Public Assistance: PARIS Project Can Help States Reduce Improper Benefit Payments
Released: 2001-10-10T00:00:00

Letter

Background

The PARIS interstate match program was initiated to help state public assistance agencies share information with one another. Its primary objective is to identify individuals or families who may be receiving or having duplicate payments improperly made on their behalf in more than one state. In this voluntary project, the participating states agree to share eligibility data on individuals who are receiving TANF, Food Stamps, Medicaid, or benefits from other state assistance programs. The participating states are primarily responsible for the day-to-day administration of PARIS, and each state designates a coordinator for the project.

How PARIS Operates

PARIS uses computer matching to identify improper benefit payments involving more than one state. This process entails comparing participating states’ benefit recipient lists with one another, using individuals’ SSNs. Other items of information are included in the files that the states share, such as the individual’s name, date of birth, address, case number, public assistance benefits being received, and dates that benefits were received. Matches are conducted by the Defense Manpower Data Center (DMDC) in February, May, August, and November of each year.DMDC produces a file of all the SSNs on the list submitted by the participating state that are the same as the SSNs appearing on the list of some other state and provides the matched records, known as match hits, to ACF, who forwards them to the appropriate states. To be considered a working member of PARIS, states agree to participate in at least the August match each year.

Once the participating states receive the file of matched SSNs from DMDC, they are expected to send the match hits to the appropriate staff for follow-up or investigation. The staff may take a number of steps to verify information that affects individuals’ eligibility for benefits. These steps include requiring an individual to come into the office to show proof of residency and contacting other states to verify whether the individual is still receiving benefits from those states. Improper benefit payments may be made because of client error, agency administrative error, or fraud and abuse. A client error might occur when an individual receiving program benefits in one state moves to another state but fails to report the move to program authorities. An administrative error could occur when a local benefit worker is informed that the recipient is moving out of the state but fails to update the record. Without PARIS matching, such errors might not be detected until the individual is asked to reverify program eligibility, which could occur as much as a year later. Additionally, the reverification of eligibility might not detect fraud or abuse when a person deliberately obtains benefits in more than one state by providing false information to program authorities.

If after investigating the match hit, state or local officials determine that an individual is improperly receiving public assistance benefits in their state, they may initiate action to cut off benefits. In general, to protect the rights of the recipients, administrative due process requirements must be followed before benefits can be cut off. For example, an individual may be given up to 30 days to respond to a formal notice that benefits will be stopped. Moreover, if the recipient can demonstrate that he or she is residing in the state and is eligible for assistance, then benefits may be continued or reinstated. “…will ensure that confidential recipient information received pursuant to this Agreement shall, as required by law, remain confidential and be used only for the purpose of the above described match and for verifying eligibility and detecting and preventing fraud, error and abuse in respective Programs.”

About the Three Programs We Examined

Our review focuses on three benefit programs covered by PARIS interstate matches: TANF, Medicaid, and Food Stamps. Benefits for TANF and Food Stamps are provided directly to recipients; however, Medicaid payments are made directly to those who provide health care services, such as MCOs and other health care providers. All three programs are generally administered at the state and local level, but are funded with federal money or a combination of federal and state money. Depending on the state, the same staff in local offices may determine eligibility and benefit levels for all three programs. However, some states administer the TANF and Food Stamp programs separately from the Medicaid program. Table 1 provides a brief description of the three programs.

A fourth program—the SSI Program administered at the federal level by SSA—is indirectly related to the PARIS interstate matches. In many states, SSI recipients are automatically qualified to receive Medicaid and are therefore included in PARIS matches.

PARIS: A Potentially Cost-Beneficial Means of Controlling Improper Payments

PARIS coordinators in most of the 16 participating states and the District of Columbia told us they believe the interstate match is effective in identifying improper TANF, Medicaid, and Food Stamps benefit payments in more than one state. By eliminating these duplicate recipients from the rolls, states can prevent future improper payments and save program dollars. However, few states tracked the actual savings realized from the PARIS match. Four states and the District of Columbia reported a total of about $16 million in estimated savings from various PARIS matches conducted in 1997, 1999, and 2000. A substantial proportion of the estimated savings was attributed to the Medicaid program. While officials in only three states have compared the costs to the benefits that result, their studies indicate that the matching is cost-beneficial. We prepared our own analysis, which also suggests that PARIS may help states save program funds by identifying and preventing future improper payments.

PARIS Detects Improper Payments in Bordering and Nonbordering States

PARIS helps to identify improper benefit payments in bordering and nonbordering states according to most of the PARIS coordinators we spoke with. The February 2001 match identified almost 33,000 instances in which improper payments were potentially made on behalf of individuals who appeared to reside in more than one state. Of these, 46 percent of the potential hits involved Medicaid benefits alone, while the remaining 54 percent involved some combination of TANF, Medicaid, and Food Stamps. However, most of the states did not maintain detailed records on the number of potential match hits that were, in fact, found to be instances of improper payments. Nor were they able to tell us what proportion of improper TANF and Food Stamp payments were due to client error, administrative error, or fraud and abuse.

Some PARIS coordinators believe that fraud and abuse may be more common in areas where two states share an urban border. For example, one coordinator told us that individuals living in the District of Columbia metropolitan area could travel in minutes to Maryland and Virginia and apply for benefits in each place. Figure 1 depicts participating states and the District of Columbia and their shared borders.

Independent of PARIS, some states conduct interstate matches with bordering states to prevent improper payments caused by either error or potential fraud and abuse. Many of these states now participate in the PARIS match. PARIS coordinators told us that the PARIS approach offers significant advantages over single state-to-state matches.

For example, PARIS makes it possible for a state to match with numerous other states by simply submitting a file to a central agency. In addition, a uniform data-sharing agreement covers the exchange, and the DMDC adjusts for incompatibilities between different computer systems. This unified approach can be more efficient than individual state-to-state matches and can help to reduce the expense of matching.

In addition to simplifying matches with bordering states, PARIS also facilitates data sharing with nonbordering states. This is important because even when two states do not share a border, improper payments can still be made, whether due to error or deliberate deception, such as fraud and abuse. For example, PARIS officials in New York discovered a woman receiving TANF benefits in New York for five children who were actually living with relatives and receiving benefits in Illinois. Table 2 shows the results from the February 2001 PARIS match for selected states, including nonbordering states.

About 80 percent of the match hits listed in table 2 are between states that do not border one another. For example, North Carolina has more match hits with Florida and New York than it does with neighboring Virginia. In addition, in New York and Pennsylvania, match hits with nonbordering states represented 73 percent and 50 percent of their total match hits, respectively. Although both of these states have matched recipient data with bordering states for years, the PARIS match identified numerous instances of potential duplicate benefits in nonbordering states that might not otherwise have been detected.

PARIS Helped Several States Avoid Millions in Improper Payments

While most states do not track the savings they have achieved or the costs they incurred because of the PARIS match, a small number of states were able to document the results of participating in the project. Four states and the District of Columbia provided us with their estimated savings from participating in PARIS. Three of the states also performed cost-benefit analyses, demonstrating that they found PARIS to be cost-beneficial.

Pennsylvania estimated that two quarterly matches in 2000 produced more than $2.8 million dollars in annual savings in the TANF, Medicaid, and Food Stamp programs and achieved a savings-to-cost ratio of almost 12 to 1. About $2.5 million (87 percent) of the total estimated savings are attributed to the Medicaid program.

Maryland estimated that its first PARIS match in 1997 produced savings of $7.3 million in the Medicaid program alone. The match identified numerous individuals who were originally enrolled in Medicaid due to their SSI eligibility, but at the time of the match no longer lived in the state. Subsequent matches conducted between November 1999 and August 2000 have produced savings of about $144,000 in the TANF, Medicaid, and Food Stamp programs, with a savings-to-cost ratio of about 6 to 1.

Kansas estimated that two PARIS matches in 1999 and 2000 resulted in savings of about $51,000 in the TANF, Medicaid and Food Stamp programs, with a savings-to-cost ratio of about 27 to 1.

New York reported that improper payments identified in four matches conducted in 1999 and 2000 produced estimated savings of $5.6 million; however, the state did not collect data on the costs associated with investigating these matches.

The District of Columbia estimated that one PARIS match conducted in 1997 resulted in savings of about $311,000 in the TANF and Food Stamp programs; however, officials did not collect savings data for the Medicaid program, nor did they collect cost data.

Our discussions with numerous state and federal officials have led us to conclude that the substantial variation in the estimated program savings and savings-to-cost ratios across these states is attributable to a number of factors. These factors, which could also apply to any participating state, include differences in the extent to which state and local officials follow up on (or fail to pursue) match hits and take action to cut off benefits where appropriate; the methods and assumptions states use to estimate their savings; the proportion of match hits that are valid in that they are found to reflect actual improper benefits being paid in more than one state (a higher proportion of valid match hits will generally yield more program savings than a lower rate, and is more likely to be cost-beneficial);the estimated number of months of avoided benefit payments; the size of the recipient population and the monthly benefits provided in each state under the TANF, Medicaid, and Food Stamp programs; how long it takes local office staff or fraud investigators to follow up on match hits; the salary costs of state and local staff involved with PARIS; and the cost to create an automated list of recipients at the state level to be sent to DMDC.

Because so few states had analyzed their savings and costs from participating in PARIS, we performed an independent analysis to assess how certain factors might influence the extent to which participating in PARIS could achieve program savings. We studied how certain key variables, such as the number of programs included, the proportion of match hits that are valid, and the estimated number of months of avoided benefit payments could affect the overall savings a state might achieve by participating in PARIS. We used national data where available (such as average benefits paid to recipients for each program). When national data were not available, we used the experiences of five states for our analysis. We used professional judgment to determine the values for several key assumptions in our analysis. Specifically, using a hypothetical example in which 100 match hits are sent to local benefit offices for staff to investigate, we assumed that each match hit requires 2 hours to determine whether benefits are improperly being paid in more than one state and costs $68.97 on average, resulting in a total of $6,897 in salaries and related expenses to follow up on all 100 match hits; the average state cost is about $440 to generate the automated list; 20 percent of the match hits investigated are found to be valid; and program savings come entirely from the future benefit payments that are avoided. (See app. I for a more detailed description of the data and assumptions used in our analysis.)

Our analysis suggests that PARIS, as it currently operates, could help save both federal and state program funds. In particular, our analysis indicates that if states include the TANF, Medicaid, and Food Stamp programs in their matching activities, the net savings could outweigh the costs of participation. Using our hypothetical example in which 100 match hits are sent to local benefit office staff for follow-up, we illustrate in table 3 how the savings to a state from participating in one PARIS match could vary depending on (1) the number of programs included in the match and (2) differences in the valid hit rate. The table assumes that the savings for each program accrue for 3 months.

If 20 percent of the match hits are valid (they accurately identify 20 out of 100 instances in which improper benefits are being paid in more than one state) and the individuals identified are enrolled in all three programs, the match would produce gross savings of almost $42,000, yielding a savings- to-cost ratio of about 5 to 1. Ultimately, the match would result in net savings of more than $34,000, as shown in table 3, taking into account total match costs of about $7,000. Conversely, costs exceed savings under only one scenario in this example. A valid hit rate of 10 percent, in which the match only includes the Food Stamp program—a rate substantially below what participating states have reported—would result in a net cost to the state of about $3,300.

The number of months that future benefit payments are avoided can also influence the amount of savings that result from a PARIS match. Table 4 illustrates the variation in program savings that could result depending on the number of months of future benefits that are avoided and the number of programs matched, given a 20-percent valid hit rate.

As the table shows, there are three scenarios under which a state in our analysis would experience a net loss from participating in PARIS. One month’s worth of TANF, Medicaid, or Food Stamp benefits avoided would yield a net cost to the state of between approximately $2,000 and $5,000. However, the match would produce savings in all other possible scenarios. For example, it would yield over $83,000 in gross savings if 6 months of benefits are avoided and the match was performed for all three programs (a savings-to-cost ratio of about 11 to 1). The net savings would be about $76,000.

Our analysis assumes that only a small number of match hits are sent for follow-up (100), which results in a small number of valid hits (20). A larger number of valid hits would likely result in greater savings as well. For example, while some states, such as Kansas, with smaller recipient populations have reported relatively small numbers of valid hits and lower levels of savings, other states, such as Pennsylvania and New York, with larger recipient populations have had much higher numbers of valid hits and much greater levels of savings.

Although the information provided by states and our analysis indicate that participating in PARIS interstate matches can save federal and state funds, savings are not the only benefit of participating in PARIS. Interstate matches are an important internal control to help states meet their responsibility for ensuring that public assistance payments are only made to or on behalf of people who are eligible for them. In addition, PARIS officials in eight states told us they believe the PARIS interstate matches can help deter people from applying for duplicate public assistance payments.

Limitations of PARIS

The PARIS project’s interstate matching has helped identify cases of duplicate benefits that otherwise would likely have gone undetected; however, PARIS has been limited by several factors. First, only one-third of the states are participating in the matches, and a large portion of the public assistance population is not covered by the matching. Second, the project has some problems with coordination and communication among project participants. Third, some states are giving inadequate attention to the project. As a result, match hits are not being resolved, and in particular, duplicate payments made for Medicaid beneficiaries receive low priority. Finally, the project cannot help prevent duplicate benefits from occurring in the first place, but can only identify and help stop them after they have started.

One-Third of the States Participate

Only one-third of the states are participating in the PARIS interstate matches. At the time of our review, 16 states and the District of Columbia were participating. As a result, the public assistance records of the other 34 states were not being shared with participating states. These nonparticipating states contain 64 percent of the population that is likely to be eligible for public assistance.

We spoke to officials in seven nonparticipating states to learn their reasons for not participating. They noted the state’s preoccupation with more urgent matters, such as implementing new programs or systems, and the fact that information about the project had not reached someone with the interest and authority to get the state involved. They also cited some concerns about the project. These include lack of data showing that participating would produce savings for their state; nonparticipation of bordering states, which are perceived as the most likely sources of valid match hits; lack of written guidance on coordinating the resolution of match hits with other states; and inadequate federal sponsorship of PARIS and the resulting lack of assurance that the project will continue.

Efforts by federal agencies to increase participation in the project have been minimal. ACF, the lead agency on the project, has not officially recognized PARIS and devotes very little resources to it. ACF management has not taken actions, such as sending letters to state TANF directors to inform them about the project and encourage them to participate. Also, ACF management has not asked other federal agencies to work with ACF on the project and help get more states involved. CMS, the federal agency that stands to reap the greatest savings from the project, has made no effort to encourage state Medicaid agencies to participate. In 1999, FNS sent a letter to state Food Stamp agencies encouraging them to participate in PARIS interstate matches; otherwise, FNS has had little involvement in the project. This lack of official support for the PARIS project may contribute to the low participation rate. For example, the TANF officials that we spoke with in one of the nonparticipating states who were relatively new to their positions said they had never heard of PARIS. In another nonparticipating state, a Medicaid official told us the state would be much more likely to participate in PARIS if CMS encouraged it to do so.

Participating States Have Difficulty With Coordination and Communication

The PARIS project has had various problems with coordination and communication that limit the project’s effectiveness. The problems include the following.

Difficulties contacting other states. Benefit workers in four of the five participating states that we visited said they have had difficulties contacting benefit workers in some other states to obtain information to resolve match hits or to get the evidence needed to take action against clients. Problems making contacts occur because the telephone numbers that states provide for obtaining information on individual cases are sometimes inaccurate or never answered or are central numbers that are just the starting point for finding the right person.

Submission of incomplete and incompatible data. We noted that some of the states submit data for matching that are likely to increase the number of invalid match hits and the amount of work other states will have to do to determine if match hits are valid. For example, we found that some states include closed cases among the active cases submitted for matching, cases with improper SSNs, or cases that omit the dates clients started receiving benefits.

Uncertainties concerning responsibilities for collecting overpayments from individuals. PARIS officials from three states said it is not clear which state should assess and collect an overpayment when it is found that a client has been receiving TANF or Food Stamp benefits from two or more states. For example, it is not clear if the state where the client does not reside should assess an overpayment because, as a nonresident, the client was not eligible to receive benefits from the state or if the state where the client does reside should assess the overpayment because it is much more likely to be able to collect the overpayment. Also, it is not clear how to determine which state should assess an overpayment when the client claims two residences very near each other but in different states, and it is not known where the client actually lives.

Although some coordination and communication problems are likely to occur in any project that involves multiple states and different federal agencies, the project’s lack of formal guidance and processes makes these problems more likely to occur. Currently, the formal guidance for the program only includes the file format the states need to provide for the match. However, it does not address matters such as the type of case information other states’ benefit workers should be able to get when they call the telephone number provided for a case. Also, the guidance does not have written definitions of some key terms, such as “active case,” or explanations of how the various data fields are to be used by states to investigate match hits. Further, the project has no guidance or protocols for coordinating the assessment and collection of overpayments. However, ACF, CMS, and FNS have not provided the management or administrative support—such as a formal focal point at the federal level—that would be needed to coordinate the project more effectively and help develop such guidance and protocols.

Management Attention Is Inadequate in Some States

In some states, management has given little or no attention to the PARIS interstate matches and has allowed match hits to go unresolved. This problem is more pronounced with Medicaid match hits because, in some states, they are given a lower priority than match hits involving TANF or Food Stamps.

We found evidence that in at least three states that have participated in the PARIS project since August 1999, match hits for the entire state or for some densely populated areas were not being resolved. The PARIS coordinator in one state told us that match hits in his state have never been sent out to workers to be resolved. In a second state, a large metropolitan area had not received any match hits from its district office until shortly before our visit in February 2001. The PARIS coordinator in a third state told us that a large county sometimes ignored the PARIS match hits sent to it for resolution.

The problem of not resolving match hits appears to be most pronounced in the Medicaid program. Information we received from DMDC indicates that some states may not be focusing sufficient attention on their Medicaid match hits. Because DMDC does not retain state data used for the PARIS matches, we were not able to determine how many match hits involving Medicaid are not resolved and thus recur each quarter. However, data provided by DMDC for the February 2001 PARIS matches show that some states have a relatively large percentage of match hits involving Medicaid. For example, if 40 percent of the records a state submitted for matching were for clients receiving benefits in a particular program, then one might reasonably expect to find that about 40 percent of the match hits involved that program. Thus, finding a disproportionately higher rate of match hits involving that program could suggest a possible problem. Such is the case with six states that have participated in PARIS since February 2000 or before. For each of the six states, the February 2001 PARIS match resulted in a proportionately higher percentage of match hits involving Medicaid than would generally be expected. For example, in one state, 60 percent of the records submitted for matching were cases involving only Medicaid benefits (not TANF or Food Stamps), but 78 percent of the resulting match hits were for such cases. In another state, 31 percent of the records submitted were for cases involving Medicaid received due to eligibility for SSI, but 69 percent of the resulting match hits were for such cases.

Match hits involving duplicate Medicaid benefits frequently occur, not because of fraud or abuse, but because Medicaid beneficiaries often do not notify the state when they move out of state. Therefore, a state will keep beneficiaries on the rolls until it discovers that they have moved. The state may make this discovery during a routine reverification of eligibility, which is generally performed once a year or less often. However, officials from several states have told us that their states never reverify the eligibility of a certain type of Medicaid beneficiary, such as one who is eligible based on his or her receipt of SSI. Therefore, the PARIS matches often involve this type of beneficiary. Although a state receives notifications from SSA when SSI clients move out of the state, states often do not remove Medicaid beneficiaries from their rolls based on these notifications, according to an SSA official.

The PARIS coordinators for two states told us this problem came to light after they examined their first PARIS interstate match results and found a startling number of match hits involving SSI recipients who were on the state’s Medicaid rolls. One state compared the Medicaid match hits from its first PARIS run with SSA files and found 5,000 SSI recipients on the state’s Medicaid rolls who, according to SSA records, were not residing in the state. This prompted the state to do a similar match with SSA records using all the state’s Medicaid beneficiaries. The state then followed up with letters to Medicaid enrollees who the matches indicated no longer lived in the state. As a result of the PARIS and subsequent SSA matches, the state identified 17,000 people on its Medicaid rolls who were no longer eligible for Medicaid in the state. We heard a similar story from another state. Both states, we were told, had been making monthly payments to MCOs for the Medicaid beneficiaries, who would have stayed on the states’ rolls indefinitely if the state had not participated in the PARIS matches.

Yet even after receiving large numbers of Medicaid match hits, some states appear not to be resolving them or addressing the problems with their Medicaid rolls. We have been told by some PARIS coordinators that the departments administering Medicaid are focusing their efforts on getting people on the Medicaid rolls rather than removing people who are no longer eligible. PARIS officials in two states said that they believe the local benefit workers or the offices responsible for Medicaid have not adjusted their thinking to recognize the shift from a fee-for-service to a managed care environment. In the past, when Medicaid services were provided on a fee-for-service basis, costs were incurred only if beneficiaries sought medical treatment and providers submitted bills for the treatment. Therefore, if a beneficiary moved out of state but remained on the state’s Medicaid rolls, medical expenses were not incurred for the beneficiary if he or she did not seek treatment in the state. However, when the state makes a fixed monthly payment to an MCO for each Medicaid beneficiary, as is done under some managed care arrangements, the state makes payments to the MCO regardless of whether the beneficiary ever seeks medical treatment.

PARIS Identifies Duplicate Benefits After They Are Provided

The PARIS project was designed to identify duplicate benefits after they have been provided, not to prevent the duplicate benefits from occurring in the first place. Therefore, the PARIS matches are part of what has been described as a “pay and chase” process, in which states pay benefits to clients and then try to recover overpayments when they discover the clients were not eligible for the benefits. Preventing an improper payment in the first place is preferable to “pay and chase” because overpayments are often difficult to collect from low-income clients who no longer live in the state. Also, when states make payments to MCOs for beneficiaries who should no longer be on their Medicaid rolls, these funds are wasted unless they can be recouped. According to a Medicaid official, it may be difficult for states to recoup overpayments to MCOs caused by errors in states’ Medicaid rolls.

Officials from most states we spoke with said they would like a data- sharing process that could be used before benefits are provided—that is, a process that would allow state caseworkers to check other states’ data to see if an applicant was already receiving benefits elsewhere before the state approved an application for benefits. Such a process would have to provide prompt responses (probably within 24 hours) to inquiries— something very different from the quarterly PARIS matches. One option for this process includes a national database of clients receiving public assistance in any state. Such a database would be maintained by the federal government and would consist of records submitted and regularly updated by the states.

Implementing such an option would require federal leadership and funding to address programming and operating expenses and potentially the standardization of data and information systems among participating states. Also, while implementing this option could help prevent duplicate payments, it must be balanced against the additional privacy concerns that might arise.

Conclusions

The PARIS project offers states a potentially powerful tool for improving the financial integrity of their TANF, Medicaid, and Food Stamp programs. However, the project has fallen short of realizing its full potential, as is most clearly evidenced by relatively low state participation. While PARIS’ success ultimately rests in the hands of the states, key federal players have not done enough to provide a formal structure to the project that encourages and facilitates state participation. More specifically, ACF, CMS, and FNS have not taken the lead in establishing a focal point in the federal government for coordinating the project. This is crucial given the complicated relationships among the three programs and among the federal, state, and local government entities responsible for implementing them. Additionally, the three federal agencies have not worked together to develop guidance and protocols that are key for helping states share information and best practices. Finally, these agencies have not formally recognized, nor devoted sufficient resources to, the project, despite its potential to identify improper payments and save program funds. Importantly, this lack of formal federal recognition might signal to some states that the project should not be taken seriously.

Recommendations for Executive Action

To help states improve the effectiveness of PARIS and prevent duplicate benefit payments to TANF and Medicaid recipients, we recommend that the Secretary of HHS direct the Administrators of ACF and CMS to formally support PARIS and provide guidance to participating states. Such support and guidance should include the following actions: Create a focal point charged with helping states more effectively coordinate and communicate with one another. An existing entity, such as the Interagency Working Group, could provide the mechanism for such a focal point. This entity could also serve as a clearinghouse for sharing best practices information that all states could use to improve their procedures, such as comparisons of match filtering systems.

Take the lead to help the PARIS states develop a more formal set of protocols or guidelines for coordinating their match follow-up activities and communicating with one another.

Develop a plan to reach out to nonparticipating states and encourage them to become involved in PARIS. At a minimum, all states should be encouraged to provide their TANF and Medicaid recipient data for other states to match, even if they choose not to fully participate in PARIS. This would help to ensure that all recipients nationally are included in PARIS matches.

Coordinate with the USDA/FNS Food Stamp program to encourage their participation in PARIS at the federal level as well as their working more closely with individual states to improve the effectiveness of PARIS and helping more states to participate.

Agency Comments and Our Evaluation

Officials from the Department of Health and Human Services and the Food and Nutrition Service provided comments on our report, the full text of which appear in appendixes II and III, respectively. The agencies also included some technical comments, which we have incorporated where appropriate.

In general, HHS agreed with the overall intent of our recommendations, but consistently stressed the need for additional funding and staff resources to increase their PARIS activities. With regard to our first recommendation, HHS commented that it had created a PARIS work group composed of representatives from ACF and DMDC and has encouraged other agencies, such as CMS and FNS, to participate more actively in PARIS. HHS also stated that additional funding and staff resources from all involved agencies could help the work group to improve its services. We believe that while the PARIS workgroup provides useful guidance to participating states, to date it has been unable to resolve the problems and limitations we identified during our review. As we note in the report, this is due in part to ACF, CMS, and FNS not providing the management or administrative support necessary to correct these problems. Our recommendation is intended to encourage greater leadership by ACF, CMS, and FNS and a more coordinated proactive approach among the agencies to working together and with the states to address the limitations in PARIS.

With regard to our second recommendation, HHS cautioned that it is not appropriate for a federal agency to dictate or appear to dictate the protocol states use in their interaction with other states. HHS also argued that states are best able to determine the necessary procedures for PARIS. However, HHS acknowledged that with additional resources, ACF could help states develop such procedures and disseminate them to other states as necessary. We continue to believe that active federal leadership is needed to solve the communication and coordination problems discussed in the report. Consequently, we believe that ACF should act as a facilitator at the federal level to help states overcome some of the challenges they have reported communicating and coordinating with one another. Moreover, such facilitation can and should occur without impinging on the states’ ability to administer the TANF, Medicaid, and Food Stamp programs in a manner that best fits their needs.

With respect to our third recommendation, HHS generally agreed that ACF could do a better job to reach out to additional states to persuade them to participate in PARIS. However, HHS did not agree with our statement that states could, at a minimum, provide their data for others to use, even if they do not directly participate in PARIS themselves. We believe that while full participation by all the states is clearly the preferred outcome, the inclusion of nonparticipating states’ public assistance data for use by states participating in PARIS could help save additional benefit funds in the TANF, Medicaid, and Food Stamp programs.

Finally, with regard to our fourth recommendation, HHS noted that ACF has consistently coordinated with FNS in all PARIS activities, but agrees that a closer working relationship with FNS would add to the effectiveness of PARIS. We concur with HHS’ assessment that ACF and FNS should work more closely together to improve existing PARIS operations and persuade additional states to participate.

FNS noted that the report is a balanced and fair description of the PARIS project, but they expressed a concern that certain passages in the report suggest that FNS should have a more formal role in PARIS, despite the fact that PARIS is primarily an ACF project. They also identified several reasons why PARIS is not used more by the Food Stamp program. They emphasized that FNS is not required by statute to track interstate receipt of Food Stamp benefits and that many states are already engaging in such activity on their own.

Although we recognize that FNS is not the lead agency responsible for PARIS, we do believe that FNS could take a more proactive stance to help coordinate the program at the federal level and persuade additional states to participate in PARIS. Moreover, we believe that although FNS is not mandated by statute to participate in PARIS, the benefits of PARIS in terms of potential program savings and enhanced program integrity warrant a more active role for the agency. Our analysis suggests that federal leadership from each of the involved federal agencies is critical to the success of PARIS, particularly with regard to expanding the number of states that participate in the project. In addition, while some states engage in interstate matching as noted in the report, we believe a more structured, far-reaching approach like that offered by PARIS is more effective.

FNS also commented that PARIS cannot prevent the initial duplicate payment of benefits and that the matching activity may not be cost- effective. We believe that although PARIS cannot prevent duplicate benefits from being provided when states initially determine individuals’ eligibility for benefits, using PARIS is preferable to not matching at all. Finally, the report notes that matching for the Food Stamp program alone may not be cost-effective and emphasizes the advantage of matching for multiple programs simultaneously.

As agreed with your office, unless you publicly announce its contents earlier, we plan no further distribution of this report until 30 days after its date. At that time, we will send copies to the Chairman, Senate Committee on Governmental Affairs; Secretary of HHS; Administrator for CMS; Administrator for FNS; and to other interested parties. Copies will also be made available to those who request them.

Please contact me or Kay Brown at (202) 512-7215 if you have any questions concerning this report or need additional information. Jeremy Cox, Kathleen Peyman, James Wright, and Jill Yost made key contributions to this report.

Appendix I: Data and Assumptions Used in Our Analysis

In the table below, we describe the data and assumptions used to support our discussion on pages 12-15.

Our analysis incorporated data from five states (Kansas, Maryland, New York, Pennsylvania, and Texas), two federal agencies (Centers for Medicare & Medicaid Services and Food and Nutrition Service), and selected research studies.

Formulas Used in Analysis

Savings

S= (A x F + B x I) x X S = Savings per benefit case avoided, A = Proportion of match hits in which entire case is closed, F = Family (case) monthly benefit, B = Proportion of match hits where household members are removed from the case, I = Monthly benefit for that number of individuals, and X = Months of future benefit payments avoided.

This calculation was performed for each of the three programs (TANF, Food Stamps, and Medicaid) separately to demonstrate how the cost- effectiveness of a “good” PARIS match hit could change depending on the number of programs that are included in a match.

Costs

C = (N x W) + L C = Costs the state incurs for each case sent to field office staff for followup, N = Number of hours required to work an average case, W = Average hourly wage of individuals following up on match hits, and L = Average cost per case that the state incurs to create the automated list of recipients each time it participates in the PARIS matches.

Savings/Cost Ratio

R = S / C R = Ratio of savings to costs, S = Savings, and C = Costs.

Alternative Scenario

The savings that a state might experience from participating in PARIS could differ from those we have reported in the report, depending on which assumptions are used. Tables 6 and 7 illustrate the possible savings a state could realize if we use the averages reported by each state instead of the more conservative assumptions cited in the report. The assumptions used in these tables, where they vary from the values used in the report, are as follows: Number of benefit months avoided per valid match hit: 7 months; Valid hit rate: 30 percent; Each match hit requires 60 minutes (1 hour) to resolve; Cost to follow up on 1 match hit: $31.77; and Cost to follow up on all 100 match hits: $31.77 x 100 hits = $3,177 + $440 (cost of creating file of recipients for matching each time the PARIS match is performed) = $3,617 total cost.

Using our hypothetical example in which 100 match hits are sent to local benefit office staff for follow up, table 6 illustrates how the savings to a state from participating in one PARIS match could vary depending on the number of programs included in the match and differences in the valid hit rate. The table assumes that the savings for each program accrue for 7 months.

If 30 percent of the match hits are valid (they accurately identify 30 instances of duplicate benefits being paid) and the individuals identified are enrolled in all three programs, the match would produce gross savings of more than $146,000 yielding a savings-to-cost ratio of about 40 to 1. After factoring in total costs of $3,617 to participate and follow up on the match hits, the net savings are more than $142,000. A valid hit rate of 10 percent—a rate substantially below what participating states have reported—in which the match only includes the Food Stamp program would still result in gross savings of about $9,500 (a savings-to-cost ratio of almost 3 to 1).

The number of months that future benefit payments are avoided can also influence the amount of savings that result from a PARIS match. Table 7 illustrates the variation in program savings that could result depending on the number of months of future benefits that are avoided and the number of programs matched, given a 30 percent valid hit rate (30 match hits out of the 100 match hits sent for follow up result in some savings).

As the table shows, the state would experience net savings from participating in PARIS under each scenario, although the range of potential savings varies considerably. Three months’ worth of Food Stamp benefits avoided would yield gross savings of more than $12,000, (a savings-to-cost ratio of about 3 to 1). The net savings would be about $8,600. However, the match could produce gross savings of about $313,000 if 15 months of benefits were avoided and the match was performed for all three programs (a savings-to-cost ratio of about 87 to 1). Net savings would be about $309,600.

Appendix II: Comments From the Department of Health and Human Services

The following is GAO’s comment on the Department of Health and Human Services’ letter dated August 17, 2001.

GAO Comment

The HHS comment concerning “the stated need for a real-time, GAO on- line system” is inaccurate. Although we discuss a national database as one option for providing prompt responses to interstate inquiries about public assistance applicants’ eligibility for benefits, the report does not state that we or any other agency should develop or operate such a system.

Appendix III: Comments From the Food and Nutrition Service