Supplemental Security Income: Sustained Management Attention Needed to Address Residency Violations
Published: 2004-05-20T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: The Supplemental Security Income (SSI) program paid about $36 billion in benefits to about 6.9 million recipients in 2003. In recent years, the Social Security Administration (SSA) has identified a general increase in the amount of annual overpayments made to recipients who are not present in the U.S. as required by SSI program guidelines--a problem we refer as "residency violations." 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. 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, we 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: I am pleased to be here to discuss the Supplemental Security Income (SSI)  program. The Social Security Administration (SSA) administers the SSI  program, which is the nation’s largest cash assistance program for the  poor. SSI provides financial assistance to people who are age 65 or older,  blind or disabled, and who have limited income and resources. In 2003,  about 6.9 million recipients were paid about $36 billion in SSI benefits.  Benefit eligibility and payment amounts for SSI recipients are determined  by complex and often difficult to verify factors such as individual living  arrangements, including whether a person resides in the United States  (U.S.). Thus, the SSI program tends to be difficult to administer and  susceptible to overpayments. In recent years, SSA has identified a general  increase in the amount of annual overpayments made to recipients who  are not present in the U.S. as required by SSI program guidelines—a  problem we refer to as “residency violations.”
My testimony today focuses on a report we issued in July 2003 in response  to a request from this subcommittee. 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 U.S. and (2) identify any  weaknesses in SSA’s processes and policies that impede the agency’s  ability to detect and deter residency violations.
In summary, SSA detected overpayments of $118 million for residency  violations between 1997 and 2001, but interviews with the Office of  Inspector General (OIG) and agency officials suggest that the agency only  detected a portion of the violations that occur each year, at least in some  parts of the country. The extent of violations appears to vary by  geographic region, with overpayments being more prevalent in several  large metropolitan areas in five states—California, Florida, Illinois, New  Jersey, and New York. We also found that recipients born outside the U.S.  accounted for at least 87 percent of all residency overpayments. Three  kinds of weaknesses have historically impeded SSA’s ability to detect and  deter residency violations. First, to verify domestic residency, the agency  has often relied on self-reported information from recipients and visual  inspection of documents that can be easily manipulated, such as rent  receipts and letters from neighbors or clergy. Second, the agency has  historically made limited use of tools at its disposal to detect possible  violators, such as its risk analysis system to screen for high-risk cases  more likely to result in overpayments. Third, SSA has not adequately  pursued the use of independent, third-party data, such as emerging  immigration databases or recipient bank account information, to help  detect residency violations.
In response to our report recommendations, SSA indicated that it is  considering implementing several initiatives that may provide a more  complete picture of residency violations in the SSI program and improve  its ability to detect and prevent such violations in a more efficient, timely  manner. These include investigating the potential for obtaining access to  foreign automated teller machines to track banking transactions over time,  requesting assistance from state Medicaid fraud investigators to help SSA  perform more home visits to verify recipients’ residence, and investigating  the potential of examining arrival/departure records maintained by the  Department of Homeland Security to identify recipients who leave the  country for more than 30 consecutive days. While it is too early to assess  how effective these initiatives may be, we support SSA’s commitment to  studying this problem further and its willingness to explore new data  sources and improvements to existing processes as a way of detecting  potential violations in a more timely manner. Thus, we view these  initiatives as positive first steps. However, sustained management  attention to identifying and preventing residency violations will be needed  to further strengthen the integrity of the SSI program.
subsections: section_title: Background
paragraphs: 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 U.S. to be  eligible for SSI payments. SSA guidelines define a resident of the U.S. as a  person who has established a dwelling in the U.S. with the intent to live in  the country. Section 1611(f) of the act also provides that no individual is  eligible for SSI payments for any month during all of which the individual  is outside the U.S. Recipients who fail to establish residency in accordance  with SSI program guidelines or do not report absences of 30 days or more  may be overpaid, and subject to 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.
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 U.S.
subsections: section_title: Residency Violations May be More Prevalent than SSA Has Detected
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,  over the past few years, SSA and its OIG have initiated a number of studies  estimating that residency violations in certain regions of the country may  represent as much as 26 percent of SSI cases in those areas. These local  studies were generally limited in duration and were performed within  specific geographic areas:    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 one 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 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 U.S.
section_title: Many Violations Are Geographically Concentrated
paragraphs: Our analysis of SSA’s data showed 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, we found that just 15  counties in 5 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,  there were other counties with a significant percentage of SSI residency  overpayments: Queens County, N.Y. (5.2 percent); New York County, N.Y.  (5.0 percent); Kings County, N.Y. (4.8 percent); San Diego County, Calif.  (4.1 percent); and Bronx County, N.Y. (3.5 percent). Moreover, of  approximately 3,000 U.S. counties, 50 accounted for 77 percent of all  residency overpayments detected by SSA during this time. (See fig. 1.)
section_title: Most Overpayments Were Made to Recipients Born Outside the U.S.
paragraphs: SSA’s data also showed that individuals born outside the U.S. 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. 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 showed that recipients from just 14 countries and 1 U.S. territory  accounted for about 73 percent of all residency overpayments during this  period. 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). (See fig. 2.)
Puerto Rico is a United States territory.
section_title: Reliance on Self- Reported Information and Other Vulnerabilities Have Impeded SSA’s Ability to Detect and Deter Violations
paragraphs: SSA’s ability to detect and deter residency violations has been impeded by  three kinds of weaknesses. First, the agency has relied heavily on self- reported information from recipients to determine domestic residency,  often without independently verifying such information. Second, SSA has  made insufficient use of its existing tools for identifying potential  violations, such as its risk analysis system to screen for high-risk cases.  SSA has also not made optimal use of redetermination reviews, home  visits, monetary penalties, and administrative sanctions to deter future  violations. Finally, the agency historically has not made adequate use of  independent data sources from other federal agencies or private  organizations to detect nonresidency of SSI recipients.
subsections: section_title: SSA Has Relied Heavily on Self-Reported Information That Can be Manipulated
paragraphs: SSA has relied on self-reported information, such as documents and  statements from recipients, to establish proof of U.S. residency. 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 recent review, about half the SSA field staff we  interviewed reported that they relied on recipients to self-report important  information with respect to travel outside the U.S. SSI program guidelines  have generally directed SSA staff to accept recipients’ assertions  concerning residency unless they have reason to question the accuracy of  their statements. If SSA field staff have reason to believe that a recipient  has been outside the country for more than 30 days, they may request  additional documentation such as a plane ticket, passport (or similar  evidence which establishes date of entry into the U.S.), 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.  However, program guidelines do not require field staff to perform any  additional verification steps to establish recipients’ residency.
We also learned that some of the documents accepted by SSA as proof of  residence are subject to manipulation or forgery. For example, staff in one  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.
Given the agency’s reliance on self-reported information, SSA field staff  often used their personal experience, judgment, and ad hoc interviewing  procedures to detect potential residency violations. In particular, SSA field  staff have looked for inconsistencies in recipient statements or a  recipient’s 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. Staff may also ask whether a recipient owns  property outside the U.S. Questionable or inconsistent answers to such  questions may result in requests to provide additional documentation.  However, effectively identifying residency violators has often depended on  the experience and persistence of individual staff.
Our review also found that the procedures for documenting recipients’  residency varied widely among the offices we visited, in particular, the  number and types of evidentiary documents requested by staff. 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,  such as a second passport or other travel documents to determine whether  the individual has been outside the country for more than 30 days. While  these steps are not required, 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 Has Not Fully Exploited Its Tools for Detecting and Deterring 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.  SSA has used statistical risk analysis techniques for many years in the SSI  program to identify recipients who are more likely to be overpaid due to  excess income or resources. Since SSA lacks adequate staff resources to  conduct an annual review of every recipient, it uses this technique to  identify recipients 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 identify cases with the highest potential for overpayments, SSA has  not used this tool to specifically identify potential residency violations. To  determine whether it would be possible for SSA to more effectively  identify potential residency violators by using its existing systems, we  developed and tested a statistical model of factors possibly associated  with residency violations. Using this model as a screen, we examined all  recipients who were currently in violation of residency requirements as of  April 2003, and found that recipients born outside the U.S.—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. 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. SSA is  studying the potential for refining its screening technique to improve its  effectiveness for identifying recipients at high risk for residency violations.
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 were used infrequently during redetermination  reviews according to staff in a number of offices we visited.
Those field offices that have used home visits as part of their  redetermination procedures have found them effective. About half of the  field offices we visited (9 of 17) employed home visits at least some of the  time to verify whether recipients actually live at the address they report to  SSA. For example, the SSA regional office in Dallas, Texas contracted 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. In one  instance, state investigators discovered an SSI recipient who was using a  residence in southern California as a mailing address, while actually  residing in Tijuana, Mexico, for at least 8 years. In another case, state  investigators found an SSI recipient using a post office box in southern  California as a mailing address, although the recipient was in fact living in  San Felipe, Mexico, since 1982. Because the state provides these  investigative services to SSA free of charge, it is highly cost-effective. To  address this issue, SSA is currently exploring the potential for having  states assist in performing home visits using their Medicaid fraud  investigators. According to SSA, 27 states and the District of Columbia  have expressed an interest in assisting in this effort.
In terms of deterring future violations, we found that existing 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. 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. However, a large number of staff  we interviewed noted that monetary penalties are too low to be an  effective deterrent against future residency violations.
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 up to 24  months. Despite having this authority, we found that benefit suspensions  are rarely if ever used by field staff for residency violators. In fact,  administrative sanctions were only imposed in 21 cases nationwide as of  January 2002. A substantial number of staff told us that they rarely use  sanctions because the process for imposing them 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. SSA is currently evaluating its policies for imposing monetary  penalties and administrative sanctions.
section_title: SSA Had 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 has  historically lacked adequate outside data sources to verify that recipients  are residents of the U.S. The agency currently receives periodic paper  reports from immigration officials on noncitizens who have current and  planned absences from the U.S. 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. We have  recommended that SSA consider using a new system called the U.S. Visitor  and Immigrant Status Indicator Technology system (US VISIT) to verify  some recipients’ entry and exit from the country. It is currently being used  by the Department of Homeland Security and will incorporate existing  entry-exit databases. When fully implemented, this system will provide a  mechanism to monitor major ports of entry/exit in the U.S., including land  crossings, seaports, and airports. As noted previously, SSA is examining  the potential for obtaining access to the system to identify SSI recipients  who reside outside the U.S. for more than 30 consecutive days.
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  (FCIA) 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. In September 2003,  the agency issued its final regulations.  SSA is testing processes to access  the records of financial institutions and credit bureaus to detect  unreported income or resources of SSI applicant and recipients. However,  it is not clear whether SSA plans to use financial institution data more  broadly to detect potential residency violations. In particular, it may be  missing potentially helpful sources of information such as data on  recipients who conduct banking transactions outside the U.S. 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 U.S. 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.  SSA may be able to obtain data for recipients whose SSI benefits are  direct-deposited into a U.S. bank and then withdrawn from automated  teller machines outside the country over extended time periods. In  response to our recommendation, SSA has indicated that it would explore  the feasibility of obtaining such information to identify recipients who  reside outside the U.S. for more than 30 consecutive days.
Mr. Chairman, this concludes my prepared statement. I will be happy to  respond to any questions you or other Members of the Subcommittee may  have.
section_title: GAO Contacts and Staff Acknowledgments
paragraphs: For information regarding this testimony, please contact Robert E.  Robertson, Director, or Daniel Bertoni, Assistant Director, Education,  Workforce, and Income Security Issues at (202) 512-7215. Individuals  making contributions to this testimony include Susan Bernstein, Jeff  Bernstein, Jeremy Cox, Sal Sorbello, Vanessa Taylor, Wendy Turenne, and  Shana Wallace.
section_title: Related GAO Products 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 ImproveOverpayment  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.
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