State Survey Analysis Report
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XII. Conclusions
The 25 State agency responses to this survey indicate a growing trend towards establishing formalized standards, policies and procedures to reduce improper payments. Some of the promising practices highlighted in this report include:
Building the organizational infrastructure necessary to reduce improper payments: As child care costs and expenditures have increased over the last decade, State agencies have responded by building the infrastructure and technology needed to administer the CCDF. Building an adequate infrastructure to detect and recover improper payments requires State agencies to foster collaborative working relationships both within and outside their own agencies. The narrative descriptions and organization charts provided by 20 State agencies point to the establishment of State level administrative units responsible for the oversight and monitoring of improper payments.
All of the State agencies surveyed describe organizational structures that include: the Child Care Agency, Offices of Business and Finance, Accounts Receivable and Collections, Auditing and Program Integrity, Special Investigations, the Attorney General (AG) or Inspector General (OIG), Data Services and Administration. Oklahoma Department of Human Services (OKDHS) describes seven administrative level divisions and approximately 20 state-office level staff assigned full time to subsidy functions, such as Eligibility Policy, Provider Contracting, Provider Licensing and Quality, EBT and Payment Processing, Eligibility Determination, Auditing and Program Integrity Systems and Application Support. Most all State agencies report the importance of involving the OIG’s and AG’s office through inter-agency agreements to pursue fraud referrals.
Establishing State laws, administrative rules, policies and procedures that formalize the processes necessary to avoid, detect and recover improper payments: All States agencies indicate a trend towards establishing more formalized standards, processes and procedures. With the growth in size of the child care program and the need to collaborate across agency division lines, States have invested considerable resources in coordinating the improper payments activities of the agency. All State agencies report having established policies and regulations for the following areas: steps involved in identifying improper payments, steps involved in verifying an improper payment, establishing claims for improper payments and collecting improper payments. Examples of standards or procedures States find most effective at detecting improper payments include: establishing standardized eligibility practices for verifying client information, quality control audits or supervisory reviews, computer data matching, ad hoc reporting or third party verification of error-prone circumstances and changes discovered at redetermination.
Developing tools for assessment, monitoring and tracking improper payments:
The role of information and technology is critical in reducing improper payments. Collecting information or data on improper payments is an important prevention strategy used by State agencies. Over three-quarters of State agencies report tracking information on sources, types, or causes of improper payments. Tracking the sources, types and causes of improper payments is a key strategy used by States to detect and prevent improper payments. For example, 20 State agenciesrate client nonreporting and underreporting of income and provider claiming for services not rendered, as contributing a great or moderate extent to improper payments.
One State agency provides an instructive example of the use of information on provider overpayments to determine the most effective strategies for overpayment recovery. Connecticut estimates that providers are responsible for approximately 40 percent of all overpayments and that 90% occur in unregulated settings. Of the provider errors, less than 5% of claims are referred for prosecution for various reasons, including cost effectiveness. The average non-fraud claim spans 7.9 months, where the average fraud claim period is approximately 19 months.
Armed with knowledge of key factors that contribute to payment accuracy, States develop a variety of tools to help identify error-prone circumstances. The top three methods State agencies use to detect improper payments include: training/meetings for providers on rules and responsibilities, training for agency staff on correct implementation of rules and responsibilities, use of information technology and record monitoring reviews.
Using information technology to detect and avoid improper payments: Promising practices in the use of information technology States consider most effective in reducing improper payments include:
- Accessing online databases, such as Wage and Unemployment Insurance (UI) databases, Public Assistance, Income Eligibility Verification System (IEVS) Motor Vehicles, Child Support, Social Security Administration records (SSA), Supplemental Security Income (SSI) information and Licensing records;
- Matching automated computer files, such as matching child care applicant income information with unemployment insurance wage information;
- Developing ad hoc or red flag reports that identify error-prone circumstances, such as out-of-state providers, capacity and extended hours of care; or
- Developing EBT systems for provider payments, eliminating the potential for most providers to charge for hours of child care that were not provided.
Conducting record monitoring reviews to improve payment accuracy and initiation of fraud investigations if warranted: State agencies report using a variety of methods to identify the total amount of improper payments, including case record reviews, reviews of service providers or contractors, findings from State and local fraud units, the State’s single audit or from State and local auditors. Three quarters of State agencies report conducting program integrity/quality control reviews to improve payment accuracy. All State agencies report initiating a fraud investigation as a key strategy critical to verify the accuracy of payment information.
Using monitoring information on error prevention and recovery activities to conduct cost benefit analyses: State agencies may use monitoring information, as highlighted in the data elements of this survey, to conduct cost benefit analyses. Appendix 26 proposes how a cost-benefit analysis could be performed using the data from the surveys and other information. Connecticut provides an example of a cost benefit analysis of error prevention and recovery activities which is also included in Appendix 26.
Thirteen State agencies provide sections of manuals or other State-issued guidance that may be instructive for other States. Where possible and appropriate, sections of manuals and administrative rules are included in the Appendices to this report. Other guidance materials that could not be attached to this report, due to length include: Benefit Errors Procedures, Payment Processing Procedures and Sample Data Integrity Reports (from Connecticut) and a Training and Monitoring Resource Guide (from CA(DE) and CA(DSS)). Copies of these attachments can be obtained through contacting the State representative listed in Appendix 25. Nine State agencies provide Web site addresses to access State manuals or guidance also listed in Appendix 24.