U.S. Department of Agriculture

Covering 19 key management issues in five of the program operations study a
areas (job search was not covered as it is no longer pertinent to Food Stamp ul
program operations), the data are mainly descriptive in nature. As such, they
are limited from providing a sense of the relative effectiveness of the 3
different options in terms of meeting program goals (as this would be i
dependent on estimates of the benefits and costs associated with different
options and are not available through the studies). These studies are a first |
step in the process of decision-making on key management issues. i

Throughout the report, where particularly appropriate and necessary, the
need for additional data collection to measure the benefits and costs of if
alternative policies is identified. 4

For each issue identified, a key question was how to handle efficiently the ul
increased automation which has penetrated all areas of program operations.
Given the rate at which computer systems are increasing in power and

sophistication, automation's potential will become an increasingly important !
part of Food Stamp program operations.

The program operations study was conducted by Mathematica Policy
Research, Inc., and its subcontractors, Abt Associates, Inc., and the Urban

Seren

Institute.
Mas J
MNDINGS Computer Matching ‘
© The Supplemental Security income (SSI) and Social Security benefit ‘|

records may be overutilized since they return little on the investment of
time and effort.

@ Department of Motor Vehicles (DMV), real estate, and National
Disqualification Reporting Network (DRIPS) records, have relatively strong 1
returns, but are underutilized. i

© The most important weakness in research, relative to the utility of
databases used in computer matching, is the incomplete coverage of the
full range of databases as they are used for both the applicant and
recipient matching; particularly, there is little evidence of the utility of .
databases used in recipient matching. L

e There is a lack of clarity on the relative worth of adding large numbers of
databases to a system, whatever the resource constraints.

e Interstate matching, while uncommon, especially online, may increase
dramatically in the future.

e Pre-selection is relatively uncommon, though its precise extent is unclear.

e Almost all hits are followed up on in some manner, with prioritization of
follow up on hits relatively uncommon.

Page 9


U.S. Denartment of Agriculture

Lo ap eetoy General

remaining 306 food stamp coupon overissuances were caused by either
the recipients not reporting income correctly or a State agency not
applying the reported income correctly.

Overissuances of food coupons went undetected because a match of
IEVS with Federal employees was not required and, during the eligibility
Process, the recipients did not correctly report income and/or the State
agency misapplied the income during the Food Stamp application/recert-
ification process.

MAJOR
RECOMMENDATIONS

The State agency is to determine which Federal information sources
would be the most effective and efficient for verifying Federal employee
and retiree income.

Utilize those agencies that provide the most effective sources of Federal
employee and retiree income.

New Jersey Department of Human Services--New Jersey Wage Match--
Trenton, New Jersey, Food and Nutrition Service, Audit Report 27019-41-
Hy, OIG Northeast Region, Hyattsville, Maryland, September 1990.

The review was to detect improper participation or incorrect benefit levels,
by identifying recipients who received income which was not reported to the
New Jersey Department of Human Services. The match involved New
Jersey Food stamp program recipient information being matched against the
U.S. Office of Personnel Management (OPM) information on Federal
employees and retirees. A match was also run against New York's
information on earned income and unemployment benefit income.

© There were 130 cases identified where income was not reported to, or
Properly utilized by New Jersey, and 44 instances in which at least one
recipient participated in two cases simultaneously. Ninety-five were
considered potential intentional program violations, and 35 resulted from
the recipient's failure to report income accurately or New Jersey's failure
to utilize the reported income correctly.

Overissuances were caused by individuals not reporting or incorrectly
reporting income and/or the State not correctly utilizing the income during
the certification process.

Page 30


: U.S. Department of Agriculture

— — —

The primary purpose for this report was to construct a systematic descriptive
profile of certification systems now in use and to distinguish the types of
systems that might provide a basis in later analyses for associating different
system approaches with differences in the cost-effectiveness of the systems.
The description of system characteristics was developed in terms of four
broad functions - data base content, system input methods and staff roles,
eligibility determinations and benefit calculations, and system outputs. This
report presents summary data on these four functions of system operations,
constructs a system typology, and then concludes with information on the
direction of future system enhancements or changes planned by the agencies
covered in the census. °

MAJOR Data Base Content of Certification Systems

e Almost all agencies record reported gross earnings and unearned income in
household records.

| e 34 of 58 agencies maintain data on gross earnings and unearned income
i by the individual, rather than lumping those data together for an entire
household.

e@ Information on self-employment income as a distinct element is maintained
by 36 systems, about half of which break this income down into revenue
and expenses.

e@ 40 systems capture reported housing costs, whether or not an excess
shelter deduction will be taken; reported utility costs are systematically
recorded in 38 systems.

1 e@ 45 agencies maintain some type of historical household data that can be

I accessed by eligibility staff, and 34 of these provide display terminals for
online inquiry to historical data. However, about half of those maintaining
t historical data limit those files to issuance-related information and most

i maintain a year or more's worth of information with 30 maintaining 3 or
more years of history.

System Input: Methods and Staff Roles

e 44 of 58 agencies require eligibility workers to complete input forms or
combined worksheet/input forms.

e@ 14 agencies have systems where application data can be entered directly.

@ 24 agencies have essentially been able to eliminate the use of manual
worksheets to calculate benefits.

4 ®@ Online data entry and editing are nearly universal (51 of 58 agencies). 31
of the 51 agencies also update household records online.

Page 26


U.S. Department of Agriculture

MAJOR
FINDINGS

Certification error rate reduction initiatives had not been successful
because eligibility workers were not using IEVS income information to
verify household eligibility and benefit levels. The State agency had a
backlog of claim referrals pending overissuance and fraud determinations
estimated at about $4.6 million.

The eligibility workers were not using income verification data either to
verify household eligibility and benefit levels or to promptly process IEVS
information.

The State agency's backlog of claims jeopardizes error reduction efforts
and collections. The State agency was not putting priority on claim
referrals, which resulted in a statewide backlog of about 10,100 potential
claims, estimated at about $4.6 million pending overissuance and fraud
determinations.

The State agency was not accurately accounting for enhanced-funded
fraud control costs. Further, time studies did not take into account time
spent by fraud control workers on Food Stamp certification activities.

Federal oversight agencies should:

@ Provide assistance to the State agency to develop effective error
reduction initiatives and to ensure implementation of the initiatives by
county offices.

The State agency should:

© Provide additional training and guidance to eligibility workers on the
proper uses of the IEVS and enforce administrative controls.

Develop and implement a plan to reduce the backlog of claim referrals and
monitor the implementation.

Determine if fiscal adjustments are appropriate, as a result of the
inaccurate cost allocation procedures used to claim enhanced-funded
reimbursement for fraud control.

Revise its cost allocation procedures to accurately account for costs of
enhanced-funded fraud control activities.

Page 35

—

peed

ah Ree pate
jae

Sremntad

a)

ee

ara

fend


U.S. Department of Agriculture

State Census of Income and Eligibility Verification System (IEVS) Procedures,

Contract Number 53-3198-8-95 (5), Mathematica Policy Research, Inc.,
Princeton, Washington, D. C., March 1992.

BACKGROUND

To be eligible for Food Stamp program benefits, a household's income and
assets must fall below specified levels. If a person applying for food stamps
provides incorrect information at the time of application, or if later changes in
a household member's circumstances are not reported, it is possible for

to receive an incorrect amount of benefits. To decrease the number of
incorrect payments under the Food Stamp program, AFDC, and Medicaid
programs, Congress required State Income and Eligibility Verification Systems |) |
(IEVS). The purpose of this study was to identify, develop, and test
exemplary and cost-effective targeting strategies so FNS can provide
information and technical assistance to State Food Stamp agencies on how
to implement cost-effective strategies. The following findings are from the
State targeting identification phase of this study. A report on IEVS cost
effectiveness has been prepared, but has not yet been released by the Food
and Nutrition Service.

MAJOR.
FINDINGS

@ MATCHING
There are six data sources mandated by Food Stamp program regulations:

State Wage Information Collection Agency (SWICA) Data: The data
consist of wage information that employers, whose employees are
covered by Unemployment Insurance, must report to the State wage
each quarter. The data is three to six months old when the matches
are conducted.

Unemployment Insurance (Ul!) Monthly Benefit Data: The data consist
of information on monthly benefits provided to Unemployment
Insurance benefit recipients. They are one month old when the
matches are conducted.

Beneficiary Earninas Exchange Record (BEER) Data: The data consist
of annual earnings information compiled from information on the IRS
Form W-2. Data is up to 18 months old when the matches are
conducted.

Beneficiary Earnings Exchange (BENDEX) Title |! Data: The data
consist of monthly information on Old Age, Survivors, and Disability
Insurance (OASDI) benefits, and other benefits provided under Title I!
of the Social Security Act. They are, at most, two months old when
the matches are conducted.

households which are actually ineligible for the program to receive benefits or in

Page 3


(Audit Report 27019-41-Hy, OIG Northeast Region) September 1990

New York City Wage Match--New York, New York, Food and Nutrition Service.
(Audit Report 27019-40-Hy, OIG Northeast Region) September 1990

Food Stamp Program--Iimplementation of Income and Eligibility Verification System
Nationwide, Food and Nutrition Service.
(Audit Report 27013-45-Te, OIG Southwest Region) March 1990

Implementation of Income and Eligibility Verification System--Texas Department of
Human Services, Food and Nutrition Service.

(Audit Report 27013-46-Te, OIG Southwest Region) February 1990

Computer Matching of Food Stamp Participation Records with Federal Personnel
Records Detected Overissuances, Food and Nutrition Service.

(Audit Report 27019-41-Te, OIG Southwest Region) October 1989

Food Stamp Program--South Carolina Department of Social Services--Error Reduction,
Food and Nutrition Service.

(Audit Report 27555-4-At, OIG Southeast Region) May 1989

Food Stamp Program--Alabama Department of Human Resources--Error Reduction, Food
and Nutrition Service.

(Audit Report 27555-3-At, OIG Southeast Region) May 1989

DEPARTMENT OF HEALTH AND HUMAN SERVICES

Office of Inspector General

Reforms are needed in State Income and Eligibility Verification Systems (IEVS).
{OEI-06-92-00080) July 1994

AFDC Pre-Eligibility Verification Measures.(OEI-04-91-00100) August 1993

The Income and Eligibility Verification System (IEVS): A Time for Reform?
(OEI-01-90-00510) July 1989

Improving the Social Security Administration's Automated Data Exchange Process.
{OAI-05-89-00820) December 1989

The Beneficiary and Earnings Data Exchange System: Its Use and Potential.
(P-01-86-00063) December 1985

Health Care Financing Administration

Fiscal Year (FY) 1989 Income and Eligibility Verification System (IEVS) Performance
Review Report. March 1990

FY 1988 Income and Eligibility Verification System (IEVS) Performance Review Report.
February 1989



U.S. Department of Health and Human Services

Income and Efigibilit
w Report, February 1989.

During fiscal year 1988, the Health Care Financing Administration 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.
FINDINGS

The States identified major concerns about IEVS, including the short
timeframes required for processing match information, the limited
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.

Although States have made significant progress in implementing IEVS,
several major compliance problems exist, such as States not conducting
matches against all required databases, not completing follow up on
match information within the required time frames, and not collecting
performance data for assessing the costs and benefits of IEVS matches.

MAJOR
RECOMMENDATIONS

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.

Page 45


U.S. Department of Health and Human Services

and

in
0063, Washi

ings Data Exchange Syste:
igton, D.C., December 198:

BACKGROUND

This inspection examined States’ experiences with the Beneficiary and
Earnings Data Exchange system (BENDEX) and identified problems and issues
associated with the operation of the system. The inspection was based
primarily on discussions with selected State and county officials involved

with BENDEX and with staff from the district offices of the SSA in 16 at
States. cd
MAJOR _ 4
FINDINGS e@ A number of problems (SSA and State) limit the usefulness of the id

BENDEX system: timeliness, completeness, and/or accuracy of the data
and insufficient communication between State agencies and SSA; ry

@ State eligibility workers rely upon SSA district offices more than on
BENDEX when verifying information on SSA benefits; ry

e States find BENDEX useful, primarily, as a postcertification verification
tool for recipients. It is of minimal usefulness during the application '
process because the data are seldom received soon enough; id

e Nearly all States have little interest in SSA's Beneficiary Earnings nt
Exchange Record (BEER), the BENDEX tape on reported wages, because
the information it contains is too old.

© Many States are trying to encourage greater use of BENDEX by local
welfare offices through (1) preparing and disseminating discrepancy
reports, (2) reformating SSA BENDEX data, and (3) sending the data to 4
local offices according to regular schedules.

MAJOR
RECOMMENDATIONS

Ensure that BENDEX is working properly to provide States accurate,
timely, and complete information;

Expand the information contained in BENDEX based on a users'
requirement analysis undertaken by a Federal-State task force;

Improve the technical assistance provided to the States in using BENDEX;
and

Ensure that BENDEX is incorporated and operating effectively in States’
automated welfare management systems.

Page 43


U.S. General Accounting Office

Computer Matching--Quality of Decisions and Supporting Analyses Little
Affected by 1988 Act. Briefing Report to the Chairman, Subcommittee on

Information, Justice, Transportation and Agriculture, Committee on

Government Operations, House of Representatives, GA O/PEMD94-2, October
71993.

BACKGROUND

The chairman of the Subcommittee on information, Justice, Transportation
and Agriculture of the House Committee on Government Operations was
concerned about how agencies have implemented the Computer Matching
and Privacy Protection Act of 1988. In response, the General Accounting
Office (GAO) identified 71 computer matching programs at 14 Federal
agencies, involving 447 matching agreements, The GAO reviewed 277 in
detail. Specifically examined were those elements required under the act.
The GAO also examined the cost-benefit analyses included in the agreements
and assessed the quality of the analyses. Included as part of the review
were interviews with 54 officials from the involved agencies to gather
information on how the computer matches were processed, approved, and
reviewed.

MAJOR
FINDINGS

Agencies are using substantially different methodologies to identify and
calculate costs and benefits. (the Office of Management and Budget has
yet to issue specific guidelines on conducting cost-benefit analyses for
the computer matching act which generally became effective January 1,
1990.)

Data Integrity Boards (DIBs).

Most DIBs meet less often than quarterly, usually on an ad hoc basis, and
tend to route correspondence to approve or review matching agreements.

Boards generally approved matches lacking adequate analyses and having |
severe methodological flaws and lack of documentation. In 27% of the
agreements reviewed, agencies made no attempt to estimate either the
costs or benefits of the computer matches before approving them; in an

Federal agencies accepted States’ claims in computer matching
agreements at face value; agencies did not not collect and maintain |
supporting documentation for States' cost-benefit analyses. Further, for
those analyses conducted, where both costs and benefits were
estimated, not all reasonable costs and benefits were considered,
inadequate analyses were provided to support savings claims, and no
effort was made after the match to validate estimates. Additionally, any
available documentation often failed to show how costs and benefits
were calculated or the time period for expected savings. Also, the
agencies did not discount the value of money over time and rarely

Page 49

Agencies are not providing full, earnest reviews of proposed matches to | |

ewe

additional 14%, only costs or benefits were estimated. | “+

—_____ — —_|


U.S. General Accounting Office

TITLE

Medicaid--Some Recipients Neglect to Report U.S. Savings Bond Holdings.
Report to the Chairman, Committee on Finance, United States Senate, and
Chairman, Subcommittee on Health and the Environment, Committee on

Energy and Commerce, House of Representatives, GAO/HRD-89-43, January
1989.

BACKGROUND

Generally, persons who receive Federal assistance under Medicaid, Aid to
Families with Dependent Children (AFDC), and Supplemental Security Income
{SSI) provisions are required to meet eligibility requirements of income and
assets, including cash or other liquid assets or property other than personal
residences and automobiles. Among assets that determine an individual's
eligibility are U. S. savings bonds. Individuals with such bond holdings above
State asset limitations for AFDC, SSI, and Medicaid are ineligible.

The law requiring a State to have an IEVS for income verification processing
includes comparing the income declared by program applicants and
beneficiaries with information obtained from the IRS and the SSA.
Information available from these agencies includes data on interest earned
from redeeming of savings bonds and on bonds paying periodic interest. It
does not, however, include the current (at time of application or
redetermination) or face value of such bond holdings. Such information is
only available from the Department of the Treasury.

in a limited test in Massachusetts, Treasury matched a file of 29,213
Massachusetts Medicaid nursing home residents to identify recipients who
own or had redeemed savings bonds. This match was further analyzed to
identify those Medicaid recipients with outstanding bonds valued at $2,000
or more (asset resource limit was $2,000). If the bonds were redeemed and
the cash disposed of within two years of an individual's Medicaid eligibility,
the disposition could render the individual ineligible.

MAJOR
FINDINGS

@ 143 nursing home residents had outstanding bonds worth about $1.5
million, with individual holdings ranging from $2,000 to over $60,000.

e Another 262 Medicaid recipients had redeemed $2,000 or more in bonds I :

or had a combination of outstanding and redeemed bonds totaling $2,000
or more.

e@ Of the 405 who owned and/or had redeemed bonds, 60 applications were |:
reviewed to determine if the recipients had identified the bonds on their
applications. Of the 49 records for which disclosure should have been
made, 48 did not indicate any savings bond holdings or redemptions, and
one identified some, but not all of the bond holdings. Consequently, 49
individuals of the 60 reviewed could be declared ineligible for filing a false
or incomplete Medicaid application.

Page 53

seen!



U.S. Department of Health and Human Services 7

MAJOR
RECOMMENDATIONS

The OIG directed these recommendations to the Administration for Children
and Families:

e Revise the evaluation reporting requirements of States to make them
more applicable to all commonly used types of pre-eligibility verification
measures, not just fraud investigative units;

Require States to periodically evaluate their pre-eligibility programs and
report the results to ACF, and to ensure that States do so;

Conduct or sponsor independent evaluations of State pre-eligibility
programs; and

Provide States with information on effective pre-eligibility verification
measures reported to ACF in States’ evaluation reports.

ification System (IEVS)

‘Several Federal. agencies and a national organization representing State
welfare agencies have examined aspects of States' implementation of IEVS.
This report analyzes 10 studies to synthesize their findings and
recommendations and to offer conclusion for Federal officials and others
considering future directions for IEVS. The analysis of the 10 reports was
supplemented with discussions with Federal and State welfare officials
concerning IEVS.

MAJOR
FINDINGS

e@ Several of the studies identified major problems with the States’
implementation of IEVS including inaccurate, duplicative, untimely, or
inaccessible information in Federal databases; highly prescriptive or
unclear or inconsistent Federal requirements; and insufficient staff and
inadequate computer resources limiting the administrative capacity of
many States.

Regarding Federal databases and requirements: the usefulness of the
databases should be improved, and requirements of the States should be
modified (i.e., more flexibility, more specificity, better coordination
between agencies).

In visiting three States, problems with Federal databases, Federal
requirements, and insufficient resources still appear to hinder effort to
operate IEVS.

Page 41


U.S. Denartment of Agriculture

e@ There is essentially no data available concerning the costs of controlling y
quality contro! procedures.

MAJOR

RECOMMENDATIONS e Consider systematic review of existing data systems to develop an i
inventory of cost and benefit measures to use as particular issues arise
for key areas of operations. i

oicrni

@ The most important focus for future research might be estimating the
benefits and costs of different automation options and different
management approaches.

Research Needs: r

Computer Matching |
e cost-effectiveness analysis of specific databases used in computer 1
matching, especially those used in recipient matching; {

usefulness of computer matching beyond detecting errors and achieving
the consequent benefit savings (e.g., employee morale, improvement of
delivery of client services, and deterrent to misreporting by clients);

how to link qualitative benefits with benefit savings when considering the
overall utility of a database;

how the marginal cost and benefits of using a database change as the
number of databases in use increases;

cost-effectiveness study of interstate matching;

obtaining data for comparing the benefits and cost of pre-selection versus
uniform matching, as well as the benefits and costs of different strategies
for pre-selection; and

assessing the general cost-effectiveness of prioritization and the relative
cost-effectiveness of prioritization of different databases.

Claims Collecti
studying the costs and benefits of using specialized staff and of allocating
claims collection responsibility at different levels of the Food Stamp
program;

examining the benefits associated with claims collection automation;

examining the benefits and the associated costs for management
techniques; and

obtaining reliable data on the overall success rate of claims collection, as
well as on success rates for various steps within the claims process.

Page 13


U.S. Department of Agriculture

— —_ — — mmm: 2

@ Overissuances went undetected because the Food and Nutrition Service
did not require State agencies to match Federal wage and retirement
income records or other States‘ income records with Food Stamp income
records.

e@ The local offices are not properly calculating the Federal retirement
pension check amounts.

e@ The State's Food Stamp recipient records identification system was not
identifying where the same social security number was being used intwo ['1
households collecting food coupons. hi

MAJOR
RECOMMENDATIONS

Recommendations to the New Jersey Department of Human Services
include:

@ Making an overissuance determination for the 130 cases identified and
establishing claims to recover the overissuances (including the
development of a plan to monitor the State agency's actions ensuring
that disqualifications from the Food Stamp are imposed);

Requesting the use of Federal employee and retiree income information
and other States’ income information in their ongoing IEVS income and
benefit amount verification process;

Developing and implementing written procedures for the local offices to
follow to ensure that Federal retirement pensions are accurately included
as Food Stamp income; and

Determining the instances of dual participation and recovering the
identified overissuances (including the development of a plan to monitor
the State agency's actions ensuring that disqualifications from the Food
Stamp program are imposed and revising their system to better preclude
dual participation).

New York City Wage Match--New York, New York, Food and Nutrition
Service, Audit Report 27019-40-Hy, OIG Northeast Region, Hyattsville,
Maryland, September 1990.

The report was the result of a computer match between Federal wage and
retirement income records of the Office of Personnel Management and the
Food stamp program recipient income reported to the project area in New
York City, New York. The objective was to detect improper participation,

Page 31


APPENDIX A

INDEX OF DOCUMENTS
FEDERAL GOVERNMENT SOURCES
DEPARTMENT OF AGRICULTURE
Food and Nutrition Service - Office of Analysis and Evaluation

State Census of Income and Eligibility Verification System (IEVS) Procedures.
Mathematica Policy Research, Inc.
(Contract Number 53-3198-8-95 (5)) March 1992

Profiles of States’ Food Stamp Program Operations: Update--Appendix. Research and
Evaluation Associates, Inc.
(Contract Number 53-3198-0-65) January 1991

Synthesis Report. Abt Associates, Inc.
(Contract Number 53-3198-5-51} November 1990

Computer Matching: A Review of Exemplary State Practices. The Urban Institute.
(Contract Number 53-3198-5-51 C) November 1990

State and Local Computer Matching Operations. The Urban Institute.
{Contract Number 53-3198-5-51) November 1990

Preventing Fraud and Abuse in the Food Stamp Program: The Use of Computer
Assisted Verification of Applicant-Reported Information. Abt Associates, inc.
(Contract Number 53-3198-6-69) February 1988

Report on the Census of State Operations: Computer Matching. Urban Institute.
(Contract Number 53-3198-5-51) February 1987

Report on the Census of State Operations: Automated Certification Systems.
Mathematica Policy Research, Inc.
(Contract Number 53-3198-5-51) February 1987

Office of Inspector General (OIG)

Cost Effectiveness of Food Stamp Program Use of Immigration and Naturalization
Service Systematic Alien Verification for Entitlement System, Food and Nutrition
Service.

(Audit Report 27013-47-Te, OIG Southwest Region) September 1992

Computer Match of Federal Employees, Food and Nutrition Service.
(Audit Report 27006-1-Te, O1G Southwest Region) March 1991

New Jersey Department of Human Services--New Jersey Wage Match--Trenton, New
Jersey, Food and Nutrition Service.


Department of Health and Human Services

OFFICE OF
INSPECTOR GENERAL

STATE INCOME AND ELIGIBILITY
VERIFICATION SYSTEMS (IEVS)

Summary of Literature

en
= JUNE GIBBS BROWN
3 C Inspector General

OCTOBER 1994
OEI-06-92-00082



Better Wage-Matching Systems and Procedures Would Enhance Food Stamp Program
Integrity. Report to the Secretary of Agriculture
(GAO/RCED-84-112) September 11, 1984

NONFEDERAL GOVERNMENT SOURCES

AMERICAN PUBLIC WELFARE ASSOCIATION

After Implementation: State Experience with the Income and Eligibility Verification
System (IEVS), Final Report, April 1989



FY 1987 Income and Eligibility Verification System (IEVS) Effectiveness Review Report.
April 1988

Assistant Secretary for Management and Budget

Evaluation of Income and Eligibility Verification Systems. Final Report for the Office of
Assistant Secretary for Management and Budget, U.S. Department of Health and
Human Services, Jack Martin & Co.

(Contract No. 100-86-0035) September 15, 1987

U. S. CONGRESS
General Accounting Office

Computer Matching--Quality of Decisions and Supporting Analyses Little Affected by
1988 Act. Briefing Report to the Chairman, Subcommittee on Information, Justice,
Transportation and Agriculture, Committee on Government Operations, House of
Representatives

(GAO/PEMD94-2) October 1993

Welfare Benefits--States Need Social Security’s Death Data to Avoid Payment Error or
Fraud. Report to the Secretary of Health and Human Services
(GAO/HRD-91-73) April 1991

Computer Matching-Need for Guidelines on Data Collection and Analysis. Report to the
Director, Office of Management and Budget
(GAO/HRD-90-30) April 1990

Medicaid--Some Recipients Neglect to Report U. S. Savings Bond Holdings. Report to
the Chairman, Committee on Finance, United States Senate, and Chairman,
Subcommittee on Health and the Environment, Committee on Energy and Commerce,
House of Representatives

(GAO/HRD-89-43) January 1989

Welfare Eligibility--Deficit Reduction Act (DEFRA) Income Verification Issues. Fact
Sheet for the Ranking Minority Member, Subcommittee on Oversight of Government
Management, Committee on Governmental Affairs, United States Senate
{GAO/HRD-87-79FS) May 1987

Computer Matching--Assessing Its Costs and Benefits. Briefing Report to the Chairman,
Subcommittee on Intergovernmental Relations and Human Resources, Committee on
Government Operations, House of Representatives

{GAO/PEMD-87-2) November 1986

Computer Matching—Factors Influencing the Agency Decision-making Process. Briefing
Report to the Chairman, Subcommittee on Intergovernmental Relations and Human
Resources, Committee on Government Operations, House of Representatives
(GAO/PEMD-87-3BR) November 1986


U.S. Denortment of Agriculture

Lod iuesion Suivice

@ The two primary sources of data are unemployment insurance files

State Roles and Policies on Computer Matching

(accessed by 77 systems) and wage files (accessed by 72 systems).

Nearly all the computer matching systems are used by several programs,
in addition to the Food Stamp program, administered by State welfare
agencies:

1) 88% are used by the Food Stamp and AFDC programs.
2) 69% are used by the Food Stamp and Medicaid programs.
3) 26% are used by the Food Stamp, AFDC, and Medicaid programs.

All States and territories, except Ohio, conduct regular computer
matching on the Food Stamp program caseload.

23% of the States and territories have 1-3 different matching systems;
57% have 4-6; and 19% have 7 or more unique computer matching
systems.

91% of the States conduct front-end matching on applicants; 98%
conduct ongoing matching on active Food Stamp program cases.

Unemployment insurance files are the primary data source for matching
by 91% of the States; employer wage files are used by 85% of the
States; SSI benefits are matched by 64%; and Social Security benefits
are matched by 60%.

Computer matching routinely involves activities at both the State and
local levels. The actual initiation of the match may occur at the local
offices; online computer access to at least one computer matching
system exists in 26 of the States.

23 States require local offices to submit some reports on matching, but
few States require local offices to submit information about matching
from all systems.

30 States report special matching using at least one type of special
match (e.g., State direct test matches using in-State files from other
programs, the various data files of neighboring jurisdiction, or matching
against Federally generated databases).

Most respondents felt the wage and unemployment insurance matches
were the most effective in terms of reducing the number of erroneous
certifications, but expressed concerns about the time lag for reporting to
the source agency and the subsequent problems related to the currency
of the information in the databases matched against.

Page 24


U.S. Department of Agriculture

Co]

Claims Collection
© All States use specialized staff in the claims collection process.

e Almost all States have specialized staff of both claims/collection and
fraud/investigation types.

e Later stages in the claims collection process are most likely to involve
specialized staff located at the State level.

© Centralization of the claims collection process is fairly high and tends to
increase at later stages of the collection process.

@ The claims collection process is particularly high in State-administered |
programs.

© The cost-effectiveness of using specialized staff, of centralizing the
claims collection responsibilities, and of different methods of
specialization and centralization is unclear.

e Almost all States have some level of automation of the claims collection
process, and most of these are automated at both the State and local
level.

e Little is known about costs of automating claims collection or the relative
cost-effectiveness of different automation options within claims
collection.

@ There is a widespread usage of a number of different management
techniques within the claims collection process, with the most common
being staff training and the use of tracking and flagging systems, usually
automated, for individual claims.

e Little is known about the benefits and costs of the different management
techniques or the relative usefulness of different ways to implement them
within the claims collection process.

e@ True measures of claims collection success are not available.

e@ No data are currently available on the relative cost-effectiveness of
different procedures used in claims suspension and termination.

Monthly Reporting

@ Many States have adopted efficiency strategies, especially selective
reporting.

e@ There is an absence of solid quantitative estimates of monthly reporting's
effect on errors.

Page 10


U.S. Denorement of Agriculture

Levice

4) The overall trend of increasing automation for case processing
functions within State Human Service agencies makes it
increasingly important that Federal policymakers in different
agencies understand the integration of the match process and the
costs imposed on State agencies by instituting rapid policy
changes.

@ The technical knowledge of professional staff ultimately seems to make
the difference between an average computer matching system and the
development of exemplary practices:

1) Skills apparently required of the individual with overall
responsibility for computer matching include familiarity with local
operations, knowledge of the departments within the public
assistance agency and the functions of each, the ability to manage
people, knowledge of computers, and the vision to see all the
component parts of the whole process. It is also important that
these match coordinators be included in the network of State
computer matching professionals that has evolved and can be
considered a major impetus for system exchange among States.

Effectiveness of computer matching depends critically on the
effective use of technical personnel.

States need to consider both their agency needs for data
management and their internal technical capacity when deciding
which types of computer matching systems to utilize. [Exemplary
States designate not only computer matching coordinators at the
State level but specialized workers or units at the local level who
must remain current on computer matching details.]

© The structure of States' client databases has important implications for
matching, especially in the exchange of systems between States.

- States must also consider the non-trivial costs associated with
exchanges of computer matching systems between States {e.g.,
locating an appropriate system to adopt and, then, reprogramming
it to meet the particular matching needs required by the State).

States generally encounter difficulties with external data sources for three
reasons: the incompatibility of identifiers used by agencies to match
clients; inconsistencies in the time period covered by the various source
data information, and difficulties encountered by local staff in attempting
to verify match information.

The choice of external data sources used by States range from the
conservative (limited to those sources required by current regulations) to
the more aggressive (matching on as many existing databases as
possible).

Page 16


TO Dap memanset af Aarton

ice

bine Gee breed &

© The extent of alert screen usage is unclear.

@ There are a number of factors which influence the relative efficiency of
different ways of configuring information input/output, although little data
is available on any of these factors.

@ Large amounts of data, which could replace information in case folders,
are currently stored in most certification systems.

@ The extent to which automated data has actually replaced case folder
information is unclear and limited only to the extent of legal
considerations.

© The key factors affecting the desirability of automation (other than legal
considerations) appears to be the concrete benefits of such automation as
well as managerial philosophy about privacy/security and the need for
hardcopy backups.

© There is little credible quantitative data on the benefits of certification
systems; there is more qualitative data available.

© The most important perceived benefit of automated certification systems
appears to be the increased reliability of program operations, saving staff
time, and reducing errors.

e it appears that States that pursue automation aggressively in one area are
likely to do so in other areas as well, but the Program operations study
suggests that many States do not automate all areas at the same pace.

Quality Control (QC)

© The QC system is currently being used by many States to serve
management purposes and that use of the system for these purposes
could be substantially expanded.

© The current system has important limitations when compared to the
features a management information system (MIS) should ideally have to
assist State managers.

@ = There is a lack of clarity on whether the existing quality contro! system
provides an appropriate basis for serving States' management purposes.

@ There appears to be no relationship between variation in quality contro!
procedures and the official, regressed error rate estimates indicating that
the effects of procedural differences are corrected by Federal re-reviews.

Page 12



U.S. Department of Agriculture _

Respondents found three aspects of computer matching the most
burdensome:

1) the requirement to match on employer wage-reporting data,
Internal Revenue Service (IRS) data on unearned income, and SSA
earned wage data (BEER);

2) the requirement to conduct matching on all Food Stamp clients;
and

3) the requirement that 100% of all hits be followed up within 30
days.

State Computer Matching Typologies

Four dimensions form the basis for the typologies - mode of access; range
of databases; intensity of State policies; and maturity of matching
Operations. These represent critical differences among States in their
approaches toward computer matching.

About half the States limit their matching to the primary sources of data
(unemployment insurance, wage, Social Security Administration (SSA),
and files internal to the welfare/Food Stamp agency); the other half also
match against some other external databases (e.g., Department of Motor
Vehicles, banks, tax agencies).

There are indications that frequent ongoing matching is conducted in lieu
of actual front-end matching which might allow for examination of the
different frequencies if ongoing matching and the operational tradeoffs
between actual front-end matching and routine matching of the entire
caseload each month.

The report gives no recommendations.

Report on the Census of State Operations: Automated Certification
Systems, Contract Number 53-3198-5-51, Mathematica Policy Research,
Inc., Princeton, New Jersey, February 1987.

The Food and Nutrition Service (FNS) sponsored an examination of
automated certification systems and five other areas of Food Stamp program
Operations (computer matching, claims collection, monthly reporting, QC, and
job search activities). The results of these five other topic areas are
presented in companion reports.

Page 25


U.S. Department of Agriculture

available on databases, eligibility determination and system capabilities,
benefit calculation system capabilities, data entry, update functions,
access and use of terminals, automated output, notices printed by the
system, integration with other assistance programs, and changes
planned.

The computer matching section includes the following: name, access
method, and date operational; special, non-routine matches performed;
systems used for applicant (front-end) and recipient (on-going) matching;
reports provided to the local offices; changes planned in the computer
matching system; system update and turnaround time; general system
information; databases accessed; system initiation, turnaround time,
identifiers used; type of data retrieved; type of matching; reporting to
local offices; using discrepancies for follow up in applicant (front-end)
matching; using discrepancies for follow up in recipient (on-going)
matching; outcome measures in applicant matching (average monthly
numbers); and outcome measures in recipient matching (average monthly
numbers).

Benefit issuance is as follows: types of issuance systems used, factors
determining use of issuance systems, authorization document systems,
use of contract agents for authorization document systems, direct access
systems, direct mail issuance, alternative issuance systems (electronic
benefits transfer and cash-out), administrative costs, issuance and
inventory losses, inventory storage and reporting, types of losses, use of
issuance controls, changes planned.

Monthly reporting is as follows: monthly reporting status, percentage of
cases required to report, public assistance cases required to report, non-
public assistance cases required to report, ranking of reasons for selecting
categories required to report and time required to implement changes,
mailing the monthly reporting forms, reporting cycle, number of days from
mailout, actions usually taken on incomplete reports, time allowances on
monthly reporting actions, worker specialization, percent of non public
assistance cases (mentally retarded and non-mentally retarded) by
certification periods, percent of public assistance cases (mentally retarded
and non-mentally retarded) by certification periods, client reporting
patterns (percentages), effects and opinions of monthly reporting, ranking
of drawbacks to monthly reporting, changes planned, and data required
on monthly reporting forms.

Employment and training is as follows: subcontracted services, 2
participation criteria, participation, program components, administrative
responsibility, categorical exemptions, individual exemptions, reporting
and tracking, follow up procedures by service providers to track ;
participant progress, other follow up procedures, reimbursement, support |

services, fiscal year 1990 federal expenditures and actual participant .
costs, program coordination, and changes planned.

Page 7


U.S. General Accounting Office aa

SSA files were computer matched with State benefit payment files from
Maryland, Pennsylvania, and the District of Columbia. Selected files were
then followed-up to confirm the SSA's recorded deaths.

MAJOR . .

FINDINGS e@ For a 24-month benefit payment period, 2,950 cases indicated benefit
payments were paid at lease two months after the dates of death
recorded in SSA files.

@ Using a judgement sample of 229 of these cases, State agencies
confirmed the deaths of 86 and reported that 85 were alive. For the
remaining 58, there was no information available to determine whether
the people were alive or deceased.

e For 34 of the 85 for which the States reported individuals alive, the
States gave either no evidence or weak and inconclusive evidence to
support the person receiving the benefits was, in fact, alive. Seven of
the cases were incorrectly reported as dead in SSA's files, while three
others were incorrect due to clerical errors in recording the persons’
SSNs.

e For at least 39 of the 86 confirmed death cases, the State reported that a
relative was using the deceased person's SSN to receive benefits. 17 of
the 86 cases resulted in relatively complete reports. Based on these, it is
estimated that $72,000 in welfare benefits were paid after the recorded
dates of death in SSA's files.

e@ State officials agreed that receiving such information from SSA would
assist them in identifying false claims and benefit payments made under a
deceased person's SSN as well as providing investigative leads for
potential cases of fraud, waste, and abuse. Department of Agriculture
and the Department of Health and Human Services’ (DHHS) Office of
Family Assistance also agreed that such data would be valuable.

e In 1990, SSA advised that it would be relatively inexpensive to change
existing systems to include death data as part of the IEVS reports to
States. By 1991, SSA had in place a new system for verifying SSN that
is replacing the Enumeration Verification System and three other systems
currently in use. However, SSA has set no timetable as to when other
States will be added to it. Further, SSA is not providing death data to the
States through this system but is reviewing the issue.

MAJOR

RECOMMENDATIONS ®@ Modify the current SSN verification systems to routinely provide death
information to States, for their use in processing welfare benefit claims
and payments and | ;

e@ Publish and make available to the States appropriate instructions on
accessing and using this information, including the need to verify SSA
provided death information, and give people advance notice before
initiating actions to stop, deny, or adjust payments.

Page 51


Food Stamp Program--Alabama Department of Human Resources--Error Reduction,
Food and Nutrition Service, May 1989

DEPARTMENT OF HEALTH AND HUMAN SERVICES
Office of Inspector General

Reforms are needed in State Income and Eligibility Verification Systems (IEVS),
Fuly 1994 ect e eee e eee eae

The Income and Eligibility Verification System (IEVS): A Time for Reform?,
BC:

Improving the Social Security Administration’s Automated Data Exchange
Process, December 1989... 6... eee cee eee eee eeeee

The Beneficiary and Earnings Data Exchange System: Its Use and Potential,
December 1985 2... 0... cee teen eee nena

Health Care Financing Administration

Fiscal Year (FY) 1989 Income and Eligibility Verification System (IEVS)
Performance Review Report. March 1990 .... 0.0... 0.000000 c cece ueeeeceee

FY 1988 Income and Eligibility Verification System (IEVS) Performance Review
Report. February 1989 2... eee eee cere eee

FY 1987 Income and Eligibility Verification System (IEVS) Effectiveness
Review Report. April 1988.2... 0.2 eee eee vee

Assistant Secretary for Management and Budget

Evaluation of Income and Eligibility Verification Systems. Final Report for the
Office of Assistant Secretary for Management and Budget, U.S. Department of Health
and Human Services, Jack Martin & Co., September 15, 1987

U.S. CONGRESS
General Accounting Office

Computer Matching--Quality of Decisions and Supporting Analyses Little Affected

by 1988 Act. Briefing Report to the Chairman, Subcommittee on Information,

Justice, Transportation and Agriculture, Committee on Government Operations, .
House of Representatives, October 1993 2... ee eee eee

Welfare Benefits--States Need Social Security’s Death Data to Avoid Payment
Error or Fraud. Report to the Secretary of Health and Human Services, April 1991 ......

Computer Matching-Need for Guidelines on Data Collection and Analysis. Report
to the Director, Office of Management and Budget, April 1990 ................0..

Medicaid--Some Recipients Neglect to Report U. S. Savings Bond Holdings. Report

to the Chairman, Committee on Finance, United States Senate, and Chairman,

Subcommittee on Health and the Environment, Committee on Energy and Commerce,

House of Representatives, January 1989 2.2... 0... cee eee eee

Welfare Eligibility--Deficit Reduction Act (DEFRA) Income Verification Issues.

Fact Sheet for the Ranking Minority Member, Subcommittee on Oversight of

Government Management, Committee on Governmental Affairs, United States Senate,

May 1987 2... eee eee eee eee

3



obviating the necessity for an applicant to locate and bring in the verification
themselves.

The matching can deter misreporting of income and/or resources.

MAJOR
RECOMMENDATIONS

@ That offices that are not now doing applicant matching, and have the
necessary computer network available, should consider designing and
implementing the necessary systems and procedures.

e Those offices that are now doing applicant matching should consider
expanding operations to include more data sources.

Report on the Census of State Operations: Compu:

Number 53-3198-5-51, Urban Institute, Washingtoi

BACKGROUND

The State agencies responsible for administering the Food Stamp program
and other assistance programs have been developing increasingly
sophisticated computer systems to support program operations, particularly
for using computer matching activities to corroborate client information or to
detect discrepancies in information. Federal funding incentives encourage
the development of new systems, and concerns about certification error
rates have prompted agencies to examine the increased automation of
certification calculations and decisions as a way to prevent errors. For the
Food Stamp program, computer matching has three purposes - 1) verifying
eligibility and benefits amounts, 2) investigating payment errors, and 3)
substantiating information to be used in prosecutions. Essentially, computer
matching is a match across data files, followed by the full range of
subsequent follow up activities.

The primary purpose of the census interviews on computer matching was to
develop a clear, descriptive profile of State level or State directed computer
matching activities and to address the considerable variation among States.
Specifically, the topics covered in the computer matching census included
the types of matching being conducted; the techniques used in performing
matches; the information or direction provided to local Food Stamp agencies
for follow up; and the tracking procedures employed by State Food Stamp
agencies. This would be done in terms of integration, with matching done by
other public assistance programs; the types of databases used; the methods
used to conduct matches; and the frequency of matches. The intent was to
also address the variation among States in terms of post matching activities,
such as requirements for reports, case prioritization, and the level and type of

Page 22


U.S. Generel Accounting Office

Better Wage-Matching Systems and Procedures Would Enhance Food Stamp
Program Integrity. Report to the Secretary of Agriculture, GAO/RCED-84-
112, September 17, 1984.

BACKGROUND

The effectiveness of State wage matching activities of five States’ Food
Stamp (FS) programs (Florida, Louisiana, New Jersey, New York, and Texas)
was reviewed. These States were chosen because of their experience and
because they represented those States with the most FS benefits issued in
their respective service regions. Wage matching activities at the service's
headquarters and at four of its seven regional offices were also reviewed,
Specific review objectives were to identify opportunities to improve/-
streamline procedures for efficiency; to determine if States were making
adequate use of matching results; and to determine if service guidance to
States provides adequate direction for implementing wage matching
effectively.

MAJOR
FINDINGS

@ Wage match systems inadequately identify inappropriate payments for
follow up.

@ States did not request matches for all members of a household who had
received benefits.

© The Food and Nutrition Service (FNS) did not establish uniform dollar
limits or tolerances to help focus follow up on cases with significant
potential for overpayment.

© States need to make more effective use of computers for the matches.

@ Caseload coverage and dollar tolerance criteria for follow up work merit
attention.

@ The Food and Nutrition Service should provide more guidance for
implementing wage match systems. No specific guidance had been
provided automated matching, caseload coverage, dollar tolerances (i.e.,
what should be considered in developing a good matching system).

@ Caseworkers had not received adequate training and guidance on how to
perform the necessary follow up casework.

e Either no action or inappropriate action was taken on most cases.

MAJOR
RECOMMENDATIONS

@ Direct the Food and Nutrition Service to provide guidance setting forth
specific expectations regarding State follow up actions, including details
on how wage match follow up work should be conducted, timeframes for

Page 58


American Public Welfare Association

ae _— —

American Public Welfare Association, After implementation: State Experience
with the Income and Eligibility Verification S) ystem (IEVS), Final Report,
Washington, D.C., April 1989.

BACKGROUND

The National Council of State Human Service Administrators (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
FINDINGS

States think the concept of IEVS is useful, but they encounter major
problems that limit the full implementation of its requirements. These
problems include:

1) Insufficient time for processing match information;

2) Limited staff available to handle the increased workload;

3) Difficulties in meeting security requirements for IRS data; and
4) Unreliability of several Federal databases.

The IEVS matches should be optional (allowing States to match 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 to:

Make optional the requirement for States to match against the Social
Securiity Administration's Beneficiary Earnings Exchange Record
(BEER) data;

Permit targeting of match data for applicants as well as for recipients;

Allow States more flexibility for having systems that track the
processing of matches;

Make optional the requirement for States to initiate matches during
the application period;

Drop the requirement that States follow up on matches within 45
days; and

Make optional the requirement for States to develop standard
computer matching formats.

Federal agencies involved with IEVS should take the following nonreg-
ulatory actions:

- Improve the reliability of the Federal data, provide more timely
response to State match requests, revise security requirements for the

Page 60


American Public Welfare Association

Internal Revenue Service data, provide States with access to other
Federal data and with more advanced notice of software changes in
Federal data files, and promote online computerized data exchange
systems such as the Wire Third Party Query system being developed
by the Social Security Administration;

- Improve interagency coordination through such actions as
development of uniform regulations and appointment of Federal
coordinators for IEVS;

- Revise the guidelines for the Federal quality contro! review process to
clarify use of case data; and

- Undertake a thorough review of IEVS to determine whether or not
current agency requirements are consistent with the goals envisioned
for the system by Congress.

Page 61


U.S. Department of Agriculture

The primary purpose for this report was to document the extent of computer
matching in local Food Stamp programs. This included identifying which
systems are used for what purposes; how key matching procedures are
carried out for systems considered to be more useful; and examining certain
aspects of computer matching that are of particular policy interest. More
specifically, the type of information collected dealt with system
documentation, tracking and monitoring, and data availability process,
policies, and activities.

!t should be noted that the first phase interviews were conducted prior to the
implementation date of the Income Eligibility Verification Systems (IEVS)
regulations. The second phase interviews documented additional systems
created by State or local agencies in response to the new regulations
implemented October 1, 1986.

MAJOR.
FINDINGS

Extent of Computer Matching in Local Food Stamp agencies

© 325 distinct computer matching systems are used in the 172 Food Stamp
agencies; this averages to four or five different systems per office.

@ Only one Food Stamp agency reported no computer matching for Food
Stamp recipients.

@ No front-end matching was done in 26 percent of the local Food Stamp
agencies.

@ Only one Food Stamp agency did not conduct ongoing matching.

@ The most common data sources used by the local offices for matching
are unemployment insurance files (33 percent of all Food Stamp
agencies); wage records (32 percent); Supplemental Security Insurance
(SSI) benefits (19 percent); Social Security (SSA) benefits (15 percent);
and AFDC files (12 percent).

@ 12 percent of the local Food Stamp agencies have developed local
computer matching systems (which usually link local property, tax, or
school records).

@ 12 percent of the systems used are for front-end matching only; 43
percent are for ongoing matching; and 46 percent are for both front-end
and ongoing matching.

Characteristics of Effective Matching Systems

@ Online systems are preferred over batch systems for front-end matching.

e@ There is an indication that online systems are becoming increasingly
important for ongoing matching.

Page 19



PREFACE

The purpose of this report is to provide a reference resource
regarding literature published about computer matching and State
Income and Eligibility Verification Systems (EVS).

The Income and Eligibility Verification System was established
by Congress under the 1984 Deficit Reduction Act to reduce
errors in determining eligibility and benefit levels in the Food
Stamp, Aid to Families with Dependent Children, and Medicaid
programs. The implementing regulations require State agencies
to compare income reported by program applicants and recipients
with income from several data sources: 1) Internal Revenue
Service data on interest, dividends, and other types of unearned
income; 2) Social Security Administration data for Retirement,
Survivors, and Disability Insurance benefits, Supplemental
Security Insurance benefits, and annual earnings; and 3) State
quarterly wage reports and unemployment insurance benefits.
States are required to complete follow up within 45 days on at
least 80 percent of all IEVS information received on applicants
and information targeted (selected) for review on recipients.

In our previous studies of IEVS systems, we found that State
IEVS practices and levels of matching success and efficiency
varied considerably. Nevertheless, the most promising approach
to improving the cost effectiveness of matching systems seems to
be through the initiative and experimentation conducted by
individual States. For this reason, we decided to compile what
information we had gathered regarding computer matching and
TEVS into an easy to read reference document and share it
among the States and Federal agencies. By doing this, we hope
to stimulate discussions and understanding within and between
State and Federal agencies as they exchange views and attempt to
improve computerized eligibility verification.

This is one of two reference resources on IEVS. The companion
report, IEVS State Profiles, provides detailed information
regarding IEVS programs operated within each State.





U.S. Denortreent of Apriculture

—————

© Claims collection is as follows: organizational structure, integration with
other assistance programs, staffing and staff training, summary reports,
time limits for processing claims, and claim referrals - identification of
overissuances, claims investigation, use of investigation methods,
prioritizing claims investigation, characteristics that increase likelihood of
investigation, claim establishment, collection of payments, follow up for
delinquent claims, alternative collections, selection of cases for
alternative collection, suspension of claims, termination of claims -
policies and responsible staff, termination of claims.

@ There are no recommendations.

MAJOR
RECOMMENDATIONS *

Synthesis Re rt, Contract Number 53-3198-5-51, Abt Associates, Inc.,
Cambridge, Massachusetts, November 7990.

BACKGROUND Authorized by Federal law, the Food Stamp program provides benefits to

nearly 20 million people. Using a common set of national guidelines and
regulations, States operate the Food Stamp program. However, these
general rules leave considerable discretion to the States resulting in operating
procedures which vary between States, sometimes narrowly, sometimes
broadly. The Food Stamp Program Operations Study (FSPOS) was initiated
to fill some existing gaps in the information routinely available to the Food
and Nutrition Service (particularly, to provide descriptive information about
selected areas of States' program operations). The program operations study
was conducted in three phases. The first consisted of a State census in six
operational areas (automated certification systems; computer matching;
monthly reporting; claims collection; quality control; and job search); the
second consisted of surveys of local agencies in two of the program
operations areas, computer matching and claims collection; and the third
consisted of building on the first two phases by providing in-depth
assessments of specific aspects of program operations.

The rationale for this current report is the perceived need to summarize more
analytically the information gathered from the study, and to synthesize the
study information around management issues of current or potential concern
within the Food Stamp program. The report assesses the adequacy of
currently available information for each of the issues presented in terms of
the data needed to make a reasonably informed decision among the
competing alternatives; a summary of the available research in light of those
data needs; and suggested future research priorities based on the shortfall
between the needed data and available research.

Page 8


TABLE OF CONTENTS

PREFACE
INTRODUCTION ........ 0.0.00 ccc cece eee eee 1
LITERATURE SUMMARIES ............ 0.0.00 cece eee eee 3

DEPARTMENT OF AGRICULTURE
Food and Nutrition Service - Office of Analysis and Evaluation

State Census of Income and Eligibility Verification System (IEVS) Procedures.
Mathematica Policy Research, Inc., March 1992... 2.2... cece ee eee 3

Profiles of States’ Food Stamp Program Operations: Update--Appendix.
Research and Evaluation Associates, Inc., January 1991... .

Synthesis Report. Abt Associates, Inc., November 1990 8

Computer Matching: A Review of Exemplary State Practices. The Urban

Institute, November 1990... 0... eee teen eee 14

State and Local Computer Matching Operations. The Urban Institute,

November 1990 2... 2... eee eee cee eee 18

Preventing Fraud and Abuse in the Food Stamp Program: The Use of

Computer Assisted Verification of Applicant-Reported Information.

Abt Associates, Inc., February 1988... 0. cee eee 21

Report on the Census of State Operations: Computer Matching. Urban

Institute, February 1987 . 2... 6. tenes 22

Report on the Census of State Operations: Automated Certification Systems.

Mathematica Policy Research, Inc., February 1987 .... 0.0.2.0... 0.00 cece eee 25
Office of Inspector General (OIG)

Cost Effectiveness of Food Stamp Program Use of Immigration and Naturalization

Service Systematic Alien Verification for Entitlement System, Food and Nutrition

Service, September 1992... 2... 6. eee eee eee 29

Computer Match of Federal Employees, Food and Nutrition Service, March 1991 ........ 29

New Jersey Department of Human Services--New Jersey Wage Match--Trenton,

New Jersey, Food and Nutrition Service, September 1990 ................0.000- 30

New York City Wage Match--New York, New York, Food and Nutrition Service,

September 1990 2.2.2... cee nee 31

Food Stamp Program--Implementation of Income and Eligibility Verification

System Nationwide, Food and Nutrition Service, March 1990 .................00. 32

Implementation of Income and Eligibility Verification System--Texas

Department of Human Services, Food and Nutrition Service, February 1990 ........... 33

Computer Matching of Food Stamp Participation Records with Federal Personnel

Records Detected Overissuances, Food and Nutrition Service, October 1989 ........... 34

Food Stamp Program--South Carolina Department of Social Services--Error
Reduction, Food and Nutrition Service, May 1989 ............. 0.00000 c eee 34


U.S. Department of Agriculture

a Gevvice

Monthly Reporting research requires an examination of the effect of monthly
reporting on errors.

i
© gathering data that will allow the relative cost of adapting existing
systems and creating new ones to be evaluated in varying situations;

© a systematic inventory of the innovative automated features being used,
or planned for use, by States;

gathering data on the different factors that influence the relative
efficiency of information input/output, especially as related to the
eligibility workers;

examining how automated data is replacing case folder data in local
agencies;

gathering data on perceived automated certification system benefits more
broadly and systematically;

using some intermediate or proxy empirical measures to determine the
extent to which the perceived benefits are actually occurring; and

© developing a detailed understanding of both the possible and necessary
linkages between the automated certification systems and the systems
and procedures used in computer matching, claims collection, and

monthly reporting.

Quality Control
© defining more precisely the State management purposes that might, or
should, be served by a quality control system, and

examining State variation in quality contro! procedures and arriving at
solid, quantitative estimates of their effects on error rates, both State-
reported and regressed.

Computer Matching: A Review of Exemplary State Practices, Contract
Number 53-3198-5-51, The Urban Institute, Washington, D. C., November
71990.

BACKGROUND

The Food and Nutrition Service sponsored an examination of computer
matching systems and five other areas of Food Stamp program operations
{automated certification systems, claims collection, monthly reporting, quality
control, and job search activities). The results of these five other topic areas
are presented in companion reports. This study was conducted by

Page 14


Department of Health and Human Services

OFFICE OF
INSPECTOR GENERAL

STATE INCOME AND ELIGIBILITY
VERIFICATION SYSTEMS (IEVS)

Summary of Literature

wvices
a JUNE GIBBS BROWN
Fy C Inspector General

OCTOBER 1994
OEI-06-92-00082



U.S. Denartment of Agriculture

The social security numbers (SSNs) of 6.5 percent of the State agencies’
recipients were not recorded in the automated Food Stamp system. Yet,
the SSNs were generally in the case files and simply had not been entered
into the system. Such lack of SSNs precluded computer matches to
verify income for those residents statewide.

The State agency did not take prompt action to establish claims for
overissued food stamps, resulting in a statewide backlog of about 87,000
potential claims estimated, at about $18.3 million pending overissuance
and fraud determinations. This was because the responsible claims
workers were assigned other duties.

The State agency overclaimed reimbursement, at the enhanced-funded
fraud control rate, for claims workers. This was a result of 1) the State
agency not having an effective cost allocation system accounting for time
claims workers spent on established intentional program violation cases,
2) not allocating claims workers’ costs in accordance with the fraud
control plan, 3) not adjusting cost accounting records when claims
workers were assigned other duties, and 4) restricting enhanced-funding
claims to time workers spent on intentional program violations.

MAJOR
RECOMMENDATIONS

‘|

Determine whether fiscal adjustments and recoveries are appropriate for
the over-claimed administrative cost cited by the State agency. If so,
require the State agency to determine the amounts of improper claims for
each year and make the necessary adjustments.

Recommendations specific to the State agency to:

1) Include in the action plan development process high error-prone
eligibility factors and households identified by quality control analysis,
as well as known deficiencies and those identified by program
reviews;

2) Provide training and written guidance to eligibility workers and
supervisors on the proper uses of the IEVS, and improve
administrative controls to assure that the workers promptly process
IEVS information;

3) Develop and implement a specific plan to timely work claim referrals
and to eliminate the current referral backlog; and

4) Establish a system to accurately allocate to enhanced-funded fraud
control activities only those costs attributable specifically to claims
development and collection of specific cases, and to monitor county
office compliance with cost accounting procedures.

Page 37



INTRODUCTION

PURPOSE

This report provides a summary of known literature related to State implementation or
operation of State Income and Eligibility Verification Systems (IEVS).

BACKGROUND AND METHODOLOGY

The Income and Eligibility Verification System was established by Congress under the
1984 Deficit Reduction Act to reduce errors in determining eligibility and benefit levels in
the Food Stamp, Aid to Families with Dependent Children, and Medicaid programs. The
implementing regulations require State agencies to compare income reported by program
applicants and recipients with income from several data sources: 1) Internal Revenue
Service data on interest, dividends, and other types of unearned income; 2) Social Security
Administration (SSA) data for Retirement, Survivors, and Disability Insurance benefits,
Supplemental Security Insurance benefits, and annual earnings; and 3) State quarterly
wage reports and unemployment insurance benefits. States are required to complete
follow up within 45 days on at least 80 percent of all match information received on
applicants and information targeted (selected) for review on recipients.

During the course of conducting our most recent IEVS review (Reforms Needed in
State Income and Eligibility Verification Systems (OEI-06-92-00080)), we reviewed a
significant amount of literature related to IEVS implementation or computerized eligibility
verification we believe could be beneficial as a reference tool for Federal and State
agencies responsible for IEVS oversight. During our discussions with States, we found
most State IEVS coordinators (a generic term we use to describe the person designated in
the State as overseeing or integrally involved in State IEVS processes) interested in any
information we were able to gather about IEVS. This information is valuable as it
provides an overview in chronological order (most recent first) of reviews conducted by
Federal agencies.

The literature summaries contain the major findings and recommendations of the selected
studies or reports pertaining to the implementation of or processes related to IEVS. Also
included are various reports concerning vulnerabilities or issues of concern related to

either computer matching processes or Federal databases involved in computer matching.

We hope this report provides readers with a better understanding of how IEVS operates
and the areas of controversy and concern arising from its implementation.

Following are the summaries of the reports reviewed. Reports are
grouped by the agency preparing the study and begin with the most
recent studies by the agency.

Page 1


Computer Matching--Assessing Its Costs and Benefits. Briefing Report to the
Chairman, Subcommittee on Intergovernmental Relations and Human Resources,
Committee on Government Operations, House of Representatives, November 1986 ...... . 55

Computer Matching--Factors Influencing the Agency Decision-making Process.
Briefing Report to the Chairman, Subcommittee on Intergovernmental Relations and
Human Resources, Committee on Government Operations, House of Representatives,

November 1986 2.1... cece tee ee eee eee 56
Better Wage-Matching Systems and Procedures Would Enhance Food Stamp Program
Integrity. Report to the Secretary of Agriculture, September 11, 1984.............., 58

AMERICAN PUBLIC WELFARE ASSOCIATION

After Implementation: State Experience with the Income and Eligibility Verification
System (IEVS), Final Report, April 1989... 6.0.0... 0... cee cece eee cece 60


U.S. General Accounting Office

estimated the most significant costs, such as collections and recovery of
overpayments.

© All 14 of the agencies that participate in computer matching programs
have established the required DIBs. However, the established boards
have not disapproved any matches because of the act's cost-benefit
requirements, even when those analyses were deficient or, as in the case
of two matches in one State, clearly wrong.

MAJOR
RECOMMENDATIONS

Recommendations direct the Office of Management and Budget to:

© Expedite the publication of minimum standard criteria for cost-benefit
analyses and specify which cost and benefit elements must be included;
and

Instruct agencies to establish procedures to track costs concurrently and
measure costs and benefits retrospectively to determine whether benefits
are actually achieved.

Welfare Benefits--States Need Social Security's Death Data to Avoid
Payment Error or Fraud. Report to the Secretary of Health and Human
Services, GAO/HRD-91-73, April 1991.

BACKGROUND

Both the Federal and State governments spend billions of dollars in welfare |
benefits through State-administered programs such as AFDC, Food Stamp,
Medicaid, and State general assistance programs. When beneficiaries die, |
benefit payments related to that individual should be terminated.

The social security number (SSN) is a unique identifier that is used to link
data files for determining benefit program eligibility. States are required to
submit the SSN of welfare applicants and recipients to the SSA for
verification. The Social Security Administration (SSA) has an opportunity to
help States quickly identify beneficiaries who may have died, but whose
deaths may not have been reported to the State welfare agencies. Further,
SSA is required to collect and maintain death information, and is authorized
to share such information with State agencies. However, when verifying
SSNs for States, SSA does not tell the requesting State agency whether it
has recorded dates of death for the people assigned the numbers.

The objectives for this review were 1) to determine whether SSA had dates
of death recorded in its files for SSNs verified for States; 2) whether benefit
payments were made after the recorded dates of death for the verified SSN;
and 3) to determine the feasibility of using SSA's Enumeration Verification
System to alert States to SSNs being verified for persons whose deaths were
recorded in SSA files.

Page 50


TT Domantmenne nf Anviaultee “7?

MAJOR
RECOMMENDATIONS

e@ Require Foad and Nutrition Service regional offices to strengthen efforts a
to ensure State compliance by following up and enforcing sanctions; a

e Determine what, if any, additional measures are needed to ensure that |
pi

States comply with the required time frame for follow up on match
information; ,

Provide States with written guidelines on targeting that defines uniform
limits or the elements to be included in the States’ plans for targeting;
and

Require regional offices to review States’ targeting plans.

Implementation of Income and Eligibility Verification System--Texas
Department of Human Services, Food and Nutrition Service, Audit Report
27013-46-Te, OIG Southwest Region, Temple, Texas, February 1990.

—

BACKGROUND

This report reviews the Texas Department of Human Services’ effectiveness
in administering the Food Stamp program as it relates to the implementation
of the Income and Eligibility Verification System. The objectives were to
determine if adequate controls had been specified at the State agency and to
determine the extent to which States are complying with IEVS program
regulations.

@ The State agency's income and eligibility verification system was not

providing for all mandatory matches. The State agency was not matching |
with the IRS. :
be
The State agency is not clearing matches within the required 45-day limit, J:
a backlog exists. uF
RECOMMENDATIONS @ The State agency is required to reemphasize efforts to eliminate the '
backlog. Ly
ft
ie



U.S. Denartment of Agriculture

© The majority of Food Stamp agencies routinely record computer matching
information in hardcopy case records; about 20 percent also enter
information about computer matching onto an automated case record

certification system.

@ The primary concern about implementation of the new IEVS regulations
was over the increasing workload of eligibility staff.

MAJOR
RECOMMENDATIONS

The report gives no recommendations.

Preventing Fraud and Abuse in the Food Stamp Program: The Use of
Computer Assisted Verification of Applicant-Reported Information, Contract
Number 53-3198-6-69, Abt Associates, Inc., Washington, D. C., February

1988.

BACKGROUND

This review assessed how the computerized systems verifying application-
reported information have been utilized in nine site:
was to evaluate the effectiveness of computer verification of applicant
information for information such as unreported income.

The applicant matching

MAJOR
FINDINGS

The discrepancies identified through applicant matching were relatively low.
Nearly six percent of screened applicants were found to have a discrepancy
between applicant-reported information and the data available from an
external source. Over three percent of the total number of applicants lead to
a change in benefits, 2.3 percent received reduced benefits, and one percent
had their eligibility denied altogether. Even though this overpayment error
was low, these errors could have been detected at the time of application.
Once the mechanism is put in place to do computer verifications, it is very
inexpensive to screen applicants against the available data sources. The
labor required to do the matching is quite minimal, an average of about six

minutes per application.

Page 21

Applicant matching improved the morale of eligibility workers by helping
them establish the integrity of case determination.

The availability of information about individual applicants was seen to
improve the delivery of services to clients. The information allows eligibility
workers to more easily meet case disposition deadlines and documentation
requirements. The information can identify alternative sources of income.
The computerized databases can be a way to save applicant's time by



U.S. Department of Heatth ond Human Services

Bonds ee kp actor General

Reforms are needed in State Income and Elic Verification Systems
(IEVS), OEl-06-92-00080, Washington, ., July 1994.

Verifying information supplied by AFDC, Medicaid, or Food Stamp applicants
and recipients with other sources through computer matching helps States
better identify individuals not eligible for public assistance or receiving
incorrect benefit payments. The Deficit Reduction Act of 1984 expanded
matching requirement's by requiring State Income and Eligibility Verification
Systems (IEVS), under which States are required to routinely match AFDC,
Medicaid, and Food Stamp applicant and recipient-supplied information,
against several other data sources: Internal Revenue Service (IRS) data on
interest, dividends, and other types of unearned income; Social Security
Administration (SSA) data concerning Retirement, Survivors, and Disability
Insurance benefits, Supplemental Security Insurance (SSI) benefits, and
annual earnings; and State wage reports and unemployment insurance
benefits. States must complete follow up within 45 days on at least 80
percent of all IEVS-supplied information on applicants and on selected
{targeted) information for review on recipients.

The purpose of this study was to assess the current status of States’ IEVS.
The review consisted of interviews and a survey of State officials
knowledgeable about their State's IEVS process. To supplement the
interviews, the Office of Inspector General (OIG) conducted onsite visits to
five States and one local office in each of these States. Additionally, the OIG
reviewed State documentation of IEVS procedures, State-supplied IEVS
statistics, and Federal IEVS regulations.

MAJOR.
FINDINGS

e@ Several States are not utilizing all required IEVS sources of information
concerning applicants and recipients.

@ The majority of States report one or more IEVS matches are not cost
effective. Yet, such conclusions are based, not on cost-benefit studies,
but on program experience or speculation as, to date, little guidance has
been provided States on how to conduct cost-benefit analyses.

@ While the majority of States report reliability and accuracy problems with |
the data from one or more IEVS matches, no specific match was
consistently perceived as a problem area by a majority of States.

e@ States want more flexibility implementing IEVS requirements to
accommodate internal State pressures such as changing workloads,
staffing, and program priorities. Such flexibility would also extend to
determining which IEVS matches to conduct, when to conduct those, and
how quickly to follow up on match results.

Page 38


U.S. Denortrent of Agriculture
bocu and Nuuition Service

—

© Local staff have primary responsibility for initiating front-end matching,
tegardless of whether the matching is online or batch.

®@ Matches are more likely to be performed more frequently by the more
effective systems.

1) 90 percent of the effective front-end online systems are used for
immediate or daily matching.

2) 44 percent of the effective front-end batch systems are used for
daily or weekly matching.

3) More than half of the effective ongoing batch systems are used for
monthly matching.

e@ Some effective systems (about 30 percent) prioritize follow up activities,
targeting certain cases with discrepancies.

1) For front-end matching, expedited service cases with discrepant
information are often reviewed before other applicants.

2) For ongoing matching, priority is given to active cases, cases with
relatively high benefit levels, and cases with recent employment or
earnings identified.

Key Operational Issues Related to Matching

® Variation exists among the local offices as to their definitions of what
constitutes a “hit" for follow up purposes: about half the matching
systems use the standard discrepancy definition; about half use a broader
definition (e.g., any case with any information in the matched database);
and a few systems use narrower definitions based on case prioritization
policies.

About 16 percent of all Food Stamp agencies do not pursue discrepancies
if the case is inactive when the match information is received.

Nearly all Food Stamp agencies take some action on discrepancies within
the required 30 days.

The most common methods for reconciling discrepancies are through
reviews of the case file or application forms; telephone calls to the
applicant or recipient; in-office interviews with the applicant or recipient;
home visits; and contacts with a third party (e.g., employers).

The vast majority of the identified discrepancies can be resolved by
reviewing the case file.

Page 20


U.S. General Accounting Office

Of these, matches most likely to provide insights on cost-benefit
methodology were further identified. An interview guide was used to
determine how each match developed and the factors or issues considered in
deciding to perform the match. The guide also collected information on the
general practices, procedures, and processes applied to proposed matches.
More than 90 officials from nine agencies were contacted. Analysis was
restricted to a broad description of agency decision-making processes and
related factors. Conducted as part of assessment Concerning computer
matching costs and benefits. (See

and Benefits.)

al

—

MAJOR.
FINDINGS

A set of factors was identified as considerations in the match decision-
making process. No agency documentation exists providing examples of
specific criteria that had been, or could be, used by decision-makers for
evaluating whether a proposed match should be considered.

There is limited documentation on the computer-match decision making
process.

@ Wide variation in the formality of procedures to structure the match
decision-making process exists.

e@ Three factors influence the decision to perform a match:

1) the current climate or environment for encouraging computer
matching (e.g., concern over fraud, abuse, and waste; technological

developments; reports of successful matches; and key organizations }
recommending computer matching); wl
2) the sources of the match initiatives (e.g., matches legislatively "Y
mandated; recommendations from oversight groups; requests from id

other agencies; and internal agency initiatives); and

3) those factors concerning justification for a match and the agency's
technical capability to implement it (e.g., automatic data processing
resources; sufficient staff; cooperation among agencies; data quality 1
and security; capacity to follow up on hits; compliance with applicable | H
legislation and regulations; support and justification for implementing
the match; rationale or reason underlying the match idea; cost versus
benefit; relationship of proposed match to other matches; potential A
response to the match). i

MAJOR
RECOMMENDATIONS

The Briefing gives no recommendations.

Page 57




U.S. Department of Agriculture

Reasonably good baseline information exists on the amount of eligibility
worker time devoted to monthly reporting.

There is some limited information about three policies which might limit
eligibility worker time - automation, making clerical staff responsible for
some monthly reporting functions, and assigning longer certification

periods to monthly reporting cases.

There are no solid estimates as to how large a reduction in eligibility
worker time can be achieved with each strategy and no details on how
best to achieve the reductions.
There is a complete absence of information about whether time-saving
strategies can be implemented without sacrificing monthly reporting's
ability to control errors.
Automated Certification Systems (ACS)

© Adaptation of existing systems is a fairly common practice (though the
frequency of adaptation may have increased in the recent past).

Adaptation appears to be most successful in small and medium-sized
States with relatively uncomplicated bureaucracies and computer
systems.

Hindering successful adaptation are the need to interface with specialized
systems in other programs and limited State computer capacity.

Adaptation, generally, appears less costly than new development.
A number of automated features, beyond those required by the Food and
Nutrition Service's Model Plan, are being used in State certification
systems.

@ The extent of the use of any of the automated features is unknown.

© Most new automated features are ad hoc responses to staff problems and
were apparently facilitated by flexible, advanced computer systems.

e@ Costs and tradeoffs for developing new automated features is unknown.

© Eligibility workers play a substantial role in preparing data for entry into
the system.

@ Eligibility workers may increasingly be responsible for actually inputting
the data, especially where they have their own terminals.

© Most certification systems have ways of alerting eligibility workers about
special problems.

Page 11

pone
Aeveerined



U.S. Department of Health and Human Services
Mee OF Aasisient Sucreiury fur Management and Budget

The Federal and State governments should work together to develop
Program performance measures and mechanisms for collecting and
reporting information on match outcomes.

The Federal government should examine the time standards imposed on
the States for disposition of match information.

A brief survey of all States should be conducted to determine the nature
and extent of performance data available nationwide and to gather
estimates of the time involved in certain matching and processing
activities.

Federal efforts to evaluate IEVS and to further its technical development
should be supported through a task order mechanism.

Page 48


U.S. General Accounting Office

© Most States will need to change systems in order to meet the
safeguarding requirements for Federal tax data. f

MAJOR
RECOMMENDATIONS

The Fact Sheet gives no recommendations.

Computer Matching--Assessing Its Costs and Benefits. Briefing Report to the
Chairman, Subcommittee on Intergovernmental Relations and Human
Resources, Committee on Government Operations, House of Representatives,
GAO/PEMD-87-2, November 1986.

The Chairman of the House Subcommittee on the Intergovernmental
Relations and Human Resources Subcommittee of the Committee on
Government Operations-requested a report concerning the methods used for
assessing the costs and benefits of computer-matching projects.

Increasing concern for the detection and prevention of fraud, waste, abuse,
and error in government programs has stimulated the development of
techniques using information technology to detect and prevent these
problems. Such techniques include computer screening, front-end matching,
and computer matching which is the identification of similarities or
dissimilarities in data found in two or more computer files. Such
identifications are often used to determine inappropriate payment of public
benefits.

Computer matching has raised the concern of whether particular matches
actually achieve the cost savings or cost avoidance anticipated. Government
agencies are not formally required to analyze for such cost and benefits.
Further, in 1982, the Office of Management and Budget (OMB) eliminated
cost-benefit analysis as a prerequisite to a match and streamlined reporting
requirements. However, in 1983, OMB did develop a computer match
checklist for agencies initiating matches subject to the Privacy Act to ensure
compliance with the procedural regulations of the act. While it did include an
item requesting an estimate of the likely costs and benefits of a match, it did
not specify what factors, or how, such analysis should be conducted. Also,
the President's Council on Integrity and Efficiency advocates conducting
cost-benefit computer matching analysis and has provided some general
guidance on how to perform such analyses.

MAJOR.
FINDINGS

e@ Three broad groups of entities potentially are involved in assessing the
costs and benefits of a government computer match. These include:

1) government or matching agency, the source agency, and the justice
system;

Page 55



U.S. Department of Agriculture

ve Sesion

Only 7 systems provide flags to prevent inappropriate switches between
utility allowances, based on a standard versus an actual cost.

37 certification databases provide some indication of outstanding claims
against a household.

47 agencies use system reports to eligibility workers to provide reports on
certifications due (usually monthly).

42 agencies use system reports to provide computer match results.

30 systems are able to provide overall caseload reports on outstanding
transaction entry errors.

Most (50) agencies use their systems to print monthly report forms, and
most can generate notices of certification period expiration (42) and
monthly reporting filing warnings (37).

@ 33 systems can produce automated notices of certification action.
Anticipated Systems Changes

e@ 45 of the 58 systems are planned for enhancement; 36 of these were
scheduled for completion by the end of 1987.

11 agencies will implement completely new certification systems; five of
these will be adaptations of the system used by Alaska (already adopted
by North Dakota and Mississippi).

Planned enhancements will make automated eligibility determinations and
benefit calculations nearly universal for the State agencies.

Generally, older systems are more likely to be replaced; 8 of 22
implemented before 1980 will be replaced, with only 3 of 36 dating after
1980 slated for complete replacement.

MAJOR i i
RECOMMENDATIONS The report gives no recommendations.

Page 28


U.S. Denartment of Apriculture

ion for Entitlement System,
Food and Nutrition Service, Audit Report 27013-47-Te, OIG Southwest

Region, Temple, Texas, September 1992.

BACKGROUND

An audit was done on the tmmigration and Naturalization Service (INS)
Systematic Alien Verification for Entitlement (SAVE) system by State agency
to detect illegal aliens who apply for Food Stamp benefits. A State can
request a waiver from using the alien verification system, if their verification
can be done in a more cost effective way.

|

MAJOR.
FINDINGS

The alien verification system was not cost effective when used by State
agencies to detect illegal alien applicants applying for Food Stamp benefits.
The number of illegal aliens who were detected by the system was so few
the State could not provide numbers. It takes 12 months before a refugee
appears in the alien verification system.

Illegal aliens rarely apply for benefits. It is more cost effective for States to
continue using their procedures to detect illegal aliens applying for benefits.

MAJOR
RECOMMENDATIONS

e@ Stop funding alien verification system administrative costs for the Food
Stamp program, because the system is not cost effective.

e Cancel requirements for New York and Massachusetts to implement the
system.

e Grant waivers requested by States without making costly or impossible
demands for data on the State agency.

nployees, Food and Nutrition Service, Audit
Te, OIG Southwest Region, Temple, Texas, March 1991.

BACKGROUND The review was to detect Food Stamp program participants who received
Federal income which was not reported to a State agency.
MARS e@ The audit determined that 807 Food stamp recipients were overissued.
Of the 807, 501 were considered to be potential intentional program
violations caused by the recipients’ failure to report Federal income. The
— le ee a |

Page 29

a



\
t
;

U.S. Department of Health ond Human Servi:

Bam

BACKGROUND

During fiscal year (FY) 1989, the Health Care Financing Administration
(HCFA) reviewed the operation of IEVS in the Medicaid program of 17
States.

MAJOR
FINDINGS

© States continue to make significant progress in implementing IEVS;
however, they are either not strictly adhering to the Federal regulations or
are not documenting their compliance. Specifically, 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 timeframes for following up on matches, and are not establishing
recordkeeping and data management systems sufficient for reviewing the
effectiveness of IEVS.

The States' major concerns with implementation are:

1) Required timeframes for processing match information;
2) Usefulness and duplication of Federal data;

3) Costs of IEVS relative to the benefits;

4) Lack of Federal instructions for recordkeeping and reporting; and
5) Lack of coordination among Federal agencies.

MAJOR
RECOMMENDATIONS

Encourage cooperation among Federal agencies in addressing IEVS
problems through continued participation in the interagency work group;

@ Delay further State evaluations until FY 1991, so that States have time to
comply with new requirements for recordkeeping and reporting and to
review the effectiveness of the matches; and

Emphasize the importance of targeting and disseminate information on
best practices based on States' experiences.

Page 44


U.S. Department of Agriculture

- The Food Stamp program managers stated that the unemployment
insurance and wage data were the most effective.

e Pertinent data is easily accessible to both eligibility and quality control
(QC) staff through computer matching.

- Quality control reviewers should be trained to use and coordinate
with computer matching systems. (Quality control becomes the
final check to ensure hits generated by matching are properly
followed up and thus, becomes an important tool to help maintain
the integrity of the computer matching system.)

- It remains unknown as to whether computer matching actually
increases the potential for errors as workers are inundated with
additional responsibilities or whether it contributes to a reduction
in the Food Stamp program error rate by providing workers with
greater access to data for validation purposes.

Potentially Effective Management Practices

e@ Public assistance agencies should pursue establishing source agency
contacts without waiting for legislation to ease doing so.

e States should continue to examine and develop alternative ways of
reducing the amount of information workers must review while, at the
same time, maintaining the positive benefits resulting from matching.

- Screening out information not useful has been largely based on
common sense decisions. (None of the States had conducted
empirical studies to determine the relative cost effectiveness of
their targeting activities; yet, all performed such activities.)

@ Tolerances are used less often than directly targeting out certain data
items and field experiences of the eligibility workers play a role in the
setting of the tolerance levels.

@ Meeting IRS security and disclosure requirements is costly and
burdensome, especially in States where matching involves some manual
transfer of paper output:

1) States have had to dedicate up to 50 percent of staff time to
comply with IRS regulations.

2) With local office workers responsible for maintaining the

requirements within the local office, a local level security liaison
must often be assigned within each office receiving IRS data.

Page 17



U.S. Department of Health and Human Services

oi

Evaluation of Income and Eligibility Verification Systems. Final Report for the
Office of Assistant Secretary for Management and Budget, U.S. Department

f Health and Human Services, Jack Martin & Co. (Contract No. 100-86-

0035) September 15, 1987.

This 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
FINDINGS

The States have not fully implemented IEVS in terms of (1) executing all
required matches with all the required data exchange sources and (2)
reporting the results to local public assistance offices for disposition.

For those matches that have been implemented, the States have little
information on program performance (i.e., 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 suggests that IEVS is
important for reducing erroneous payments, deterring clients from
misreporting income, and boosting the confidence of eligibility 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.

The effort and costs involved with IEVS are influenced by the number of
matches conducted, the quality of the data received from the required
matches, the volume of match information referred to local offices for
disposition, and the procedures followed by the State and local offices in
processing the information received.

Page 47

oe)

weserpaa!


U.S. General Accounting Office

clients or individuals with a specific relationship to the programs
involved in the match; and

3) the general population made up of the general public and subgroups
with specific relationships tying them closely to the match.

@ The major costs to matching and source agencies are the salary and
fringe benefits of personnel involved in all phases of the match process.

@ The major benefits to the matching and source agencies are the recovery
of overpayments and debts, the avoidance of future overpayments,
improvements in program operations, deterrence, and law enforcement.

© Overall, the review indicated that when agencies perform cost benefit
analyses, there was not a full accounting of costs and benefits. Some
agencies’ analyses did not include all the costs and benefits to matching
agencies that could reasonably be measured or estimated. Further, of
those analyses of matches which extended over a lengthy period of time,
none used discounting in evaluation of the analyses.

The information available was not adequate to support a sound decision
about whether specific matches were, or might, be monetarily cost-
beneficial.

The performance of more rigorous cost-benefit analyses could more firmly
establish and monitor the magnitude of the benefits obtained for the
resources expended.

No recommendations were presented in this report.

Computer Matching--Factors Influencing the Agency y Decision-making
Process. Briefing Report to the Chairman, Subcommittee on
Intergovernmental Relations and Human Resources, Committee on
Government Operations, House of Representatives, GAO/PEMD-87-3BR,
November 1986.

BACKGROUND

The chairman of the Intergovernmental Relations and Human Resources
Subcommittee of the Committee on Government Operations requested a
review of the criteria used by Inspectors General in their determinations of
whether a particular computer match should be conducted.

The objective in doing this review was to provide a general description of the
computer match decision making process and the factors that are considered
in making the decision to perform a match. During the initial interview

Process, information was gathered on approximately 40 match operations.

Page 56





U.S. Denortment of Agriculture

v + Os Mikpectar General

Food Stamp Program--Alabama Department of Human ources--Error
Reduction, Food and Nutrition Service, Audit Report 27555-3-At, OIG
Southeast Region, Atlanta, Georgia, May 1989.

BACKGROUND

Alabama Department of Human Resources administers the Food Stamp
program through local offices in 67 counties where applicable staff determine
the eligibility and the amount of benefits issued to participating households.
The FNS funds the total cost of Food Stamps; 50 percent of the State
agencies' administrative costs and 75 percent of its fraud control expenses
are also reimbursed. The State agencies’ average monthly caseloads in FY
1987 (of 161,000 households) included over 457,000 family members. The
FNS requires State agencies to develop statewide and local level corrective
action plans that address overissuance causal factors disclosed by quality
control findings and deficiencies cited by audits, investigations, FNS and
State agency program evaluations, and other sources. This audit's objective
was to evaluate the adequacy and implementation of the State agency's
action plan for reducing certification errors and managing claims.

Administrative controls over the development and implementation of the
action plans, as well as the accounting for enhanced-funded fraud control
costs, were evaluated through a review of Food and Nutrition Service and
State agency program policies and procedures, analysis of management
evaluation reviews, evaluation of quality control findings, assessment of
action plans, review of recipient case files, tests of accounting records, and
interviews with responsible program officials. Primarily directed at fiscal year
(FY) 1988 program operations, with emphasis on corrective action planning
based on FY 1987 quality control findings, other periods were included as
deemed necessary.

The audit was conducted in several locations, including the Food and
Nutrition Service's Atlanta regional office, Montgomery Department of
Human Resources, and county offices of Jefferson, Montgomery, Baldwin,
Escambia, Madison, and Mobile.

MAJOR.
FINDINGS

@ The State agencies’ corrective action plans did not target eligibility
factors and household characteristics with high error-prone ratings and
did not address longstanding problem areas.

@ The State agency did not adequately use the quality control review
analysis and findings reported by management reviews and other sources
when developing the corrective action plan.

© Eligibility workers were not using the income information to verify
household eligibility and benefit levels. This lack of use was because of
ineffective or unenforced State agency and county controls.

Page 36


U.S. Department of Agriculture

eee G

Computer Matching of Food Stamp Participation Records with Federal
Personnel Records Detected Overissuances, Food and Nutrition Service,
Audit Report 27019-41-Te, OIG Southwest Region, Temple, Texas, October
1989.

The objective of the audit was to detect Food Stamp program participants
that received Federal income which was not reported to the State agency.
The computer match was done on retirement benefit records of the Office of
Personnel Management and the U.S. Postal Service with the Oklahoma
Department of Human Services, the Texas Department of Human Services,
and Louisiana Department of Health and Human Resources, Orleans Parish.

MAJOR
FINDINGS

The matches identified the overissuances of 197 Food Stamp coupons
totaling $145,655. Overissuances of Food Stamp coupons were caused by
individuals not reporting, or incorrectly reporting income and/or the State
agencies misapplying the income during the application process. The State
agencies are not required to computer match Federal income records with
Food Stamp program files; so, the overissuances went undetected.

The Oklahoma Department of Human Services, Texas Department of Human
Services, and Louisiana Department of Health and Human Resources are to
make overissuance determinations for the cases identified and establish
claims for overissuances, where appropriate. Where intentional program
violations are confirmed, ensure disqualifications from the Food Stamp
program.

Food Stamp Program--South Carolina Department of Social Services--Error
Reduction, Food and Nutrition Service, Audit Report 27555-4-At, OIG
Southeast Region, Atlanta, Georgia, May 1989.

The Department of Agriculture's Office of Inspector General conducted an
audit of the Food Stamp program administered by the South Carolina
Department of Social Services. The audit was to evaluate the adequacy and
implementation of the State agency's actions to reduce certification errors
and manage claims. The State agency's payment error rates were the
highest in the Nation in fiscal year (FY) 1986 and second highest in FYs
1987 and 1988.

Page 34


U.S. General Accounting Office

completing follow up actions, and the necessary management controls to a
ensure accurate and timely follow up; : |

@ Direct States to establish controls for monitoring accuracy, timeliness,

and completion of local office follow up; and
@ The Food and Nutrition Service should evaluate adequacy of State follow -
up activities as part of State level operations.reviews and validations of Hf }
management evaluation reviews. id
nN
i
it
il
}

Page 59


}
i
i

U.S. Department of Agriculture

State Data Exchange (SDX) Data: The data consist of monthly
information on Supplemental Security Insurance (SSI) benefits and are
accessed through the State Data Exchange system. The data is, at
most, one week old when received by the states.

Internal Revenue Service (IRS) Data: The data consist of annual
unearned income information, such as information on interest and
dividends, compiled by the IRS from the tax Form 1099. The data on
the previous tax year are available to the states in late summer of the
current year.

At the time of this study, all 51 states conducted matches with all of
these databases, except for the BEER and BENDEX files; three states
were not currently matching with the BEER file, and one state was not
matching with the BENDEX file. In addition to the above, the IEVS
matches, over half the States conduct matches with other databases,
i.e., Division of Motor Vehicles, vital statistics, Worker's Compensation,
and welfare files.

TARGETING

Targeting is the selection of a subset of matched cases for follow up.
The purpose of targeting is to increase the cost-effectiveness of IEVS
computer matching. Most of the States (46) have implemented a
targeting strategy for at least one of the mandated databases; 39 target
matched cases from at least three databases. The targeting strategies
employed by the States vary by database:

SWICA Match. 36 States target cases from the SWICA match. The
most common targeting strategy employed by the States focuses on
the size of any discrepancy found between reported earnings and
earnings on the wage file; that is, follow up is performed only for
cases in which the earnings on the SWICA file differ from the earnings
reported by the client by an amount greater than a specified amount.

Ul Match. 23 States target the Ul match. The most commonly used
targeting strategy for the UI matched cases is to use a discrepancy
threshold. Follow up activities are performed only for cases for which
the discrepancy between the reported UI benefit amount and the
amount on the UI file is greater than a specified amount, or there is a
discrepancy or change in the amount of benefits.

BEER Match. Most of the data is not unique to the BEER file - more
up-to-date information can be obtained from the SWICA file for in-
State employers. The most common targeting strategy used by the
States for the BEER match is to examine only data unique to the BEER
file.

Page 4



U.S. Department af Health ond Human Services

i bie Pliiwlug éutenitistation

me and Eligibility Veri

April 1988.

System (IEVS) Effectiveness

BACKGROUND

This report summarized the Health Care Financing Administration's review of
the implementation of IEVS in the Medicaid Program during fiscal yeaer
1987. The report was based on information (1) for all States, which was
summarized in compliance assessments and monthly reports prepared by the
tegional HCFA offices, and (2) for 20 States, which were selected for a
special data collection initiative.

MAJOR.
FINDINGS

@ Performance data from the States on the costs and savings of IEVS are
extremely limited, and "a significant number" of States did not provide
HCFA with all the performance data it requested. However, HCFA
reports estimated savings in the Medicaid program of more than $20
million for the six-month review period in 7 of the 20 States reviewed.

e IEVS is fully operational for the Medicaid program in only 18 of 53 States
and territories reviewed by HCFA; "virtually ali" States have implemented
IEVS to at least a minimal degree.

© Several factors limit more efficient operation of IEVS, including the
following: the failure of some States to match information from all
categories of clients with all the required data sources; some Federal data
being too old to be useful; technical problems with SSA and IRS,
including the safeguarding requirements for the IRS data; and
unreasonable time frames for following up on match information.

e In the absence of regulations implementing the 1986 Ominibus Budget
Reconciliation Act, many States are not targeting follow up of IEVS
match information to those areas likely to be most productive.

MAJOR
RECOMMENDATIONS

e Assess further the available data to determine the potential for savings
from IEVS;

@ Publish, as soon as possible, regulations or guidelines on targeting match
data for follow up;

© Resolve those operational and policy factors impeding the efficient
operation of IEVS, and clarify policy in writing; and |

e@ Examine the feasibility of requiring data reporting in order to measure the
costs and benefits of IEVS.

asl
Page 46


U.S. General Accounting Office

Computer Matching-Need for Guidelines on Data Collection and Analysis,
Report to the Director, Office of Management and Budget, GAO/HRD-90-30,
Washington, D.C., April 1990.

BACKGROUND

This review focused on the States’ data collection and reporting systems for
evaluating the cost-effectiveness of IEVS. The objectives were to determine
if these systems allow Federal and State officials to assess whether IEVS is
saving money, whether they provide State officials with sound information
for targeting follow up activity on match information, and whether the IEVS
data collection requirements conform with those of the Computer Matching
and Privacy Protection Act of 1988 (Public Law (P.L.) 100-503).

MAJOR
FINDINGS

© As of February 1990, none of the involved, responsible Federal agencies
(Food and Nutrition (FNS), Administration for Children and Families (ACF),
and Health Care Financing Administration (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 follow up
on match information, or to provide the cost-benefit analyses required.

e Regulations governing cost-effectiveness analyses were issued separately
by Federal agencies contained varying requirements.

@ Requirements for data collection and reporting under IEVS need to be
consistent with those required by the computer matching act.

MAJOR
RECOMMENDATIONS

The Office of Management and Budget should work with the Food and
Nutrition Service, the Administration for Children and Families, and the
Health Care Financing Administration to develop uniform guidelines for data
collection and reporting that will satisfy IEVS requirements and those of the
Computer Matching and Privacy Protection Act of 1988.

Page 52


U.S. Dorecpeant of Apricultn

@ PERCEIVED COST-EFFECTIVENESS.

A majority of respondents feel that the SWICA, UI, BENDEX, and SDX

} matches are cost-effective. These matches were seen as providing

I relevant, timely information and are easy to conduct. Six respondents
felt that the BEER wage match was cost-effective; 23 felt that the IRS

} unearned income match was cost-effective. Respondents commented

that the data in these files are too old to be of much use. Several
respondents did note that the unique information on the BEER and IRS
files can be useful.

MAJOR
RECOMMENDATIONS The report gives no recommendations.

Profiles of States’ Food Stamp Program Operations: Update--Appendix,
Contract Number 53-3198-0-65, Research and Evaluation Associates, Inc.,
Washington, D. C., January 1991.

BACKGROUND This report (an appendix) consists of tables presenting descriptions of State

operations in fiscal year 1990 for all 50 states, the District of Columbia,
Guam, and the Virgin Islands. The tables are presented by area in the
following order: state summary, automated certification and cases
management system, computer matching, benefit issuance, monthly
reporting, employment and training, and claims collection.

MAJOR The following is a listing of the tables presented.

© State summaries consist of the following: program organization, average
monthly caseload overlap between food stamps and public assistance,
benefit issuance, local offices, percent of local offices Providing services,
translation availability, multiservice offices/integrated functions, reducing
barriers to participation, outreach activities for targeted subgroups,
administration of outreach activities, volunteer workers involved in
program operations, administrative responsibility for volunteer activities,
temporary/nonceiling workers involved in program operations, nutrition
education, and fair hearings.

@ The automated certification and case management system area consists
of the following: system history and source, processing hardware and
terminal usage, system updates, software updates and function

automation, database modifications, States without automated case

systems, how data is stored on the database, household eligibility data
available on databases, case management capabilities, historical data

Page 6


The mission of the Office of Inspector General (OIG), as mandated by Public Law 95-452,
as amended, is to protect the integrity of the Department of Health and Human Services’
(HHS) programs as well as the health and welfare of beneficiaries served by those programs.
This statutory mission is carried out through a nationwide network of audits, investigations,
and inspections conducted by three OIG operating components: the Office of Audit Services,
the Office of Investigations, and the Office of Evaluation and Inspections. The OIG also
informs the Secretary of HHS of program and management problems and recommends
courses to correct them.

OFFICE OF AUDIT SERVICES

The OIG’s Office of Audit Services (OAS) provides all auditing services for HHS, either by
conducting audits with its own audit resources or by overseeing audit work done by others.
Audits examine the performance of HHS programs and/or its grantees and contractors in
carrying out their respective responsibilities and are intended to provide independent
assessments of HHS programs and operations in order to reduce waste, abuse, and
mismanagement and to promote economy and efficiency throughout the Department.

OFFICE OF INVESTIGATIONS

The OIG’s Office of Investigations (OI) conducts criminal, civil, and administrative
investigations of allegations of wrongdoing in HHS programs or to HHS beneficiaries and of
unjust enrichment by providers. The investigative efforts of OI lead to criminal convictions,
administrative sanctions, or civil money penalties. The OI also oversees State Medicaid
fraud control units which investigate and prosecute fraud and patient abuse in the Medicaid
program.

OFFICE OF EVALUATION AND INSPECTIONS

The OIG’s Office of Evaluation and Inspections (OEI) conducts short-term management and
program evaluations (called inspections) that focus on issues of concern to the Department,
the Congress, and the public. The findings and recommendations contained in these
inspection reports generate rapid, accurate, and up-to-date information on the efficiency,
vulnerability, and effectiveness of departmental programs. This report was prepared in the
Dallas regional office under the direction of Ralph Tunnell, Regional Inspector General, and
Chester Slaughter, Deputy Regional Inspector General. Project staff include (names listed
alphabetically and by region):

DALLAS REGION HEADQUARTERS
Leah K. Bostick Alan Levine
Kevin Golladay

Nancy Watts

For further information contact: Kevin Golladay at 214/767-3310 or 1/800/848-8960.


U.S. Department of Agriculture -

Sa —

© Of those agencies performing online updating, approximately 20 have data |
entry staff, rather than eligibility workers, initiate the automated eligibility |
processing and file updating; thus, only about 10 agencies have true
interactive eligibility processing at the disposal of eligibility staff.

e@ 37 agencies use combined FS/AFDC applications, but only 25 have |
integrated the input of the program data into a single process. a

Eligibility and Benefit Calculation Functions

f

e 40 of the 48 States and 5 of the 10 local agencies have the capacity to i
perform automated eligibility tests for at least gross and net income.

@ 48 of 53 systems can perform benefit calculations. i

13 systems perform eligibility tests in terms of the status of individuals
(e.g., work registration and student); 21 systems perform eligibility tests in
terms of resource limits.

48 of 58 systems can calculate net income and excess shelter deductions
based on the input of reported gross earnings and housing and utility costs.

About half of the systems can retrieve AFDC benefits automatically for
food stamps certification purposes.

In 19 systems, the majority of eligibility processing is performed by the
system; however, this is not true in all circumstances. Workers must, at
times, input manually determined results; in 9 of these agencies, true
overrides are possible in which eligibility workers can examine the results
derived by the system and replace them with the results they have derived
manually.

Only 7 agencies have implemented features which require workers
routinely to examine the eligibility and benefit results produced by the
certification system and to input an approval to trigger issuance.

System Output: Case Management, Monitoring, and issuance

A variety of system features are used to provide alerts or flags to eligibility
staff:

@ Most systems' databases include flags to indicate the work registration
status of individuals and, when necessary, the fact that an individual has
been disqualified for a program violation.

26 systems maintain flags that indicate outstanding verification
requirements.

Page 27


U.S. Denartenent of Agriculture a

Mathematica Policy Research, Inc., and its subcontractors, Abt Associates, |
Inc., and the Urban Institute. i

This report describes the findings from the third of the three phase study of 1
computer matching systems. The first phase consisted of structured i
telephone interviews with Food Stamp agency staff conducted in 53 States -

(including Guam, the Virgin Islands, and the District of Columbia). The |
second phase involved telephone interviews with the staff of a national ne
sample of 191 local level Food Stamp agencies. This study, the third phase,
was based on site visits to six States with computer systems thought to be j
exemplary in certain respects. i !

The primary purpose for this review was to collect information that would be | ° )

useful to other States in developing or enhancing their own computer i}
matching efforts and to provide the Food and Nutrition Service with a
detailed understanding of the administrative responses to recent Federal i}

regulations and the obstacles encountered in attempting to comply with the iJ
Federal regulations on computer matching. It should be noted that the first

phase interviews were conducted prior to the implementation date of the ny
Income Eligibility Verification Systems (IEVS) regulations. The second phase |: |
interviews documented additional systems created by State or local agencies
in response to the new regulations implemented October 1, 1986.

The six States selected to participate were Illinois, New Jersey, South

Dakota, Utah, Wisconsin, and Wyoming. State respondents include the y
person responsible for computer matching at the State level; computer i}
processing professionals; quality control staff; overpayment collection staff;

State fraud staff; and any other persons whose work activities affected, or

:
were affected by, computer matching. Local respondents included office il
managers, income maintenance supervisors, income maintenance workers,

local fraud and quality control staff, and, as appropriate, clerical staff and an]

others involved in the computer matching activities. t

Rs Issues Facing State Agencies

© Computer matching activities in the study States were highly integrated 1
with other public assistance case processing tasks:

1) Computer matching the Food Stamp program is virtually ;
inseparable from highly integrated matching for AFDC and :
Medicaid programs. a

2) Basic computer matching tasks done by workers are very similar.
3) States are concerned over the increasing difficulty when | ..

regulations for the Food Stamp program, AFDC, and Medicaid
differ, even in minor ways. -3

Page 15




U.S. Denartment of Health and Hurnan Services

application of authority further limit State flexibility and weaken
coordination among Federal programs.

@ While 37 States report IEVS could be made more efficient, 28 report
they lack the resources to support these efforts.

e@ States want access to additional Federal data they report would be
useful (e.g., Veterans Administration benefits, Federal employee salaries
and pensions, U.S. Savings Bond holdings, and State death records
maintained by the Social Security Administration).

Variations in waiver authority, among the three involved programs, and |

od

MAJOR
RECOMMENDATIONS

@ The Administration for Children and Families (ACF) and the Health Care
Financing Administration (HCFA) should use appropriate mechanisms to
address IEVS issues by examining existing IEVS requirements in each
agency; addressing the need for, and degree of flexibility to be afforded
States concerning IEVS; identifying specific areas in which coordination
between the involved oversight agencies can be improved, resources can
be consolidated or more effectively utilized to monitor IEVS, and
procedures streamlined to minimize duplication of effort and
contradictions among Federal agencies’ I!EVS policies; and engaging
outside, involved parties to the fullest extent possible as IEVS issues and
requirements are debated.

The ACF should continue to seek a rule change to allow the AFDC
program an equivalent degree of flexibility as that currently available to
the Food Stamp program regarding IEVS.

The HCFA should seek regulatory changes for the Medicaid program, to
provide IEVS flexibility equivalent to that sought by ACF for AFDC.

The ACF and HCFA should inform State public assistance agencies of
their willingness to work with them to strengthen automated eligibility
verification activity.

AFDC Pre-Eligibility Verification Me 1, OEI-04-91-00100, Washington,

D.C., August 1993.

BACKGROUND

Although States must follow Title !V-A regulations for determining AFDC
eligibility, administrative procedures vary between States. Generally,
regulations require the applicant to complete an application which includes
information verified by caseworkers, who determine eligibility and the
amount of financial assistance. Such verification activities include client
interviews, examination of documents, verification from third-party sources,

Page 39


U.S. Denartment of Apricutture

— Sen

information reported to the local agency as a result of the State-directed
matching.

However, the availability of comprehensive and systematic information on
the characteristics and capabilities of State-level or State-generated computer
matching functions now in use directly impacts future policy decisions at the
Federal level. To collect such information, the Food and Nutrition Service
(FNS) sponsored an examination of computer matching and five other areas
of Food Stamp program operations (automated certification systems, claims
collection, monthly reporting, quality control, and job search activities). The
results of these five other topic areas were presented in companion reports.
This study, the Food Stamp Program Operations Study (FSPOS), was
conducted by Mathematica Policy Research, Inc., and its subcontractors, Abt
Associates, Inc., and the Urban Institute.

This report on the first of three phases of data collection and analysis, a

census of State agencies, was based on structured telephone interviews with |

Food Stamp agency staff conducted in 53 States (including Guam, the Virgin

Islands, and the District of Columbia). The primary purpose for this first |

report was to construct a systematic profile of all State-generated computer
matching functions currently being undertaken by the States and to present
the data collected in a structured format that allowed examination of the

systems on the basis of clearly defined system dimensions. It should be |

noted that the first phase interviews were conducted prior to the

LY

j

ee

implementation date of the Income Eligibility Verification Systems (IEVS)
regulations.

MAJOR
FINDINGS

@ Inthe Food Stamp program there are 248 distinct computer matching
systems in use nationwide.

@ The major characteristics of the systems are twofold:
1) the purpose (to perform either front-end verification of information
on applicants versus ongoing verification of information on

recipients) and

2) the method by which an agency accesses and uses the external
data files (batch or online access).

e@ The majority of the systems are used for ongoing matching; 43% are
exclusively ongoing; and 42% are both front-end and ongoing).

@ The majority of the systems (78%) have batch access; 21% have online | _,
access.

Page 23

“3
Extent of Computer Matching in the Food Stamp Program | if



S. Department of Agriculture

poet General

both fraudulent and at the incorrect benefit level, by identifying recipients
who receive Federal income which was not reported.

MAJOR.
FINDINGS

Of the 174 cases identified, 102 were referred to the Inspector General's
Office of Investigations for further analysis. The remaining 72 overissuances
were caused by either the recipient's failure to report income correctly or the
State agency's failure to utilize the reported income correctly.

The Food and Nutrition Service does not require State agencies to match
Federal wage and retirement income records with Food stamp program files.

MAJOR
RECOMMENDATIONS

The State agency is to:

@ Require the Human Resources Administration to make an overissuance
determination for the cases identified and establish claims to recover the
overissuances (including the development of a plan to monitor the State

agency's actions to ensure that disqualifications from the Food Stamp

program are imposed) and

Consider exercising its authority to request the use of Office of Personnel
Management Federal employee and retiree income information in its
ongoing IEVS income and benefit amount verification process.

Food Stamp Program--Implementation of Income and Eligibility Verification
System Nationwide, Food and Nutrition Service, Audit Report 27013-45-Te,
OIG Southwest Region, Temple, Texas, March 1990.

BACKGROUND

This report summarized 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, as well as, the administration of
the program by 5 regional offices of the Food and Nutrition Service.

MAJOR
FINDINGS

@ Several States are not in full compliance with IEVS 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
follow up in the absence of final Federal regulations; and

e A few States are obtaining useful financial information from Federal
sources other than those required.

Page 32


U.S. Department of Agriculture

_ —

@ States can designate a permanent matching coordinator to ensure the
system's staying technologically current, to respond to environmental
changes made when matching occurs, and to ensure the quality of the
follow up effort. .

© Development of local staff capabilities is essential for computer matching
to become an integral part of the Food Stamp program.

@ The success of computer matching largely depends on the follow up
efforts of local workers. States can establish methods to monitor how
well, to what extent, and how timely workers perform their assigned
computer matching follow up activities.

e@ Data can be aggregated to provide useful management information
concerning those practices which may be either exemplary or in need of
particular attention.

The report gives no recommendations.

tions, Contract Number 53-3198-
. €., November 1990.

State and Local Computer Matching Opi
5-51, The Urban Institu ,

BACKGROUND

This report describes the findings from the second of the three phase Food
Stamp Program Operations Study of computer matching systems. The first
phase consisted of structured telephone interviews with Food Stamp agency
staff conducted in 53 States (including Guam, the Virgin Islands, and the
District of Columbia). The second phase involved telephone interviews with
the staff of a national sample of 191 local level Food Stamp program
agencies (of which 172 completed the survey). This study, the second
phase, was designed to fill a critical gap identified from phase one - that of
computer matching activities at the local agency level.

In this phase, a sample of 191 local Food Stamp agencies was drawn from a
universe of approximately 2,900 local agencies. The population of local Food
Stamp agencies nationally was stratified by State. On average, two local
Food Stamp agencies were chosen in each State with minimal local variation
among State agencies, and five local Food Stamp agencies were chosen in
each State with substantial local variation. Respondents in the local level
interviews were extremely knowledgeable about local matching procedures
and operations, while the State level interviewees were more familiar with
tegulations and policy aspects of computer matching of Food Stamp program
clients.

Page 18


ACS
AFDC
BEER
BENDEX
CSE
COLA
DA
FAMIS
FNS
FS
FTMS
FY
HHS
IEVS
IRS
OIG
SAVE
SDX
SSA
SSN
SVES
SWICA
Ul
WTPY

ABBREVIATION LIST

Automated certification system

Aid to Families with Dependent Children

SSA’s Beneficiary Earnings Exchange Record

SSA’s Beneficiary Data Exchange

Child Support Enforcement

Cost of Living Allowance (annual adjustment)

U.S. Department of Agriculture

Financial Assistance Management Information System
Food and Nutrition Service (Department of Agriculture)
Food Stamp Program

SSA’s File Transfer Management System

Fiscal Year

U.S. Department of Health and Human Services
Income Eligibility Verification System

Internal Revenue Service

Office of Inspector General (HHS or DA)

Systematic Alien Verification for Entitlement Programs
SSA’s State Data Exchange

Social Security Administration or Act

Social security number

State Verification and Exchange System (SSA)

State Wage Information Collection Agency
Unemployment Insurance

SSA’s Wire Third Party Query System

Page 2


U.S. General Accounting Office

© Treasury cannot release the identity of the 405 individuals with
outstanding and/or redeemed bonds because of restrictions contained in
the Privacy Act of 1974 on release of personal data.

IEVS does not provide a mechanism for obtaining information needed to
verify the savings bond holdings of applicants for public assistance and
thus, enables States from verifying bond holdings.

Fee OR MENDATIONS The report recommends a legislative proposal to amend IEVS requirements to
| expand information available to the States under IEVS. This amendment

! would require States under IEVS to include data files maintained by the
Department of the Treasury on U. S. savings bond holdings and redemptions.
Further, additional supporting legislation would enable the Treasury to make
available information for the necessary computer matches.

Welfare Eligib ici ction Act (DEFRA) Income Verification Issues.
Fact Sheet for the Ranking Minority Member, Subcommittee on Oversight of
Government Management, Committee on Governmental Affairs, United

os : States Senate, GAO/HRD-87-79FS, May 1987.

This Fact Sheet summarizes data from a national survey of all States
conducted by the General Accounting Office during the summer of 1986 to
* : determine progress and problems in the States’ early efforts to implement

, lEVsS.

MOR The Fact Sheet identifies the following major concerns of the States with
lEvVS:

© Additional funding is needed to develop and operate the DEFRA income
verification systems;

The efficiency of States' automated systems for processing data from the
Internal Revenue Service (IRS) and the Social Security Administration
(SSA) is questionable;

The timeframes required by Federal regulations, for following up on
information received from the Federal databases, are difficult to comply
with;

The States’ start-up and operating costs, to process and use tax data,
might exceed the benefits in terms of dollars saved;

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

Page 54


U.S. Denarteront of Health ond Human Services
Gites Gs mispecior General

and computer matches with State and Federal agencies to document
provided information such as wages and unearned income.

However, inappropriate payments can occur through both agency and client
(applicant and recipient) errors. Concern over inappropriate Payments led the
Administration for Children and Families (ACF) to require States to operate a
quality control (QC) program through which examination of a statistically
valid sample of cases determines the accuracy of payments and eligibility
decisions. Also, Section 605 of the 1988 Family Support Act (P.L. 100-485)
requires States to establish pre-eligibility fraud detection measures as a
condition of State plan approval. It further requires State agencies to
annually evaluate the effectiveness of these measures and to provide a
written report of their evaluations to ACF.

The purpose of this study was to determine how the fraud detection
measures, required by the 1988 Family Support Act, affected States’ pre-
eligibility verification activities to prevent inappropriate AFDC decisions.
Each of the 50 States and the District of Columbia were surveyed, using a
standardized questionnaire. As needed, telephone interviews were also
conducted with State AFDC staff for clarification of, and elaboration on their
initial questionnaire responses. Staff from ACF and the American Public
Welfare Association were also interviewed.

MAJOR.
FINDINGS

Principally, ACF's regulations allow States to comply with the legislative
requirements without actually improving their pre-eligibility systems. The
regulations contain a major disconnect between regulations which prescribe
no specific pre-eligibility activities and evaluation reporting requirements that
focus only on measuring the effectiveness of fraud investigative units. More
importantly, the current reporting requirements fail to provide ACF the
information needed to make management judgments concerning the
effectiveness of specific pre-eligibility measures.

@ The Act had little effect on State activities for preventing inappropriate
AFDC payments. This was a direct result of ACF's implementing
regulations being broadly written, allowing States to use their existing
pre-eligibility verification as fraud detection measures.

© States did not routinely utilize third-party sources or investigative staff as
available verification measures because of limited resources and concern
that it would delay application processing.

© Some States did not perform their required evaluation of their pre-
eligibility verification measures, because it required too much time to
track measures and the requirements focused only on measuring
effectiveness of fraud investigative units.

e The required format for the evaluation of effectiveness was not applicable
to pre-eligibility measures most used by States, such as computer
matches.

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U.S. Department of Health and Human Services
C.ice of faspector General

MAJOR
RECOMMENDATIONS

The findings warrant further examination of IEVS. The OIG will undertake
further study addressing the effectiveness of particular matches and,
additionally, the Departments of Health and Human Services {DHHS) and
Agriculture (DA) may well consider a basic reexamination of IEVS, to address
ways in which the Federal government could give States more flexibility and,
at the same time, hold them more accountable for results; the Federal
databases may be made more useful; and additional Federal data made
available to States.

Exchange

This study assessed experiences of State and local welfare offices with the
data exchange systems of the Social Security Administration (SSA). State
welfare officials in all 50 States and the District of Columbia were contacted,
as were local welfare officials in 11 States.

MAJOR.
© FINDINGS

Many welfare agencies consider SSA data questionable.

Welfare officials would like access to certain additional information
through SSA data files.

SSA's communications with State officials on data exchange issues need
improvement.

SSA should:
© Take steps to provide welfare agencies with information that is correct;
e@ Continue to expand the types of data provided to welfare agencies;

Establish a network with welfare agencies for ongoing communications;
and

Involve welfare agencies in resolving problems and in long-range planning
on data exchange issues.

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U.S. Department of Agriculture _

- — ——— —
BENDEX Match. 21 States have implemented targeting strategies for

the BENDEX Title ll data. 17 States use a discrepancy between
reported benefit amounts and those listed on the BENDEX file.

SDX Match. 15 States target the matches from this database. 12 of
the 15 States use a discrepancy between reported SSI benefits and
those on the SDX file.

IRS Match. 42 of the 46 States target the IRS match. The strategy
for the IRS match is to follow up on a case only if the amounts of one
or more of the unearned income types on the IRS file are above a
tolerance threshold. This match only examines the information on the
IRS file and does not examine client reported information on unearned
income. The IRS data is quite old when the States receive the
matched information. A State would need to have a fairly extensive
benefit history file in order to be able to compare reported unearned
income information from the same time period to which the IRS data
refers, to the information on the IRS file. Because of this, States
typically focus targeting strategies, using only the information from
IRS.

@ FOLLOW UP.

Verification. Follow up activities include verifying both the client-
reported information used in the computer match and the information
on the external database. In most cases, the eligibility worker
assigned to a case performs the verification activities. Several States
(13) have instructed workers to prioritize the order in which they
perform verification on cases designated for follow up for at least one
of the mandated databases.

Monitoring. Federal regulations require that the States complete
follow up procedures within 45 days of the receipt of the matched
information. In every State, there is a monitoring process to
determine whether cases designated for follow up have been resolved
for at least some of the mandated databases. There is a substantial
variation in the degree and complexity of the monitoring process
across the States. Estimates of how many cases are followed up in
the 45 day time period varied widely from State to State. Most State
respondents thought that follow up procedures are completed within
45 days for two-thirds to three-fourths of the cases designated for
follow up.

Reporting. 36 States produce reports that describe the results of the
follow up process, or the status of actions taken on matched cases.
Most of these reports are produced through an automated process at
the State office.

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