Instructions

Office of Family Assistance

Improper Payments Information Survey for the TANF Program

State of Michigan

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 : 12/30/2005

Name: Mave M. Coxon

Title: Manager, Cash Assistance and Employment Programs

State Agency: Michigan Department of Human Services

(Area Code) Phone Number: (517) 335-3609

E-mail Address: coxonm@michigan.gov

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.

As a point of reference, under the Improper Payments Information Act of 2002, the term, “Improper Payment”

(a) means any payment that should not have been made or that was made in an incorrect amount (including overpayments and underpayments) under statutory, contractual, administrative, or other legally applicable requirements; and

(b) includes any payment to an ineligible recipient, any payment for an ineligible service, any duplicate payment, payments for services not received, and any payment that does not account for applicable discounts.

General Overview: Policies and Infrastructure

1. How does the TANF Lead Agency define improper payments? Improper payments include over- or under-issuance of benefits or issuing benefits in error.

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. The DHS organizational chart is available on the page located at this URL: http://www.michigan.gov/dhs/0,1607,7-124-5459---,00.html

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.)

ü Steps involved in identifying a potential improper payment

ü Steps involved in verifying an improper payment

ü Establishing claims for improper payments

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

ü Distribution of recovered improper payments

ü 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?

ü Yes.

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.)

ü a. Monthly cash assistance payments

üb. “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

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

üd. Payments to service providers

q e. Other (Please specify:) ________________________________________________________
___________________________________________________________________________

q No.

5. Please describe your process for identifying and handling improper payments. Over and under-issuances are discovered through normal case work (e.g, verifying/comparing information provided at application, redetermination or change), case readings, computer cross-checking/data matches, reported on the fraud hotline, etc. Once an incorrect payment is discovered, staff recalculate benefit amounts to arrive at the amount that should have been paid. In the event of an under-issuance, a supplemental payment is issued. Over-issuances due to Agency Error are not pursued if the amount is under $500. Over issuances are entered on an Automated Recoupment System and recovered from the client or if appropriate, for Child Day Care, from the provider. Recoveries are made through automatic deduction from benefits for active cases, cash repayment plans and treasury stops of income tax refunds.

URL for online manual material: http://www.mfia.state.mi.us/olmweb/ex/pam/700.pdf

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

ü Other (Please specify :) Over-payments and recoveries are collected on our automated systems and reports are generated monthly. Under-payments are rectified as found and are not tracked in regular monthly reports as are over-payments.

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.

ü 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

_5_ Provider fraud

_6_ 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 %

Underpayments %

We do not keep the same cumulative reports on underpayments and therefore cannot calculate an accurate percentage of overpayments versus underpayments.

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) Use of Information Technology

2) Clear communication, including access to expert staff for policy clarification

3) Staff training, including job aids

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.

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	ü Yes q No	Pre-approval, at each reported change, and at annual redetermination.	Min. every 12 months. For changes, whenever reported.	ü
b. Fingerprint clients	q Yes ü No
c. Access online databases	ü Yes q No	Pre-approval, when it appears necessary at time of change, at annual redetermination and periodically throughout the year.	At least every 3 months.	ü
d. Match automated computer files	ü Yes q No	Periodically throughout the year	Some ea month, others every 3 months	ü
e. Conduct telephone, fax, or email contacts	ü Yes q No	When case circumstances indicate it is needed	As needed
f. Conduct home visits	ü Yes q No	Home visits are required under certain circumstances, but generally related to family functioning and barrier identification, not payment accuracy.	As needed
g. Initiate a fraud investigation if warranted	ü Yes q No	When case circumstances indicate it is needed	As needed
h. Conduct program integrity/quality control review	q Yes ü No	No quality control reviews are completed for TANF programs as of FY 2001.
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.)

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)	ü Yes q No	After approval	Every 3 months
b. Other human services programs in your agency/State	ü Yes q No	Pre-approval, at reported changes if appropriate.	As needed
c. State department of labor or employment security	ü Yes q No	Pre-approval, after approval, periodically and when indicated	As needed. Some quarterly reports	ü
d. State directory of new hires	ü Yes q No	When received, both pre-approval and after approval	Monthly	ü
e. State department of motor vehicles	ü Yes q No	Pre-approval	As needed
f. Public Assistance Reporting Information System (PARIS)	q Yes ü No
g. State data (from other States) on length of TANF receipt	ü Yes q No	After approval	Approx. every 3 months.
h. State data (from other States) on potential concurrent TANF receipt	ü Yes q No	Pre-approval and when indicated	As needed
i. State data (from other States) on client or provider debarment from benefits, for fraud or other infraction	q Yes ü No
j. Lottery agencies	q Yes ü No
k. Prisons and criminal justice agencies at State level	q Yes ü No
l. National Criminal Information Center (NCIC)	q Yes ü No
m. Local jails	ü Yes q No	After approval	Based on data matches. As needed but at least quarterly
n. Credit bureaus	ü Yes q No	Pre-approval, at redetermination and as otherwise indicated	As needed
o. Financial institutions	ü Yes q No	Pre-approval, at redetermination and as otherwise indicated	As needed
p. State tax intercepts	ü Yes q No	When an overpayment exists	As needed, including on closed cases.
q. Immigration authorities	q Yes ü No
r. K-12 school systems	ü Yes q No	Pre-approval and after opening	As needed to verify school attendance, based on age of children
s. Community colleges	ü Yes q No	Pre-approval and after opening	As needed to verify school attendance
t. Other providers of services, education, training	ü Yes q No	Pre-approval and after opening	As needed to verify participation/ attendance
u. Child support	ü Yes q No	Pre-approval and after opening	At least monthly for payment information. When indicated for cooperation requirements.	ü
v. Social Security Administration (SSA) form W-2 (wage statements)	ü Yes q No	Pre-approval	As needed
w. SSA Social Security number verification	ü Yes q No	Pre-approval and after opening	At least quarterly, as needed.
x. SSA Supplemental Security Income (SSI) data	ü Yes q No	Pre-approval and after opening	Several times per week
y. SSI death information	ü Yes q No	After opening	As needed
z. Other (Please specify :)	q 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 $2,815,332 (Specify ending month/ year) 09/2005

ü Includes fraudulent improper payments

Next most recently completed fiscal year $3,853,827 (Specify ending month/ year) 09/2004

ü Includes fraudulent improper payments

q Not tracked Note: NOT TRACKED BY FISCAL YEAR. UNDUPLICATED CASH AND AUTOMATED RECOUPMENT PAYMENT COLLECTIONS ARE REPORTED MONTHLY.

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

A. Agency: No standard penalties beyond repayment. (Has not been an issue.)

B. Clients/Parents: Penalties vary based on the type of error (unintentional mistake, fraud, intentional program violation.) There are no penalties involved for unintentional, client error. Penalties are explained in detail in the state’s policy manual and vary based on the number of occurrences and whether there is intentional program violation involved.

C. Providers: May result in loss of provider license.

D. County/Local Agency: No standard penalties beyond repayment (Has not been an issue)

Fraud: Intentional Overpayments

16. How does the TANF Lead Agency define “fraud”? Fraud is knowingly failing to report changes in circumstances that results in receiving/continuing to receive a higher benefit amount (or benefits.)

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

ü 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. Our fraud investigation unit designs and runs specialized reports, drawing data from many sources, looking for suspicious data patterns, such as particularly high provider payments, high shelter amounts claimed in our FS data but no earned income reported, etc. The fraud unit has been very effective with these methods.

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:

18. What steps, if any, beyond improper payments prevention, does your State take to specifically prevent fraud? See answer to #17.

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.)

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

ü No

Other

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

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.

Michigan’s policy manuals are available online through: http://www.michigan.gov/.

The server is currently down. I will forward the complete links to each of the relevant manual items within the next couple of days (as soon as the server is available.)

1/2/2006 – Links to Michigan’s policy manuals for over and under issuance:

Use policy related to FIP which is our TANF cash program.

Under-issuance –

FIP and SDA Supplemental Benefits - http://www.mfia.state.mi.us/olmweb/ex/pam/405.pdf

Note: Many under-issuances are not due to improper payments (e.g., retro-active initial payments, increased need supplements, annual children’s clothing allowance, etc.)

Over-issuance:

Benefit Over-issuances - http://www.mfia.state.mi.us/olmweb/ex/pam/700.pdf

Agency Error Over-Issuances - http://www.mfia.state.mi.us/olmweb/ex/pam/705.pdf

Client Error Over-Issuance - http://www.mfia.state.mi.us/olmweb/ex/pam/715.pdf

Intentional Program Violation - http://www.mfia.state.mi.us/olmweb/ex/pam/720.pdf

Collection Actions - http://www.mfia.state.mi.us/olmweb/ex/pam/725.pdf

CDC Recoupment - http://www.mfia.state.mi.us/olmweb/ex/pam/730.pdf

The Data Exchanges used to help prevent improper payments and fraud are described in the following manual items:

- http://www.mfia.state.mi.us/olmweb/ex/pam/800.pdf

- http://www.mfia.state.mi.us/olmweb/ex/pam/801.pdf

- http://www.mfia.state.mi.us/olmweb/ex/pam/802.pdf

- http://www.mfia.state.mi.us/olmweb/ex/pam/803.pdf