Supplemental Security Income: SSA Could Enhance Its Ability to Detect Residency Violations
Published: 2003-07-29T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: The Supplemental Security Income (SSI) program paid about $35 million recipients in 2002. In recent years, the Social Security Administration (SSA) has identified a general increase in the amount of annual overpayments made to (1) individuals who are found to have violated program residency requirements or (2) recipients who leave the United States and live outside the country for more than 30 consecutive days without informing SSA. This problem has caused concern among both program administrators and policy makers. As such, GAO was asked to determine what is known about the extent to which SSI benefits are improperly paid to individuals who are not present in the United States and to identify any weaknesses in SSA's processes and policies that impede the agency's ability to detect and deter residency violations.
section_title: What GAO Found
paragraphs: Overpayments resulting from residency violations totaled about $118 million between 1997 and 2001. However, this figure, which represents only violations detected by SSA, likely understates the true level of the problem. Additionally, the extent of violations appears to vary by geographic region, with overpayments being more prevalent in several large metropolitan areas. GAO found that 54 percent of all overpayments detected by SSA during this period occurred in just 15 counties. In addition, GAO found that recipients born outside the United States accounted for at least 87 percent of all residency overpayments. SSA's ability to detect and deter residency violations is impeded by three kinds of weaknesses. First, the agency relies heavily on self-reported information from recipients to determine domestic residency, often without independently verifying such information. Second, SSA makes insufficient use of existing tools to detect violations, such as its "risk analysis" system, redeterminations, and home visits. Finally, the agency has not adequately pursued independent sources of information from other federal agencies or private organizations to detect nonresidency of SSI recipients. GAO recognizes that the SSI program is complex to administer, and residency requirements are particularly difficult to enforce because they can necessitate time-consuming, labor-intensive verification checks, such as home visits. However, SSA has not employed a systematic, comprehensive approach to this problem that would allow the agency to use its available systems and procedures more efficiently and reduce the program's exposure to additional violations.

section_title: Letter
paragraphs: The Supplemental Security Income (SSI) program is the nation’s largest  cash assistance program for the poor. The program paid about $35 billion  in benefits to about 6.8 million aged, blind, and disabled recipients in  2002. Most SSI recipients are also eligible to receive medical benefits  under the Medicaid program. Benefit eligibility and payment amounts for  the SSI population are determined by complex and often difficult to verify  factors such as an individual’s living arrangements, including whether an  individual resides in the United States. Individual circumstances such as  permanent residence may change frequently, requiring staff to regularly  reassess recipients’ eligibility for benefits. Thus, the SSI program tends to  be difficult, time-consuming, and labor-intensive to administer. The  program’s complexity has also made it susceptible to overpayments. In  recent years, the Social Security Administration (SSA) has identified a  general increase in the amount of annual overpayments made to (1)  individuals who are found to have violated program residency  requirements or (2) recipients who leave the United States and live  outside the country for more than 30 consecutive days without informing  SSA. This problem, which we refer to as a “residency violation,” has  caused concern among both program administrators and policy makers.
Because of your interest in the SSI program’s potential vulnerability to  residency violations, you asked us to (1) determine what is known about  the extent to which SSI benefits are improperly paid to individuals who  are not present in the United States and (2) identify any weaknesses in  SSA’s processes and policies that impede the agency’s ability to detect and  deter residency violations. To answer these questions, we reviewed SSI  performance data, prior reports by SSA and its Office of Inspector General  (OIG), and our prior work on the SSI program. We analyzed SSI payment  data over a 5-year period between 1997 and 2001 and examined cases in  which SSA identified recipients who were residing outside the country. In  addition, we developed and tested a statistical model to help predict  whether certain SSI recipients were more likely than others to have  residency violations. Finally, we conducted in-depth interviews with more  than 150 management and line staff from SSA’s headquarters; its regional  offices in Atlanta, Chicago, Dallas, New York, and San Francisco; 17 field  offices; as well as officials from other federal agencies, including the  former Immigration and Naturalization Service (INS) and the Centers for  Medicare and Medicaid Services. During our meetings, we documented  management and staff views on how extensive residency violations are in  the SSI program; the effectiveness of current procedures and processes for  detecting and preventing residency violations; and potential improvements  to existing program processes, policies, and systems. We performed our  work from September 2002 through May 2003 in accordance with  generally accepted government auditing standards.
subsections: section_title: Background
paragraphs: SSI provides financial assistance to people who are age 65 or older, blind  or disabled, and who have limited income and resources. The program  provides individuals with monthly cash payments to meet basic needs for  food, clothing, and shelter. In 2002, about 6.8 million recipients were paid  about $35 billion in SSI benefits.
Individuals may apply for SSI benefits at any of about 1,300 SSA field  offices. During the initial interview, SSA staff solicit information on  applicants’ financial situation and the disability being claimed. Applicants  are required to report any information that may affect their eligibility for  benefits, such as income, resources, and their living arrangements  (including current residence). Similarly, once individuals receive SSI  benefits, they are required to report changes in their address or residence  to SSA in a timely manner. The Social Security Act (Section 1614  (a)(1)(B)(i)) requires that an individual be a resident of the United States  to be eligible for SSI payments. SSA guidelines define a resident of the  United States as a person who has established a dwelling in the United  States with the intent to live in the country. Section 1611(f) of the act also  stipulates that no individual is eligible for SSI payments for any month  during all of which the individual is outside the United States. Further, an  individual who is outside the United States for 30 consecutive days cannot  be eligible for SSI benefits until he or she has been back in the United  States for 30 days. Recipients who fail to establish residency in accordance  with SSI program guidelines, or do not report absences of 30 consecutive  days or more, may be subject to overpayments, monetary penalties, and  administrative sanctions such as suspension of benefits. Similarly, SSI  recipients who become ineligible for SSI benefits because they violate SSI  residency guidelines may also be ineligible to receive Medicaid benefits.
To a significant extent, SSA depends on program applicants and current  recipients to accurately report important eligibility information. To verify  this information, SSA may use computer matches to compare SSI records  against recipient information in records of third parties such as other  federal agencies. SSA also periodically conducts “redetermination”  reviews to verify important eligibility factors such as income and  resources to determine whether recipients remain eligible for benefits  after the initial assessment. Recipients are reviewed at least every 6 years,  but reviews may be conducted more frequently if SSA determines that  changes in eligibility are likely. To determine which recipients should  receive more frequent reviews, SSA uses a risk analysis system to identify  recipients who may be more likely to incur overpayments. Those identified  as “high-risk” generally have a redetermination conducted at least annually  by SSA field office staff who contact the recipient in person or by phone,  while lesser-risk redetermination reviews (such as those designated “low- risk”) may only be conducted once every several years by mail. In  addition, SSA uses “limited issue” redetermination reviews to review a  specific factor that may affect a recipient’s eligibility, such as income or  current residence. These reviews tend to be less time-consuming and labor  intensive for field staff to perform than “full” redetermination reviews,  which often require an examination of numerous eligibility factors.
In recent years, detected overpayments from residency violations  increased from about $13.7 million in 1995 to about $22 million in   2001, reaching a high of almost $27 million in calendar year 2000. In  addition, the number of individuals SSA detected receiving SSI benefits  while outside the United States increased from about 44,000 recipients in  1997 to almost 49,000 recipients in 2001.
section_title: SSA Detected Overpayments of $118 Million for Residency Violations over 5 Years, but More May Go Undetected
paragraphs: SSA detected overpayments of $118 million for residency violations  between 1997 and 2001, but interviews with OIG and SSA officials suggest  that the agency detects only a portion of the violations that occur each  year, at least in some parts of the country. Special initiatives of limited  duration conducted by SSA and its OIG have uncovered additional  residency overpayments. According to our own analysis of SSA’s data,  residency overpayments appear to vary by geographic region, with the  majority of overpayments having been detected in several large  metropolitan areas. Finally, we determined that most of the overpayments  detected during this period were attributable to recipients who were born  outside the United States.
subsections: section_title: Residency Violations May Be More Prevalent than SSA Currently Detects
paragraphs: SSA detected an average of about 46,000 recipient residency violations  annually between 1997 and 2001, resulting in $118 million in  overpayments. While SSA’s data show that less than 1 percent of all SSI  recipients violate residency requirements annually, SSA field staff and OIG  officials suggest that the problem may be more prevalent. For example,  staff and managers from field offices in several SSA regions estimated that  over 40 percent of all recipients are in violation of residency requirements  at some point. A small number of staff told us that as much as 90 percent  of recipients served by their office may be involved in such violations.  Other staff said that while the problem is more pervasive than SSA  currently detects, it is difficult to estimate the true extent of the problem  because the agency relies heavily on recipients to self-report absences  from the country. In addition, a number of OIG officials we spoke with  told us that residency violations are significantly higher than SSA currently  detects; one official familiar with this problem estimated that as much as  70 percent of SSI recipients in some areas close to the southern border of  the United States improperly receive benefits outside the country.
Over the past few years, SSA and its OIG have initiated a number of  projects that uncovered additional residency violations and overpayments.  Although there is no empirical data to determine the true level of  residency violations nationwide, these studies have estimated that  residency violations in certain regions of the country may represent as  much as 26 percent of SSI cases in those areas. These initiatives, which  were limited in duration and were performed within specific geographic  areas, include the following:    A 1997 SSA and OIG joint study of SSI residency used home visits in  southern California to identify potential residency violations. The study  concluded that about 25 percent of SSI recipients in 1 field office were  living outside of the country. The study also determined that 47 percent of  SSI recipients from this field office could not be located at their reported  residence, an indication that they may be violating residency requirements.
A 1998 OIG eligibility study in El Paso, Texas, found that about 26 percent  of recipients investigated were violating residency requirements. This  project identified a total of about $3 million in residency overpayments.
In 1998 and 1999, joint SSA/OIG studies examined 32,641 recipients in New  York and California who had not used their Medicaid benefits for at least   1 year. Using redetermination reviews, these studies found that   1,281 recipients (about 4 percent) were living outside the United States.
A 2002 SSA residency verification project in 5 South Florida field offices  used a targeted sample of 750 noncitizen recipients that uncovered a total  of over $107,000 in additional residency overpayments. Staff performed  special redetermination reviews in which recipients were required to  produce a valid passport as proof of continuing residency in the United  States and found 46 recipients (6 percent) violating residency  requirements.
A 2002 OIG address verification project in New York uncovered   205 recipients violating SSI residency requirements resulting in a total of  about $262,000 in overpayments. These recipients were found to be  receiving both SSI and Title II Social Security benefits at addresses in two  different countries. The study also found that SSA’s automated controls  and special projects did not identify SSI recipients who had their benefits  direct deposited into banks in Puerto Rico or the U.S. Virgin Islands.
While the results of these projects suggest that the problem is more  pervasive than the 1 percent of recipients that SSA’s data show, SSA has  not systematically implemented similar projects in other areas that might  benefit from these efforts.
section_title: Many Violations Are Geographically Concentrated
paragraphs: Our analysis of SSA’s data also shows that overpayments due to residency  violations are more prevalent in a number of large metropolitan areas. For  example, overpayments from violations detected in Los Angeles County,  California, represented 10.5 percent of the nation’s SSI residency  overpayments between 1997 and 2001. Overall, our analysis indicates that  just 15 counties in five states—California, Florida, Illinois, New Jersey, and  New York—accounted for 54 percent of all residency overpayments  detected by SSA during this period. (See fig. 1.) In addition to Los Angeles  County, other counties with a significant percentage of SSI residency  overpayments include Queens County, New York (5.2 percent); New York  County, New York (5.0 percent); Kings County, New York (4.8 percent);  San Diego County, California (4.1 percent); and Bronx County, New York  (3.5 percent). Moreover, of approximately 3,000 counties in the United  States, 50 accounted for 77 percent of all residency overpayments detected  by SSA during this time.
section_title: Most Overpayments Were Made to Recipients Born outside the United States
paragraphs: SSA’s data also show that individuals born outside the United States  accounted for at least 87 percent of all SSI residency overpayments  between 1997 and 2001. Residency overpayments were most common  among recipients who were born in Latin America, the Caribbean, and  South/Southeast Asia, but included other areas as well, such as the Middle  East. (See fig. 2.) Recipients from the Philippines accounted for the  greatest amount of residency violations or $24 million of all SSI residency  overpayments during this period. SSA data also show that recipients from  just 14 countries and one United States territory accounted for about   73 percent of all residency overpayments during this period. In addition to  the Philippines (20.2 percent), these include the Dominican Republic   (12.3 percent), Mexico (7.6 percent), Puerto Rico (7.5 percent), India   (7.1 percent), and Iran (3.4 percent). Moreover, a prior study by SSA’s OIG  found that SSI residency violations are more prevalent among recipients  born outside the United States than for native-born citizens. Specifically,  the OIG found that more than 20 percent of the recipients born outside the  United States had periods of ineligibility because of absences from the  United States, compared with 0.2 percent for native-born recipients.
section_title: Reliance on Self- Reported Information and Other Vulnerabilities Impede SSA’s Ability to Detect and Deter Violations
paragraphs: SSA’s ability to detect and deter residency violations is impeded by three  kinds of weaknesses: dependence on self-reported information by clients,  insufficient use of existing compliance tools, and a failure to pursue  independent data sources for its verifications. First, the agency relies  heavily on self-reported information from recipients to determine  domestic residency, often without independently verifying such  information. Second, to detect and deter residency violations, SSA makes  insufficient use of its existing tools for program integrity, such as its risk  analysis system to screen for high-risk cases. To test the feasibility of  using the agency’s system to screen for residency violations, we developed  and tested, with some success, a statistical model of factors that may be  associated with such violations. SSA has also not made optimal use of  redetermination reviews, home visits, monetary penalties, and  administrative sanctions. Finally, the agency has not employed the use of  independent data sources from other federal agencies or private  organizations to detect nonresidency of SSI recipients.
subsections: section_title: SSA Relies Heavily on Self- Reported Information That Can Be Manipulated
paragraphs: SSA relies heavily on self-reported information, such as documents and  statements from recipients to establish proof of U.S. residency. According  to SSA and OIG officials, however, this practice increases the SSI  program’s vulnerability to residency fraud and abuse. Our prior work has  shown that about 77 percent of all payment errors in the SSI program  were attributable to recipients who do not comply with reporting  requirements. In our current review, about half of SSA field staff we  interviewed reported that they rely on recipients to self-report important  information with respect to travel outside the United States. SSI program  guidelines generally direct SSA staff to accept recipients’ assertions  concerning residency unless they have reason to question the accuracy of  their statements. SSA staff also have discretion with respect to the types of  documents they can accept to confirm that a recipient resides at a given  address. For example, program guidelines direct field staff to obtain a  combination of two or more documents as proof of initial residency.  Acceptable documentation includes such things as rent receipts, utility  bills, driver licenses, pay stubs, or mail addressed to the recipient. If SSA  field staff have reason to believe that a recipient has been outside the  country for more than 30 days, or information in SSA records conflicts  with recipients’ statements, they may request additional documentation  such as an airline ticket, passport (or similar evidence that establishes  date of entry into the United States), or a signed statement from one or  more U.S. residents, such as neighbors, clergy, or others who may have  knowledge of the individual’s whereabouts. In general, program guidelines  do not require field staff to perform any additional verification steps to  establish recipients’ residency during initial or post-entitlement eligibility  reviews.
We were also told that some of the documents accepted by SSA as proof of  residence are subject to manipulation or forgery. For example, staff in 1  field office noted that documents such as rent receipts can be purchased  from a local drugstore and easily forged. Other field staff said that  statements from neighbors could be falsified or manipulated to support  assertions that an individual has not traveled outside the country. Field  staff also reported that recipients may use multiple passports in order to  conceal extended stays outside the country. For example, staff in two SSA  regions we visited said that SSI recipients sometimes use a foreign  passport to exit and reenter the country while maintaining a separate,  “clean” U.S. passport for evidence of continuing residency. One field office  staff reported that some recipients have even paid foreign customs  officials not to stamp their passport to conceal evidence that they were  outside the country.
Given the agency’s heavy reliance on self-reported information, we found  that SSA field staff often relied on their personal experience, judgment,  and ad hoc interviewing procedures to detect potential residency  violations. In particular, SSA field staff look for inconsistencies in  recipient’s statements or their inability to answer simple questions about  where they live. For example, recipients may be asked about the names of  people living in their household, or basic facts about their neighborhood  such as the location of a well-known landmark. Field staff may also ask  whether a recipient owns property outside the United States. Questionable  or inconsistent answers to such questions may result in requests to  provide additional documentation. However, the ability of staff to  effectively identify violators often depends on the experience and  persistence of individual staff. This is particularly true in the case of  recipients who are “coached” by advocacy groups or others to provide  false information to SSA in order to obtain or retain SSI benefits. For  example, one official told us that they recently identified an SSI applicant  who apparently was coached to provide false information to SSA  regarding her residence in the United States. Upon further questioning, the  recipient admitted that she was not residing continuously in the United  States and had misreported her residency to SSA in order to obtain SSI  benefits. In addition, field staff who were familiar with this problem told  us that they sometimes look for suspicious documents that recipients may  reveal during the course of an office visit, such as a foreign driver license  or foreign voter registration card. One manager in a field office close to the  Mexican border also noted that some field staff check address listings in  Mexican telephone books or check the parking lot for cars with foreign  license plates.
Our review also found that the procedures for documenting recipients’  residency vary widely among the offices we visited. In particular, the  number and types of evidentiary documents requested by staff differed  across the field offices we visited. While staff in several offices reported  that they often request only the most basic documentation required by SSI  program guidelines, staff in other offices told us that they routinely ask for  additional documentation for recipients. For example, some field staff we  interviewed noted that they ask recipients to provide a second passport or  other documents (such as travel documents from foreign consular offices)  to determine whether the individual has been outside the country for more  than 30 days. While these steps are not required by SSI program  guidelines, some field staff reported that they have been effective in  identifying potential violators and deterring future violations. SSA staff  reported a number of reasons for different documentation requirements  such as variance in individual office policies, personal preferences based  on experience, time pressures to complete cases, and the inability to  effectively verify supplied documentation.
section_title: SSA Does Not Fully Exploit Its Tools for Detecting Program Violations
paragraphs: SSA has not made optimal use of several tools that could be used to detect  residency violations. These include its “risk analysis system” for screening  cases more likely to result in overpayments, its “redetermination reviews”  of recipients’ eligibility, and home visits to verify recipients’ whereabouts.  Given its current focus on other types of program violations such as  excess income or resources, some staff told us that SSA’s risk analysis  system is not entirely effective at identifying residency violators. SSA has  used statistical risk analysis techniques for many years in the SSI program  to identify recipients who are more likely to be overpaid. Since SSA lacks  adequate staff resources to conduct an annual redetermination for every  recipient, it routinely screens for and targets those participants who are  most likely to have a change in their eligibility status or benefit amount.  Despite the proven effectiveness of its risk analysis system to help the  agency detect cases with highest potential for overpayments, SSA has not  used this tool to specifically identify residency violations. In fact, a  number of field staff told us that, in their experience, residency violations  frequently occur among SSI recipients who are designated as medium or  low risk for payment errors by SSA’s system. The agency may not discover  these violations for several years (if at all) unless it detects a change in a  recipient’s circumstances that causes the individual to be designated as  high risk.
To determine whether it is possible for SSA to target potential residency  violators more effectively using its existing systems, we developed and  tested a statistical model of factors possibly associated with residency  violations. Based on our field work and prior SSA and OIG studies, we  selected the following factors for testing: recipients born outside the  United States, prior residency violations, payments made to post office  boxes, direct deposit payments, and lack of response to agency inquiries  or recipients with unknown whereabouts. Using this model as a screen,  we identified all recipients who were currently in violation of residency  requirements as of April 2003. We found that recipients born outside the  United States—noncitizens as well as naturalized citizens—were more  than 40 times as likely to be violating residency requirements than were  native-born recipients. Similarly, recipients with prior residency violations  were about 10 times as likely to be current violators compared with  recipients who have no prior violations. We also found that recipients who  used post office boxes were somewhat more likely to be receiving benefits  outside the country than those without post office boxes. Some of the  other factors we considered, however, such as recipients who use direct  deposit, and lack of response of agency inquiries, were less likely to be  residency violators. Given the potential usefulness of this limited modeling  demonstration, it may be possible for SSA to expand and refine its risk  analysis system to better target potential violators.
Beyond the targeting problems we identified with SSA’s risk analysis  system, we found that the agency was not using redeterminations as  efficiently as it could despite the fact that SSA’s data and our prior reviews  have documented their effectiveness for verifying recipients’ eligibility. In  particular, home visits are not used frequently enough during  redetermination reviews according to staff in a number of offices we  visited. Although a number of field staff who use home visits reported that  it is a highly effective tool for verifying recipients’ residency, SSA and OIG  officials told us that this technique is not currently employed in some  offices that could benefit from the practice. For example, while a number  of field offices in two SSA regions we visited routinely use home visits,  other offices in the same geographic area rarely use this tool. SSA officials  and field office staff told us that a number of factors account for the  variation in how frequently this technique is used. These include a lack of  adequate staff resources in some offices, differences in the priorities of  field office managers, and differences in how individual staff view the  seriousness of the residency problem.
Those field offices that do carry out home visits as part of their  redetermination procedures have found them effective. About half of the  field offices we visited (9 of 17) routinely employ home visits at least some  of the time to verify whether recipients actually live at the address they  report to SSA. For example, SSA’s regional office in Dallas, Texas,  currently contracts with a private investigation firm to conduct residency  home visits. Using these investigators, field offices within the region  performed 4,200 home visits that uncovered at least $2.1 million in  additional overpayments between October 1997 and January 2003.  According to SSA data, this project achieved a benefit-to-cost ratio of  almost 8 to 1. Similarly, the California Department of Health Services has  worked cooperatively with SSA field offices in the San Diego area by  conducting residency home visits. Because Medicaid eligibility is often  directly tied to SSI eligibility, identifying residency violations may save  funds from both programs. Between October 2000 and September   2002, state Medicaid investigators identified about 1,600 SSI recipients  with residency violations. SSI staff in participating offices refer recipients  suspected of violating residency guidelines to the Medicaid investigators,  who subsequently perform unannounced home visits to establish the  recipient’s residency. Both SSA and state officials we interviewed told us  that this project has been effective at identifying residency violations that  might not have been detected by the agency using standard verification  procedures. For example, in April of 2002, state investigators discovered  an SSI recipient who was using a residence in southern California as a  mailing address. The investigators determined that this recipient had been  residing in Tijuana, Mexico, for at least 8 years. Similarly, in June   2002, state investigators found an SSI recipient using a post office box in  southern California as a mailing address. Upon further examination, the  investigators determined that the recipient had been living in San Felipe,  Mexico, since 1982. In addition, in July 2002, state investigators identified  two SSI recipients who improperly received SSI benefits while residing in  Tijuana, Mexico, between August 1999 and April 2002. SSA estimates that  these recipients were overpaid more than $40,000 during this time. Finally,  because the state provides this service to SSA free of charge, it is highly  cost-effective.
In terms of deterring future violations, we found that monetary penalties  and administrative sanctions are rarely, if ever, used in the offices we  visited. For example, about 72 percent of the field staff we interviewed  said that penalties or sanctions are not used in their offices, or are only  used occasionally. National data on SSA’s use of monetary penalties and  administrative sanctions also suggest that these tools are not routinely  utilized for recipients who fail to report important information that can  affect their eligibility, including absences from the country. For example,  in a recent report, we estimated that at most about 3,500 recipients were  penalized for reporting failures in fiscal year 2001. Under the law, SSA  may impose monetary penalties on recipients who do not file timely  reports about factors or events that can affect their benefits. A penalty  causes a reduction in 1 month’s benefits. Penalty amounts are $25 for a  first occurrence, $50 for a second occurrence, and $100 for the third and  subsequent occurrences. The penalties are meant to encourage recipients  to file accurate and timely information so SSA can adjust its records to  correctly pay benefits. However, a large number of staff we interviewed  noted that monetary penalties are too low to be an effective deterrent  against future residency violations. In addition, the Foster Care  Independence Act of 1999 (Pub. L. No. 106-169) gave SSA authority to  impose administrative sanctions on persons who misrepresent material  facts that they know, or should have known, were false or misleading. In  these circumstances, SSA may suspend benefits for 6 months for the initial  violation, 12 months for the second violation, and 24 months for  subsequent violations. Despite having this authority, we found that  administrative sanctions such as benefit suspension are rarely if ever used  by field staff for residency violators. Consistent with the results of our  field work, a prior review shows that administrative sanctions were only  imposed in 21 cases nationwide as of January 2002. A substantial number  of staff told us that they rarely use this tool because the process for  imposing administrative sanctions is often time-consuming and  cumbersome. In addition, some staff reported that SSA management does  not encourage the use of penalties or sanctions to deter residency  violations. In response to recommendations we made in a recent report,  SSA is currently evaluating its policies for imposing monetary penalties  and administrative sanctions.
section_title: SSA Has Not Actively Pursued Third-Party Data Sources to Detect Potential Violators
paragraphs: While SSA uses third-party information to verify certain aspects of  recipients’ eligibility such as income, we found that the agency lacks  adequate outside data sources to detect potential residency violations.  SSA is planning to conduct periodic computer matches with immigration  databases to identify noncitizen SSI recipients who voluntarily report their  planned absences from the country or are deported from the United  States. The agency currently receives periodic paper reports from  immigration officials on noncitizens who have current and planned  absences from the United States and sends them to the appropriate SSA  field offices for follow up. However, these procedures are only effective  for recipients who voluntarily report their absence to immigration  officials. Thus, SSA will remain limited in its ability to independently verify  the residency of SSI recipients who deliberately seek to conceal extended  periods outside the country. Over half of the SSA managers and field staff  we interviewed told us that access to automated immigration data would  help them to more accurately verify recipients’ residency.
Despite this limitation, SSA has not adequately explored the potential for  obtaining access to emerging data sources such as an entry-exit system  being developed by the Department of Justice and the Department of  Homeland Security (DHS). This system is being implemented as a  mechanism to monitor all major ports of entry/exit in the United States,  including land crossings, seaports, and airports. Once operational, this  system will allow authorized federal agencies to collect, maintain, and  share information on selected individuals who enter and exit the United  States to ensure border security, among other purposes. Our work  suggests that this system may also provide information that could help  SSA determine when noncitizen SSI recipients exit the country for  extended periods of time. We acknowledge that such databases could have  limitations that affect their accuracy and completeness—especially given  problems that our prior work has identified with some immigration data.  Thus, SSA would likely have to determine the reliability and cost- effectiveness of accessing such data before negotiating data sharing  agreements and using the information for detecting potential residency  violations.
SSA has also not fully utilized its authority to obtain independent data  from other sources, such as financial institutions, as a tool for detecting  potential residency violations. The Foster Care Independence Act of   1999 granted SSA new authority to verify recipients’ financial accounts. To  implement this authority, SSA issued proposed regulations on its new  processes for accessing financial data in May 2002. These regulations,  which were still in draft at the time of our report, may permit SSA to  obtain a variety of financial records from banks, credit card companies,  and other financial institutions, including those operating branches and  automated teller machines (ATM) outside the United States. However,  according to SSA officials, the agency only intends to use this information  to verify recipients’ bank account balances as a way of verifying their  financial resources. SSA does not currently plan to use financial institution  data more broadly to detect potential residency violations.
Given the relatively narrow scope of SSA’s proposed use of financial data,  the agency may be unnecessarily limiting its ability to detect residency  violations. In particular, SSA may be missing potentially helpful sources of  information such as data on recipients who conduct banking transactions  outside the United States using ATMs. As noted previously, a large  proportion of the residency overpayments SSA detected between 1997 and  2001 were tied to recipients who originated in various countries in Latin  America and South/Southeast Asia. However, SSA currently has no way to  identify recipients who withdraw SSI benefits from ATMs outside the  United States. Information we obtained from a national financial data  vendor indicates that it is now possible for authorized users to obtain  detailed information on individuals’ financial transactions from a large  number of national and international institutions. Such data sources  include basic information such as bank account balances from banks in  the United States, as well as more sophisticated information such as ATM  activity that is transmitted on the international telecommunications  networks. Our review suggests that such data could provide SSA with a  potentially powerful tool to identify residency violations. For example,  SSA may be able to obtain data for recipients whose SSI benefits are direct  deposited into a U.S. bank and then withdrawn from ATMs outside the  country for extended periods of time. However, SSA does not currently  plan to obtain access to direct deposit data from financial institutions or  ATM networks that operate in other countries.
section_title: Conclusions
paragraphs: SSA has made progress in addressing residency violations in recent years,  especially through the special initiatives it has undertaken. However, many  of these initiatives have been short-lived and limited to a small number of  field offices. Thus, the agency’s approach to this problem has been  generally ad hoc and restricted in scope. As a result, our review suggests  that SSA identifies only a portion of the violations and resulting  overpayments that occur each year. We recognize that the SSI program is  complex to administer and residency requirements are particularly  difficult to enforce because they can necessitate time-consuming, labor- intensive verification checks, such as home visits. However, SSA has not  employed a systematic, comprehensive approach to this problem that  would allow the agency to use its available systems and procedures more  efficiently and reduce the program’s exposure to additional violations. In  particular, SSA has not reengineered its current systems and processes to  make better use of limited budgetary and staff resources. For example, our  review shows that minor modifications of its risk analysis system could  help the agency identify recipients who are most likely to violate residency  requirements. Without such modifications, however, it will be difficult for  the agency to effectively target its redetermination reviews and  incorporate home visits in a cost-effective manner.
Additionally, SSA has not made sufficient use of independent, third-party  data sources to help verify recipients’ residency despite having  successfully used such tools to verify other aspects of recipient eligibility,  such as their income and other financial resources. SSA could improve SSI  program integrity and reduce residency overpayments by exploring more  creative use of technology, including the use of financial institution data to  detect recipients who use ATMs for bank transactions outside the United  States for extended periods of time. The agency may also benefit from  pursuing other emerging data sources such as entry/exit systems being  developed by the Departments of Justice and Homeland Security, although  prior problems we have identified with immigration data may require SSA  to determine the reliability of such databases.
Ultimately, failure to implement a more strategic approach to this problem  and to reengineer its existing processes may compromise the agency’s  ability to use its limited resources in the most cost-effective manner.  Moreover, failure to make optimal use of existing tools and access  emerging data sources could leave SSI and other programs, such as  Medicaid, vulnerable to continuing residency violations and additional  overpayments.
section_title: Recommendations
paragraphs: In order to further strengthen and increase SSA’s ability to detect SSI  residency violations and reduce resulting overpayments due to recipient  absences from the United States, we recommend that the Commissioner of  Social Security take the following actions:    Consider reengineering the agency’s risk analysis system to more  specifically target potential residency violators. The list of potentially  high-risk characteristics we have developed and tested could provide a  starting point for such refinements. To accomplish this, SSA may wish  to test the idea on a one-time basis using methods the agency deems  appropriate to assess its effectiveness.
Consider expanding the use of unannounced home visits in some areas  as a way of verifying the residency of recipients whom the agency  identifies as potentially being at high risk for violations. To ensure that  only cases with a high potential for success are selected, any potential  profile of high-risk recipients that SSA develops could be a primary  source of referrals. To maximize limited staff resources, SSA should  apply a strategic approach to this problem, recognizing that violations  are not equally prevalent in all areas of the country.
Study the feasibility of expanding the type of information SSA obtains  from financial institutions as authorized by The Foster Care  Independence Act of 1999 (Pub. L. No. 106-169). Additional information  to help identify violators could include bank and ATM withdrawal  records to help identify SSI recipients who may be accessing their SSI  benefits outside the United States for extended periods of time.
Investigate the potential for obtaining access to emerging third-party  data sources such as entry/exit databases being developed by DHS to  help field staff more accurately verify whether SSI recipients are  violating program regulations.
section_title: Agency Comments and Our Evaluation
paragraphs: We provided a draft of this report to SSA and DHS for review and  comment. SSA generally agreed with our recommendations, but noted  some challenges to their implementation.
While agreeing with each of our recommendations, SSA supplied  additional information concerning its ability to implement these  recommendations. With regard to our first recommendation to reengineer  its risk analysis system to more specifically target potential residency  violators, SSA agreed with the intent of the recommendation but  expressed concern that including individuals born outside the United  States as one risk factor could be considered discriminatory. As noted in  our report, we suggest that this factor could be included as one of several  different factors that the agency could use to refine its risk analysis  system. We believe that such an approach could be implemented in a non- discriminatory manner and would help SSA use its limited resources more  efficiently. Moreover, as discussed in the report, our analysis suggests that  this factor is a potentially powerful indicator of possible residency  violations.
With regard to our second recommendation to expand the use of  unannounced home visits, SSA agreed that home visits are a useful tool for  verifying SSI recipients’ residency, but noted that costs and employee  safety must be considered. We agree that these are important issues that  SSA must consider as it studies how home visits can be used most  effectively. Further, as we discuss in the report, some states have  successfully used state personnel and private investigators to perform  home visits. We also note that at least one state has found the use of  private investigators to be cost-effective. Thus, we believe that SSA could  look more closely at the experience of these states to identify potential  best practices for conducting home visits.
SSA also agreed with our third recommendation that the agency study the  feasibility of expanding the type of information it obtains from financial  institutions. SSA noted some potential legal and technical issues that will  require further study by the agency.  For example, SSA noted that financial  records may not be an accurate basis for identifying recipients who are  outside the country for more than 30 days.  While we agree that  definitively determining whether a recipient is outside the country for   30 consecutive days or more presents a challenge for the agency, we only  suggest that SSA could use financial institution data as a potential  indicator of residency violations.
Finally, with regard to our fourth recommendation, SSA agreed that there  may be potential benefits to accessing external data sources to help verify  recipients’ residency. The agency indicated that it will explore the  potential feasibility of using such data sources as part of its SSI Corrective  Action Plan.
SSA’s formal comments appear in appendix II.  SSA also provided  additional technical comments that we have incorporated in the report, as  appropriate.
We are sending copies of this report to the House and Senate Committees  with oversight responsibility for the Social Security Administration. We  will also make copies available to other parties upon request. In addition,  the report will be available at no charge on GAO’s Web site at  http//:www.gao.gov. If you have any questions concerning this report,  please contact me at (202) 512-7215.
section_title: Appendix I: Scope and Methodology
paragraphs: This appendix provides additional details about our analysis of the  Supplemental Security Income program’s (SSI) residency violations,  including potential weaknesses in the Social Security Administration’s  (SSA) policies and procedures. To meet the objectives of this review, we  reviewed prior and ongoing projects by SSA and its Office of Inspector  General (OIG), conducted independent audit work, and reviewed our prior  work on the SSI program. We also reviewed SSA’s policies and SSI  program guidelines concerning eligibility determinations and procedures  for detecting potential residency violations. In addition, we analyzed SSI  payment data between 1997 and 2001 and examined studies in which SSA  or its OIG identified recipients who were residing outside the country. We  reviewed our past work on the SSI program to evaluate the current use of  such tools as administrative sanctions and monetary penalties. Finally, we  interviewed SSA and OIG officials at its headquarters in Baltimore,  Maryland, and key regional and field managers and staff responsible for  administering and monitoring the SSI program.
We conducted independent audit work in five states (California, Florida,  Michigan, New York, and Texas) to identify common residency violation  characteristics and examine SSA’s processes to identify residency  violations. We selected locations for field visits based on the following  criteria: (1) geographic dispersion, (2) states previously included in a SSA  or OIG special initiative, (3) states with large numbers of SSI recipients,  (4) states with large dollars of SSI expenditures, and (5) states with large  numbers of noncitizen SSI recipients. These states represented about   72 percent of the total noncitizen population potentially eligible for SSI  benefits, about 41 percent of the total SSI recipients, and 45 percent of  total SSI benefits paid in the United States. In total, we visited 17 field  offices and interviewed 112 SSA field office managers and line staff  responsible for the SSI program. We visited field offices more prone to  having recipients with residency violations, especially offices near border  crossings either by land, sea, or air. Where appropriate, we also visited  offices that were involved with a prior or ongoing SSA or OIG special  initiative to detect residency violations.
During our meetings with SSA and OIG officials, we documented  management and staff views on how extensive residency violations are in  the SSI program; the effectiveness of current procedures and processes for  detecting and preventing residency violations; and potential improvements  to existing program processes, policies, and systems. We also interviewed  certain state officials knowledgeable about or involved with SSI residency  verifications. In addition, we interviewed officials from other federal  agencies, including the former Immigration and Naturalization Service,  and the Centers for Medicare and Medicaid Services (CMS) to determine  how these agencies could assist SSA in verifying recipients’ residency. We  also interviewed officials from a national financial data vendor to obtain  information on currently available financial data. We conducted our work  from September 2002 through May 2003 in accordance with generally  accepted government auditing standards.
As part of our study, we developed and tested a logistic regression model  to help predict whether certain SSI recipients were more likely than others  to have residency violations. The factors we used in our model were  recipients who (1) were born outside of the United States, (2) have their  SSI benefits direct deposited into bank accounts, (3) use post office boxes  to receive their mail, (4) have had a prior residency violation, or (5) could  not be located by SSA for an extended period. In deciding which variables  to include in our regression analysis, we chose variables that were most  frequently reported to us by SSA and OIG staff during our fieldwork.  Additional potentially useful variables were also reported. (See table 1 for  a more comprehensive list of the variables cited.) This is a partial listing of  the factors reported to us; it does not include all responses.
Our model resulted in estimates of the relative likelihood (odd ratios) of a  current residency violation depending on the absence or presence of the  included five variables (see table 2). If there is no significant difference  between the presence and the absence of one of the variables, with  respect to a current residency violation, the odds would be approximately  equal, and the ratio of the odds would be close to 1.00. The more the odds  ratio differs from 1.00 in either direction, the larger the effect it represents.  For example, if there were very little difference between those  beneficiaries who did and did not use direct deposit, with respect to a  current (as of Apr. 2003) residency violation, the odds ratio for direct  deposit would be close to 1.00.
section_title: Appendix II: Comments from the Social Security Administration
subsections: section_title: GAO Comments
paragraphs: The following are GAO’s comments on SSA’s letter dated June 27, 2003.  1.  Based on our analysis, we continue to believe that this factor— recipients born outside the United States—is a good indicator of  a  potential residency violation. Use of this factor may help SSA further  refine its risk analysis system (see report page 18).  2.  Our report does not state that direct deposit is a good indicator of a  residency violation. Rather, we discuss the potential use of financial  institution data such as recipients’ banking transactions outside the  United States using automated teller machines, which is currently  unavailable to SSA (see report page 22).
section_title: Appendix III: GAO Contacts and Staff Acknowledgments
subsections: section_title: GAO Contacts
section_title: Staff Acknowledgments
paragraphs: In addition to those named above, Jeff Bernstein, Sue Bernstein, Kriti  Bhandari, Salvatore F. Sorbello, Vanessa Taylor, Wendy Turenne, and  Shana Wallace made important contributions to this report.
section_title: Related GAO Products
paragraphs: Supplemental Security Income: Progress Made in Detecting and  Recovering Overpayments, but Management Attention Should Continue.  GAO-02-849. Washington, D.C.: September 16, 2002.
Supplemental Security Income: Status of Efforts to Improve  Overpayment Detection and Recovery. GAO-02-962T. Washington, D.C.:  July 25, 2002.
Social Security Administration: Agency Must Position Itself Now to Meet  Challenges. GAO-02-289T. Washington, D.C.: May 2, 2002.
Social Security Administration: Status of Achieving Key Outcomes and  Addressing Major Management Challenges. GAO-01-778. Washington,  D.C.: June 15, 2001.
High Risk Series: An Update. GAO-01-263. Washington, D.C.: January  2001.
Major Management Challenges and Program Risks: Social Security  Administration. GAO-01-261. Washington, D.C.: January 2001.
Supplemental Security Income: Additional Actions Needed to Reduce  Program Vulnerability to Fraud and Abuse. GAO/HEHS-99-151.  Washington, D.C.: September 15, 1999.
Supplemental Security Income: Long–Standing Issues Require More  Active Management and Program Oversight. GAO/T-HEHS-99-51.  Washington, D.C.: February 3, 1999.
Major Management Challenges and Program Risks: Social Security  Administration. GAO/OCG-99-20. Washington, D.C.: January 1, 1999.
Supplemental Security Income: Action Needed on Long-Standing  Problems Affecting Program Integrity. GAO/HEHS-98-158. Washington,  D.C.: September 14, 1998.
Supplemental Security Income: Opportunities Exist for Improving  Payment Accuracy. GAO/HEHS-98-75. Washington, D.C.: March 27, 1998.
High Risk Program: Information on Selected High-Risk Areas. GAO/HR- 97-30. Washington, D.C.: May 16, 1997.
High Risk Series: An Overview. GAO/HR-97-1. Washington, D.C.: February  1997.