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Audit Report - A-04-95-06017


Office of Audit

Review of Referral and Monitoring Agency Contracts for Drug Addicts and Alcoholics - A-04-95-06017 - 7/11/97

TABLE OF CONTENTS

EXECUTIVE SUMMARY

BACKGROUND

SCOPE

FINDINGS

Identifying DA&A Population

Managing DA&A Workload

Periodic Review of RMA Accomplishments

Placing DA&As into Appropriate and Available Treatment

Establishing and Managing a QA Program

Sanction Rate of DA&As

Authorizing Changes and Modifying the Contract

CONCLUSIONS AND RECOMMENDATIONS

APPENDICES

Appendix B - Acronym’s Glossary

Appendix C - Major Contributors to This Report

EXECUTIVE SUMMARY

INTRODUCTION

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.

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BACKGROUND

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.

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SCOPE

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)

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FINDINGS

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.

Identifying DA&A Population

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.

pie chart of DA&A contracted workload 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.

Managing DA&A Workload

pie chart of DA&A Treatment StatusP.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.

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Periodic Review of RMA Accomplishments

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.

Placing DA&As into Appropriate and Available Treatment

chart of Maximus Time Delay 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.

Establishing and Managing a QA Program

chart of 20 Active Case Files in Kentucky-Contacting Treatment Source 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.

20 Active Cases in Kentucky Chart-1st Month in Treatment 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.

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Sanction Rate of DA&As

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.

pie chart noncompliances in Kentucky Resulting in Sactions 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.

Authorizing Changes and Modifying the Contract

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.

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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.

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CDR(s) Continuing Disability Review(s)

CFR Code of Federal Regulations

DA&A(s) Drug Addict(s) and Alcoholic(s)

FO(s) Field Office(s)

FTE Full-Time Equivalent

GAO General Accounting Office

GPRA Government Performance and Results Act

HHS Department of Health and Human Services

OIG Office of Inspector General

SSA Social Security Administration

P.L.(s) Public Law(s)

QA Quality Assurance

RFC Request for Contract

RFP Request for Proposal

RMA(s) Referral and Monitoring Agency(ies)

SSI Supplemental Security Income

MAJOR CONTRIBUTORS TO THIS REPORT

Office of Inspector General

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

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