Department of Health and Human Services 

OFFICE OF 

INSPECTOR GENERAL 

INCORRECT DISTRIBUTION OF CHILD


SUPPORT COLLECTED ON BEHALF OF


CHILDREN IN NON-IV-E FOSTER CARE


Management Advisory Report 

@ SE RVICE$ 

J& Q,*V 

*+ 

JUNE GIBBS BROWN 

g

< Inspector General 2 

% # ‘+++ MAY 1994

%’d~~ 2 OEI-04-91-00981 
OFFICE OF INSPECTOR GENERAL 

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 OIGS 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 (01) conducts criminal, civil, and administrative 

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

unjust enrichment by providers. The investigative efforts of 01 lead to criminal convictions, 

administrative sanctions, or civil money penalties. The 01 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.


OEI’S Atlanta Regional Office staff prepared this report under the direction of Jesse J.


Flowers, Regional Inspector General and Christopher Koehler, Deputy Regional Inspector


General. Principal OEI staff included:


Atlanta Region Headquarters


Maureen Wilce, Project Leader David Wright


Ron Kalil, Team Leader W. Mark Krushat


Ruth Reiser


Paula Bowker


For additional copies of thk repti, please contact the Atlanta Rep”onal Ofjice by telephone, at 

(404) 331-4108, or by F& at (404) 730-2308. 
Purpose


To describe incorrect distribution of child support collected on behalf of children in


State foster care programs which are not funded under Title IV-E of the Social


Security Act.


Background


Foster care children that have been removed from homes where income is below Aid


to Families with Dependent Children (AFDC) standards is financed through Federal


and State funds under Title IV-E of the Social Security Act. Those from families


whose incomes are higher or who for other reasons are not covered by Title IV-E, we


call “non-IV-E’ foster care children. More than 260,000 children nationwide are in


non-IV-E foster care. Non-IV-E foster care is funded partially through Title IV-B of


the Social Security Act and through State monies. Federal law requires foster care


agencies to refer low-income biological parents of foster care children to child support


enforcement agencies for semices. However, no such requirement exists for higher-


income parents of non-IV-E foster care children.


We recently reported on the potential for collecting child support for children in non-


IV-E foster care (OEI-04-91-00980). That report showed that child support collections


could be increased if States actively pursued child support on behalf of children in


non-IV-E foster care. For example, during 1991, child support payments were


collected on behalf of 7 percent of our non-weighted sample of non-IV-E foster care


children. This collection rate reflects a low emphasis by States on collecting child


support. State foster care agencies do not routinely and systematically record basic


information on biological parents of non-IV-E foster care children. Further they


referred only 29 percent of parents of sampled children to child support enforcement


agencies for possible collections. Since few referrals are made, and information on the


parents is often inadequate, child support orders are established for only 11 percent of


sampled non-IV-E foster care children. Although many parents of children in


non-IV-E foster care have financial resources to pay child support on behalf of their


child, States are not taking full advantage of this potential source of funds.


When child support collections are made, the money is intended to benefit non-IV-E


foster care children and defray costs of non-IV-E foster care programs. While


performing our study on the potential for collecting child support from biological


parents of children in non-IV-E foster care programs, we observed that some child


support collected from biological parents of a foster care child is not distributed to the


foster care agency which has custody of the child.


Methodology


We randomly selected nine States with probability proportional to size. We then


asked each non-IV-E foster care agency to furnish us a random sample of 70 children


1 
in non-IV-E foster care. Thereafter, using a structured questionnaire, we surveyed 

State child support agencies to determine (1) extent of child support collected from 

biological parents of sampled children, and (2) distribution of any collections. Because 

of the small number of collections reported, we did not project to the universe. 

Finding 

Child Support Payments Collected From 17 Percent Of The Parents Of Sampled NonIV-E Foster Care Children Were Incorrectly Distributed 

Fifty-two parents in our sample made child support payments in 1991 to help 

financially support their children in non-IV-E foster care. Payments from nineof the 

parents (17 percent) were not distributed correctly. Child support collected from 

three of the nine parents was incorrectly distributed to biological mothers of the foster 

care children, even though they had lost custody of their children. Likewise, child 

support collected from six parents was incorrectly distributed to the AFDC program. 

As shown by the figure below, child support paid by the remaining 43 parents (83 

percent) was correctly distributed to foster care agencies. 

Distribution Of Child Support Payments 

Recipients Of Payments 

The distribution errors are partly caused by the recording system. This system, 

required by the federal Office of Child Support Enforcement, does not adequately 

record collections made on behalf of children in non-IV-E foster care. Also, current 

procedures and reporting mechanisms are confusing, adding to the problem of 

incorrect distribution. States which are making child support collections report that 

they must operate dual recording systems to adequately track and distribute 

collections. When the dual systems fail, foster care agencies do not receive needed 

funds. Finally, the dual systems fail to reflect that collections are intended to offset 

government expenses. 

The lack of adequate tracking and reporting hinders pursuit of child support on behalf 

of children in non-IV-E foster care. Perhaps more importantly, it limits potential for 

building parental responsibility. Other States may choose not to pursue child support 

2

on behalf of non-IV-E foster care children because of the difficulties in the 

distribution system. 

Recommendation 

The Administration for Children and Families (ACF) should develop a systemtohelp


States accurately record and distribute collections to an appropriate foster care 

agency. That system should include guidance to States for designating (or 

redesignating) payees. 

Agency Comments 

ACF agreed with our recommendation but clarified that the problem of incorrectly 

distributed collections may also be attributed to correctly designating (or 

redesignating) payees. We accept this explanation and have revised our 

recommendation accordingly. The full text of their comments are attached. 

3

*%:*,Uwrr; .. . .

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: DEPARTMENT OF HEALTH& HUMAN SERVICES


z
8

++.d


ADMINISTRATION FOR CHILDREN AND FAMILIE 

Office of the Assistant Secretary, Suite 600 

370 L’Enfant Promenade, S.W. 

Washington, D.C. 20447 

Date: March 29, 1994 

.yj To: June Gibbs Brown ..,>

-.

... 

Inspector General 

From: Mary Jo Bane =


Assistant Secretary for


Children and Families Umm 5 ~“’.


Subject:	 Comments on Office of Inspector General Draft 

Management Advisory Re~ort, “Incorrect Distribution &J+ 

Chil& Support Coll&cte~ on-Behalf of Children in Non-


IV-E Foster Care,” OEI-04-91-00981


Thank YOU for the opportunity to comment on our recent meetin9 

and di~cussion of d~>ft findkgs and options for recommendations 

on the above-named Office of Inspector General (OIG) study. 

OIG Recommendation


The Administration for Children and Families (ACF)
should develop


a system to enable States to accurately distribute
collections to


an appropriate foster care agency.


ACF Comments


The ACF agrees with this recommendation. The State child support


enforcement automated systems are now accurately distributing


collections to the appropriate foster care agency when that


agency has been designated as the payee for collected child


support. The problem of incorrectly distributed collections is


not a system problem; it is a problem of correctly designating


(or redesignating) the payee.


If the State (non-IV-E) foster care agency wishes the state IV-D


agency to be its agent for the collection of child support, there


are two possible payers--the non-custodial biological parent and


the ex-custodial biological parent from whom the child or


children were taken. How the State IV-D agency takes action


depends on which of these two prospective payers is pursued.


In the case of the non-custodial parent, the foster care agency


and the IV-D agency could request a modification of the support


order (if it exists) to designate the foster care agency as the


recipient rather than the ex-custodial parent. AS long as the


order specifies the ex-custodial parent (or under different


circumstances the AFDC agency) as the payee, the IV-D agency


cannot distribute the child support collections elsewhere, unless


and until there is a reassignment of support rights to the State


foster care agency.

.

.,

,, .,+ 

..

i’. 

Page 2 - June Gibbs Brown


In the case of the ex-custodial parent, the foster care agency in 

its application to the IV-D agency for child support enforcement 

services, can designate the foster care agency as the payee. The 

child support award is determined by the appropriate State or 

local authority using the established State guidelines for the 

determination of the amount of the award. In instances where the 

children are placed in foster care on a temporary basis (because 

of short-term hospitalization or incarceration of the biological 

custodial parent, for example), the pursuit of child support from


the parent may be inappropriate.


Thank you again for giving us the opportunity to comment on this


draft report.

approximately $1,200 per device for devices consisting of “nothing more than a $50 piece 

of foam rubber. ” 

After reviewing a sample of claims for body jackets, it was determined that 95 percent of 

the devices claimed under code L0430 did not meet either the construction requirements 

or the medical purpose of a Medicare-coveredbody jacket. In many cases, the devices 

billed were provided primarily for the purpose of keeping patients upright in a wheelchair. 

The significance of the finding suggests that more than $7 million in 1991 and, perhaps, 

as much as $13.7 million in 1992 were inappropriately paid for non-legitimate devices 

billed as L0430. 

Although the study did not focus solely on body jackets received by SNF residents, the 

findings are equally pertinent to the SNF population. The billing of 14430 for SNF 

residents amounted to $129,668 in 1991 and $384,795 in 1992. Assuming 95 percent 

were for non-legitimate devices, approximately half a million dollars were incorrectly paid 

for SNF residents ($123,185 im 1991 and $365,555 in 1992). Significantly, claims for the 

non-legitimate devices are increasing dramatically by triple digit rates (190 percent from 

1991 to 1992 after adjusting for medical cost inflation). 

Misrepresenting the place of service. 

Durable medical equipment (DME) is a noncovered item for beneficiaries, unless the 

DME is provided in the beneficiary’s residence. A SNF, like a hospital, is not considered 

a residence. Based on data from this database and presented in a separate report, 

“Payment for Durable Medical Equipment Billed During Skilled Nursing Facility Stays,” 

the combined Medicare and resident cost for DME was approximately $10 million in 1992 

and over $8 million in 1991.14 Significantly, 99 percent of the 1991 DME claims 

imxmectly showed (intentionally or unintentionally)the resident’s location when the item 

was provided. Suppliers stated the place of service was the ‘home’ or ‘other’; however, 

at the time of the senice, the beneficiary was actually residing in a SNF. Had the 

supplier indicated that the beneficiary resided in a SNF, the carrier would have known to 

disallow the claim. 

. 

22


● 
In a 1993 survey, we askal carriers to list their concerns about possible abuses in 

utilization and payment for durable medical equipment and supplies in nursing homes. 

Some of these concerns reflect suspected or known abuse in areas discussed previously in 

this report. Others reflect concerns about false billing, improper handling of certificates 

of medical necessity, and financial arrangements. 

We note that some of the problems listed are being, or have been addressed by the new 

Durable Medical Equipment Regional Carriers (DMERCS)15.Carriers were not asked to 

provide details on the source or extent of their reports of possible fraud and abuse or 

whetherthey had referred any cases to the Offi& of InspectorGeneral. 

. 

23