Improper Payments Information Survey for the TANF Program

State of Colorado

Instructions

In accordance with the Paperwork Reduction Act of 1995, collection of this information has been approved by the Office of Management and Budget (OMB) under OMB Control Number 0970-0290, expiration date 10-31-2008.  Submission of this information, however, is voluntary.  The public reporting burden for this collection of information is estimated to average 24 hours per response, including the time for reviewing instructions, gathering and maintaining the data needed, and reviewing the collection of information.  An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless it displays a currently valid OMB control number.

Please enter the following information for the individual(s) completing this questionnaire and attachments, so we may contact them to clarify information, if necessary.

Date :               12/30/05                                                                                                                       

Name:              Dan Daly                                                                                                                     

Title:                 Policy Analyst                                                                                                              

State Agency:   Colorado Department of Human Services/Colorado Works Program                               

(Area Code) Phone Number:     (303) 866-5821                                                                                     

E-mail Address:                         dan.daly@state.co.us                                                                            

Please return the completed questionnaire and attachments in the enclosed business reply envelope.  Alternatively, you may fax your completed questionnaire and brief attachments to the attention of Dennis Poe at 202-205-5887, or preferably email an electronic copy of the questionnaire and any attachments to him at dspoe@acf.hhs.gov.

If you have any questions or comments regarding your submissions, please contact Dennis Poe at 202-401-4053, or at dspoe@acf.hhs.gov.

Please return the questionnaire and attachments by December 30, 2005.

General Overview:  Policies and Infrastructure

1.       How does the TANF Lead Agency define improper payments?

Overpayments or underpayments paid to recipients or vendors as a result of household or administrative errors.  Payments paid as a result of any fraudulent acts by vendors, recipients or agency staff.

 

2.       Provide a description (electronic copy, if available) of the organizational structure of the agency in your State that handles improper payments in the TANF program.  If available, please submit an organizational chart, or provide the web site address where it can be found.

Colorado’s TANF program is county-administered, state supervised.  Each county is subject to state statutes and regulations governing the program regarding the handling of improper payments.  Each county is responsible for establishing claims and making recoveries.

 

3.       Please check all of the topics or activities listed below for which your State has policies or regulations in place for the program. (Please check all that apply.)

X    Steps involved in identifying a potential improper payment

X    Steps involved in verifying an improper payment

X    Establishing claims for improper payments

X    Collecting improper payments, including, for example, the authority to reduce payments to recover overpayments

X    Distribution of recovered improper payments

q   Sources of funding for addressing improper payments

q   Other (please specify : )                                                                                              

Identification and Assessment of Improper Payments

4.       Has your State performed an assessment or analysis to determine whether the program is at risk of improper payments?

X    Yes.  In addition, individual counties may also have instituted assessments.

For which of the following uses of program funds did your state perform an assessment or analysis to determine whether the program is at risk of improper payments? (Please check all that apply.)

X a.   Monthly cash assistance payments

X b.   “Nonassistance” benefits or services, for example, one-time cash payments designed to
divert a family from welfare or payments for car repairs or rental assistance

q c.  Other types of benefits and services for families not receiving cash assistance

q d.  Payments to service providers

q e.  Other (Please specify:) ________________________________________________________
___________________________________________________________________________

q No. 

 

5.       Please describe your process for identifying and handling improper payments.

Please see responses to 2 & 3 above.

 

6.       Which methods, if any, did your state use to identify a total amount of improper payments for the program? (Please check all that apply.)

Calculation based on:

q Findings from the state’s Single Audit

q Other audit findings from state auditors

q Findings from other state or local auditors, including legislative review entities (Please specify :) ______________________________________________________________________________

q Findings from state or local fraud units (Please specify :) ______________________________________________________________________________

q Reviews of service providers and/or contractors

q Reviews of sampled cases, although not statistically representative of all program payments

q Statistically representative sample of payments

X Other (Please specify :)  Full caseload report from Accounts Receivable on-line sub-system.

 

7.       Does your State calculate an improper payments (including fraudulent payments) rate, that is, a measure of the percentage of total payments that are determined to be improper? (Please check one response and provide the appropriate data.)

q Yes.  Please describe the methodology used to arrive at the error rate.

X No 

q Information not available.

 

Describing Improper Payments:  Sources, Types, Causes

8.       Please rank the following sources of improper payments (1 to 7) for the program in your State over the past two fiscal years, beginning with one (1) indicating the primary source of improper payments.  Error is defined as an inadvertent mistake whereas fraud is defined as a willful misrepresentation. (Please rank each source below.)

_1__ Client error

_4__ Provider error

_3__ Agency error

_2__ Client fraud

___ Provider fraud

_5__ Agency fraud

___ Other (Please specify)_________________________

 

9.       Of all improper payments in your State, what proportion of those payments would you estimate are overpayments, and what proportion would you estimate are underpayments?  An overpayment is defined as a payment larger than what should have been made/received or any payment that is received when none should have been received.  An underpayment is defined as a payment smaller than what should have been made/received or no payment was received when there should have been one.

Overpayments                     75         %

Underpayments                   25         %

 

10.   To what extent, if any, have the following factors contributed to improper payments in your State over the past two fiscal years?  (Please check one answer in each row.)

Factors contributing to improper payments	Great extent	Moderate extent	Little extent	No extent	Don’t know
Related to clients
a. Nonreporting/underreporting of income		X
b. Client receiving payment in more than one jurisdiction				X
d. Incorrect reporting of household size			X
e. Incorrect citizenship or immigration status			X
f. Incorrect information on client’s compliance with program requirements, such as participating in required activity			X
g. Other (Please specify):
Related to providers
h. Overstating performance					X
i. Claiming for services not rendered					X
j. Other (Please specify):

 

Prevention of Improper Payments

11.   Please describe your top 3 priorities for preventing and reducing improper payments (e.g., training/meetings for providers on rules and responsibilities; training for agency staff on correct implementation of rules and responsibilities; clear communication with parents on rules and responsibilities; use of information technology.)

1.      Training of county agency staff on rules, regulations and best practices.

2.      Training of county agency staff on system-driven tools to reduce these payments.

3.      Increased training on detection and prevention of fraud.

 

12.   For each activity listed below, indicate whether or not your State performs it to verify the accuracy of information needed to determine eligibility for and/or proper amount of a program payment.  If yes, indicate when in the process the step or activity is performed and how often it is performed.

As noted in our earlier responses, all of the following, except “h” below are county-initiated practices. 

Steps or activities  performed	Is the step/activity performed?	If yes, at what stage in the process (e.g., pre-approval/approval; redetermination at  3 mos., 6 mos. or 12 mos. ;etc.)?	If yes, how often?	Please insert a checkmark by the 3 items you consider the most effective.
a. Require documentation from client	X Yes   q No	Upon approval and at time of redetermination.	Rederterminations are required at least once every 12 months	X
b. Fingerprint clients	q Yes   X No
c. Access online databases	X Yes   q No	Upon approval	ongoing
d. Match automated computer files	X Yes   q No	Upon approval	ongoing	X
e. Conduct telephone, fax, or email contacts	X Yes   q No	Upon approval	ongoing
f. Conduct home visits	X Yes   q No	Infrequent
g. Initiate a fraud investigation if warranted	X Yes   q No	Upon discovery
h. Conduct program integrity/quality control review	X Yes   q No	State Colorado Works staff conduct a quality control review of each county’s program once every four years.		X
i. Other (Please specify :)	q Yes   q No

 

13.   Data sharing is a method used to obtain and disclose information about individuals from within your agency, from other agencies and/or from independent, third party sources, including federal and State agencies or private companies.  These activities can be conducted before an initial payment is made to an individual or provider (pre-payment) and also after payment is made (post-payment) to verify eligibility and payment accuracy.   For each source listed below:

Indicate whether or not your agency or State utilizes this data source to better ensure accurate payments under the program.  If your State utilizes the source, indicate when in the process the source is used (before the payment is issued or at some point after the payment is issued), and/or indicate how often that source is used. (Please check all appropriate responses for each row.)

As with our response to 12 above, counties are responsible for the administration of the program, but we know these data sources to be utilized or not based on rules, regulations, and/or reviews of county programs.  For all sources marked “Yes” the timing and frequency of the source is Upon approval and ongoing as necessary by the county agency.

Data source	Is the source used?	If yes, when in the process (e.g., pre-approval/approval; redetermination at  3 mos., 6 mos. or 12 mos. ;etc.)?	If yes, how often?	Please insert a checkmark by the 3 items you consider the most effective.
a. Income Eligibility Verification System (IEVS)	X Yes   q No
b. Other human services programs in your agency/State	X Yes   q No
c. State department of labor or employment security	X Yes   q No
d. State directory of new hires	X Yes   q No
e. State department of motor vehicles	X Yes   q No
f. Public Assistance Reporting Information System (PARIS)	q Yes   X No
g. State data (from other States) on length of TANF receipt	X Yes   q No
h. State data (from other States) on potential concurrent TANF receipt	X Yes   q No
i.  State data (from other States) on client or provider debarment from benefits, for fraud or other infraction	X Yes   q No
j. Lottery agencies	X Yes   q No
k. Prisons and criminal justice agencies at State level	X Yes   q No
l. National Criminal Information Center (NCIC)	X Yes   q No
m. Local jails	q Yes   X No
n. Credit bureaus	q Yes   X No
o. Financial institutions	X Yes   q No
p. State tax intercepts	X Yes   q No
q. Immigration authorities	X Yes   q No
r. K-12 school systems	X Yes   q No
s. Community colleges	X Yes   q No
t. Other providers of services, education, training	X Yes   q No
u. Child support	X Yes   q No
v. Social Security Administration (SSA) form W-2 (wage statements)	X Yes   q No
w. SSA Social Security number verification	X Yes   q No
x. SSA Supplemental Security Income (SSI) data	X Yes   q No
y. SSI death information	X Yes   q No

 

Recovery of Improper Payments

14.   For the most recently completed fiscal years, how much in program improper payments has your agency, or another agency within your State, recovered? (Please indicate your responses in the space provided below.)

Most recently completed fiscal year  $245,962.14  (Specify ending month/ year)  09/05

X  Includes fraudulent improper payments

Next most recently completed fiscal year   $33,803.41  (Specify ending month/ year)  09/04

X  Includes fraudulent improper payments

q      Not tracked

 

15.   What penalties does your program mandate for clients, agencies, or providers, who commit an error leading to improper payments?

A.  Agency:  None

B.     Clients/Parents:  At an individual level (not family), the 1^st infraction results in a 12 month disqualification; 2^nd infraction is 24 months; and, 3^rd is lifetime.

C.     Providers:  None

D.     County/Local Agency:  None

 

Fraud:  Intentional Overpayments

16.   How does the TANF Lead Agency define “fraud”?

We have the following description of fraud in our Colorado Department of Human Services Rules and Regulations:

3.820 FRAUDULENT ACT

3.820.1 DEFINITION - FRAUD

3.820.11

"Fraud" means an individual secured or attempted to secure or aided or abetted another person in securing public assistance to which the individual was not entitled by means of willful misrepresentation or intentional concealment of an essential fact.

3.820.12

Fraud is subject to criminal action and must be proven beyond a reasonable doubt. The three basic elements which have to be proven are

A. the misrepresentation or concealment must have been deliberate and done intentionally. Fraud does not exist is the misrepresentation or concealment is the result of an unintentional act, a misunderstanding, or mental incompetency;

B. the fraudulent act must have been for the express purpose of receiving or attempting to receive or obtain assistance to which the individual was not entitled;

C. it must be shown that, if the county department had been aware of the facts, assistance should not have been granted or should have been granted in a lesser amount.

3.820.2 ESTABLISHING FRAUD

3.820.21

The misrepresentation or concealment must concern a fact that would affect eligibility or payment. This includes household composition, resources, income, and any other eligibility factor.

3.820.22

The misrepresentation may be oral or written. It can be in the form of an application for assistance, a written communication to the department, a redetermination form, a conversation with a technician, a telephone conversation, or failure to notify the department of a change in circumstances that would affect eligibility or payment.

3.820.23

Criminal intent must be proved beyond a reasonable doubt; therefore, the misrepresentation or concealment must be verified by written documentation and must relate to facts that existed at the time of the misrepresentation or concealment.

3.820.24

Colorado Statutes provide for fraud charges to be filed against a person who aided another person in securing public assistance for which he was ineligible by misrepresenting or concealing essential facts.

3.820.25

In collecting evidence of fraud, the county department shall not violate the legal rights of the individual. Examples of such violation would be invasion of the privacy of the home, unreasonable search and seizure, denial of due process of law, denial of the right to legal counsel, etc. When the department questions whether an action it contemplates might violate the legal rights of the individual, it shall seek the advice of its legal advisor.

3.820.26

Determination of whether fraud exists and referral to the District Attorney are within the administration of public assistance programs involved and are not considered a violation of safeguards and restrictions provided by confidentiality rules and regulations.

 

17.   Does your agency maintain data on fraudulent payments in the program as a subset of your improper payments data? (Please check one response.)

This is typically tracked at the county level, unless the Colorado Department of Human Services Audit Division is involved in the investigation of a fraud.  That unit does maintain data on the amount and nature of fraudulent payments investigated, prosecuted, and amount agreed upon for restitution.

q      Yes

If yes, please list the methods you use for finding occurrences of fraud and indicate whether you would rate each method as very effective, somewhat effective, somewhat ineffective, or very ineffective.

The CDHS Audit Division has been using data mining software to help find fraud, as well as analytical review and comparison of expenditures by counties.  Both the data mining approach and the analytical review have been very effective.  Data mining allows us to sum and sort the payments in a variety of ways to look for anomalies such as duplicate payments made to a client, or excessive benefits issued by a certain county technician.

q      No 

Does any other entity in your State maintain this information, such as a State fraud unit or Inspector General? If yes, please provide us with a contact name and phone number: 

In addition to the CDHS Audit Division, individual counties maintain this information as well.

 

18.   What steps, if any, beyond improper payments prevention, does your State take to specifically prevent fraud?

CDHS has established a toll free fraud hotline for anyone to call and report concerns about potential fraudulent acts.  This includes any fraud related to the delivery of public assistance benefits.    The department has also made a short training video about fraud prevention and red flags of fraud to watch for.  Magnets with the toll free fraud hotline number as well as pens are widely distributed on a regular basis to make it easy for people to know where to call.  The department routinely trains and speaks on a variety of fraud prevention topics.  Fraud prevention checklists, fraud policies, and other material has been widely distributed to county human services directors for further consideration of assessing and strengthening the internal control environment.

The Colorado Welfare Fraud Council is also actively engaged in all methods of fraud prevention including regular training to county employees on how to spot fraud, how to interview clients, red flags, etc.  In addition, the CWFC distributes posters that are hanging in all county human services offices with the state’s toll free fraud hotline number.

 

19.   Is your agency required to report, or to have information available, on improper payments to the State legislature, the Governor, or any other higher-level agencies? (Please check one response.)

CDHS does have a responsibility to report all suspected fraudulent activities of $5,000 or more to the State Controller.

X Yes ® Please provide a copy of the report(s), and indicate who received them.

Please see attached letters to our state controller.

q      No

 

Other

20.   Describe any other information that may be relevant to improper payments in the program that you wish to share with us.

We are continuing to explore various methods for flagging any unusual activities within our benefit payment system; for example, one change we might want to flag is when a technician changes income for a client that forces a maximum benefit.  This is just one example of many triggers that we are looking at (in addition to routine system controls) to more effectively identify improper payments.

21.   Please submit copies of pertinent sections of manuals and other State-issued guidance that you would like to make available, or provide the web site address where they can be found.

Below, please find a link to the web site containing the Colorado Department of Human Services Rules and Regulations referenced in the response to question 16. 

http://www.cdhs.state.co.us:8008/CDHS/rule_display$.Calling_DisplaySection?P_VOL_NUM=3&P_SEC_NUM=0800

 

 

Thank you very much for your time and assistance!