Testimony of Fritz Streckewald, Acting Assistant Deputy Commissioner for Disability and Income Security Programs,
Social Security Administration, before the House Committee on Ways and Means Subcommittee on Social Security
May 10, 2001
Mr. Chairman, Congressman Matsui, members of the Subcommittee, thank you for inviting me here today to talk to you on a variety of issues that affect Social Security programs. I want to discuss some recent improvements we have made to strengthen our representative payee program as well as some legislative changes the subcommittee has considered that would improve protections for beneficiaries with payees. Additionally, I want to provide our perspective on legislative proposals that would:
- Require States to report death information to SSA in a more timely manner; and
- Apply the current Supplemental Security Income (SSI) fugitive felon provisions to the Old Age, Survivors, Disability Insurance (OASDI) program.
The Social Security Administration places great importance on our role as stewards of the OASDI and SSI programs and in ensuring that only those who are entitled to benefits receive them for any given month. The public's trust in the Social Security program is vitally important to us. Because of the importance of this trust, we have devoted significant resources and attention to strengthening and maintaining the integrity of the Social Security program; $1 out of every $4 in SSA's administrative budget is dedicated to program stewardship and program integrity.
SSA is deeply committed to protecting the 6.5 million Social Security and SSI beneficiaries who are paid $30 billion per year through representative payees. Our goal is to select the most qualified individual or organization to serve as representative payee. All payees are investigated before being selected. If an interested family member or friend cannot be found (or willing to serve), SSA will ask a qualified organization willing to perform the duties of representative payee.
When appointed, all payees receive information on their responsibilities and duties as payees. Further, to provide additional support for organizational payees, we recently revised a publication (Guide for Organizational Payees) that we developed and sent last year to all organizational payees. The newly revised version will be distributed in June and will also be available on our web site. When a suitable payee has been appointed, we also provide the beneficiary with information explaining why they have a payee, how we selected their payee, what to do if they want to appeal our selection of payee, what they should expect of their payee and what they should tell their payee.
Once selected, all payees must maintain records of the beneficiary's income and expenses. SSA requires annual accounting of all of the benefits received and how they were spent for every beneficiary. If this information is not received or is incomplete, we follow up with the payee. If SSA has cause to believe that an organization is not using benefits properly, we have an additional review procedure that focuses on the organization's records and includes contact with the beneficiary and staff of the organization, as well as vendors.
We believe this oversight process works well; misuse of funds occurs in less than one-hundredth of one percent of all cases. However, we are constantly seeking ways to improve the process.
Last year, we described to you our plans for improving safeguards for our most vulnerable beneficiaries-those who need assistance from a representative payee. We have made great strides towards implementing those representative payee program improvements. Let me briefly describe our initiatives and then provide you with the status.Triennial Onsite Reviews of all Fee-for-Service and Volume Payees
We have begun a review of the approximately 825 fee-for-service representative payees on a triennial cycle. We are also performing triennial reviews of all organizational payees serving 100 or more beneficiaries, which we refer to as "volume" payees, and of all individual payees serving 20 or more beneficiaries. This review includes an assessment of the payee's record keeping, and we interview a sample of beneficiaries in order to assess whether their needs are being met. Expenses may be corroborated with providers of services. In addition, we contact vendors to ensure that beneficiaries' bills are being paid. Over the last year, approximately 540 of these reviews have been conducted. While the incidence of misuse found has been minimal, we have found problems with commingling of funds and incorrect titling of accounts. We have taken corrective actions in those cases.Annual Verification of Bonding or Licensing
Currently, in order to collect a fee from a beneficiary's check, the non-governmental fee-for-service organization must be either licensed or bonded to serve as representative payee. This is a statutory requirement. Beginning in June 2000, we began an annual re-certification of these organizations to ensure the bonding or licensing requirement continues to be met. To date, we have completed 693 re-certifications of the 825 fee-for-service payees.
For those fee-for-service payees that are bonded, there is no requirement that specifies the minimum amount of the bond that would be paid in the event of misuse (e.g., $600 of coverage for each beneficiary). However, we are drafting a regulation that will give guidance on the level of bonding needed by fee-for-service organizations. We anticipate publishing this regulation in early 2002.A 6-Month Review for All Newly Appointed Fee-for-Service Payees
Beginning with fee-for-service payees newly appointed in January 2000, we began site visits 6 months after their initial appointment as payee. This visit ensures that they fully understand their duties and responsibilities, and are on the right track with respect to record keeping and reporting. We focus on their accounting procedures so that they are able to account for beneficiaries' funds as well as comply with our requests for review. To date, 17 visits have been made for those fee-for-service payees newly appointed since January 2000.Random Reviews of Volume and Fee-for-Service Payees
Each year SSA will conduct a random sample of 30 percent of volume payees and fee-for-service payees that have not already been selected for review. Of the cases selected, we will review a sample of beneficiary records for compliance with our policies and procedures. We issued instructions needed to implement this initiative in December 2000, and this program began this Spring.
In addition, we continue to monitor for "trigger" events. That is, we conduct reviews of payees in response to third-party reports of misuse, complaints from vendors of failure to receive payment, and similar reports. Over the last year, we have done 26 reviews due to trigger events.We believe that our expanded onsite review program will:
- protect vulnerable beneficiaries by quickly reacting to questionable indications;
- deter payee misconduct;
- provide a strong oversight message to payees;
- ensure that fee-for-service payees continue to be qualified under the law; and
- establish good lines of communication and promote good payee practices.
Contracts Relating to Monitoring Initiatives and Background Checks
We are currently developing a contract proposal for an independent audit firm to review the revised monitoring process and offer suggestions for improvement. This includes a review of instructional materials as well as onsite review processes. The contractor will provide a report with any recommendations for corrective changes as deemed appropriate. We expect to obtain bids by this Summer and start the audit in the Fall of 2001.
We are also in the process of awarding a contract to obtain the assistance of an expert consultant to explore options available for criminal and credit background checks for fee-for-service payee organizations. This effort is consistent with OIG's suggestion that we put more emphasis on the selection of our representative payees. Contractor bids were due by April 16 and we expect to award the contract by early June. We expect the contractor to complete its work in about 6 months and hope to have a final report of recommendations by the end of the year.
We have undertaken a demonstration project to obtain expert assistance in our onsite reviews in two regions. We have contracted with an accounting and management firm to provide support to our review teams when they conduct site reviews. This support will continue through September 2001. The purpose of this demonstration is to assess the value of using contractors with expertise in accounting practices to assist the SSA teams in conducting the site reviews. To date, the contractor has assisted our field review teams in 35 site reviews in our Chicago and Philadelphia Regional Office areas, and is on schedule under the terms of the contract. While no misuse of benefits was found in these reviews, they revealed record keeping problems and that some of the organizational payees have a weak financial position. We will continue to monitor these payees.
Recruitment and Education Campaign
We have new projects either well underway or completed to help our field offices recruit and educate new and existing organizational payees. As previously noted, we revised our "Guide for Organizational Representative Payees" and we expect distribution by June. This booklet provides guidelines and suggestions to assist organizations in understanding the principles of the representative payment program and their responsibilities.
We have produced a training video which can by used by the field offices when training organizational payees. Both the video and the guide will become part of a "training kit" which includes a lesson plan for training organizational payees, a power point presentation, and CDs. We plan to release this kit to our regions in June. These educational products will assist our field offices when providing training for organizational payees and also serve as tools for payees to refer to when questions arise or when the organizational payee has staffing changes.
Changes to Representative Payee System and Related Systems
The Representative Payee System (RPS) is an integral part of the representative payee application process as well as a centralized computer file containing information about individuals and organizations providing representative payment services and the beneficiaries that they serve. While there have been some problems with the RPS, especially with regard to the way the RPS interacts with other SSA systems, it has been useful for investigating fraud, suitability of payee applicants, and identifying trends.The RPS contains a number of investigative features, for example, the RPS:
- Automatically verifies the representative payee's Social Security number against SSA's Numident file;
- automatically checks the database for a history of misuse/fraud;
- does not permit the selection of a person convicted of a violation under section 208 or Section 1632 of the Social Security Act (penalties for fraud) to serve as payee.
The RPS is our most effective investigative tool in assisting our field office employees in making appropriate representative payee selections. While the RPS provides many benefits, it needs to be strengthened. An internal systems workgroup undertook a comprehensive review of the RPS and related systems and developed a project that includes a number of improvements to the RPS and the accounting processes. The project will result in:
- A redesign of the accounting systems,
- additional systems' support for an expanded monitoring process, and
- a comparison of databases to assure payee suitability.
We plan to implement improvements for both the RPS and the accounting processes in three phases. The improvements will provide additional information for use in determining the suitability of the payee, additional information for use in monitoring payee performance, and additional control and consistency of the Title II and Title XVI accounting processes. For the RPS, the first phase, targeted for implementation at the end of 2001, will involve database record clean-ups (including the updating of the RPS to reflect terminated benefit records involving prior payees) and the collection of additional data for fee-for-service payees (e.g., license or bonding information such as the amount of the bond and expiration dates). The next phase, targeted to begin towards the end of 2002, will develop and/or improve several alert processes and provide additional representative payee data. The final phase will be a complete redesign of our current accounting process. The timing of that redesign depends on the completion of Phases 1 and 2 and the availability of resources.
By the fall of 2001, we also expect the RPS to contain additional information needed to assist the expanded monitoring program. For example, we plan to store the date of our site visit, the date and reason why an organization is no longer authorized to charge a fee and information regarding bonding and licensing of the organization. We will have the capability of updating the information and storing it. This will provide a historical record on each of the fee-for-service organizations.
We recognize that administrative actions alone are not sufficient to address all of the issues and concerns that have been identified with our representative payee program. Last year the Ways and Means Committee adopted H.R. 4857, a bill that would strengthen our recovery of misused funds by payees and, more importantly, restore misused funds to our beneficiaries.
Currently, when any payee has been determined to have misused an individual's benefits, SSA can reissue the benefits only in cases where there has been negligent failure on our part to investigate or monitor the payee. In virtually all other cases, the individual loses his or her funds unless SSA or the beneficiary can obtain restitution of the misused benefits from the payee. Additionally, SSA can seek restitution only through a civil action if the representative payee refuses to return the misused funds.
To facilitate restitution of misused funds to beneficiaries, provisions contained in H.R. 4857 would require SSA to reissue benefit payments (including any respective fees for fee-for-service payees) in all cases when an organizational payee is found to have misused a beneficiary's funds, without either a finding of negligence on SSA's part or restitution from the organizational payee. Requiring re-issuance of such misused benefit payments, including any fees that were deducted from the beneficiary's benefit, would provide important protection to the most vulnerable of beneficiaries-those who have no family or friends willing or able to be a payee.
Such authority would enable us to restore benefits that have been misused by an organizational representative payee, thereby reducing the hardship that can be caused by such a loss. SSA would, through all available avenues of legal recourse, continue to seek restitution of the misused funds from the former representative payee.
In addition to this change, provisions such as those found in H.R. 4857 would provide increased safeguards for beneficiaries with representative payees. Although SSA does not have a formal position on these provisions, they would:
- Require non-governmental fee-for-service organizational payees to be bonded and licensed, provided that licensing is available under State or local law. (The requirement under current law is bonding or licensing.) State licensing provides some oversight by the State into the organization's business practices, and bonding provides some assurance that a surety company has investigated the organization and approved it for the level of risk associated with the bond. The proceeds from redeemed bonds would reduce the costs to the program when re-issuing benefits in cases of representative payee misuse.
- Require SSA to conduct periodic onsite reviews of all non-governmental fee-for-service representative payees, any other organization serving 50 or more beneficiaries, and individual payees serving 15 or more beneficiaries.
- Provide that when an organization has been found to have misused an individual's benefits, the organization shall not qualify for the fee from that individual's benefits for months the payee misused the funds. Requiring payees to return the fees charged for periods of misuse is reasonable because the payee was clearly not properly performing the service for which the fee was paid. Permitting the organization to retain the fees is tantamount to rewarding the payee for violating his or her responsibility to use the benefits for the individual's current and future needs.
- Provide that misused benefits (including any respective representative payee fees) would be treated as an overpayment to the organizational or individual representative payee and, therefore, subject to current SSA overpayment recovery authority. Although SSA has been given expanded authority in the recovery of overpayments (such as tax refund offset, referral to contract collection agencies, notifying credit bureaus, and administrative offset of future federal benefit/payments), these tools cannot be used to recoup benefits misused by a representative payee. Providing that benefits misused by any representative payee would be an overpayment to the payee would provide SSA with additional means for recouping the misused payments.
- Extend civil monetary penalty provisions to representative payees that misuse benefits. As it pertains to representative payees, this provision would allow SSA to impose administrative penalties and assessments against representative payees who misuse benefits. This would improve our ability to ensure that individuals who commit this type of fraud against SSA are penalized, even if such individuals are not prosecuted criminally.
- Disqualify an individual from serving as representative payee if he or she has been convicted of an offense resulting in more than one year of imprisonment, unless the Commissioner of Social Security determines such certification to be appropriate not withstanding such conviction.
- Provide authority to redirect Social Security benefits to field offices when the representative payee fails to provide an annual accounting of benefits. Notifying the payee of this possibility, and redirecting benefits to the field office, would provide an extremely effective tool for increasing the number of payees who return the annual accounting form, while providing the field offices the flexibility to take the most appropriate action in a particular case.
SSA supports the Subcommittee's efforts to provide increased safeguards for beneficiaries with representative payees and will work with the Subcommittee staff to bolster the other efforts SSA has initiated to help prevent misuse by payees.
Status of OIG Recommendations
In the mid-1990s, SSA requested the OIG to review and make recommendations to improve the representative payee program. We requested these reviews in order to better meet the needs of the changing demographics of our representative payee population.
OIG made several recommendations -- from how to select a representative payee to the kind of monitoring program needed. SSA evaluated the recommendations within the framework of our competing priorities and resource limitations. We have implemented several recommendations including:
- Issuing instructions to field offices to screen payees more thoroughly.
- Conduct periodic reviews of selected payees.
- Changing the focus of the current process from accounting to monitoring and compliance.
In addition, we have the following OIG recommendations in process:
- Develop an accounting form tailored to organizational payees.
- Expand our automated Representative Payment System.
- Improve the ability to retrieve accounting forms when they are needed for subsequent review.
Another important area I want to discuss is timely termination of benefits to deceased beneficiaries. We process over 2 million death reports annually. Our agency compiles and maintains a comprehensive database, the death master file (DMF), which contains death information. We receive reports from family members, funeral homes, all 50 States, the District of Columbia, some territories, the Department of Veterans Affairs, the Health Care Financing Administration, the postal authority, financial institutions, and other sources. We independently verify reports from third parties (such as other government agencies) before we terminate benefits.
We are always looking for ways to strengthen and improve our death termination process and we are interested in ways to improve the timeliness with which we receive and process death reports. Last year you considered a proposal that would have required States to report death information to SSA within 30 days of when they receive it. Overpayments may occur when a spouse or a representative payee negotiates a check after the Social Security beneficiary has died, or when the benefit is electronically deposited into a joint or payee account. Timely reports of death help prevent such overpayments. We will continue to work with the subcommittee to explore ways to improve our death termination process.
SSA has identified ways to improve its death report processing. These improvements will be implemented through system enhancements, such as modifying the Death Alert, Control and Update System and, when completed, will strengthen the processes we use to terminate deceased beneficiaries' benefits.
Within the next two months, we will pilot a project on Electronic Death Registration under an agreement with the State of New Jersey. This project will enable us to cooperatively test a process designed to provide SSA with more accurate and up-to-date death data.
Under current law, it is illegal for fugitive felons to collect SSI payments. A fugitive felon is an individual who is:
- fleeing to avoid prosecution for a crime which is a felony under the laws of the place from which a person flees;
- fleeing to avoid custody or confinement after conviction of a crime which is a felony under the laws of the place from which the person flees; or
- violating a condition of probation or parole imposed under Federal or State law.
Working with the IG on what we call the Fugitive Felon Project, we have identified over 22,000 fugitives receiving SSI during FY 1998-2000. Using information provided by SSA, the IG and other law enforcement agencies apprehended more than 2,800 of these fugitives. While the monetary savings have been significant, just as important, is the positive impact on public safety resulting from the apprehension of these individuals.
This Fugitive Felon Project utilizes a multi-faceted approach that requires extensive and cooperative efforts of many law enforcement agencies throughout the United States. SSA and our IG are actively involved in this project by identifying and taking action against fugitive felons collecting SSI payments.
This project identifies individuals who are prohibited under the law from receiving SSI benefits by conducting computer matches with available sources of warrant information, which include the Federal Bureau of Investigation's (FBI) National Crime Information Center (NCIC) and the States. The NCIC is a major national repository for information on felons and other offenders. We also have signed agreements with the U.S. Marshals Service and the FBI, giving us access to all federal warrants.
Unfortunately only about 30 percent of all outstanding warrants are reported to the NCIC because the reporting of such information is voluntary and selective. Eleven States report all of their warrants to the NCIC. These States are Connecticut, Maine, New Hampshire, Alabama, Florida, Georgia, North Carolina, Arkansas, New Mexico, Kansas, and Missouri. The remaining 39 States report some, but not all warrant information to the NCIC.
In a joint effort to develop comprehensive sources of warrant information, SSA and the IG are actively pursuing matching agreements with those States that only provide some of their warrants to the NCIC. SSA currently has signed matching agreements with Alaska, California, Colorado, Delaware, Kentucky, Nebraska, Massachusetts, New Jersey, New York, Rhode Island, South Carolina, Tennessee, and Washington to obtain the additional warrant information that is not reported to the NCIC. In addition, we have agreements with four major metropolitan police departments, New York City, Baltimore City, Baltimore County, and Philadelphia.
Negotiating these individual State and local agreements is a major undertaking. We need to address State and local variations in records, incompatible formatting of data, privacy concerns, and the lack of State and local central reporting repositories. Our regional fugitive coordinators and field office staff are working to negotiate matching agreements with all State and local authorities. We expect to have negotiated matching agreements with all outstanding States within the year. Every effort is being made to automate the matching operations necessary to identify SSI recipients that have outstanding warrants.
One of the difficulties with such matches is that law enforcement agencies frequently do not have accurate identifying information for fleeing felons. Felons often use aliases and the law enforcement agency may not have an accurate Social Security Number (SSN). Therefore, their correct identification may be difficult. Unlike prisoners, fugitive felons are not incarcerated and may not have been convicted of a crime. For these reasons our matching operations are carefully designed to determine that the person being sought by law enforcement is the same individual receiving SSI. In order to protect individuals from unwarranted invasions of their privacy resulting from collections and use of information about them, all of our data matches and exchanges are done pursuant to agreements that comply with Privacy Act requirements, and we take security measures to limit access to the data.
When we obtain warrant information from the NCIC or from any other source, these records are first matched against SSA's files to verify identity information, such as name, date of birth, and SSN. Once the records are verified then a second match is conducted against our SSI recipient files to determine which of the fugitives are receiving SSI benefits. The results of the second match are then forwarded to the IG for processing. The two-step matching process performed by SSA takes four to ten days, from the time the warrant information is obtained from a participating federal, State or local agency until the information is forwarded to the IG.
The IG must conduct thorough investigations of the warrant information matches to ensure that the fugitive felon warrants are valid and that the appropriate individuals are brought to justice. The IG works with the FBI Information Technology Center (ITC) to verify that the felony, probation or parole violation warrant is active. The ITC provides the address information about each SSI recipient to the appropriate law enforcement agency so that they can apprehend the individual.
After action by the appropriate law enforcement agency, the IG refers their findings to SSA for appropriate action. SSA also provides feedback to the IG reflecting the actions taken and any overpayment that may have occurred.
Even though SSA is working to expand the number of matches through agreements with local authorities, much of the investigative process cannot be automated. Verification of warrant information requires direct contact with the local law enforcement personnel who issued the warrant. If the felon is no longer in the jurisdiction of the originating law enforcement agency, then additional contacts must be made with law enforcement personnel in the new jurisdiction in order to facilitate the fugitive's apprehension.
SSA needs to be very careful when reviewing warrants to make sure they are accurate, up-to-date, and that it pertains to the correct person. To arrest or to suspend benefits of the wrong individual would have severe consequences.
In their report dated August 2000, the IG recommended that SSA pursue legislation prohibiting payment of OASDI benefits to fugitive felons. That recommendation is worth exploring. We would be happy to work with the Subcommittee to develop a fugitive felon provision for the OASDI program.
SSA continues to strive to improve our programs through procedural and technology changes and by supporting and proposing legislative solutions. We are committed to our role as stewards of the trust funds. We look forward to working with this subcommittee to assure public confidence in our programs.