insufcient staff and inadequate computer resources. 

Although many State public assistance agencies were verifyng client inormation 

prior to IEVS, the additional requirements of IEVS created a more rigorous 

extensive verification process. This process has burdened many States that have insuffcient staff and computer capability. 

The IEVS increased the workload of nearly all State public assistace agencies 

particularly for clerical staff and eligibility workers, according to the APW A survey. Nearly 80 percent of the States reported that they needed more staff to meet the 

demands of IEVS but that staffing levels had not increased. 

Inadequate computer capability has also hampered implementation of IEVS by the 

States. In establishing IEVS, the Federal government assumed that States were 

operating with extensive, sophisticated computer systems that would require little 

modification to accommodate an IEVS. This was not the case. In late 1986, at the time when States were first required to have an IEVS in place, only six reported to GAO that their existing automated systems met the requirements for IEVS or would 

do so with only minimal modifications. 

forMany States have continued to operate with inadequate or obsolete automated 

systems that limit their ability to implement IEVS fully and effectively. For instance agencies have had to rely on the mail exchanging computer tapes, mark-sense cards, and sometimes even paper forms. Only two States had begun to use the 

electronic transfer of data through a Wire Third Party Query system (WTY). 
Moreover, followig up on match inormation is a largely manual process in most instances. The States may not have case information stored in automated data 

bases, or, even if they do, workers in local welfare offces frequently lack access to 

computer terminals. 

Finally, the inormation systems for keeping track of the disposition of IEVS matches 

may not be automated. Even if they are, they may not be sophisticated enough to 

provide the information necessary for determnig productive targeting strategies or the costs and benefits of the overal IEVS process. 

The studies make no rec=endations concerng States' resurce but they do addres Federa data bas and Federa requiments. 

The usefulness of the Federal data bases should be improved. 

The HHS OIG focused its attention on the SSA data bases in two reports. 

examined the BENDEX (Beneficiary and Earnings Data Exchange) system in 1985 

just prior to the implementation of IEVS in 1986.. At that time, OIG reco=ended that SSA improve the accuracy, completeness, and timeliness of the system, expand the information it contained, and improve the agency s co=unications with State welfare agencies. Four years later, aftr a broader review of SSA's automated data 

exchange process, the OIG again directed similar recommendations to SSA. 

The APWA, summariing survey respones from 50 States, echoed the OIG in callng for improved reliability of Federal data and improved communications with State 

agencies. It outlined further steps for improving the usefulness of the Federal data. 

These included more timely response to State matching requests, revised security requirements for the IRS data, and greater access to other Federal data unavailable 

to the States for IEVS matches. 

Federal requirements of the States should be modified. One report caIls for 

them to be made more flexible; other reports urge that they be more specifc. 

Several reports urge they be better coordinated among the Federal agencies. 

The APW A, on behalf of the State public assistance agencies, urged a "sweeping reform" of IEVS. It argued that increasing States' flexibilty in conducting IEVS matches would enhance the cost-effectieness of the process. Further, the APWA 

caIled for a "systematic review" of IEVS to assess the effectiveness of the present 

system and to determine whether it serves the purposes intended by Congress. It offered numerous other recommendatians intended to relax those Federal 

requirements it considers too prescriptNe or unrealistic such as the time frames for 

followup on match information. 

The thrust of the recommendations in the FNS and HCF A reviews is very diferent 

from that of the APWA. Rather than urging greater flexibilty, these reports have 
numerous roommendations that, in general, call for more specifc regulation for the 

system. ThCJ urged more detailed guidance to States; more comprehensive, reliable performance data to document the savings and costs of IEVS; and more intensive 

monitoring 1I sanctionig of States not complyig with requirements. 

Several of t!& reports, both Federal and non-Federal, agreed on the need for improved cOldination among the Federal agencies involved with IEVS. The HCFA, 

in its most nxnt program review issued in 1990, as well as GAO and APW A, have€

urged that Faeral agencies develop more consistent regulations. The APW A argued€

further that dr lack of Federal coordination is serious enough to warant the
 designation at a single Federal coordiator for IEVS or a coordiator in each


agency.


In the thee Skte we vi proble wih Fedl data bases Fed reqem and in resoures st appe to hi efort to opete IE. 

Although neany all the welfare offcials from the three States we visited thought 

IEVS had bee useful, many were experiencing problems with IEVS similar to those 

identified in the reports. 

The problenB with the Federal data bases mentioned most freql,ently were the age 

of the informion, particularly the IRS data, and the lack of access to other data 

that would be helpful. Problems with inaccurate or inconsistent data were also 

mentioned but somewhat less frequently. 

Several offcWs thought the Federal requirements for IEVS were too extensive and 

prescriptive. For instance, some commented on the limited usefulness of matching 

all applicants for assistance or of matching with particular data bases. Overall, the officials were about equaIly divided about the reasonableness of the 45-day requirement iJr foIlowup on match information. 

Senior offcial in two States spoke of the limits of computer capability in their

departments. They observed that Federal planners had assumed that the States were 

more automatd than they were and that the burden of IEVS could be "automated 

away." Thesl: offcials noted, however, that some States stil have little automation. 

Others with Bore sophisticated systems have found their abilty to adapt their systems for IEVS sometimes limited by budget problems, technical complexities, and other demandl on the agencies' resources. 

The Federal :aencies associated with IEVS have taken some steps to deal with these 

problems.6 Bit these observations from State offcials, which are based on their recent experices, suggest that their efforts have not remedied the fundamental 

problems with the system. 
CONCLUSIONS


The problems identifed in this report appear to be substantial enough to warrant further examination of IEVS. Toward that end, the Offce of Inspector General wil undertake further study addressing the effectiveness of particular matches. In addition, the Department of Health and Human Servces and the Department of 

Agrculture might weII consider a basic reexamination of IEVS. That reexamiation 

might address ways in which: 

the Federal governent could give States more flexibilty in carrg out IEVS matches and at the same time hold them more accountable 

for results; 

Federal data bases used in IEVS matches might be made more useful; 

and 

additional Federal data could be made available to States. 

The information supporting the fidings in this report is insuffcient to support 

definitive recommendation caIIing for a reform of IEVS. It is compellg enough however, to raise serious questions about IEVS. These questions concern the effectiveness of particular IEVS matches. They also concern the need for more 

fundamental reform and the directions it might take. 

Thus, the Offce of Inspector General wi undertake further inquiry into particular aspects of current IEVS requirements. Also, it would appear to be timely for the Department of Health and Human Servces and the Department of Agrculture 

individuaIIy or coIIectively (perhaps through the President's Council on Integrty and Effciency), to undertake a basic review of IEVS. 

If the signals identified in this report are correct, such a broader review could indicate that some major changes in course are necessary. Such changes might 

involve the scope and usefulness of the Federal data bases made available to the 

States. Even more signficantly, they might caII for a twofold approach that (1) gives the States more discretion in how they go about implementing IEVS and (2) holds 

them more accountable for results through the use of various performance 

indicators.? The States and Federal agencies could work together to determe the kid of indicators that might most appropriately be used to help assess performance. 

1985€

United States Deparment of Health and Human Servces, Offce of Inspector General The Beneficiary and Earninl.s Data Excham!e System: Its Use and 

Potential, 01-8600063, Washington, D. , December 1985 

Backgun 

Ths inspection examied States' experiences with BENDEX and identifed problems 

and issues associated with the operation of the system. The inspection was based 

priariy on discussions with selected State and county offcials involved with 

BENDEX and with staf from the district offces of the Social Security 

Administration in 16 States. 

Major Fin&s: 

A number of problems (SSA and State) limit the usefuln ss of the BENDEX 

system: timeliness, completeness, and/or accuracy of the data and insuffcient 

communication between State agencies and SSA; 

State eligibility workers rely upon SSA district offices more than on BENDEX 

when verifyng information on SSA benefits; 

States find BENDEX useful primarily as a postcertification verification tool 

for recipients. It is of minimal usfulness durig the application process 

because the data are seldom received soon enough;


Nearly all States have little interes in BEER, the BENDEX tape on reported 

wages, because the information it contains is too old; and 

Many States are tryg to encourae greater use of BENDEX by local welfare offices through (1) preparing and disseminating discrepancy reports, (2) reformatting SSA BENDEX data, and (3) sending the data to local offces€

according to regular schedules.


Major Recommtins: 

The recommendations are directed to SSA: 

Improve the usefulness of BENDEX during the application process; 
Ensure that BENDEX is working properly in providing States with accurate 

timely, and complete information; 

Exand the inormation contained in BENDEX based on a users' requiement analysis undertaken by a Federal-State task force; 

Improve the techncal assistance provided to the States in using BENDEX; 

and 

Ensure that BENDEX is incorporated and operating effectively in the States automated welfare management systems. 
1987€

United States General Accounting Offce Welfare ElilribiItv--Deficit Reduction Act€

Income Verification Issues. Fact Sheet for the Rankig Miority Member€ Subcommittee on Oversight of Governent Management, Commttee on€ Governental Afairs, United States Senate, GAOIH-87-79FS, May 1987€

Backgund:€

Ths Fact Sheet summaries data from a national survey of al States conducted by€ GAO durig the summer of 1986 to determine progress and problems in the States€

early efforts to implement IEVS.€

Major Fin€

The Fact Sheet identifies major concerns of the States with IEVS. These include:€

Additional funding is needed to develop and operate the DEFR income€

verification systems;€

The efficiency of States' automated systems for processing data from IRS and€

SSA is questionable;€

The time frames required by Federal regulations for followig up on€

information received from the Federal data bases are difcult to comply with;€

The States' startup and operating costs to process and use tax data might€

exceed the benefits in terms of doIlars saved;


The usefulness of Federal tax data might be limited by its age and other€

considerations; and€

Most States wiIl need to change systems in order to meet the safeguarding€

requirements for Federal tax data.€

Major Recommtins:€

The Fact Sheet gives no recommendations.€

A -€
1987€

Jack Martin & Co. Evaluation of Income and Elilrbility Verification Systems. Final 

Report for the Offce of Assistant Secretary for Management and Budget, U.S. 

Deparment of Health and Human Servces, Contract No. 100860035 

September 15, 1987 

Backgund: 

Ths evaluation assessed IEVS implementation and operation in five States in late 

1986 and early 1987. The States--New Jersey, Oklahoma, Tennessee, Vermont, and 

Wisconsin--were selected because they were relatively advanced in implementing the 

systems and procedures required by IEVS. 

The objectives of the evaluation were to (1) document the status of IEVS, including

factors that facilitated or inhibited implementation; (2) assess the cost-effectiveness of 

the various matches using available State data; and (3) provide recommendations for 

conducting subsequent evaluations and for improving program performance. 

Major Fin 

The States have not fuUy implemented IEVS in terms of (1) executing 

required matches with aU the required data exchange sources and (2) 

reporting the results to local public assistance offces for disposition;


For those matches that have been implemented, the States have little 

information on program performance, i. , outcomes and costs. Therefore, no 

assessment of the cost-effectiveness of the required matches is possible in 

these States; 

The limited available data and anecdotal information suggest that IEVS is 

important for reducing erroneous payments, deterrng clients from 

misreporting income, and boosting the confidence of eligibilty workers in their 

decisions; 

Anecdotal information from these States suggests that the substantial effort 

required by local public assistance offices to resolve match results creates the 

widespread perception among State and local office staff that IEVS is 

burdensome and not cost-effective despite its important benefits; and 

The effort and costs involved with IEVS are influenced by the number of 

A -
matches conducted, the quality of th data received from the required 

matches, the volume of match infomation referred to local offces for 

disposition, and the procedures folled by the State and local offces in 

processing the inormation received 

Major Recommtins: 

The Federal and State governments should work together to develop measures


of program performance and mechaisms for coIlecting and reporting 

inormation on match outcomes;


The Federal government should exane the time standards imposed on the 

States for disposition of match inforation; 

A brief survey of all States should be conducted in order to determe the 

nature and extent of performance data available nationwide and to gather 

estimates of the time involved in cerain matching and processing activities; 

and 

Federal efforts to evaluate IEVS aDd to further its technical development 

should be supported through a task order mechanism. 
1988€

United States Deparent of Health and Human Servces, Health Care Financing Admiistration, FY 1987 Income and Eligibility Verification System CIE Effectiveness Review Report. April 1988 

Backgun 

Ths report summarid HCF A's review of the implementation of IEVS in the 

Medicaid program dnrig Fiscal Year 1987. The report was based on inormation 

(1) for all States, whih was summaried in compliance assessments and monthly 

reports prepared by me regional HCFA offices, and (2) for 20 States, which were 

selected for a special data coIlection initiative. 

Major Finfr: 

Performance data from the States on the costs and savings of IEVS are

extremely limed, and "a significant number" of States did not provide HCF A 

with all the peormance data it requested. However, HCF A reports 

estimated savigs in the Medicaid program of more than $20 mion for the 

six-month reviw period in 7 of the 20 States reviewed. Estimates of startup 

costs in 16 of 1Ie 20 States totaled less than $3 million; 

IEVS is fuIly Cferational for the Medicaid program in only 18 of 53 States 

and terrtories reviewed by HCF A; "virtuaIly all'' States have implemented 

IEVS to at least a minimal degree; 

Several factor5 limit more efficient operation of IEVS, including the foIlowig:

the failure of some States to match information from all categories of clients 

with all the rarired data sources; some Federal data being too old to be 

useful; technica problems with SSA and IRS, including the safeguarding 

requirements iJr the IRS data; and unreasonable time frames for following up 

on match infalation; and


In the absencc of regulations implementing OBRA 1986, many States are not targeting follOip of IEVS match information to those areas likely to be most 

productive. 

A -€
Major Reommndtins: 

The recommendations are directed to HCFA: 

Assess further the available data to determne the potential for savings from 

IEVS; 

Publish as soon as possible regulations or guidelines on targeting match data 

for foIIowup; 

Resolve those operational and P9licy factors impeding the effcient operation 

of IEVS and clarify policy in wrting; and 

Examine the feasibilty of requiring data reporting in order to measure the 

costs and benefits of IEVS. 

A -
1989€

United States Department of Health and Human Servces, Health Care Financing Admistration FY 1988 Income and Eligibiltv Verification Svstem (ll Performance Review Report. February 1989 

Backgun 

Durig Fiscal Year 1988, HCF A reviewed the implementation of IEVS in the 

Medicaid programs of 18 States. The primary objectives of the review were to assess compliance with IEVS requirements and the cost-effectiveness of the required 

matches. 

Major Finr;: 

The States identifed major concerns about IEVS, including the short time 

frames required for processing match information, the 1iited usefulness of 

some Federal data, the costs of IEVS relative to its benefits, the costs of changes required to meet safeguarding requirements for IRS data, and the lack of Federal instructions for recordkeeping and reporting; and 

Although States have made significant progress in implementing IEVS, several major compliance problems exist, such as States not conducting matches 

against all required data bases, not completing foIlowup on match information 

within the required time frames, and not coIlecting performance data for 

assessing the costs and benefits of IEVS matches. 

Major Recommtins: 

The recommendations are directed to HCF A: 

Issue guidelines and instructions to the States that clarify the requirements for 

recordkeeping and data reporting; 

Support an independent study of the costs and benefits of IEVS data matches 

that would include developing model targeting methodologies; and 

Evaluate the usefulness of the required data matches in order to recommend 

changes in legislation and/or regulations. 

A -€
1989€

United States Department of Health and Human Servces, Offce of Inspector€ General ImDrovim! the Social Security Administration s Automated€

Process. OAI-05-89-00820, Washigton, D. , December 1989


Backgund: 

Ths study assessed experiences of State and local welfare offces with the data 

exchange systems of the Social Security Administration. State welfare offcials in all 

50 States and the District of Columbia were contacted as were local welfare offcials 

in 11 States.


Major Fin&r: 

Many welfare agencies consider SSA data questionable; 

Welfare offcials would like access to certain additional information through 

SSA data fies; and 

SSA's communications with State officials on da a exchange issues need to 

improve. 

Major Reommtins: 

The recommendations are directed to SSA: 

Take steps to provide welfare agencies with information that is correct; 

Continue to expand the tyes of data provided to welfare agencies;


Establish a network with welfare agencies for ongoing communications; and 

Involve welfare agencies in resolvig problems and in long-range plang on data exchange issues. 

A -€
1989


American Public Welfare Association After Implementation: State 

the Income and EIi!!biItv Verification System ( Final Report

ence wi.!€

Washigton, D. , April 1989 

Backgund: 

The National Council of State Human Servce Admistrators (NCSHSA) of the American Public Welfare Association surveyed 50 States in 1988. The purpose of the survey was to assess the implementation of IEVS and to identify problems that 

States were encountering in operating the system.€

Major Fings: 

States think the concept of IEVS is useful, but they encounter major problems 

that limit the fuII implementation of its requirements. These problems 

include: 

Insuffcient tie for processing match information; 

liited staf available to handle the increased workload; 

Difficulties in meeting security requirements for IRS data; and 

Unreliability of several Federal data bases. 

Major Recommtins: 

IEVS matches should be optional, so that States can match against only those 

data sources that are reliable and cost-effective; 

If all IEVS matches are not made optional, Federal statute and regulations 

should be changed as foIIows: 

The requirement for States to match against SSA's BEER data should 

be made optional; 

Regulations should be revised to permit targeting of match data for 

applicants as weIl as for recipients; 

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Requirements for States to have sytems for tracking the processing of matches should allow States more flexibility; 

The requirement for States to inte matches durig the application 

period should be optional; 

The requirement that States follow up on matches within 45 days 

should be dropped; and 

The requirement for States to develop standard computer matchig 

formats should be made optional. 

Federal agencies involved with IEVS should take the followig nonregulatory 

actions: 

Improve the reliabilty of the Federal data, provide more timely 

response to State match requests, revise security requirements for the 

IRS data, provide States with acces to other Federal data and with 

more advanced notice of softare changes in Federal data files, and 

promote on-line computerized data exchange systems such as the Wire 

Thrd Part Query system being developed by SSA; 

Improve interagency coordination though such actions as development 

of uniform regulations and appointment of Federal coordinators for 

IEVS; 

Revise the guidelines for the Federal Quality Control review process to 

clarify use of case data; and 

Undertake a thorough review of IEVS to determine whether or not 

current agency requirements are cosistent with the goals envisioned


for the system by Congress.


A -

1990€

United States Department of Health and Human Servces, Health Care Financing Administration, Fiscal Year (FI l ncome and..ity Veri..on System (IEVS) ormance ReDort. March 1990 

Backgun 

Durig Fiscal Year 1989, HCFA reviewed the operation of IEVS in the Medicaid 

program of 17 States. 

Major Fings: 

States continue to make signifcant progress in implementing IEVS but are not 

strictly adherig to the Federal regulations or not documenting compliance. 

SpecifcaIly, States are not matching information on applicants against all 

required data sources, are not developing targeting plans for all IEVS match 

data, are not meeting required time frames for foIlowig up on matches, and are not establishing recordkeeping and data management systems suffcient for 

reviewing the effectiveness of IEVS; 

The States' major concerns with implementation are: 

Required time frames for processing match information; 

Usefulness and duplication of Federal data;€

Costs of IEVS relative to the benefits;€

Costs of complying with IRS requirements for safeguarding data;€

Lack of Federal instructions for recordkeeping and reporting; and€

Lack of coordination among Federal agencies.€

Major Recommtins: 

The recommendations are directed to HCFA: 

Encourage coordination among Federal agencies in addressing IEVS problems 

A -
through continued participation in the interency work group; 

Delay further State evaluations until FY 199 so that States have time to 

comply with new requirements for recordkeing and reporting and to review 

the effectiveness of the matches; and 

Emphasize the importance of targeting and dissemiate inormation on best 

practices based on States' experiences. 

A -
1990€

United States General Accounting Offce Computer Matching--Need for Guidelines 

on Data CoIlection and AnaIvsis, Report to the Director, Offce of Management and Budget, GAOIHD-90- , Washington, D.C., Apri 1990 

Backgund: 

Ths review focused on the States' data coIlection and reportg systems for evaluating the cost-effectiveness of IEVS. The objectives were to determe if these 

systems allow Federal and State offcials to assess whether IEVS is savig money,

whether they provide State offcials with sound information for targeting foIlowup 

activity on match information, and whether the IEVS data coIlection requirements 

conform with those of the Computer Matching and Privacy Protection Act of 1988 

(P.L. tOO-503). 

Major Finr;: 

As of February 1990, none of the Federal agencies (FNS, ACF, and HcFA) had issued final guidelines to the States on data collecting and reporting for 

the IEVS program. As a result, data have not been available to assess the 

savings resulting from IEVS, to develop informed targeting strategies for 

foIlowup on match information, and to provide the cost-benefit analyses

required; 

Regulations governing cost-effectiveness analyses were issued separately by the 

FNS, ACF, and HCFA and contained varyg requirements; and 

Requirements for data coIlection and reporting under IEVS need to be 

consistent with those required by the Computer Matching Act. 

Major Recommtins: 

The Offce of Management and Budget should work with FNS, ACF, and HCFA to develop uniorm guidelines for data collection and reporting that wiIl satisfy IEVS requiements and those of the Computer Matching and 

Privacy Protection Act of 1988.

1990


United States Department of Agrculture, Offce of Inector General Food Stamp 

Pro!!am--ImDlementation of Income and Eligibilty Vercation System Nationwide. 

Food and Nutrition Servce, Audit Report 27013-45-Te, OIG Southwest Region 

Temple, Texas, March 1990 

Backgund: 

Ths report summaried a review of the implementation of IEVS in the Food Stamp 

program during Fiscal Years 1987 and 1988. The scope of this review included 

program operations in 33 States and a U.S. Terrtory as weII as the admistration of 

the program by 5 regional offces of the Food and Nutrtion Servce. 

Major Finfr: 

Several States are not in fuII compliance with IES requirements. Some are 

not conducting the required matches, and those that are fail to follow up on 

match information within the required time frames; 

State agencies are using various methods and approaches for targeting 

foIIowup in the absence of final Federal regulations; and 

A few States are obtaining useful financial information from Federal sources 

other than those required. 

Major Recommndtins: 

The reco=endations are directed to the Administrator, FNS: 

Require FNS regional offces to strengthen effort to ensure State compliance 

by foIIowig up and enforcing sanctions; 

Determine what, if any, additional measures are needed to ensure that States 

comply with the required time frame for foIIowu on match information; 

Provide States with wrtten guidelines on targeting that defines uniorm liits 

or the elements to be included in the States' plans for targeting; and 

Require regional offces to review States' targeting plans. 

A -

APPENDIX B 

ENNOTE 

In addition to analyzing the 10 reports summaried in appendix A, we 

reviewed other documents pertinent to IEVS. These included statutes 

regulations, guidelines, and agency correspondence. We discussed IEVS with 

- staff from the APWA and with State offcials durig site visits to three States 

(Massachusetts, New Jersey, and Pennsylvania) and through telephone 

conversations with offcials from several other States. Finally, we talked with offcials from the major Federal agencies involved with IEVS. They included the Office of Management and Budget; the Department of Labor; the Internal 

Revenue Servce and the Social Security Administration, which maintain the 

data bases involved in IEVS matching; and the Food and Nutrition Servce 

of the Department of Agrculture, the Administration for Children and 

Families and the Health Care Financing Administration in HHS, the three Federal agencies responsible for administering, respectively, the Food Stamps 

AFDC, and Medicaid programs. . 

DEFR also included as part of IEVS the Unemployment Compensation 

program of the Department of Labor. This program is not a needs-based 

public assistance program like the other three programs. Therefore it 

operates as a source of information for IEVS rather than a user of 

information. 

The Federal rules require that financial information from applicants and 

recipients be matched with: 

Unemployment insurance benefit (UIB) information from the State 

agency administering the State s unemployment compensation law. 

Applicants are to be matched during the application period and at least 

monthly during the foIIowing three months. Recipients reporting a loss 

of employment must be matched at the point of that loss and at least 

monthly during the foIIowing three months. Applicants and recipients 

receivig unemployment benefits must be matched monthly until such 

benefits are exhausted. 

State wage and benefit data from the State Wage Information 

CoIIection Agency (SWICA). Applicants are to be matched durig the 

application period and recipients to be matched quarterly. 
Unearned income information from the IR. States must request 

information during the application proces and at least yearly for 

recipients. 

Wage, benefit, and other data from the A fies: BENDEX, the 

Beneficiary and Earnings Data Exchange System; BEER; and SDX, the 

State Data Exchange on Supplemental Serity Income (SSI) benefits.

States must request inormation for appIints and for recipients for 

whom such information has not been prevusly requested. 

Social Security numbers of both applicants and recipients must be 

veried through SSA fies, including NUENT, or Enumeration, or

Third Part Query (TQY systems). 

The time standard for foIlowup on match informtion was revised from 30 

days to 45 days in the regulations amending IEVS after the Omnibus Budget 

Reconciliation Act (OBRA) of 1986. Nearly thre-fourths of the States were 

having difficulty complyig with the 45-day standmd for foIlowup in 1988 

according to the APW A. The foIlowup process can be very time consuming. 

It involves comparing the information received frm the matchig process 

against individual case files, seeking additional iDormation to resolve 

discrepancies, determining whether eligibilty or benefit payments are affected 

recording the determinations in the case fies, and notifyg the clients of any 

intended adverse actions. 

Targeting refers to screening strategies for foIlowig up on only the match 

information most likely to identify and prevent ineligIoilty and incorrect 

payments. The OBRA 1986 legislation amended IEVS requirements to allow 

States to target rather than to foIlow up on all match information. 

The Federal agencies associated with IEVS have: 

Issued final regulations implementing the targeting provision of OBRA 

1986. They were issued by HCFA in early 1990 and by ACF in early 

1991. However, they contain requirements that difer somewhat with 

each other, that vary significantly from the FNS interim rules issued in 

1988, and that continue to differ with those for cost and benefit data of 

the Computer Matching Act. 

Established an interagency work group composed of representatives 

from FNS, ACF, and HCFA and two State. Since late 1989, this 

group has been a forum for discussing issues and a mechanism for 

encouraging coordination among the participating Federal agencies. 

However, the group lacks legal authority to make decisions binding the 

agencies and thus has limited power to effct significant change. 
Afording States more flexibilty in operating IEVS would be in accord with 

the President s Executive Order No. 12612, entitled "Federalism," dated 

October 26, 1987. This Executive Order detailed the President's priciples for maxing States' discretion in administering national policies.