United States General Accounting Office

GAO Report to Congressional Requesters

June 1997 SUPPLEMENTAL

SECURITY INCOME

Timely Data Could

Prevent Millions in

Overpayments to

Nursing Home

Residents

GAO/HEHS-97-62

GAO United States

General Accounting Office

Washington, D.C. 20548

Health, Education, and

Human Services Division

B-271862 

June 3, 1997

The Honorable Nancy L. Johnson

Chairman, Subcommittee on Oversight

Committee on Ways and Means

House of Representatives

The Honorable E. Clay Shaw, Jr.

Chairman, Subcommittee on Human Resources

Committee on Ways and Means

House of Representatives

Recent growth in the Supplemental Security Income (SSI) program and

approximately $1 billion in annual overpayments to SSI recipients have

increased congressional interest in ensuring that SSI recipients receive only

those benefits to which they are entitled. In 1996, about 6.6 million SSI

recipients received about $24 billion in federal payments and $3 billion in

state supplemental payments, and the maximum monthly SSI federal

benefit for eligible individuals was $470. There were about 1.8 million

individuals in nursing homes and other similar institutions having their

care paid by Medicaid at a cost of about $39 billion in 1995, and contrary

to law, some of them were continuing to receive their full SSI benefits. This

usually occurs because the Social Security Administration (SSA), which

administers the SSI program, is unaware that the individuals are in

Medicaid facilities.

Because of your concern that some SSI recipients in nursing homes and

other medical treatment institutions may receive overpayments, you asked

us to determine (1) the extent of such overpayments, (2) the success or

failure of SSA actions in preventing and detecting these overpayments, and

(3) the methods by which SSA can better prevent such overpayments.

To answer these questions, we interviewed officials from the Health Care

Financing Administration (HCFA), which is the U.S. Department of Health

and Human Services (HHS) agency responsible for the Medicaid program;

SSA headquarters in Baltimore, Maryland; 4 SSA regional offices; and 13

field offices. We also visited with Medicaid agencies in five states

(California, Florida, New York, Tennessee, and Texas) to collect

information on their Medicaid data systems. In addition, we analyzed SSA

data on detected overpayments caused when SSA was not notified in a

timely manner of SSI recipients’ admissions to medical institutions. We also

obtained Medicaid nursing home admissions data for December 1996 from

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New York and Texas to determine the number of SSI recipients recently

admitted to nursing homes in these states and potentially receiving

overpayments. To demonstrate the potential of an automated information

interface between SSA and state Medicaid agencies to help minimize

overpayments, we obtained Tennessee state Medicaid data on admissions

to nursing homes and other Medicaid facilities and matched that

information against the Supplemental Security Record (SSR), SSA’s payment

record for the SSI program. This showed those recipients who were

residing in nursing homes but who were still receiving full SSI benefits.

(See app. I for more information on our scope and methodology.)

Results in Brief SSA estimates that overpayments to individuals in nursing homes may

exceed $100 million annually; however, the exact extent is unknown.

Despite SSA procedures to prevent overpayments, and recent legislation

designed to further help prevent these overpayments to SSI recipients in

nursing homes, we determined, based on SSA data, that it had detected

overpayments totaling $24 million to about 31,000 recipients in fiscal year

1995. Furthermore, in two states we visited, New York and Texas, we

determined that SSA may not have been aware of an additional 1,699 SSI

recipients recently admitted to nursing homes during a 1-month period

and potentially overpaid these individuals $515,714 in benefits during the

subsequent month alone.

SSA efforts to prevent these overpayments or detect them in a timely

manner have had little success. In many cases, recipients or their

representative payees1

 did not report the change in living arrangements in

a timely manner. In addition, because of other work priorities, SSA field

representatives have not routinely contacted the over 23,000 U.S. nursing

homes to solicit their cooperation in notifying SSA of admissions of SSI

recipients, as SSA policies require. Furthermore, our analysis of SSA data

shows that overpayments to SSI recipients residing in nursing homes have

increased by nearly 13 percent since the October 1995 effective date of the

legislation that was designed to reduce overpayments. While the effect of

this legislation is difficult to determine because SSA does not have uniform

systems for either following up on admission notifications from nursing

homes or monitoring compliance with the law, it has likely been

diminished by limited SSA actions to enforce the reporting requirement and

the lack of a statutory penalty for nonreporting by nursing homes.

Moreover, SSA’s other processes to detect overpayments in a timely

1

Representative payees are individuals or organizations that receive checks on behalf of SSI recipients

who are unable to manage their own affairs. A representative payee is responsible for dispensing the

SSI payment in a manner that is in the best interest of the recipient.

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manner have not been effective. SSA’s redetermination process does not

always provide timely identification of individuals in nursing homes

because redeterminations are typically conducted only once every 6 years.

Also, SSA’s annual computer match with HCFA does not contain Medicaid

data from all states; does not result in timely identification of admissions;

and places a substantial, manual workload on field office personnel.

SSA could more quickly detect overpayments by electronically obtaining

nursing home admissions data directly from states to help identify recent

changes in recipients’ living arrangements. SSA could then use an

automated interface to automatically adjust the benefits of SSI recipients

admitted to nursing homes who are ineligible for continuation of benefits

due to temporary institutionalization and prevent the occurrence of

overpayments for the ensuing months. In the states we visited, we found

that the state Medicaid agencies can make these data available to SSA. SSA

could use an existing data exchange system with states to obtain the

needed data electronically. Additionally, we found that in the interim

period, while some states prepare their automated systems to make the

electronic exchange of data with SSA, states could provide SSA with tapes

or paper listings of this information for SSA’s use in detecting

overpayments. To identify the program improvements such an automated

interface could potentially produce, we conducted a joint effort with SSA

and the Tennessee Department of Health Services. Through this match, SSA

identified $31,000 in overpayments to individuals who had been approved

for nursing home admission during February 1996 that SSA had not

previously detected. Furthermore, by identifying SSI recipients in nursing

homes sooner, the match demonstrated the potential to prevent an

additional 9 months or more of overpayments that would likely have

occurred before SSA detected the nursing home admissions. SSA and state

Medicaid officials told us that they are addressing privacy concerns that

may arise from this automated match.

Background The SSI program is the country’s largest cash assistance program for the

poor and one of the fastest-growing federal entitlement programs. SSI

benefits are available under title XVI of the Social Security Act to people

who are aged, blind, or disabled and have limited income and resources.

The total SSI benefit is based on the amount of income and resources the

recipients report and are verified to have by SSA. The benefit consists of a

basic federal payment and, in some cases, a state supplement.

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In cases where SSI recipients are expected to be permanent residents

throughout a full calendar month in Medicaid-certified medical treatment

institutions2

 and Medicaid pays over 50 percent of the costs of that care,

the maximum SSI federal benefit is limited to $30 per month. The benefit

reduction is applicable beginning with the first full month of permanent

residence. If the admission is not reported promptly to SSA, a recipient may

receive more than he or she is entitled to in the months following

admission. In some cases, at the time of application for admission to a

nursing home, a physician preliminarily determines whether the individual

is expected to stay in the facility temporarily, and this information is

provided to the state Medicaid agency. The agency is responsible for

determining eligibility for Medicaid coverage of nursing home care.

Individuals may continue to receive their full monthly benefit for up to 3

months if a physician certifies that they are expected to be

institutionalized for 90 full calendar days or less and they demonstrate the

need to pay expenses to maintain their home or living arrangement to

which they may return upon discharge from the facility. Recipients have

until the day of discharge or the 90th day of institutionalization, whichever

is earlier, to provide the physician certification and statement of need. SSA

does not change the benefit amount until a determination is made of

whether the recipient’s nursing home stay will be temporary.

SSA attempts to prevent overpayments to nursing home residents by relying

on recipient self-reporting and maintaining contacts with nursing homes to

obtain admissions information. In addition to attempting to prevent

overpayments from occurring, SSA also uses its redetermination process, a

periodic review of SSI recipients’ financial eligibility, and an annual

computer match with Medicaid data provided by 28 states to HCFA to

detect and stop payments that have occurred. (See app. II for more

detailed information on SSA actions to prevent and detect overpayments.)

Actual Extent of

Overpayments Is

Unknown, but May

Exceed $100 Million

SSA’s Office of Program and Integrity Reviews (OPIR), which annually

conducts detailed examinations of a sample of cases to determine the

accuracy of benefit payments, estimates that overpayments to SSI

recipients in nursing homes may exceed $100 million each year. OPIR

identifies erroneous payments that would otherwise go undetected

because it reviews and verifies all nonmedical factors of payment

eligibility for a random sample of individuals currently receiving benefits.

For example, OPIR reviews include visits to institutions and recipients’

2

These include hospitals, nursing homes, psychiatric institutions, and intermediate care facilities for

the mentally retarded. For the purposes of this report, we will refer to these facilities as “nursing

homes.”

Page 4 GAO/HEHS-97-62 Overpayments to Nursing Home Residents
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residences to verify living arrangements. These types of in-depth

examinations on a small sample of cases are in contrast to the usual

procedures used in SSA field offices. There, claims representatives rely

primarily on recipients to self-report changes in status because, according

to SSA, it would be cost-prohibitive for field offices to conduct the same

in-depth examinations. As a result, many admissions to nursing homes go

undetected.

In contrast to OPIR’s estimate of potential overpayments of $100 million, we

found that in fiscal year 1995 SSA detected overpayments totaling

$24 million to about 31,000 SSI recipients in nursing homes. Detected

overpayments averaged about $800 or about 2 months of benefits;

however, SSA estimates that such overpayments can continue for up to 9

months before they are detected. As shown in table 1, detected

overpayments to SSI recipients in nursing homes in 1995 ranged from less

than $500 to over $7,500. Our analysis of SSA’s overpayment data showed

that 1,960 recipients received in excess of $2,500 in overpayments,

including 386 who received more than $5,000.

Table 1: Range of SSA-Detected

Overpayments to Nursing Home

Residents in Fiscal Year 1995

Amount of overpayment Number of recipients Percentage of recipients

$1-$499 17,701 57.5

$500-$999 6,074 19.7

$1,000-$2,499 5,043 16.4

$2,500-$4,999 1,574 5.1

$5,000-$9,999 383 1.2

>$10,000 3 0.1

Total 30,778 100.0

Source: SSA’s Supplemental Security Record.

SSA Is Unaware of Some

SSI Recipients Recently

Admitted to Nursing

Homes

We obtained nursing home admissions data for December 1996 from New

York and Texas, two of the states that do not provide data to HCFA via the

Medicaid Statistical Information System (MSIS) and, therefore, are not

included in the annual match with SSA. We determined that SSA paid

$515,714 in benefits to 1,699 SSI recipients in the month following their

admission to nursing homes. Because these individuals were

institutionalized for a full calendar month, SSI payments to them after that

time are overpayments unless the recipients receive continuation of

benefits due to temporary institutionalization. According to SSA records at

the time of our review, these individuals were still classified as having

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living arrangements other than institutionalization, indicating SSA may not

have been aware that they were in nursing homes. Thus, SSA would have

continued to erroneously pay them full benefits either indefinitely or until

SSA found out about the situation. These matches indicate both that

non-MSIS states have undetected overpayment situations and that they have

information readily available that SSA could use to minimize its SSI

overpayments to nursing home residents.

SSA Achieved Limited

Success in Preventing

and Detecting

Overpayments

We found that SSA efforts to prevent and detect overpayments to residents

in nursing homes have had limited success. SSA has not been able to

effectively prevent overpayments because some SSI recipients (or their

representative payees) are not reporting changes in living arrangements as

required, SSA field offices are not routinely contacting facilities to identify

SSI recipients residing in the facilities, and recent legislation requiring

nursing homes to notify SSA of admissions of SSI recipients has had little

effect. Likewise, additional efforts to detect overpayments have been

hindered by (1) redeterminations that may be too infrequent to identify

many institutionalized individuals in a timely manner and (2) an

incomplete and untimely computer match with HCFA.

Recipients and

Representative Payees Are

Not Reporting Admissions

as Required

SSA’s first line of defense against making overpayments to nursing home

residents is reports from the SSI recipients themselves. However, our

review of SSA records indicate that some SSI recipients or their

representative payees did not report changes in living arrangements as

required. Of the 30,778 individuals in nursing homes that SSA determined

were overpaid in 1995, about 47 percent had representative payees while

institutionalized. In one region we visited, SSA found that almost 75 percent

of erroneous payments to individuals in nursing homes had been caused

by recipients or their representative payees failing to report changes in

living arrangements. Twenty-five percent of erroneous payments had

resulted from field offices not following procedures when determining a

recipient’s living arrangement.

SSA Field Offices Not

Routinely Obtaining

Admissions Data From

Facilities

SSA field office representatives have not routinely contacted nursing homes

to solicit their cooperation in notifying SSA of admissions, as SSA policies

require. In October 1993, SSA established policies requiring all field offices

to work closely with the staffs of nursing homes to facilitate the flow of

information regarding the admission to nursing homes of SSI recipients. We

found that most field offices we contacted had not established working

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relationships with the facilities, and in some cases they were not even

aware of the facilities in their area of responsibility.

According to the field office personnel we interviewed, some nursing

homes have routinely notified SSA field offices of SSI recipient admissions;

however, field offices could not always account for the notifications

because some do not maintain a log or have standard procedures for

following up on notifications. We found that neither SSA headquarters staff

nor field office representatives routinely monitor facility notifications to

ensure follow-up.

Each field office manager establishes the office’s work priorities, and in

the offices we visited we found that the priority placed on following up on

facility notifications varied. We were told that facility notifications are

given much lower priority than work responsibilities that are monitored,

such as claims processing. In addition, both SSA field office representatives

and regional office representatives stated that some notifications would

not have been processed in a timely manner, or in some cases not at all,

because they had been misplaced or lost. We were unable to quantify the

number of untimely or unprocessed facility notifications because no

records of notifications have been maintained.

Effect of Recent

Legislation in Preventing

Overpayments Is

Questionable

The effect that recent legislation3 requiring nursing homes to report

admissions to SSA has had in preventing SSI overpayments to nursing home

residents is difficult to determine; SSA does not have a uniform system for

following up on admission notifications from nursing homes or for

monitoring compliance with the law. However, our analysis of

overpayment data and interviews with SSA headquarters and field office

officials indicate that the legislation has had little effect in preventing

overpayments. For example, the amount of detected overpayments to SSI

recipients in nursing homes has grown by 12.3 percent since the

October 1995 effective date of the legislation, increasing from $24 million

in fiscal year 1995 to $27 million in fiscal year 1996. In instances where

facilities had reported admissions of SSI recipients, the majority of the field

offices we visited had no system for documenting the receipt or

disposition of the admissions referrals to SSA. As a result, SSA has no data

on which to determine whether nursing homes are complying with the

law, and there is no assurance that field office claims representatives are

following up on all admissions notifications.

3

The Social Security Domestic Employment Reform Act of 1994 (P.L. 103-387, sec. 6, Oct. 22, 1994).

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The effectiveness of the law has likely been diminished by limited SSA

efforts to carry out the reporting requirement and the lack of a penalty for

nonreporting by nursing home administrators. SSA has not developed any

regulations establishing a uniform mechanism for nursing homes to report

admissions or revised its agency policies on coordinating with institutions

since enactment of the law. Instead, SSA efforts primarily focus on having

its 1,300 field offices maintain contacts and solicit information from the

over 23,000 U.S. nursing homes. SSA has publicized the nursing home

reporting requirement and HCFA has issued notices to nursing home

administrators informing them of their reporting responsibilities. The

legislation, however, does not have a penalty for nonreporting by nursing

home administrators, and the amount of reimbursement nursing homes

receive for treating Medicaid patients is not affected by reporting or not

reporting; therefore, SSA must rely on voluntary compliance by nursing

homes. In 1995, SSA requested that HCFA develop and implement

procedures for monitoring compliance with the reporting requirement. To

date, neither SSA nor HCFA has developed such a system.

Often Redeterminations

Have Not Identified

Institutionalized

Individuals in a Timely

Manner

SSA uses its redetermination process to verify that recipients remain

financially eligible for SSI payments and are receiving the correct amounts.

However, because of resource constraints, SSA reviews the eligibility of

most recipients only once every 6 years. SSA records indicated that in 1995,

4,792 of the 30,778 overpaid individuals had redeterminations while they

were in nursing homes. We found that 3,099 individuals each had one

redetermination, 352 had two, and 60 had three or more. According to SSA

records, 364 of these redeterminations involved face-to-face contact

between an SSA field office employee and the recipient or the

representative payee. Because of the infrequency of some

redeterminations, SSA cannot rely on this process to routinely and

effectively identify in a timely manner overpayments due to nursing home

residency.

Current Computer Match

With HCFA Is Incomplete,

Not Timely, and Results in

Unnecessary Field Office

Work

Although SSA’s computer match with state Medicaid data from HCFA results

in about $4 million in program savings each year, it only contains data

from 28 states, identifies overpayments only after they have continued for

a lengthy period, and places an unnecessary work burden on field offices.

SSA does not independently obtain Medicaid nursing home admissions data

from states not participating in MSIS. Consequently, admissions of SSI

recipients to nursing homes in the remaining states, unless self-reported,

are likely to go undetected for long periods.

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In addition, SSA’s computer match with HCFA is not timely. For example, in

June 1995 HCFA matched data on possible nursing home admissions

occurring between April 1, 1994, and March 31, 1995. The resulting match

cases were sent to SSA field offices in October 1995 to be included in their

annual workload.4

 Based on our review of a sample of cases identified

using the match, we found that an average of 14 months elapsed from the

time an individual was admitted to a nursing home until SSA headquarters

notified the field office to review the person’s case. Furthermore, it took

field office representatives an additional 4 months before they reviewed

the cases and made changes, if necessary, to the benefit amount.

The match also incorrectly identifies many individuals as having changed

their living arrangement, therefore placing an unnecessary and

unproductive work burden on field offices. Field office officials told us

that many of the match cases they review result in no changes in

recipients’ living arrangements or benefit amounts. We analyzed a sample

of 1996 MSIS match cases sent to field offices at the beginning of the fiscal

year and found that as of the close of the year, SSA field offices had not

completed reviews of 141 (28 percent) of the 503 cases in our sample.

About 28 percent of the completed cases were erroneously selected for

review because the individuals were temporarily institutionalized and had

been granted a continuation of full benefits. Another 26 percent of the

completed cases identified individuals who did not require a change in

benefit amount. SSA officials are aware of the deficiencies in the match

selection criteria that result in temporarily institutionalized individuals or

those in nursing homes for less than a full calendar month being selected

for review. However, they have yet to change the criteria to only identify

individuals institutionalized for a full calendar month who have not been

granted a continuation of full benefits because of temporary

institutionalization.

Automated Interface

Could Help Prevent

Overpayments

Obtaining MMIS data on nursing home admissions directly from states and

conducting an automated interface in accordance with laws and standards

governing computer matching, privacy, and security could provide SSA

with the opportunity to prevent or detect erroneous payments more

quickly, without the use of SSA field office personnel, and could result in

program savings and reduced administrative costs. The cost and ease of

states making MMIS data directly available to SSA electronically will vary

depending upon the level of automation in each state. However, we have

4

Field office workloads consist of processing initial claims and completing postentitlement actions,

such as redeterminations, benefit recomputations, and address changes.

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discussed this with selected state Medicaid, HCFA, and SSA officials, who

agreed that such a data exchange would be both practical and desirable.

Currently, for those who do not self-report their nursing home admission,

our review of a sample of 1996 cases found that it takes an average of 14

months from the time an individual enters a facility until the overpayment

is detected using the annual computer match with HCFA data that are only

available from 28 states, and takes an additional 4 months for the benefit

amount to be reduced by SSA. By electronically obtaining nursing home

admissions data directly from state Medicaid agencies SSA could prevent

overpayments or detect them much sooner—1 to 3 months after they

begin—for all 50 states. For example, an automated interface could consist

of matching SSI payment data with monthly nursing home admissions data

from state Medicaid Management Information Systems (MMIS) obtained

using existing telecommunications lines.5

 According to SSA and HCFA

officials, SSA could obtain the data directly from states by modifying

existing state data exchange agreements6

 to make SSA the recipient agency

of state MMIS data on nursing home admissions.

A way to efficiently use state MMIS data on nursing home admissions would

be through an automated system. An individual identified in the data as

residing in a facility for a full calendar month and subject to a benefit

reduction could automatically be sent a notice generated by computer

explaining the detection of a potential overpayment situation, the potential

revised payment amount, criteria for receiving the continuation of benefits

if the recipient is temporarily institutionalized, and the process for

appealing the benefit reduction. Following a reasonable response time

period to provide due process, the computer could, in appropriate cases,

automatically adjust the SSI benefit to the correct amount for the

appropriate months’ payments. Field office claims representatives would

not have to review the case or manually input changes to the recipient’s

payment file in order to correct the benefit amount. This would minimize

the time period over which the overpayment occurs, thereby saving

program dollars, and would reduce field office time devoted to this

activity, freeing it for other purposes. In those cases in which individuals

requested, and were determined to be eligible for continuation of benefits

5

These lines, known as the File Transfer Management System (FTMS), already exists between SSA

headquarters and the states. SSA installed FTMS so that it could transmit SSA data on its clients to

every state. State agencies are required by the 1984 Deficit Reduction Act to use this information to

better identify those who are not eligible for public assistance or who are receiving incorrect benefits.

6

At least monthly, SSA makes available to all states SSI eligibility and payment information to assist

them in administering SSI state supplemental payments and other federally funded programs such as

Medicaid and food stamps.

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due to temporary institutionalization, SSA could manually input changes to

the recipients’ files, overriding the automatic benefit reduction and

thereby continuing uninterrupted full benefit payments. Such an

automated system would require testing on SSA’s part to ensure the

reliability of state data for making automatic payment reduction decisions

and to minimize the risk of inappropriate reductions.

Some states have already demonstrated their capability to share data with

SSA to prevent and detect overpayments. Currently, the SSI payment file is

matched with data from the 28 states participating in MSIS. Furthermore, in

1994, SSA began establishing direct connections between its field offices

and states that had automated databases that could be easily linked to

SSA’s computer system. Currently, 15 states have entered into agreements

allowing SSA field offices to directly access certain state databases

containing information SSA can use to verify recipients’ reported income

and other factors of financial eligibility.

State Medicaid and SSA field office officials we interviewed said that SSA’s

routinely obtaining nursing home admission data directly from states

could provide the best opportunity to prevent or detect overpayments to

SSI recipients in nursing homes. Three of the states we visited do not

participate in MSIS, but the Medicaid officials in these states said that they

can make nursing home admissions data available to SSA electronically.

Tennessee has already made various state databases available for use by

SSA field offices. New York and Texas are negotiating with SSA to establish

pilot projects granting SSA access to certain state databases.

Pilot Match With

Tennessee Demonstrates

Feasibility and

Effectiveness of Directly

Obtaining State Data

To help demonstrate the feasibility of SSA’s directly obtaining state

Medicaid nursing homes’ admissions data and more quickly detecting

overpayments, we coordinated a joint effort between SSA and the

Tennessee Department of Health Services to identify SSI recipients in

nursing homes. On the basis of data we obtained from Tennessee and

provided to SSA, SSA detected $31,000 in overpayments to 40 SSI recipients

from February to July 1996. These recipients had not previously been

identified by SSA as residing in nursing homes. The overpayment amounts

ranged from less than $10 to almost $1,800, and the average overpayment

was $775. In addition to detecting overpayments, the pilot allowed SSA to

prevent at least 9 months of additional overpayments to individuals that

would likely have gone undetected and that SSA would not have been likely

to collect. The pilot match in Tennessee, a state that accounts for about

3 percent of all SSI recipients, demonstrates that by directly obtaining state

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MMIS data, SSA could not only more quickly identify SSI recipients in nursing

homes, but also prevent future overpayments.

SSA Currently Conducts

Automated Interfaces With

Some Federal Agencies

SSA already conducts routine automated computer interfaces with the

Department of Veterans Affairs, the Office of Personnel Management, and

the Railroad Retirement Board that result in automatic benefit reductions

without SSA field office involvement. In each of these interfaces, SSR and

files from the source agencies are matched. When the match determines

that an individual on both the SSR and the source agency file are the same

person and there has been a change in income affecting the SSI benefit, the

system automatically adjusts the benefit and generates a notice to the

recipient about the revised payment amount. Before any benefit reduction

occurs, a recipient has 10 days after receiving notification of the benefit

change to file an appeal and continue receiving unreduced benefits,

otherwise the benefit reduction occurs automatically, without a field

office representative reviewing the case. SSA estimates that these

interfaces result in about $41 million in program savings each year.

SSA and States Have Taken

Actions That Address

Privacy and Security

Concerns Raised by

Electronic Data Exchanges

Certain privacy and security concerns may arise when data are exchanged

electronically between agencies. These concerns center on ensuring that

personal information that an individual provides to one government

agency is protected from being disclosed to other agencies that do not

have a legal right to it. Granting SSA direct access to state Medicaid data

will not violate the privacy rights of individuals who provide this

information because SSA will simply electronically obtain information to

which it already has a legal right. SSA already obtains this information from

28 states using HCFA’s MSIS data.

As part of its procedures to determine whether to implement electronic

data exchanges with state agencies, SSA assesses the costs, benefits, and

security risks of conducting such exchanges. According to SSA officials, an

automated computer interface between SSA and state MMIS would be

subject to the same procedures and feasibility testing prior to nationwide

implementation. Although we did not evaluate the effectiveness of SSA’s or

the states’ security procedures, SSA and state officials told us that these

procedures will be stringent enough so that SSA can obtain state data

electronically and conduct automated interfaces without compromising

confidentiality. SSA and states have taken steps specified in federal security

standards that, we were told, would ensure the confidentiality and security

of data exchanged electronically. These include instituting written

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agreements between SSA and state agencies regarding how the data will be

used and using computer lines dedicated solely to the transmission of data

between government agencies.

States Can Provide Data to

SSA in Other Formats

While Preparing to Make It

Available Electronically

In the interim period, while states are preparing to make the necessary

nursing home admissions data directly available to SSA electronically, they

could provide SSA with tapes or paper listings of admissions to nursing

homes. SSA could use this information to detect overpayments sooner than

it can using data from the current annual computer match. In the states

that we contacted during our review, state officials told us that providing

this information to SSA routinely would require only minimal computer

programming to format the data for SSA’s use. Two states we visited, New

York and Texas, provided this information to us on computer tapes so that

we could identify previously undetected potential overpayments to

nursing home residents in those states.

Conclusions Generally, SSI benefits are supposed to be reduced for those individuals in

nursing homes for more than a full calendar month when Medicaid is

paying the cost of care. For many years, however, SSA has lacked an

effective process to prevent SSI recipients in nursing homes from receiving

overpayments. It has relied primarily on (1) inadequate self-reporting by

recipients, (2) inconsistent and irregular field office contacts with nursing

homes, (3) untimely redeterminations, and (4) an incomplete computer

match with Medicaid data from HCFA that does not result in timely

identification of nursing home admissions. Neither SSA’s efforts nor the

recent legislation requiring nursing homes to report admission of SSI

recipients to SSA has been fully effective. As a result, SSA continues to

overpay millions of dollars to thousands of recipients in nursing homes.

Given SSA’s experience that only about 15 percent of outstanding

overpayments to SSI recipients are collected, it is important that SSA detect

these overpayments as soon as possible and prevent future overpayments.

HCFA has the authority to require states to make available to SSA MMIS

information on nursing home admissions. States would be paid 90 percent

of the costs of developing the necessary capabilities and 75 percent of the

operating costs. Our efforts with three states have shown that directly

obtaining state MMIS data could help SSA prevent or more quickly detect

overpayments and simultaneously reduce the SSA field office workload. In

the interim, while such arrangements are being made, states could provide

tapes or hard copies of these data to SSA to help control its payments, with

Page 13 GAO/HEHS-97-62 Overpayments to Nursing Home Residents
B-271862 

minimal effort or cost to the states. Preventing or detecting erroneous

payments more quickly and decreasing SSA’s reliance on recipients and

nursing homes to report changes in circumstances that affect eligibility

would bolster the integrity of the SSI program by helping ensure that

clients are receiving only those benefits to which they are entitled and

would save both program and administrative costs.

Recommendations To prevent overpayments to SSI recipients in nursing homes or detect them

sooner, we recommend that the Secretary of Health and Human Services

direct the Administrator of HCFA to require states, as part of MMIS systems

requirements, to include information on nursing home admissions as

standard data elements in their MMIS and make these data elements

available to SSA electronically, in accordance with the laws and standards

governing computer matching, privacy, and security.

We also recommend that the Commissioner of SSA take the following

actions:

• Establish agreements with the states to routinely obtain state MMIS data on

nursing home admissions electronically, as soon as feasible.

• Establish interim agreements with state Medicaid agencies, while states

adapt their systems to make this information available to SSA

electronically, to obtain computer tapes or paper listings of admissions to

nursing homes and use this information to identify overpayment situations

and begin recovery actions and payment reductions.

• Determine the reliability of state MMIS data for purposes of supporting

automatic benefit reductions for those SSI recipients identified as residing

in nursing homes for a full month who are not eligible for continuation of

full benefits due to temporary institutionalization and, if the data are

reliable, implement a system for automatic benefit reduction.

Agency Comments

and Our Evaluation

In commenting on a draft of this report, SSA agreed that improvements can

be made in obtaining and processing nursing home admissions data on SSI

recipients (see app. III). SSA noted that it has been working on solutions to

this problem, including obtaining MSIS data, which are submitted

voluntarily by 28 states, from HCFA. Acknowledging that MSIS data do not

cover all admissions, SSA is working with HCFA to determine if HCFA’s new

system, the Resident Assessment Instrument System (RAIS), can be used to

identify SSI recipients in nursing homes in a more timely manner. The

primary purpose of collecting the assessment information is to help

Page 14 GAO/HEHS-97-62 Overpayments to Nursing Home Residents
B-271862 

nursing home staff plan and evaluate the care they provide to residents.

SSA said that should RAIS not prove feasible, it would then consider the

recommendations in our report.

We have no objection to SSA’s use of RAIS, if in fact it is the most effective

and efficient way of reducing SSI overpayments to nursing home residents.

However, while RAIS may provide SSA with the data it needs to more

quickly identify SSI recipients in nursing homes, we have several significant

concerns in this regard. First, not all states participate in RAIS. While HCFA

has instructed all Medicare- and Medicaid-certified nursing facilities to

complete the assessment on all residents upon admission, currently HCFA

does not require that the assessment results be submitted to it or any other

entity. According to HCFA officials, HCFA will require all states to participate

in RAIS as part of the President’s fiscal year 1998 budget proposal to create

a separate prospective payment system for nursing homes. HCFA officials

told us that they do not know whether this proposal will be adopted.

However, contrary to SSA’s comments on our report, HCFA already has the

authority to require all states to make nursing home admissions data

available to SSA using state MMIS, as we suggested in this report.

Second, we are concerned about the reliability of the RAIS data in

identifying whether Medicaid is paying for the nursing home care, which is

a key factor in determining whether a recipient’s SSI benefit amount is

affected by residency in a nursing home. According to HCFA officials,

facilities’ nursing staffs would most likely be completing the assessments

and may not be familiar with the source of payment for the residents. If

the nurses do not accurately complete the source of payment information

on the assessment forms, SSA would be matching its file with erroneous

payment data from RAIS. The MMIS information we recommend that SSA use

is treatment authorization or paid claims data already approved by the

state Medicaid agency.

A third issue concerning RAIS is timeliness. RAIS is still being piloted and,

according to HCFA officials, may not be fully operational in all states at

least until summer 1998, which would allow the current level of related SSI

overpayments to continue for over a year. SSA stated in its comments on

this report that MMIS data would be available only quarterly. However, MMIS

data can be provided monthly or even more frequently if sent from the

states directly to SSA. Consequently, we continue to believe that

electronically obtaining nursing home admission data directly from states

provides SSA with the best opportunity to detect nursing home admissions

Page 15 GAO/HEHS-97-62 Overpayments to Nursing Home Residents
B-271862 

more quickly than its current efforts and also to prevent additional

overpayments.

In the interim, while SSA determines whether RAIS is the best solution for

identifying SSI recipients in nursing homes, we believe that obtaining MMIS

data directly from states each month through computer tapes or paper

listings is preferable to the delays experienced under SSA’s current

procedures. The states we contacted said that they could format the data

for SSA’s use and provide data to SSA on a monthly basis. Furthermore, two

states we visited demonstrated that nursing home admissions data could

be made available by providing us with computer tapes that allowed us to

identify previously undetected potential overpayments.

Finally, SSA said that it is highly questionable that a system for automatic

benefit reduction can be implemented because of the in-depth information

required to determine whether a recipient is eligible for continued benefits

due to temporary institutionalization. As we stated in the report, the

benefit reduction would occur only after automated notices were sent to

recipients asking if they resided in the nursing home for more than a full

calendar month and the appropriate due process procedures were

followed. For those recipients requesting a continuation of benefits, the

automated reduction would be suspended, and SSA would then follow its

current procedures for determining eligibility for continued benefits. Only

the benefits of those recipients remaining in nursing homes and not

requesting a continuation of benefits would automatically be reduced

without field office review.

In commenting on a draft of this report, HHS noted HCFA’s willingness to

provide the MSIS data it now receives from the states to SSA on a quarterly

rather than annual basis. (See app. IV.) This suggestion fails to recognize

the underlying reason for our specific recommendation. Having HCFA

involved in the pass-through of information between the states and SSA

causes both an unnecessary expense for HCFA and a timeliness delay for

SSA. The SSI program needs access to nursing home admissions data as

quickly as possible after the actual admissions to minimize the

overpayments it makes. Consequently, we continue to believe that the

most effective data transfer is directly between the states and SSA on as

frequent a basis as possible.

HHS also commented about the need to offset the costs associated with our

recommendation for each state and for HCFA against the benefits to be

derived by the SSI program. We agree. As stated in this report, we were told

Page 16 GAO/HEHS-97-62 Overpayments to Nursing Home Residents
B-271862 

by both officials of the states we visited and knowledgeable officials in

HCFA that only minimal computer programming would be required to

format the data for SSA’s use. It should also be noted that the federal

government would pay 90 percent of the developmental costs and 75

percent of the operating costs for operating such a data exchange system,

thereby further reducing the burden of this change on the states. The

minimal costs associated with developing and operating such a system,

including those incurred by SSA, should be compared with the tens of

millions of dollars in reduced overpayments to the SSI program that our

work indicates would accrue. Moreover, if our recommendations are

adopted, HCFA will no longer be asked to provide MSIS data to SSA, thereby

saving HCFA the costs it currently incurs.

Finally, HHS suggested that we also investigate using the RAIS database as

another alternative to our recommendation. As stated in our response to

SSA’s comments on this report, it is unknown when all states will

participate in contributing data on nursing home admissions to RAIS, and

the reliability of this system for identifying whether Medicaid is paying for

the nursing home care is questionable. This information is paramount to

determining whether an SSI overpayment has been made.

SSA and HHS also made other technical comments, which we incorporated

throughout the report as appropriate.

We are sending copies of this report to relevant congressional committees;

the Director, Office of Management and Budget; the Commissioner, SSA;

the Secretary of Health and Human Services; and other interested parties.

Copies will also be made available to others on request. If you or your staff

have any questions concerning this report, please call me on

(202) 512-7215. Other GAO contacts and staff acknowledgments are listed in

appendix V.

Jane L. Ross

Director, Income Security Issues

Page 17 GAO/HEHS-97-62 Overpayments to Nursing Home Residents
Contents

Letter 1

Appendix I 

Objectives, Scope,

and Methodology

20

Appendix II 

SSA Actions to

Prevent and Detect

Overpayments

22

Appendix III 

Comments From the

Social Security

Administration

25

Appendix IV 

Comments From the

Department of Health

and Human Services

29

Appendix V 

GAO Contacts and

Acknowledgments

33

Table Table 1: Range of SSA-Detected Overpayments to Nursing Home

Residents in Fiscal Year 1995

5

Page 18 GAO/HEHS-97-62 Overpayments to Nursing Home Residents
Contents

Abbreviations

FTMS File Transfer Management System

HCFA Health Care Financing Administration

HHS Department of Health and Human Services

MMIS Medicaid Management Information System

MSIS Medicaid Statistical Information System

OPIR Office of Program and Integrity Reviews

RAIS Resident Assessment Instrument System

SSA Social Security Administration

SSI Supplemental Security Income program

SSR Supplemental Security Record

Page 19 GAO/HEHS-97-62 Overpayments to Nursing Home Residents
Appendix I 

Objectives, Scope, and Methodology

To determine the extent of overpayments to individuals because they

resided in nursing homes, we reviewed the Supplemental Security Record,

the Social Security Administration’s payment record for the Supplemental

Security Income program. We obtained fiscal year 1995 and 1996 data and

identified those individuals SSA determined had been paid erroneously

because of institutionalization in nursing homes. We analyzed the payment

record and developed aggregate information on overpaid recipients.

To determine the success or failure of SSA’s actions in preventing and

detecting overpayments, we interviewed SSA headquarters officials in

Baltimore, Maryland; 4 regional offices; and 13 field offices. In addition to

these discussions, we analyzed the SSR to determine the effectiveness of

SSA’s match with the Health Care Financing Administration. Of the 5,907

fiscal year 1996 Medicaid Statistical Information System match cases sent

to the field offices for review, we identified the 503 cases that appeared in

SSA’s 10-percent sample data files. These files are random samples of all

cases in a given month on the SSR. SSA field offices had completed reviews

of 362 of the 503 cases as of the end of the fiscal year. We obtained and

analyzed payment history data for the completed cases to determine the

outcome of SSA’s matching effort.

Finally, to determine methods by which SSA can better prevent

overpayments, we interviewed state Medicaid officials in five states to

obtain information about Medicaid data systems to determine the

feasibility of conducting an automated interface with SSA. We selected

Tennessee because of its advancements in providing electronic access to

the state’s information systems. We selected the other four states

(California, Florida, New York, and Texas) because they have the four

largest SSI populations, accounting for almost 40 percent of the total SSI

population. We obtained Medicaid nursing home admissions data for

December 1996 from New York and Texas and matched it against the SSI

payment file to identify SSI recipients admitted in that month to nursing

homes in these states and the resulting potential overpayments. Moreover,

we coordinated a pilot between SSA and the Tennessee Department of

Health Services to further document the feasibility of SSA’s directly

obtaining state Medicaid data. Tennessee officials provided data on all

individuals in Tennessee approved for admission to nursing homes in

February 1996 and paid claims data from February through July 1996. We

used these data to determine the length of nursing home stays. We

provided this information to SSA and had SSA systems analysts develop a

computer program to compare Tennessee’s admissions and paid claims

Page 20 GAO/HEHS-97-62 Overpayments to Nursing Home Residents
Appendix I 

Objectives, Scope, and Methodology

data with SSR data to identify SSI recipients who had received

overpayments because they resided in nursing homes.

Since SSR and the state Medicaid information systems are subject to

periodic quality assurance reviews, we did not independently examine the

computer system controls for them. Except for this limitation, we

conducted our review between April 1996 and April 1997 in accordance

with generally accepted government auditing standards.

Page 21 GAO/HEHS-97-62 Overpayments to Nursing Home Residents
Appendix II 

SSA Actions to Prevent and Detect

Overpayments

SSA Relies on

Reporting by

Recipients and

Nursing Homes to

Prevent

Overpayments

SSA requires that recipients report entrance into nursing homes as quickly

as possible. However, because many recipients do not report this

information, SSA also establishes working relationships with nursing

homes to obtain admission and discharge information on the SSI

population. Furthermore, legislation was enacted, effective in

October 1995, to require that nursing homes provide this information to

SSA.

At the time of application for benefits, claims representatives in SSA field

offices inform SSI recipients that they are required to report information

that may affect their eligibility or payment amounts. If the recipient has a

representative payee, the payee is responsible for reporting such

information to SSA. Significant events to be reported include a change in

income, resources, marital status, or living arrangements, such as

admission to or discharge from a nursing home. Failure to report such

changes can result in monetary penalties of up to $100 per event.

Although SSI recipients are the primary source for reporting changes in

their living arrangements, SSA recognizes that recipients entering nursing

homes may not always report their admissions on a timely basis, if at all.

Therefore, SSA attempts to obtain admission and discharge information

directly from nursing homes. In October 1993, SSA instructed its field

offices to work closely with nursing homes to facilitate the flow of

information regarding the admission of SSI recipients. Field offices are to

maintain ongoing contact with all appropriate institutions in their service

areas, use regular visits as a means to encourage cooperation, and

establish procedures for institutions to make timely reports on events that

affect SSI recipients’ eligibility and benefit amount. Also, the Social

Security Act, as recently amended, states that the Commissioner of SSA

must require each administrator of a nursing home to report within 2

weeks any admission occurring on or after October 1, 1995, of any eligible

individual or eligible spouse receiving SSI benefits. The legislation was

designed to prevent overpayments to SSI recipients who failed to report

their admission to nursing homes. To comply with the legislation, SSA and

HCFA notified nursing home administrators of the reporting requirement.

The law, however, did not contain a penalty for nonreporting by nursing

home administrators.

SSA Actions to Detect

Overpayments Once

They Have Been Made

In addition to relying on recipient self-reporting and contacts with nursing

homes to prevent overpayments, SSA uses its redetermination process and

an annual computer match to detect such payments once they have

occurred. A redetermination is a review of financial eligibility factors to

Page 22 GAO/HEHS-97-62 Overpayments to Nursing Home Residents
Appendix II 

SSA Actions to Prevent and Detect

Overpayments

ensure that recipients are still eligible for SSI payments and are receiving

the correct amount. A redetermination addresses financial eligibility

factors such as income, resources, and living arrangements and can be

conducted by mail, telephone, or face-to-face interview. Given its limited

resources, SSA conducts redeterminations on over two-thirds of the SSI

population receiving benefits approximately once every 6 years but may

conduct them more frequently if it determines that changes in eligibility or

erroneous payments are likely. Recipients with a history of recent earnings

are likely to be redetermined more often than recipients, such as

institutionalized individuals, who generally do not experience fluctuations

in their income or resources. The redetermination procedure includes a

question for recipients about whether the recipient spent a full calendar

month in a hospital, nursing home, other institution, or any place other

than the recipient’s normal residence. With this question, SSA hopes to

identify situations where overpayments to recipients may have occurred.

SSA has conducted an annual computer match with HCFA since 1992 to

identify SSI recipients in nursing homes. Currently, SSA sends a file to HCFA

containing identifying information on all SSI recipients residing in the 28

states that provide data to HCFA via the Medicaid Statistical Information

System (MSIS). The MSIS file contains Medicaid usage data submitted by

states on a voluntary basis. HCFA matches the MSIS nursing home

admissions data with the SSA file to identify SSI recipients who resided in

nursing homes during the period covered by the match and sends a file to

SSA with this information. After reviewing the match results, SSA deletes

cases in which individuals (1) have self-reported their admission to SSA,

(2) are not in current pay status, or (3) are deceased. SSA then distributes

information on potential overpayment situations to the appropriate field

offices during October of each year. According to SSA procedures, field

office representatives are to contact the recipients or nursing homes

during the balance of the fiscal year to determine if overpayments have

been made. SSA does not begin overpayment recovery efforts until

recipients are discharged from facilities and are eligible to receive their

full SSI benefit.

Although SSA uses the MSIS data from 28 states to help detect

overpayments, Medicaid data from all states exist and could be used by SSA

more frequently than once a year. Generally, nursing homes report

admissions of individuals and file claims for reimbursement with state

Medicaid agencies in a timely manner to ensure rapid payments from

Medicaid to them. States use automated systems, known as Medicaid

Management Information Systems (MMIS), to process claims and to capture

Page 23 GAO/HEHS-97-62 Overpayments to Nursing Home Residents
Appendix II 

SSA Actions to Prevent and Detect

Overpayments

and report data needed by HCFA and the states to manage the Medicaid

program. The Secretary of Health and Human Services has broad authority

to require states to report data that HCFA needs to administer the Medicaid

program. State MMIS must meet performance standards as well as system

and compatibility requirements established by HCFA. HCFA requires each

state’s MMIS to include 122 standard data elements and pays 90 percent of

the development costs and 75 percent of the operating costs of these

systems.

Page 24 GAO/HEHS-97-62 Overpayments to Nursing Home Residents
Appendix III 

Comments From the Social Security

Administration

Page 25 GAO/HEHS-97-62 Overpayments to Nursing Home Residents
Appendix III 

Comments From the Social Security

Administration

Page 26 GAO/HEHS-97-62 Overpayments to Nursing Home Residents
Appendix III 

Comments From the Social Security

Administration

Page 27 GAO/HEHS-97-62 Overpayments to Nursing Home Residents
Appendix III 

Comments From the Social Security

Administration

Page 28 GAO/HEHS-97-62 Overpayments to Nursing Home Residents
Appendix IV 

Comments From the Department of Health

and Human Services

Page 29 GAO/HEHS-97-62 Overpayments to Nursing Home Residents
Appendix IV 

Comments From the Department of Health

and Human Services

Page 30 GAO/HEHS-97-62 Overpayments to Nursing Home Residents
Appendix IV 

Comments From the Department of Health

and Human Services

Page 31 GAO/HEHS-97-62 Overpayments to Nursing Home Residents
Appendix IV 

Comments From the Department of Health

and Human Services

Now on p. 9.

Now on p. 4.

Now on p. 9.

Page 32 GAO/HEHS-97-62 Overpayments to Nursing Home Residents
Appendix V 

GAO Contacts and Acknowledgments

GAO Contacts Roland H. Miller III, Assistant Director, (202) 512-7246

George A. Scott, Evaluator-in-Charge, (202) 512-5932

Acknowledgments In addition to those named above, the following individuals also made

important contributions to this report: Mary Ellen Fleischman, Evaluator;

James C. Lawson, Evaluator; Graham D. Rawsthorn, Evaluator; John G.

Smale, Jr., Senior Social Science Analyst; and James P. Wright, Assistant

Director (Study Design and Analysis).

(106809) Page 33 GAO/HEHS-97-62 Overpayments to Nursing Home Residents
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