Erroneous Payment Initiative

Dear Colleague Letter

Publication Date: March 16, 2009

March 16, 2009

Dear Colleague:

The Improper Payments Information Act of 2002 requires Federal agencies to estimate and report to Congress on the annual amount of improper payments in their programs, the causes of improper payments, and the corrective actions taken to reduce improper payments.  The Temporary Assistance for Needy Families (TANF) program was designated as high risk for improper payments and, as such, is required to estimate and report on the amount of improper payments annually.

In FY 2007, the Office of Inspector General (OIG) conducted pilot reviews in three states. The OIG continued their State reviews during FY 2008, selecting eight States to develop a nationwide improper payment rate for the TANF program. To date, work has been completed in seven States. The FY 2008 TANF error rate reported in the HHS Annual Financial Report is a national estimate based on the seven States reviewed in FY 2008, using data from April 1, 2006 through March 31, 2007 and based on one State reviewed in FY 2007, using data from July 1, 2005 through December 31, 2005.  The reported national estimate was 9.3%, representing $1.6 billion in improper payments.

The findings of the State evaluations showed that a number of the sampled payments were improper due to eligibility and payment calculation errors and/or documentation errors. The causes of the improper payments included the following: (1) recipient families did not fully disclose information during their application or redetermination or did not notify the local TANF office of changes in their financial situation or other changes affecting eligibility; (2) the local TANF office did not verify all information provided to support these applications; or (3) the local TANF office did not maintain the appropriate documentation to support eligibility and payment determinations.

In view of these general findings, I would like to encourage you to stress the importance of payment accuracy for TANF cases and seriously consider measures that will reduce the incidence of erroneous payments in your State.  Actions that may prove beneficial in this area (these are not intended to be all inclusive) include the following:

  • Conduct local office quality control reviews at both the initial intake and redetermination stages of case development for basic assistance eligibility and payment processes;
  • Consider payment accuracy as proper case documentation measures or elements of staff performance;
  • Develop and maintain a reminder system for critical follow-up actions on cases such as responding to reports of non-cooperation with child support, IEVS “hits”, redeterminations of eligibility, or failure to fulfill work requirements; 
  • Establish a process for the collection of TANF overpayments from the applicable recipients;
  • Periodically remind the caseload of their responsibility to accurately report income, resources, and other family circumstances to the local TANF agency on a timely basis;
  • Conduct training on investigative interviewing techniques for intake workers and case managers;
  • Perform periodic “checks” of case records paying particular attention to documentation that includes a current application and facts supporting income, household composition, participation in work activities, and cooperation with child support enforcement;
  • Establish and monitor internal procedures to ensure that TANF payments are adjusted on a timely basis when family circumstances change and affect case eligibility or the amount of payment.

Thank you for your consideration of these findings.

Ann H. Barbagallo
Acting Director
Office of Family Assistance

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