The Social Security Act (the Act) allowed payments to drug addicts
and alcoholics (DA&A) under the Supplemental Security Income
(SSI) program, title XVI. In August 1994, Public Law (P.L.) 103-296,
effective March 1995, extended coverage to DA&As eligible under
title II of the Act. The law requires DA&A recipients to
undergo appropriate and available treatment and demonstrate compliance
with such treatment as a condition for continued eligibility. Additionally,
the Social Security Administration (SSA) was to provide for monitoring
and testing to ensure compliance with such treatment. In September
1993, SSA began entering into contracts with Referral and Monitoring
Agencies (RMA) for individuals covered under title XVI. By January
1995, the total amount awarded to the contractors was $67 million
and all contracts covered a 3-year period. RMAs assessed the needs
of DA&A recipients, referred them to appropriate and available
treatment, and monitored their progress to ensure compliance with
the treatment requirements. New contracts were awarded beginning
in September 1995 when coverage was extended to title II. The total
amount awarded under these new contracts to RMAs was $416 million.
Our objective was to evaluate the effectiveness of SSA’s 12
contracts with RMAs in meeting program goals, as well as managing
and monitoring contractor performance. The goal of the DA&A program
is to assure that DA&As are complying with treatment plan requirements.
As a result of such treatment, DA&As are rehabilitated and can
return to substantial gainful activity.
SUMMARY OF RESULTS
This report shows that weaknesses in the design of the monitoring
contracts prevented SSA from effectively managing the contracts and
monitoring contractor performance in accordance with the ultimate
goal of the program. We reviewed 12 RMA contracts that covered DA&As
eligible under title XVI. The contracts we reviewed covered the period
September 1993 through September 1995. These contracts included the
largest RMA contractor, Maximus. Because the legislation was amended
to include DA&As eligible under title II, the 12 initial RMA
contracts were terminated and 9 new RMA contracts were awarded.
The nine new RMA contracts covered DA&As eligible under title
II and title XVI. SSA improved controls under the nine new contracts.
Our review of the 12 original contracts identified the following:
SSA did not provide contractors timely and accurate data identifying
the DA&A population. SSA grossly understated the actual DA&A
population to the contractors. By the end of the contracts, SSA’s
reports indicated a majority of DA&As were not placed in treatment.
SSA did not require the contractor to report the cumulative number
of DA&As placed in treatment. This impeded SSA’s ability
to effectively evaluate the performance of the contractor in meeting
the goal of the program. As a result, SSA’s September 1995
RMA report indicated that only 34 percent of DA&As referred
were in treatment. Consequently, as much as $18.3 million of SSA
benefits may have been paid during September 1995 to DA&As
not in treatment.
SSA did not provide in the contract for periodic reviews to determine
the number of DA&As removed from the disability rolls, nor
the required information needed to report those removed to the
Congress. Therefore, SSA was not measuring contractors’ performance
to assure they were accomplishing the intent of the legislation.
As of September 1995, only 2,182 DA&As had successfully completed
treatment. Also, SSA records show that only 32 DA&As were removed
from the rolls as a result of successfully completing treatment
from April through December 1995.
One contractor, Maximus, indicated in its contract proposal it
would take a little over 2 months after being awarded the
contract to begin to assess, refer, and monitor DA&As into
appropriate and available treatment programs. Despite not receiving
cases in a timely manner from SSA, Maximus incurred delays ranging
from 1 to 9 additional months. As a result, SSA also had difficulty:
(1) effectively monitoring and managing how valid were its standards
to process cases timely; and (2) effectively measuring how well
its contractors met those timeliness standards when processing
the cases.
SSA did not require Maximus to have a quality assurance (QA)
program. However, the contractor’s bid proposal contained
and was approved with a QA program. SSA did not modify the contract
to include this element nor did SSA establish any control environment
in which to monitor this element. As a result, SSA failed to receive
assurance that the DA&A program was helping to rehabilitate
DA&As and return them to substantial gainful activity.
SSA did not establish a control environment to ensure that all
reported noncompliance cases resulted in appropriate action, i.e.,
sanctioned, appropriately not sanctioned.
Finally, the contractor made changes to the contract without
receiving proper authorization from the contracting officer.
In March 1996, P.L. 104-121 eliminated DA&As’ eligibility
for title II and title XVI benefits as of January 1, 1997. In effect,
this change terminated the current monitoring contracts. Because
the DA&A RMA program terminated as of January 1, 1997, improvements
will not affect that program. We, therefore, did not review contractor
performance or SSA’s controls over the contractors beyond the
original 12 contracts. The results of our review can be used by SSA
as a lessons learned when contracts are used to provide information
relating to SSA programs. In the future, the Government Performance
and Results Act of 1993 (GPRA) will require SSA to improve accountability
for its programs. We recommend that SSA:
review and determine, during the contract closeout, whether the
contractors were overpaid or underpaid based on the costs associated
with the effort it would take the contractors to process cases;
review and determine, during the contract closeout, whether the
costs associated with the unauthorized changes made by Maximus
were allowable; and
review the design and implementation of the current and proposed
contracts to determine whether measures exist to evaluate the program
performance against its goals and to determine that the contractor
performance is being measured effectively.
SSA believes that the audit has value in its focus to improve Federal
program goals for results, service quality, customer satisfaction,
and measuring program performance against these goals. SSA, however,
did not concur with our first two recommendations. SSA believes that,
based on its review and administration of incurred costs, the contractors
were neither overpaid nor underpaid. SSA also believes that all contract
changes were reviewed and determined to be allowable by the contracting
officer. SSA concurred with our third recommendation. The full text
of SSA’s comments are in Appendix A.
SSA did not provide us information, either during our review or
during the comment period, to support its conclusion that the level
of effort expended by the contractors was adequate. Also, we were
not provided with documentation that SSA certified the changes made
by Maximus. We intend to review the contract closeout process used
for these contracts.
In 1972, P.L. 92-603 established the SSI program under title XVI
of the Act. The SSI program provides income maintenance payments
to low-income individuals who are aged, blind, or disabled. Disabled
persons medically determined to be drug addicts or alcoholics and
who meet the income and other eligibility requirements are eligible
for SSI benefits. These individuals are commonly called DA&A
recipients. The law requires that in order for DA&As to be eligible
for SSI, they must undergo appropriate and available treatment and
demonstrate compliance with such treatment. SSA is to provide for
monitoring and testing of all DA&A recipients to assure compliance
with treatment. Recipients who fail to meet this requirement can
have their benefits suspended. In addition, P.L. 92-603 required
SSA to annually determine how the imposition of the treatment requirement
contributes to the achievement of the program and report this to
Congress.
From 1973 to late 1993, SSA did not have a nationwide system to
refer and monitor DA&As for treatment and ensure that DA&As
were complying with treatment. In 1991, the Department of Health
and Human Services/Office of Inspector General (HHS/OIG) reported
that SSA was mostly unaware of DA&As’ treatment status and
provided very little monitoring. In February 1994, the SSA Commissioner
testified before the U.S. House of Representatives Committee on Ways
and Means. Her testimony dealt with issues relating to DA&As
receiving SSI. In the Commissioner`s testimony, she stated, ".
. . [SSA] knew very little about the treatment progress of SSI recipients
and could document few, if any, recoveries. We [SSA] realize that
we are not completely fulfilling our referral and monitoring responsibilities."
In 1994, HHS/OIG issued two additional reports regarding the SSI
DA&A population. The reports indicated payments rarely ceased
due to successful treatment and only one-third of the DA&A recipients
were in treatment. Also in 1994, the General Accounting Office (GAO)
reported SSA was not taking appropriate measures to ensure that all
DA&As were in treatment, accounted for, and monitored as required.
SSA began awarding cost plus fixed fee contracts in late 1993 to
State agencies and private organizations to assess, refer, and monitor
DA&As in all 50 States and the District of Columbia. These organizations
are referred to as RMAs. RMAs receive DA&A history from SSA field
offices (FO). RMAs then assess DA&As and arrange for treatment
and monitor DA&As. RMAs report monthly to SSA on the status of
DA&A workloads, including compliance requirements. The compliance
requirement states DA&As must establish and/or comply with treatment
plans. When DA&As fails to comply with the requirements, RMAs
report DA&As to the SSA FO for noncompliance. As a result, DA&A
benefit payments can be suspended.
As of January 1995, SSA awarded the monitoring of DA&As in 46
States and the District of Columbia to 12 contractors. Of the
remaining four States, three had RMA agreements ongoing and one did
not have any RMA services. The largest contractor was Maximus, a
private organization. Maximus served as the RMA to 35 States and
the District of Columbia. The total amount awarded to contractors
as of January 1995 was approximately $67 million and covered
3 years. Through March 31, 1995, the total expended under
these contracts was approximately $25 million. All contracts, except
for Mississippi, were terminated as of September 1995, due to a change
in the law.
In September 1995, SSA awarded new cost plus fixed fee RMA contracts
which included the requirements of P.L. 103-296. This law mandated
each State have an RMA contractor for monitoring both title II and
title XVI DA&A recipients. The law also limited the number of
benefit payments each DA&A received and further specified suspension
periods when the DA&A did not comply with program requirements.
The new DA&A requirements were effective March 1, 1995. As of
February 1996, SSA awarded nine new RMA contracts to serve DA&A
recipients in each State, the District of Columbia, and Puerto Rico.
In late March 1996, P.L. 104-121 was signed which eliminated
DA&As’ eligibility as of January 1, 1997.
Our review was conducted in accordance with generally accepted government
auditing standards. Our objective was to evaluate the effectiveness
of SSA’s 12 contracts with RMAs in meeting program goals, as
well as managing and monitoring contractor performance. The goal
of the DA&A program is to ensure that DA&As are complying
with treatment plan requirements. As a result of such treatment,
DA&As are rehabilitated and can return to substantial gainful
activity.
To accomplish our objective, we:
Reviewed public laws, regulations, SSA’s Program Operations
Manual System, congressional testimony, and HHS/OIG and GAO reports
dealing with DA&As.
Reviewed 12 initial RMA contracts covering 46 States and the
District of Columbia. These contracts covered the period September
1993 through September 1995. We did not review the three State
agreements or the State without any RMA services.
Reviewed the RMA contracts under P.L. 92-603 and P.L. 103-296
to determine the feasibility of the contracts’ design and
application.
Reviewed and analyzed the DA&A workload reports to determine
how the DA&A population was progressing toward the program
goal.
Interviewed SSA officials, contractor officials, and subcontractors
to understand how the process of referring and monitoring DA&As
operated.
Reviewed compliance reports issued by SSA to determine what type
of performance problems were occurring with RMAs and if any similar
problems existed among RMAs.
Reviewed documentation on the initial RMA contracts, dated August
28, 1992 through September 24, 1995.
Reviewed 20 active case files and 20 closed case files in the
State of Kentucky as of June 30, 1995 to determine if assessing,
referring, and monitoring DA&As was documented as required.
Reviewed SSA’s Supplemental Security Income Display to determine
if 94 noncompliant Kentucky DA&As reported by Maximus
from January 14, 1994 through June 30, 1995 were sanctioned.
Compared the results from our judgmental sample with the results
from SSA compliance reports.
We judgmentally selected one contractor, Maximus, to review because
it was the largest contractor in both workload and dollars awarded.
One of Maximus` 35 States, Kentucky, was judgmentally selected.
This State was chosen because no previous on-site reviews had been
done by SSA.
Limited testing of Maximus` system was done to determine how
subcontractors were monitored and reimbursed for their services.
The review of the nine new RMA contracts was limited to determining
whether the contracts had design and work statement problems similar
to those we identified in the initial contracts. We did not perform
any analysis or testing on the workload reports for the new contracts.
We considered internal control procedures necessary to meet our
objective. The substantive testing was limited to SSA’s internal
controls for identifying the DA&A population nationwide, the
number of DA&As removed from the benefit rolls, and the number
of DA&As sanctioned as a result of noncompliance. SSA and Maximus
were relied upon to provide us with the information requested. We
did not test SSA`s system to determine how the information was
gathered and analyzed.
We performed on-site reviews in Vienna, Virginia; Louisville, Lexington,
Mayfield, and Paducah, Kentucky; Woodlawn, Maryland; and Atlanta,
Georgia, from February 1995 through June 1996. The reviewed SSA entities
included the Offices of the Deputy Commissioner for Finance, Assessment
and Management and Chief Financial Officer and the Deputy Commissioner
for Program and Policy. (See Appendix D)
Weaknesses in the design of the monitoring contracts did not allow
SSA to manage the contracts and monitor contractor performance in
accordance with the ultimate goal of the program. SSA, through its
management and monitoring of the contracts, did not: (1) identify
the DA&A population; (2) manage the progress of the DA&A
workload as required by P.L.92-603; (3) perform periodic reviews
of RMA accomplishments to meet the ultimate objective of the program;
(4) establish a time limit to place DA&As in appropriate
and available treatment and monitor and manage the time limits; (5) establish
and manage a QA program; (6) determine the sanction rate of
DA&As; and (7) identify changes made by the contractor to
the contract without proper modification and authorization. Such
deficiencies prevented SSA from ensuring that DA&As were being
referred for appropriate and available treatment and monitored to
ensure compliance with treatment requirements. These design flaws
were not identified by SSA in its internal review process before
releasing the Request for Proposal (RFP) in 1992. As a result, SSA
lacked the assurance that approximately $67 million awarded
under the 12 initial contracts and approximately $416 million awarded
under the 9 new contracts met or would accomplish the intent
of the law.
In addition, because deliverables were poorly designed in the monitoring
contracts, SSA received little or no results when 11 of the 12 initial
RMA contracts were terminated in late September 1995. From March
1994 through September 1995, SSA sent 98,599 DA&A cases
to RMAs of which 37,392 were closed. Of the remaining 61,207 cases
as of September 1995, only 21,066 were in treatment Also, through
September 1995, RMAs had reported 2,182 DA&As successfully
completed treatment. However, we were informed by SSA that only 32
DA&As who had completed treatment had their benefits terminated
as a result of medical improvement. SSA paid contractors approximately
$25 million under the 12 initial contracts.
The Code of Federal Regulations (CFR) requires the Request for Contract
(RFC) to list and describe data that is to be made available to the
prospective offerors for use in preparation of proposals and/or the
contractor for use in performance of the contract. The project officer
must indicate whether such material is currently available and, if
not, when it will become available. CFR further indicates the RFP
is the mechanism used to form the final definitive contract. The
contracting officer is responsible for preparing the RFP with the
assistance of the project officer. Much of the RFP information is
derived directly from the RFC or the project officer.
Neither the RFC, RFP, nor the initial RMA contracts stated how SSA
would provide accurate and timely data to the contractors on the
DA&A population. After the RFP was released, Maximus, at the
time a potential bidder, requested that SSA provide information on
where the DA&A populations were located in each State. SSA responded
that the information was unavailable. The RFP on the new contracts
also stated this information was unavailable.
The information, however, was available for the title XVI DA&As.
The Supplemental Security Income Display, a computerized record,
contains a field which identifies beneficiaries as DA&As. Because
SSA did not provide this data to Maximus, Maximus did not know the
total workload or location of the DA&A population and Maximus
was delayed in establishing its subcontracts in locations to service
the DA&A population. After receiving the case files, Maximus
discovered the files contained out-of-date information on DA&As,
i.e., old addresses, deceased, no longer eligible for SSI. As a result,
Maximus requested an SSI monthly update tape as early as June 1995.
However, as of September 1995 when the initial Maximus contract
was terminated, SSA had not provided these updates.
The
contract was awarded to the contractors based on an estimated cost
of $67 million to serve an estimated workload of 27,022; 39,649;
and 52,025 under the first, second, and third years of the contracts.
The estimated cost was based on the effort it would take the contractors
to put each DA&A into treatment and keep him/her there for 1 year.
SSA described the DA&A workload as dynamic, not static and, therefore,
impossible to estimate the number of cases that would "drop
out" at each processing phase or go into treatment. There was
no correlation between the number of cases contracted for and the
number of cases delivered to the contractor.
Based on our analysis of the workload from March 1994 through
September 1995, SSA sent and the contractors accepted 98,599 cases
of which 37,392 were closed for various reasons, i.e., death, treatment
refusal, treatment successful. This left 61,207 cases for the contractor
to place in treatment. As of September 1995, 40,141 cases were
in process and 21,066 cases were in treatment. We noted the
new RFP and contract specifically stated the contractor was not to
take any action on cases received in excess of the new workload limits
unless authorized by the contracting officer.
P.L.
92-603 requires strict compliance by DA&As to their treatment
programs. According to P.L. 92-603 and the CFR, no eligible title
XVI DA&A shall receive benefits unless the individual is undergoing
appropriate and available treatment and demonstrates compliance with
such treatment. If the DA&A refused such treatment, the DA&A’s
benefits were to be suspended until such time the DA&A agreed
to and demonstrated compliance with treatment. In short, the law
allowed the DA&A to receive benefits as long as: (1) treatment
was determined as appropriate and available; (2) treatment was
determined as either inappropriate and/or unavailable; or (3) treatment
noncompliance was referred to the appropriate SSA FO for further
action. Under P.L. 103-296, the strict requirement for compliance
with treatment included both title II and title XVI DA&As
to be in appropriate and available treatment. However, the new law
limited the number of payments each DA&A could receive. Further,
the law set strict sanction periods when benefit payments would be
suspended if a DA&A was not complying with treatment. This law
entitles title II DA&As to receive benefits for 36 months
once treatment starts and entitles title XVI DA&As to receive
benefits for 36 months whether treatment was started or not.
The contractors reported to SSA monthly the number of DA&As
who were noncompliant and those where treatment was inappropriate
and/or unavailable. These reports also showed the total number of
DA&As who were in treatment during each month. However, RMA contractors
were not required to report the cumulative number of DA&As who
were placed in treatment during the contract period. Therefore, SSA
could not evaluate the contractors based on the total number of cases
processed during the contract period. As a result, of the 98,599 cases
referred for treatment, SSA did not know the number placed in treatment.
For example, the contractors reported that as of September 1995,
there were 21,066 (or 34 percent) DA&A cases in treatment
and 40,141 (or 66 percent) DA&As not in treatment. This reporting
did not include cumulative data and, therefore, did not provide SSA
with sufficient information to effectively evaluate the performance
of the contractor in meeting the goal of the DA&A program.
These design flaws hindered SSA’s ability to successfully monitor
the contract and determine the number of DA&As who left the rolls.
Also, SSA was not able to provide Congress with the required reporting
on how the imposition of the treatment requirement contributed to
the achievement of the program. Because 40,141 DA&As were not
in appropriate and available treatment as of September 1995, as much
as $18,384,578 ($458 X 40,141)may have been paid monthly
to DA&As not in treatment.
The new contracts under P.L. 103-296 required the contractor to
report monthly by Social Security number the number of DA&As
in treatment. This would allow SSA to know the cumulative number
of DA&As in treatment over the life of the new contract.
SSA performed periodic reviews of the contractors by conducting
on-site reviews, monitoring the monthly deliverables, and requiring
the contractor to respond to specific concerns with an action plan
or letter. However, SSA did not provide for periodic reviews in the
contract to evaluate how many persons were removed from the disability
payment rolls over the contracted 3 years. Therefore, SSA did not
have a mechanism whereby it could gather data required by Congress
on how the imposition of the treatment requirement contributed to
the achievement of the program.
To remove DA&As from the disability payment rolls, SSA needed
to initiate Continuing Disability Reviews (CDR). A CDR is the process
used by SSA to review disability cases and determine if the beneficiary
is still disabled. Since DA&A eligibility cannot be terminated
until a CDR is performed, we attempted to obtain reports or memos
indicating how many CDRs over time had been performed on DA&As.
In late October 1995, SSA stated it initiated CDRs on 492 DA&As,
even though RMAs reported 2,182 successfully completed treatment
from March 1994 through September 1995. SSA reported in March 1996
that 32 DA&As had ceased receiving benefits.
To report to Congress on how the imposition of the treatment requirement
contributed to the achievement of the program annually, SSA provided
Congress with a written report. From 1978 through 1994, SSA did provide
reports to Congress without the data requested. Furthermore, the
initial contracts did not link this congressional requirement to
the contractors’ performance.
It took SSA from September 1993 to March 1996 to report on how many
successfully treated DA&As were removed from the benefit payment
rolls. As a result, SSA was sufficiently impeded in its ability to
measure the ultimate success of the program. Although SSA provided
Congress with an annual written report on DA&As, SSA did not
fully address the data required in P.L. 92-603.
We
reviewed Maximus’ contract proposal for placing DA&As into
appropriate and available treatment on a timely basis. Maximus was
awarded a contract to serve 29 States and the District of Columbia
in January 1994. Maximus` proposal stated subcontractors would
be used as local service providers who would identify case managers.
The case managers would be responsible for direct contact with the
client to assess, refer, and monitor treatment requirements. Maximus’ proposal
detailed the time it would take to: (1) receive and inventory the
States` workloads; (2) negotiate and finalize contracts
with subcontractors; and (3) identify and train case managers. After
this occurred, the case managers could begin to assess, refer, and
monitor the DA&As into appropriate and available treatment. The
time limit set was a little over 2 months after awarding the
contract. Therefore, this process was scheduled to be completed in
mid to late March 1994.
Maximus did not receive DA&A cases on a timely basis from SSA.
The initial DA&A cases from each State were first received from
March through May 1994. Despite these delays, Maximus should
have been able to place DA&As in appropriate and available treatment
as early as June and as late as September 1994 in each State. Maximus
did not reach this goal in 25 of the 29 States and the District of
Columbia. The delays ranged from 1 month to 9 additional
months. For example, Maximus began receiving case files from Connecticut
in April 1994. By April 1995, Maximus had received 161 DA&A
cases before it began to place a case in treatment.
Maximus’ failure to place DA&As in each State into treatment
on a timely basis was caused by the contractor not having the infrastructure
established based on its accepted bid proposal’s timeline and
by SSA not requiring the contractor to state in its bid proposal
how long it would take the case managers to assess and refer DA&As
into treatment.
As early as March and May 1994, SSA expressed concern with
Maximus’ infrastructure to serve the 29 States and the
District of Columbia. Despite these concerns, Maximus still did not
meet its contractual requirement and SSA did not pursue this issue
again with Maximus until May 1995. As a result, DA&As were delayed
in being placed in treatment but SSA did not penalize the contractor
for the delays.
Maximus’ proposal stated how long each task would take in terms
of minutes per activity. However, the proposal failed to place a
time limit to complete all assessment and referral procedures. Maximus’ proposal
indicated it would take 1 hour and 20 minutes to inform the
DA&A of his/her responsibilities and be assessed. The next task
was to determine if treatment was appropriate and available. This
task took 45 minutes. The proposal failed to place time limits
between each task. Thereby, SSA had difficulty in measuring the overall
timeliness of the contractor to process cases.
Although
the new RFP and contract provided for an extensive QA program, the
initial RFP did not require the contractor to develop a QA program.
Nonetheless, we found that Maximus’ initial bid proposal contained
a QA program. SSA awarded the contract to Maximus with a QA program
included, but never modified the contract accordingly. As a result,
SSA did not establish any controls to measure this element’s
performance and, therefore, could not measure whether DA&As were
being rehabilitated and returned to substantial gainful activity.
Our
on-site review of 20 Kentucky case files, as of June 30, 1995,
concurred with Maximus’ finding that the QA program was ineffective.
We found 17 of the 20 (85 percent) DA&As had not been
monitored as required during the first month of treatment. We found
15 of 20 (75 percent) DA&As’ treatment sources had
not been contacted regarding the DA&As’ progress. As a
result, Maximus paid for unsupported or incomplete services from
its subcontractors.
In addition, SSA’s internal reviews support our finding. From
September 1994 through November 1995, SSA conducted 31 on-site
reviews of RMAs. SSA found that contractors were not following and
monitoring DA&As’ treatment in 11 of the 31 contracts reviewed.
In 7 of the 31 contracts reviewed, SSA specifically identified
no formal QA process or a lack of QA procedures. Finally, the contractor
did not document treatment or treatment compliance in 4 of the
31 contracts reviewed.
The case files did not contain adequate evidence that DA&As
were complying with the treatment plans, as required by the contract.
As a result, Maximus did not know in a timely manner or at all when
a DA&A was failing to comply with treatment requirements. In
addition, unsupported payments were made to contractors and the major
program objective was not achieved. Consequently, clients remained
on SSI rolls indefinitely. By failing to have controls established
to monitor the contractor adequately, SSA failed to receive assurance
that the DA&A program was helping DA&As to be rehabilitated
and return to substantial gainful activity.
SSA did not determine the sanction rate of its DA&A program
due to a weak internal control environment. The sanction is a disciplinary
action taken by SSA which stops benefit payments. SSA failed to implement
procedures to determine that action was being taken on all DA&As
reported by the contractors as noncompliant.
Maximus was to inform the SSA FO when a DA&A was noncompliant
with treatment requirements. A noncompliance occurs when the DA&A
is uncooperative in establishing a treatment program or the DA&A
is not complying with the established treatment plan. The SSA FO
then sanctions the DA&A if noncompliance is found. Each month,
Maximus reported on its monthly deliverables the number of DA&As
which had been referred to SSA FOs as noncompliant.
Pursuant to P.L. 92-603, CFR was revised to state: (1) DA&A
recipients are subject to suspension of benefits effective with the
first month in which they do not undergo appropriate and/or available
treatment; (2) DA&A recipients are also subject to suspension
of benefits if it is determined they are not complying with the terms,
conditions, or requirements of treatment; and (3) suspended benefits
can be resumed once the DA&A demonstrates compliance by actually
undergoing the required treatment and such compliance is verified
by the responsible authority at the treatment facility.
P.L. 103-296 and the CFR state: (1) a DA&A will be suspended
due to noncompliance; and (2) suspension of SSI benefits will continue
until the recipient demonstrates compliance with treatment for a
minimum of 2 consecutive months, 3 consecutive months, and 6 consecutive
months respectively, for the first, second, and third and all subsequent
determinations of noncompliance. Suspension of benefits for 12 consecutive
months will result in termination of benefits. SSA failed to establish
controls or procedures to know how many DA&As reported as noncompliant
resulted in sanctions.
Without
establishing controls and procedures to determine the number of noncompliances
resulting in sanctions, SSA was unable to monitor the contractor
effectively. If controls and procedures had been established, information
would have been available for SSA to determine if the contractor
and/or the SSA FO were following appropriate procedures. For example,
we reviewed 20 case files Maximus had closed and referred to
FOs as of June 30, 1995. We found that 11 of the 20 case
files were closed due to noncompliance. Of the 11, 3 were sanctioned,
4 were appropriately not sanctioned, and 4 were not sanctioned
as required. In one of the four not sanctioned cases, the FO indicated
that at the time of receipt, it was unfamiliar with sanctioning procedures.
Subsequently, the FO received training and now understands and enforces
the procedures. The remaining three cases were not sanctioned because
noncompliant notifications were either not sent by Maximus or were
misplaced by the FO. Further, Maximus reported from January 14, 1994
through June 30, 1995, 177 Kentucky DA&A cases were referred
for closure. Of the 177 cases identified, 94 were noncompliant referrals.
Of these 94 cases, we determined that 24 were sanctioned, another
27 had adequate reasons why they were not sanctioned, i.e.,
deceased, no longer receiving SSI, and of the remaining 43, we were
unable to determine why no action was taken.
We reviewed the official SSA contracting file pertaining to the
initial RMA contract with Maximus. Prior to January 1995, Maximus
was awarded monitoring contracts for 29 States and the District
of Columbia. In October 1994, Maximus negotiated to monitor six additional
States. Although the contracting file showed that four modifications
were made to Maximus’ contract, it appears that Maximus possibly
incurred costs and performed services outside the requirements of
the contract. As such, these costs should be analyzed as part of
the final closeout review of the contract. In addition, changes were
made to the RFP requirements without adequate documentation and timely
evaluation by SSA.
Based on the official contracting officer’s files, Maximus
made adjustments to its workload limits and QA task without the proper
authority and contract modification. Our analysis of the workload
indicated that Maximus received 37,921 cases as of September 1994.
This represents a 145 percent increase in workload over the contracted
workload limit of 15,447. Although none of the four approved modifications
to the contract increased the original workload limit, Maximus indicated
the project officer had approved a 20 percent increase in workload.
This is outside the scope of the project officer’s duties since
the contracting officer is the only one who can change terms or conditions
in the contract.
The contract and CFR require the project officer and contracting
officer to coordinate technical aspects of the contract. The project
officer is not allowed to make changes which affect the contract
amount, terms, and conditions. The contracting officer is the only
person with the authority to: (1) direct or negotiate any changes
in the statement of work; (2) modify or extend the period of
performance; (3) change the delivery schedule; (4) authorize
reimbursement to the contractor for any costs incurred during the
performance of the contract; and (5) otherwise change any terms and
conditions of this contract.
Also, Maximus included costs for two QA specialists. The contract
was modified to include one part-time QA specialist. Based on our
analysis, it appears Maximus hired two QA specialists.
In addition to the workload limits and QA task, Maximus admitted
during negotiations it had changed part-time to full-time positions
without the contracting officer’s authority and that it was
not meeting the Full-Time Equivalent (FTE) requirement as established
in the RFP. Neither of these requirements were written in the contract.
However, Maximus’ proposal indicated it would be able to meet
the FTE requirement by including part-time positions. The official
contracting file did not provide any written authorization approving
this change nor any request by Maximus for this change.
This report shows that weaknesses existed in the design of the
monitoring contracts which prevented SSA from managing the contracts
and monitoring contractor performance. As a result, SSA was not
able to measure the effectiveness of the program in order to meet
performance goals. Because the DA&A RMA program terminated
as of January 1, 1997, improvements will not affect that
program. In the future, GPRA will require SSA to improve accountability
of its programs; therefore, we recommend that SSA:
review and determine, during the contract closeout, whether
the contractors were overpaid or underpaid based on the costs
associated with the effort the contractors used to process the
DA&A population;
review and determine, during the contract closeout, whether
or not the costs associated with the unauthorized changes made
by Maximus were allowable; and
review the design and implementation of current and proposed
contracts to determine whether measures exist to evaluate program
performance against its goals and to determine that contractor
performance is being measured effectively and in accordance with
GPRA.
SSA’s Comments
In responding to our first recommendation, SSA stated that it
was satisfied with the level of effort associated with the costs
incurred. SSA feels assured that the contractors were neither overpaid
nor underpaid, and, consequently no further review will be necessary.
In response to our second recommendation, SSA believes all changes
to the contract were reviewed and determined to be allowable by
the contracting officer. SSA agreed with our third recommendation
and indicated that, whenever possible, GPRA policy has been implemented
in the use of performance-based contracting procedures.
OIG Response to SSA’s Comments
Our review showed that SSA did not know the level of effort that
was expended by the contractors. This weakness in the controls,
in our opinion, prevented SSA from determining if the contractors
were either overpaid or underpaid. Costs were based on the contractors
providing complete treatment for 1 year. However, all DA&As
did not stay in treatment for 1 year or did not complete the
treatment program. By the end of the contract, SSA’s reports
indicated a majority of the DA&As were not placed in treatment.
Therefore, in order for SSA to certify the contract costs, SSA
needs to determine, during the contract closeout, the level of
effort the contractors actually expended. At the time of our fieldwork,
SSA indicated it did not have this information.
SSA indicated the contracting officer reviewed and determined
all costs to be allowable. However, we did not find or receive
any further documentation from SSA indicating that the costs associated
with the unauthorized changes made by Maximus were approved by
the contracting officer. SSA should review these costs during the
contract closeout to determine their allowability. SSA should also
determine whether a contracting officer should formally certify
these costs.
SSA stated it was implementing GPRA policy to the maximum extent
practicable when acquiring services through performance-based contracts.
SSA did not indicate if it was applying GPRA principles to current
contracts. SSA should assure itself that GPRA policy is being implemented
under both new and current contracts.
We intend to review the contract closeout process used for these
contracts.
Gary A. Kramer, Director, Program Audits
Michael Kowal, Team Leader
Kathryn Woodcock, Team Leader
Richard Edris, Senior Auditor
Steve Sachs, Senior Auditor
Michele Roshetko, Auditor-in-Charge
www.socialsecurity.gov
The
contract was awarded to the contractors based on an estimated cost
of $67 million to serve an estimated workload of 27,022; 39,649;
and 52,025 under the first, second, and third years of the contracts.
The estimated cost was based on the effort it would take the contractors
to put each DA&A into treatment and keep him/her there for 1 year.
SSA described the DA&A workload as dynamic, not static and, therefore,
impossible to estimate the number of cases that would "drop
out" at each processing phase or go into treatment. There was
no correlation between the number of cases contracted for and the
number of cases delivered to the contractor.
P.L.
92-603 requires strict compliance by DA&As to their treatment
programs. According to P.L. 92-603 and the CFR, no eligible title
XVI DA&A shall receive benefits unless the individual is undergoing
appropriate and available treatment and demonstrates compliance with
such treatment. If the DA&A refused such treatment, the DA&A’s
benefits were to be suspended until such time the DA&A agreed
to and demonstrated compliance with treatment. In short, the law
allowed the DA&A to receive benefits as long as: (1) treatment
was determined as appropriate and available; (2) treatment was
determined as either inappropriate and/or unavailable; or (3) treatment
noncompliance was referred to the appropriate SSA FO for further
action. Under P.L. 103-296, the strict requirement for compliance
with treatment included both title II and title XVI DA&As
to be in appropriate and available treatment. However, the new law
limited the number of payments each DA&A could receive. Further,
the law set strict sanction periods when benefit payments would be
suspended if a DA&A was not complying with treatment. This law
entitles title II DA&As to receive benefits for 36 months
once treatment starts and entitles title XVI DA&As to receive
benefits for 36 months whether treatment was started or not.
We
reviewed Maximus’ contract proposal for placing DA&As into
appropriate and available treatment on a timely basis. Maximus was
awarded a contract to serve 29 States and the District of Columbia
in January 1994. Maximus` proposal stated subcontractors would
be used as local service providers who would identify case managers.
The case managers would be responsible for direct contact with the
client to assess, refer, and monitor treatment requirements. Maximus’ proposal
detailed the time it would take to: (1) receive and inventory the
States` workloads; (2) negotiate and finalize contracts
with subcontractors; and (3) identify and train case managers. After
this occurred, the case managers could begin to assess, refer, and
monitor the DA&As into appropriate and available treatment. The
time limit set was a little over 2 months after awarding the
contract. Therefore, this process was scheduled to be completed in
mid to late March 1994.
Although
the new RFP and contract provided for an extensive QA program, the
initial RFP did not require the contractor to develop a QA program.
Nonetheless, we found that Maximus’ initial bid proposal contained
a QA program. SSA awarded the contract to Maximus with a QA program
included, but never modified the contract accordingly. As a result,
SSA did not establish any controls to measure this element’s
performance and, therefore, could not measure whether DA&As were
being rehabilitated and returned to substantial gainful activity. 
Our
on-site review of 20 Kentucky case files, as of June 30, 1995,
concurred with Maximus’ finding that the QA program was ineffective.
We found 17 of the 20 (85 percent) DA&As had not been
monitored as required during the first month of treatment. We found
15 of 20 (75 percent) DA&As’ treatment sources had
not been contacted regarding the DA&As’ progress. As a
result, Maximus paid for unsupported or incomplete services from
its subcontractors.
Without
establishing controls and procedures to determine the number of noncompliances
resulting in sanctions, SSA was unable to monitor the contractor
effectively. If controls and procedures had been established, information
would have been available for SSA to determine if the contractor
and/or the SSA FO were following appropriate procedures. For example,
we reviewed 20 case files Maximus had closed and referred to
FOs as of June 30, 1995. We found that 11 of the 20 case
files were closed due to noncompliance. Of the 11, 3 were sanctioned,
4 were appropriately not sanctioned, and 4 were not sanctioned
as required. In one of the four not sanctioned cases, the FO indicated
that at the time of receipt, it was unfamiliar with sanctioning procedures.
Subsequently, the FO received training and now understands and enforces
the procedures. The remaining three cases were not sanctioned because
noncompliant notifications were either not sent by Maximus or were
misplaced by the FO. Further, Maximus reported from January 14, 1994
through June 30, 1995, 177 Kentucky DA&A cases were referred
for closure. Of the 177 cases identified, 94 were noncompliant referrals.
Of these 94 cases, we determined that 24 were sanctioned, another
27 had adequate reasons why they were not sanctioned, i.e.,
deceased, no longer receiving SSI, and of the remaining 43, we were
unable to determine why no action was taken.