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Audit Report - A-09-96-64201


Office of Audit 

Monitoring Representative Payee Performance: Roll-Up Report - A-09-96-64201 - 3/28/97

TABLE OF CONTENTS

EXECUTIVE SUMMARY

INTRODUCTION

SUMMARY FINDINGS

  • Problems With Payees are Less Extreme Than Anecdotal Stories Would Suggest
  • The Accounting Review Process Places an Undue Administrative Burden on SSA
  • The Accounting Review Process Produces Limited Results
  • The Accounting Review Process Fails to Meet Mandated Minimum Requirements
  • The System Relies on Incomplete and Inaccurate Data

RECOMMENDATIONS

1. SSA Should Develop a System to Continuously Educate Payees Concerning Their Responsibilities

2. SSA Should Conduct More Thorough Screenings of Potential Representative Payees

3. SSA Should Revise Its "Preference Lists" for Payees to Place Greater Emphasis on Custody Arrangements

4. SSA Should Develop a Comprehensive Automated Representative Payee System

5. SSA Should Not Require Annual Reports From All Representative Payees

6. SSA Should Tailor Forms to Address Variations Among Payees and Differences in Relationships Between Payees and Beneficiaries

7. SSA Should Conduct Periodic Reviews of Selected Payees

8. SSA Should Change the Focus of the Current Process From Accounting to Monitoring and Compliance

9. SSA Should Develop a Payee Coding Scheme That Reflects the Agency`s Needs for Administering the Process

10. SSA Should Review Previous HHS/OIG and SSA/OIG Recommendations Related to Representative Payment to Determine if Additional Benefit Could be Gained From These Recommendations

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APPENDICES

A: Department of Health and Human Services’ Office of Inspector General and Social Security Administration’s Office of the Inspector General Representative Payment Reports: Executive Summaries

D: List of Contributors

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EXECUTIVE SUMMARY 

PURPOSE

This roll-up report provides comprehensive recommendations for increasing the efficiency and effectiveness of the Social Security Administration`s (SSA) representative payee monitoring process. This report summarizes the findings and recommendations of 16 audit and evaluation reports concerning representative payee issues. These reports, issued by the Department of Health and Human Services` Office of Inspector General (HHS/OIG) and SSA`s Office of the Inspector General (SSA/OIG) during the 1990`s, provided findings and recommendations concerning: (1) SSA`s accounting review process; (2) assessment of risk by various types and categories of representative payees; and (3) the demographics of representative payees and beneficiaries.

BACKGROUND

SSA administers two programs under The Social Security Act--title II (Old-Age, Survivors, and Disability Insurance (OASDI)) and title XVI (Supplemental Security Income (SSI)). These two programs provide monthly benefits to approximately 49.2 million beneficiaries and recipients (collectively called beneficiaries) who are aged, disabled, or survivors.

If beneficiaries cannot manage their own finances, Congress has authorized SSA to pay their benefits to other individuals or organizations on their behalf. SSA calls these individuals and organizations representative payees (hereinafter called payees). As of December 1994, approximately 6.6 million SSA beneficiaries had payees. Payee responsibilities include, but are not limited to, frequently monitoring the beneficiary’s current well-being for food, shelter, clothing, medical care, and personal needs; informing SSA of changes in the payee’s own circumstances that would affect the payee’s performance; reporting events to SSA that may affect the beneficiary’s entitlement or amount of benefits; and submitting an annual accounting to SSA reporting about benefits received, used, and conserved.

SSA has undertaken initiatives to strengthen the entire annual accounting process. To assist in this effort, SSA requested that we conduct a series of inspections to review and recommend improvements to the annual accounting process. For this report, we reviewed previous HHS/OIG and SSA/OIG reports concerning representative payment to identify common issues. Based on these common issues, we developed summary findings and comprehensive recommendations for improving the accounting review process.

SUMMARY FINDINGS

The HHS/OIG and SSA/OIG produced 16 reports in the 1990`s specifically addressing payee issues (see Appendix A). Most of these reports focused specifically on, or grew out of concerns about, the current accounting review process. In summarizing these reports, five general findings emerge.

  • Problems With Payees are Less Extreme Than Anecdotal Stories Would Suggest
  • The Accounting Review Process Produces Limited Results
  • The Accounting Review Process Places an Undue Administrative Burden on SSA
  • The Accounting Review Process Fails to Meet Mandated Minimum Requirements
  • The System Relies on Incomplete and Inaccurate Data

RECOMMENDATIONS

Our collective findings suggest that SSA needs to make fundamental changes to the current accounting review process. Therefore, SSA should:

  • develop a system of continuous training for payees;
  • conduct more thorough screenings of potential representative payees;
  • revise its "preference lists" for payees to place greater emphasis on custody arrangements;
  • develop a comprehensive automated representative payee system;
  • not require annual reports from all representative payees;
  • tailor forms to address variations among payees and differences in relationships between payees and beneficiaries;
  • conduct periodic reviews of selected payees;
  • change the focus of the current process from accounting to monitoring and compliance;
  • develop a payee coding scheme that reflects the Agency`s needs for administering the process; and
  • review previous HHS/OIG and SSA/OIG recommendations related to representative payment to determine if additional benefit could be gained from these recommendations.

AGENCY COMMENTS

SSA is in general agreement with our recommendations. SSA identified areas where it is planning to revise procedures, conduct pilot studies, seek approval for form revision, and explore obtaining legislative relief to implement our recommendations. The areas where SSA did not agree with our recommendations are discussed in the Recommendations section of the report. The full text of the Agency comments are in Appendix B of the report.

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INTRODUCTION 

PURPOSE

This roll-up report provides comprehensive recommendations for increasing the efficiency and effectiveness of SSA’s representative payee monitoring process. This report summarizes the findings and recommendations of 16 audit and evaluation reports concerning representative payee issues. These reports, issued by HHS/OIG and SSA/OIG during the 1990`s, provide findings and recommendations concerning: (1) SSA`s accounting review process; (2) assessment of risk by various types and categories of representative payees; and (3) the demographics of representative payees and beneficiaries.

BACKGROUND

SSA administers two programs under The Social Security Act--title II (OASDI) and title XVI (SSI). These two programs provide monthly benefit payments of about $25 billion to approximately 49.2 million beneficiaries and recipients who are aged, disabled, or survivors. Concurrently entitled beneficiaries receive benefit payments from both programs based on their entitlement to title II and eligibility for title XVI.

SSA collects and maintains data on all beneficiaries in two computerized data bases--title II data are maintained in the Master Beneficiary Record (MBR), and title XVI data are maintained in the Supplemental Security Record (SSR). The data bases contain descriptive information about the beneficiary, such as date of birth and amount of benefits.

Overview of the Representative Payee Program

Approximately 6.6 million beneficiaries, or slightly more than 13 percent, cannot manage their own finances. If beneficiaries cannot manage their own finances, Congress has authorized SSA to pay the benefits to other individuals or organizations on their behalf. The law requires payees for disability beneficiaries who have an alcoholism or drug addiction condition and are incapable of managing their benefits. SSA calls these individuals and organizations representative payees (hereinafter called payees).

SSA determines if beneficiaries need payees using medical and Agency guidelines. Such beneficiaries may include the mentally or physically impaired and persons incapable of exercising good financial judgment. The law includes a list of preferred payees for disability beneficiaries with an alcoholism or drug addiction condition who are incapable of managing their benefits. In addition, SSA requires a payee for some individuals, including legally incompetent adults and most minor children under age 18.

The Social Security Act authorizes the Commissioner of SSA to appoint payees. Payees may include, but are not limited to, parents with or without custody of children, spouses, other relatives, legal guardians, friends who show strong concern for the beneficiary`s welfare, and institutions with or without custody of the beneficiary. (Concurrently entitled beneficiaries may have a payee for only one program, the same payee for both programs, or a different payee for each program.)

When SSA appoints payees, it updates beneficiaries` MBR and/or SSR files with information about the payees. This information includes, but is not limited to, the payees` names and addresses, the type of payee code, and the custody arrangements.

Payee Responsibilities

A payee`s responsibilities include:

  • frequently monitoring the beneficiary`s current well-being for food, shelter, clothing, medical care, and personal needs;
  • acting for the beneficiary on matters relating to the beneficiary`s claim with SSA;
  • informing SSA of changes in the payee`s own circumstances that would affect the payee`s performance;
  • returning benefits to which the beneficiary is not entitled, such as when the beneficiary is incarcerated or dies;

  • reporting events to SSA that may affect the beneficiary`s entitlement or amount of benefits, such as work, marriage, and changes in address or custody; and
  • submitting an annual accounting to SSA reporting on benefits received, used, and conserved.

Payees receive the booklet, A Guide For Representative Payees, during the application interview which describes these responsibilities and the appropriate use of benefits. The booklet includes a worksheet to record the use of benefits and a sample accounting form.

The Jordan Court and the Beginnings of the Accounting Review Process

Prior to 1983, SSA did not have a mandate to conduct accountings of funds that payees received on behalf of beneficiaries. The Agency relied on its own initiative to create an accounting system. In 1979, Ms. Jeanne Jordan brought a class action suit against SSA challenging how it monitored payees. (Ms. Jordan alleged that her payee was not using her SSA benefits properly to meet her needs.) In its 1983 decision, the Jordan Court decided that payees should be required to give a full accounting of how they spend and save title II and title XVI benefits on behalf of beneficiaries. Subsequently, Congress amended The Social Security Act to require annual accounting of all payees except State mental institutions participating in the on-site review program.

SSA designed an annual accounting process to gather data from the payee about various situations involving the beneficiary. The data is intended to help SSA determine:

1. the continuing suitability of the payee;

2. the continuing need for representative payment; and

3. whether the payee used benefits properly during the 12-month report period.

Selecting Payees for Accounting Review

Each month, SSA uses its computerized data bases (the MBR and the SSR) to identify payees who are to receive annual accounting forms. SSA usually schedules payees to receive forms on the anniversary of the month they were selected to be the payee, although SSA and/or payees may designate an alternate report period. As a result of this selection process, SSA sends initial accounting forms to approximately one-twelfth of all payees each month. SSA uses a contractor to mail accounting forms to payees.

SSA’s policies are designed to prevent selection of a payee who should not receive accounting forms. Circumstances in which a payee should not receive an accounting form include when the payee: (1) has received the beneficiary’s benefits for less than 1 year; (2) is covered under the on-site review program; or (3) lives in a foreign country.

Certain payees for concurrently entitled beneficiaries also should not be selected. SSA’s policies for concurrently entitled beneficiaries are designed to prevent the same payee from receiving two accounting forms on behalf of the same beneficiary. It is likely that this would occur if SSA selected information from both the MBR and SSR. Therefore, SSA selects information from the SSR only. As a result, however:

  • SSA will select information necessary to mail accounting forms to payees managing both benefits for beneficiaries;
  • SSA will select information necessary to mail accounting forms to payees managing the title XVI benefits but will not select information necessary to mail accounting forms for payees managing the title II benefits for beneficiaries with different payees; and
  • SSA will not select information necessary to mail any accounting forms for beneficiaries who have payees for their title II benefits but receive their title XVI benefits directly.

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Controlling the Return of Accounting Forms

When the contractor mails accounting forms to payees, SSA establishes a centralized computer systems diary to control the forms` return. When a payee returns the form, SSA clears the systems diary to acknowledge receipt. If a payee does not return the accounting form to the Wilkes-Barre Data Operations Center (WBDOC) in Pennsylvania within 3 months, the contractor mails a second copy of the accounting form. If a payee returns the form as a result of the second request, SSA clears the systems diary.

If payees have not returned either form within 6 months of the first mailing, SSA, through the National Computer Center in Baltimore, Maryland, produces lists of payees from the systems diary who have not returned the forms. The lists (called "nonresponder alerts" or "listings") are sent to SSA field offices and processing centers for follow-up by telephone or mail. The field offices contact nonresponding payees for title XVI beneficiaries. The processing centers contact nonresponding payees for title II beneficiaries. If the processing centers are unsuccessful, they send development requests to the appropriate SSA field offices. The processing centers retain control of development requests for nonresponding payees and follow up with field offices for status reports.

Processing Returned Accounting Forms

The WBDOC in Pennsylvania completes the initial screening, data verification, and review of all returned forms. The staff use a computer program to review the accounting forms and determine whether further contact with payees is necessary. Contact is usually by telephone and may include completing unanswered questions, clearing up misunderstandings, counseling on proper use of benefits, and investigation for alleged misuse or fraud. Depending on the nature of the contact, the WBDOC, processing centers, and/or field offices may become involved.

Once no further action is necessary relative to a form (i.e., the form did not require further contact with the payee or all issues have been resolved), SSA stores it for a period of 2 years. Due to the volume of forms, SSA does not store them in an easily retrievable format. SSA generally groups them by the report period date.

The Increasing Costs of Annual Accounting

The cost of annual accounting has almost doubled over the last 5 years as indicated in the graph below. In Fiscal Year (FY) 1991, SSA spent approximately $33.2 million to administer annual accounting. For FY 1996, SSA estimated that it would spend $66.0 million for annual accounting.

SSA Initiatives and Changes in Annual Accounting

SSA has instituted various means to help address rising costs and reduce administrative burdens. Five initiatives are listed below.

  • To handle a high volume of annual accounting, SSA originally developed the standardized accounting form SSA-623. This form asks how payees used the funds for:

    1. food and shelter;
    2. other items such as clothing, education, personal items, and medical and dental expenses; and (3)
    3. savings.

  • The form also asks payees about:

    1. changes in the beneficiary`s custody;
    2. whether the payee or another person controlled the SSA benefits; and (3)
    3. their own felony convictions during the previous 12 months. SSA sends all payees an SSA-623 for each beneficiary that a payee represents (except those who are covered by the on-site review process or complete the SSA-6230).

  • In July 1990, SSA introduced the SSA-6230 accounting form for parents and, later, stepparents and grandparents with custody of minor children who receive title II benefits. These payees may report their use of benefits for up to four children on the same form. Since parents, stepparents, and grandparents represent the largest type of payee category, most title II payees now receive the SSA-6230.
  • SSA asked OIG to conduct a series of inspections that would review and recommend improvements to the annual accounting process.
  • Independent of the OIG`s work, SSA appointed an internal Quality Improvement Team to analyze various parts of the accounting process. The team recommended changes in the accounting forms and processes to reduce manual workloads and streamline the process.
  • n June 1995, SSA appointed an external Representative Payee Advisory Committee to study all aspects of the accounting process from payee selection through monitoring payee performance. The Committee reported its findings and recommendations to the Commissioner of SSA in November 1996.

METHODOLOGY

We reviewed previous HHS/OIG and SSA/OIG reports concerning representative payment to identify common issues. Based on these common issues, we developed summary findings and comprehensive recommendations for improving the accounting review process.

This inspection was conducted in accordance with the Quality Standards for Inspections issued by the President`s Council on Integrity and Efficiency.

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SUMMARY FINDINGS 

HS/OIG and SSA/OIG have produced 16 reports in the 1990`s specifically addressing payee issues (see Appendix A). Most of these reports focused specifically on, or grew out of concerns about, the current accounting review process. In summarizing these reports, five general findings emerge.

Problems With Payees are Less Extreme Than Anecdotal Stories Would Suggest

Stories in the media frequently highlight cases in which payees have acted inappropriately. While these cases are often severe, they do not represent the millions of payees who serve willingly and act appropriately. The problem cases that we identified: (1) often were the result of payees failing to fully understand their responsibilities; and (2) could have been prevented had SSA conducted more thorough suitability checks prior to payee selection.

The Accounting Review Process Places an Undue Administrative Burden on SSA

Staff throughout SSA expressed frustrations related to the amount of time and effort needed to address the ever growing payee workload. Our own independent analysis supports these concerns. We found that SSA staff expend vast effort following up reported changes or potential problems as identified by the accounting forms. In many cases, these "changes" or "problems" were the result of payee confusion rather than actual events. (It is important to note that our findings focused on the process from SSA`s perspective. We did not address what burden this process places on payees, especially payees serving multiple beneficiaries.)

The Accounting Review Process Produces Limited Results

Although problems may be limited, they are real. Our findings support SSA staff`s belief that the accounting review process rarely detects misuse of benefits. In addition, we found that the current accounting review process rarely detects problems of any kind. Reasons for this include, but are not limited to: (1) SSA’s resources being used to clear up payee confusion rather than identify real problems; (2) limited follow-up of nonresponding and/or high-risk payees; (3) questions either do not focus on real problems or are not phrased in a manner that quickly identify problems; and (4) the process essentially treats all payees the same.

The Accounting Review Process Fails to Meet Mandated Minimum Requirements

Congress and the courts require that SSA obtain completed accounting forms from virtually all payees annually. Our findings suggest that some payees never receive forms, and many more do not return forms. These findings do not address whether it is appropriate for all payees to complete annual accounting forms, but rather SSA`s ability to administer the process effectively and completely.

The System Relies on Incomplete and Inaccurate Data

Currently, SSA selects beneficiary records for payee accounting based on coding in SSA`s computerized data bases (the MBR and the SSR). Our findings demonstrate that these data are, in many cases, incomplete or inaccurate. As a result, payees may receive incorrect accounting forms or beneficiary records may either be selected or not selected (improperly) for annual accounting purposes.

Although a variety of less significant findings were previously reported in the 16 reports, we will concentrate our recommendations on these five main findings. We believe that, in addressing these five findings, many of the less significant findings will be addressed.

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RECOMMENDATIONS 

Our collective findings suggest that SSA needs to make fundamental changes to the current accounting review process. The "shotgun" approach--asking payees to complete the same form at the same interval--ignores the various relationships between payees and beneficiaries. Even worse, the current process produces only limited results for the amount of effort SSA expends. While we agree with the need for some process to oversee payees` efforts, we do not believe that the current process is the only means to achieve this goal. Therefore, we recommend that SSA:

1. Develop a System of Continuous Training for Payees

Problems that we identified often were the result of payees failing to understand their responsibilities. The payees either forgot their responsibilities or did not recall having received instruction when SSA appointed them payee.

1.A. SSA should consider having payees periodically sign statements (which clearly state payees` responsibilities) to certify that they understand and agree to fulfill their responsibilities. This would help re-educate them about their responsibilities.

We found high staff turnover at some agencies, institutions, and other volume payees. The result is that staff with no knowledge of SSA may be directing the use of benefits.

1.B. SSA should develop methods to periodically train the staff at these volume payees.

2. Conduct More Thorough Screenings of Potential Representative Payees

Problems that we identified often were not new and, in many cases, existed from the time SSA appointed the payees. For example, many potential misuse cases were the result of parents falsely claiming to have custody of their children. (Overall, we found that problem payees often were coded incorrectly as having custody of the beneficiaries.) A simple custody check could have prevented years of misuse or questionable use of benefits.

2.A. During custody checks, SSA should verify payees` statements made on the application and during the interview.

2.B. For agencies, institutions, or other volume payees, SSA should determine whether the potential payees` record keeping systems are sufficient to ensure that beneficiaries` needs will be adequately met.

2.C. SSA should conduct suitability checks only for payees it intends to select. We do not believe that SSA needs to conduct checks for all payee applicants.

SSA COMMENT

Recommendation 2.C. -– SSA believes that suitability checks are necessary for all applicants in order to select the best possible payee.

OIG RESPONSE

We continue to believe that the most efficient use of resources is to conduct a suitability check only for the payee highest on the preference list, continuing down the list only if the most preferred payee is found to be unsuitable. A policy of conducting suitability checks for all applicants would seem to be unnecessary, burdensome, and of questionable benefit.

3. Revise Its "Preference Lists" for Payees to Place Greater Emphasis on Custody Arrangements

SSA`s current "preference lists" are weighted towards relationships between payees and beneficiaries. Our findings suggest that, in many cases, custody is a more important factor affecting payee performance than relationship. For example, a nonparent relative with custody may, in some respects, be a better choice than a parent without custody.

4. Develop a Comprehensive Automated Representative Payee System

Although the current process allows SSA to manage the return of millions of forms each year, we believe that the process could be improved through automation. SSA is working to make the Representative Payee Master File fully operational. At a minimum, we believe that the following could be added to this file as part of the fully automated system:

4.A.Tracking system for payees` return of accounting forms -- This would prevent information about unreturned forms from being overwritten as well as provide SSA staff with a performance measure to use in the payee selection process.

4.B. On-line exception processing -- The current process for reviewing forms is primarily manual. When an exception occurs--a payee answers a question in a manner which requires direct contact--the form may be mailed from one office to another until the exception is resolved. Each office must do its own review to determine what follow-ups are required. This manual processing reduces the timeliness of SSA`s actions. For example, if a payee reports excessive resources for a title XVI beneficiary, it may take days or weeks for the form to be mailed to the appropriate office. An overpayment is the likely result of these delays. An automated system could send a message to the appropriate office as soon as the form is recorded into the system.

4.C. On-line copies of completed forms -- Once SSA has processed the forms, it stores them in a manner that does not allow easy retrieval. This reduces the forms` usefulness for trend analysis or criminal investigations. Having on-line access to responses would allow SSA to review questions to determine the forms` effectiveness and adequacy in identifying problem payees.

The comprehensive automated system would allow SSA to close "gaps" in the current process. These gaps result in:

1. payees not receiving forms when they should (i.e., title II payees for concurrently entitled beneficiaries); and
2. inadequate systematic controls over the return of forms.

5. Not Require Annual Reports From All Representative Payees

Our findings suggest that some payee types demonstrate low risk of misuse or poor performance. The risk associated with some payee types (e.g., parents and relatives with custody) is sufficiently low as to warrant other than annual reporting.

5.A.  SSA should consider sending forms to payees at 3-year intervals where statements concerning relationship, custody, and record keeping have been verified (see recommendation 2). We also found that problems associated with some payee types could be reduced if SSA screened payees more thoroughly and re-educated payees periodically. Therefore, other payee types could be included under the 3-year cycle if these efforts could reduce their risk category sufficiently.

5.B. SSA should exempt from annual reporting those payees who complete extensive reporting for an official or an external organization (e.g., legal guardians).

SSA COMMENT

Recommendation 5.B. – SSA does not agree that payees who are required to complete extensive reporting for officials or external organizations (e.g., legal guardians) should be exempted from annual reporting because they may have creditor relationships, and few have custody.

OIG RESPONSE

We agree that some of these payees may have creditor relationships. However, our rationale for exemption from annual accounting is based on the premise that such payees have apparently demonstrated the responsibility necessary for their selection to a position of fiduciary responsibility (e.g., legal guardian). The financial accountability requirements required for such positions would usually be more extensive than required by SSA for a representative payee.

5.C. SSA should also periodically certify that these payees still complete the alternate reporting.

5.D. SSA should, in order to implement the above recommendations, seek legislative relief from The Social Security Act and the Jordan Court order concerning the requirement to obtain an annual accounting of benefits from all payees.

Focusing strictly on parents and relatives with custody, we believe that SSA could save $34.7 million of the $66 million estimated cost for annual accounting--$173.4 million over 5 years--by implementing a 3-year cycle. (These savings would be somewhat reduced by the initial face-to-face checks required to screen potential payees.) If SSA exempted the 6.7 percent of payees who are legal guardians, it could save $4.4 million annually or $22.1 million over 5 years.

SSA COMMENT

Recommendation 5 -- SSA agrees that significant savings are possible by moving away from an annual payment cycle, but believes that the OIG savings estimates are overstated because we did not consider that parents with custody can report compliance on up to four children on one accounting form.

OIG RESPONSE

We did consider that multiple children can be reported on a single accounting form in determining the amount of savings that could be achieved by implementing a 3-year rather than a 1-year accounting cycle. Our calculations were based on the number of forms, not the number of beneficiaries, that would be affected by this change.

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6. Tailor Forms to Address Variations Among Payees and Differences in Relationships Between Payees and Beneficiaries

The current forms treat all payees virtually the same. One form, the SSA-6230, is for parents, stepparents, and grandparents with custody of minor children receiving title II benefits, while the other form, the SSA-623, is for all other payees. This reduces the effectiveness of the process and requires payees to answer questions which are not appropriate for their particular situation.

6.A. SSA should, at a minimum, create forms which differentiate individual payees from agencies, institutions, and other volume payees.

For individual payees (e.g., parents, friends, etc.) we recommend that:

6.B. Payees` responsibilities should be clearly stated on the application form. If, at a later date, it is shown that a payee did not fulfill his or her responsibilities, this signed document will provide SSA with evidence that the payee understood and agreed to the responsibilities.

6.C. Questions should be more specific to the payee`s and/or beneficiary`s situation. For example, if a beneficiary is coded as being in the payee`s custody, ask "Did the beneficiary live with you the entire report period?" If the beneficiary is in his or her own custody, ask "Is the beneficiary still in his (or her) own custody?" If the beneficiary was in an institution`s custody, ask "Did the beneficiary live in the same institution during the entire report period?"

6.D. Questions should focus on events that payees commonly fail to report. Although payees certify that they will fulfill their responsibilities, including reporting significant events to SSA, our findings suggest that this does not always occur. Many problems we identified resulted from payees failing to inform SSA of significant events (e.g., beneficiaries in prison). Using the form to collect this information could significantly reduce overpayments to payees, and allow SSA to maintain the most up-to-date information in its data bases.

SSA COMMENT

Recommendation 6.D. -- SSA does not agree that it should tailor the accounting forms so that questions focus on events that payees commonly fail to report. SSA believes that events affecting eligibility/entitlement should be reported as they occur. There are programs in place which are designed to identify individuals who are no longer eligible/entitled to receive payments. Moreover, SSA’s use of questions designed to capture specific reporting events confused payees, causing forms to be rejected from automated processing.

OIG RESPONSE

We believe that it is appropriate to tailor the accounting forms to focus on specific events. The inclusion of such questions on the form could significantly reduce many problems we identified, including reducing overpayments that result from failure to report events that affect eligibility. Including questions to capture specific reporting events would enhance SSA’s ability to identify such events by reaching individuals who might otherwise be missed by SSA’s recontact programs. We believe that payees would not be confused by such questions if they were properly worded.

For agencies, institutions, and volume payees, we recommend that:

6.E. SSA should send a single request to each payee for all beneficiaries that SSA wishes to receive information. Instead of processing thousands of forms for a specific organization, SSA would need to process no more than 12--1 per month--each year.

6.F. For each beneficiary, SSA should request the amount of benefits received, the conserved funds balance, and whether the beneficiary`s custody has changed. Our findings suggest that inadequate record keeping often is an initial indicator of greater problems. SSA could compare responses regarding funds received to amounts SSA disbursed.

6.F.1. If these amounts do not coincide, SSA should review the organization on-site.

6.G. SSA should allow payees to submit responses electronically. Many payees representing multiple beneficiaries have sophisticated computerized financial management systems. These systems could transmit information to SSA directly.

7. Conduct Periodic Reviews of Selected Payees

We identified problems mainly through the use of in-person interviews and found that the current process could not have identified many of these problems. For example, we identified cases where payees did not have custody of the beneficiary but reported that they did on the accounting form.

7.A. Therefore, SSA should review both suspect cases and randomly selected cases from high-risk payee categories (e.g., payees coded "other") and determine if any action is necessary on the case.

8. Change the Focus of the Current Process From Accounting to Monitoring and Compliance

SSA`s policies and procedures commonly refer to this process as "representative payee accounting." However, SSA freely acknowledges that the process is not, nor is it intended to be, an accounting process. The result is that payees, beneficiaries, advocacy groups, and even SSA staff are confused about the objectives of the process. Although this change may seem minor, we believe that it will fundamentally change perceptions of the process from financial reporting to payee oversight.

9. Develop a Payee Coding Scheme That Reflects the Agency`s Needs for Administering the Process

We question the coding that SSA uses for payees. In some cases (e.g., payees coded "other") the coding is too general. In other cases (e.g., the various types of institutions) the coding is too specific.

9.A. SSA should institute a workgroup to explore if certain coding breakdowns are still necessary, and what the appropriate coding should be.

9.B-D. At a minimum, we believe that SSA should:

-- split the "other" coding category to distinguish friends or other nonprofessional individuals from lawyers and payees with professional relationships with beneficiaries;

-- group some of the institution coding--the number of possible codes tends to confuse rather than provide meaningful distinctions between the various institutions; and

-- differentiate between agencies that may or may not have custody (e.g., social service agencies) from agencies that have legal but not physical custody (e.g., foster care agencies).

10. Review Previous HHS/OIG and SSA/OIG Recommendations Related to Representative Payment to Determine if Additional Benefit Could be Gained From These Recommendations

In our early reviews of the process, we made several recommendations intended to improve overall efficiency and effectiveness. Although SSA did take steps to implement many of these recommendations, we believe that, in the process of redesigning aspects of the process, some further attention should be given these recommendations. Some recommendations that we believe SSA may want to revisit include:

10.A. SSA should have WBDOC share more information on systems exceptions with processing centers and field offices;

10.B. WBDOC should manage the entire accounting review process and refer to field offices only those cases that require face-to-face contact with payees; and

10.C. SSA should resolve the incorrect coding of payee type highlighted in this and previous reports. (We believe that our findings and recommendations, in total, provide substantiation for complete, accurate, and consistent information for all payees.

10.D. We also believe that SSA should include system improvements in its automated systems designed to cross-check data in order to increase its accuracy.)

These recommendations provide a "blueprint" for improving the annual review process. We remain committed to improving this process and are willing to work with SSA in its efforts to develop the specifics necessary to carry out these recommendations.

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APPENDIX A  

DEPARTMENT OF HEALTH AND HUMAN SERVICES`
OFFICE OF THE INSPECTOR GENERAL
AND
SOCIAL SECURITY ADMINISTRATION`s
OFFICE OF THE INSPECTOR GENERAL
REPRESENTATIVE PAYMENT REPORTS:
EXECUTIVE SUMMARIES

The following pages contain the purpose, findings, conclusion, and/or recommendations for the key representative payee reports the Department of Health and Human Services` Office of Inspector General and Social Security Administration`s (SSA) Office of the Inspector General produced during the 1990`s. Our earlier reports are based on the data contained in SSA`s data bases. Our later reports are based on our data.

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REVIEW OF PROCEDURES RELATING TO REPRESENTATIVE PAYEES (A-07-90-00266/FEBRUARY 1991)

PURPOSE

To determine whether SSA`s procedures provide adequate assurance that representative payees properly use Social Security benefits on behalf of beneficiaries.

CONCLUSION

Our review showed that representative payee reports are administratively burdensome to SSA, the financial data on the reports is of little value in detecting misuse of benefits, procedures do not ensure selection of qualified payees, and a system deficiency causes some payees to be omitted from the report mailing lists. Specifically we found:

1. The annual accountability report format is overly complex, causing payees to provide answers which are excepted by the optical scanner. Excepted reports require burdensome manual processing.

2. While financial data on the accountability reports can indicate situations of potential misuse, SSA does not perform sufficient analysis to identify suspicious reports for additional review. Further, information is accepted as reported. There is no verification of the reported data.

3. Amount of funds conserved from the prior accounting period was not being imprinted on the accountability report, thereby preventing SSA from monitoring conserved funds balances from potential misuse. The cause was a computer system deficiency.

4. The basis for selecting a representative payee is the information supplied by a prospective payee on the application form. The servicing office evaluation of that information and the selection decisions are not documented in the claims folder. Without documentation, there is no assurance that selection was based on adequate evaluation of qualifications.

5. Representative payee coding was not always annotated on the Master Beneficiary Records (MBR) of certain beneficiaries over the age 18. As a result, representative payees for these beneficiaries did not report as required because they were omitted from the mailing of accountability report forms.

RECOMMENDATIONS

  • Review the accountability report to identify areas where it can be simplified to reduce errors by representative payees and facilitate processing.
  • Review accountability reports to identify aberrant or high risk representative payees and verify the information reported. In addition, a randomly selected number of all accountability reports could be selected for verification.
  • Record the amount of conserved funds reported by representative payees on the subsequent accountability reports. This information is necessary to assure that conserved funds are transferred to either the new payee or beneficiary`s estate when appropriate, and to help evaluate whether funds were properly used.
  • Review the procedures used by field offices to evaluate the qualifications of prospective representative payees to ensure they are adequate. The procedures should include documented interviews with prospective payees.
  • Enter representative payee coding on the MBR for all beneficiaries over age 18 when benefit payments are paid to another person. This coding would provide assurance that the representative payees are receiving accountability reports for title II benefits.

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REPRESENTATIVE PAYEES SERVING MULTIPLE BENEFICIARIES (OEI-02-90-00900/MAY 1991)

PURPOSE

To describe representative payees serving multiple Social Security beneficiaries.

FINDINGS

"Other" Payees Serving Multiple Beneficiaries are Few in Number

Only 2.4 percent of payees coded "other" serve more than two beneficiaries. Payees serving very large numbers of beneficiaries are concentrated in Michigan.

Most are Professionals Serving in an Official Capacity

Payees coded "other" are mostly guardians, attorneys, licensed residential facilities, and agencies. Most are miscoded or inappropriately coded "other." Most are monitored by courts and other agencies. Most report they contact beneficiaries regularly. Most payees report they communicate effectively with other professionals and with SSA on the beneficiaries` behalf.

Problem Payees Were Identified, But Are Small in Number

RECOMMENDATIONS

  • SSA should resolve the incorrect coding of payee type highlighted in this and previous reports.
  • SSA should develop a coding scheme for type of payee that is more useful in monitoring payees.
  • SSA should contact the payees who did not respond to this survey to determine their continued suitability.

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MONITORING REPRESENTATIVE PAYEE PERFORMANCE: EFFECTIVENESS AND EFFICIENCY OF THE ACCOUNTING REVIEW PROCESS (OEI-09-92-00851/JUNE 1994)

PURPOSE

The inspection analyzed the effectiveness and efficiency of SSA`s representative payee accounting review process.

FINDINGS

The Accounting Review Process May Deter, But Rarely Detects, Misuse of SSA Benefits

The current process cannot be relied upon to detect misuse or questionable performance because data on the accounting forms are self-reported by payees. Although a more labor-intensive process may be needed to detect misuse, the administrative costs would far outweigh the results.

Duplication of Staff Effort is Inherent in the Current Accounting Review Process

The Wilkes-Barre Data Operations Center (WBDOC) staff initially call payees to complete any blank responses. The processing centers and field offices also contact payees by telephone or mail to verify and correct inaccurate responses.

SSA Staff are Frustrated by Large Workloads and the Time Needed to Resolve Questionable Accounting Forms

Workloads for payee accounting are large, and they increase each year. In Fiscal Year (FY) 1993, WBDOC received and processed approximately 4.2 million forms, a 13.5 percent increase over FY 1992. Staff also are frustrated with the time needed to clear both systems and unresolved exceptions and contact nonresponders. Often, it takes more than a year to resolve exceptions.

Some Processing Centers and Field Offices Have Developed Creative Ways to Eliminate Duplication and Streamline the Process

Some processing centers and field offices have streamlined the paper flow and decreased the processing time by: (1) mailing call-in cards to payees; (2) standardizing form letters, such as close-out letters that mention possible suspension of benefits; and (3) developing a regional operations bulletin to supplement SSA policy.

Despite Improvements, the Accounting Forms are Still Difficult to Understand, Cause Exceptions, and are Not Appropriate for Some Institutionalized Beneficiaries

While SSA has improved the accounting forms, the questions still may be too difficult for most payees to understand.

RECOMMENDATIONS

The findings in this report reaffirm the need to conduct the additional inspections on assessment of risk, payee programs of other Federal and State agencies, and best practices of advocacy groups and private organizations. However, prior to the completion of such studies, SSA should consider the following short-term recommendations:

SSA should have WBDOC share more information on systems exceptions with processing centers and field offices

If WBDOC shared the initial computer analysis, the processing centers and field offices could access the data to identify systems exceptions quickly and decide what actions should be taken.

  • SSA should revise the SSA-623 accounting forms to:
  • make its language comparable to the SSA-6230, the form used by payees for child beneficiaries;
  • include the total yearly benefits clearly on the form; and
  • tailor a different form for some types of payees, especially those who are payees for institutionalized beneficiaries.
  • SSA should share information with WBDOC, processing centers, and field offices on the duties and responsibilities of all components involved in the accounting review process

By sharing information, staff involved in accounting review will better understand each component`s responsibilities.

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DEMOGRAPHICS OF BENEFICIARIES WITH REPRESENTATIVE PAYEES: ADULT BENEFICIARIES (OEI-09-92-00855/MARCH 1994)

PURPOSE

This inspection analyzes the demographics of adults with representative payees.

FINDINGS

More Than Two-thirds of Adults With Payees are Under the Age of 65

Younger adults (ages 18 to 64) are more likely to have payees than older adults (age 65 or older) because most younger adults` entitlement is based on disability rather than retirement.

Adult Supplemental Security Income (SSI) Beneficiaries are Six Times More Likely to Have Payees Than Adult Old-Age, Survivors and Disability Insurance (OASDI) Beneficiaries

This is because a much greater portion of adult SSI beneficiaries are disabled.

One-fifth of Younger Adults With Payees Receive Both OASDI and SSI Benefits

More than half of beneficiaries who receive both OASDI and SSI are adults who were disabled as children.

One-tenth of SSI Younger Adults Receive Less Than $200 Per Month in Benefit Payments

In the extreme case, 6.2 percent of younger adults with only SSI receive $30 or less per month.

The Percent of Disabled Adults Who Have Payees Varies by Disabling Condition

Beneficiaries with mental disorders, especially mental retardation, are more likely to have payees than all other disabled beneficiaries combined.

Living Situations Differ Between Younger Adults and Older Adults With Payees

While younger adults are more likely to live with relatives, older adults are more likely to live in institutions.

The OASDI Older Adults are Much Less Likely to Have Payees Than OASDI Younger Adults

Approximately 1.8 percent of OASDI older adults have payees compared to 11.6 percent of younger adults.

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DEMOGRAPHICS OF BENEFICIARIES WITH REPRESENTATIVE PAYEES: CHILD BENEFICIARIES (OEI-09-92-00856/MARCH 1994)

PURPOSE

This inspection analyzes the demographics of children with representative payees.

FINDINGS

Two-thirds of OASDI Beneficiaries With Payees and One-third of SSI Beneficiaries With Payees are Under Age 18

This is because more than 99 percent of children have payees, compared with 4 percent of OASDI adults and 22 percent of SSI adults.

The Number of SSI Children With Payees Has Nearly Tripled in 4 Years

In contrast, the number of OASDI children with payees increased only 11.6 percent between December 1989 and January 1994. The dramatic increase in the number of SSI children appears to be due to the 1990 U.S. Supreme Court decision, Sullivan v. Zebley, 493 U.S. 521, and the resulting regulations.

Parents are Payees for More Than 80 Percent of Children

Parents and other relatives serve as payee for, and have custody of, almost all OASDI and SSI children.

One-fifth of OASDI Children With Payees Receive Less Than $100 Per Month in Benefit Payments

In the extreme case, 1.4 percent of OASDI children receive less than $10 per month.

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DEMOGRAPHICS OF BENEFICIARIES WITH REPRESENTATIVE PAYEES: SSI DRUG ADDICTS AND ALCOHOLICS (OEI-09-92-00857/JUNE 1994)

PURPOSE

This inspection analyzes the demographics of SSI drug addicts and alcoholics (DA&A) with representative payees.

FINDINGS

The Number of SSI DA&As Has Increased Dramatically During the Past Decade

The number of DA&As increased from 4,021 beneficiaries in December 1984 to 78,310 beneficiaries in December 1993. Furthermore, almost one-half of all DA&As live in two states: California and Illinois.

One-third of Payees for SSI DA&As are Coded "Other"

Payees coded "other" include, but are not limited to, friends, acquaintances, and professionals such as attorneys. These payees may be at higher risk of misusing benefits than parents, other relatives, or institutions. In contrast to SSI DA&As, only one-tenth of all SSI younger adults (ages 18 to 64) have payees that are coded "other."

One-fifth of SSI DA&As are Concurrently Entitled to SSI and OASDI

Approximately 16,810 DA&As are concurrently entitled, receiving both SSI and OASDI benefits.

Nearly One-half of Concurrently Entitled DA&As Receive OASDI Directly Rather Than Through Payees

Of the 7,460 DA&As, 2,940 receive OASDI payments directly that are at least 4 times the SSI payments that are made on their behalf to payees. On average, these DA&As receive $467 per month to spend as they wish. Overall, 82.3 percent of DA&As (6,140) who receive OASDI directly receive larger OASDI payments than SSI payments.

CONCLUSION

The dramatic increase in the number of DA&As, the payees that are coded "other," and the direct OASDI payments to DA&As present serious challenges to SSA`s representative payee program. We will continue to work with SSA on various studies that should provide useful information and present options for addressing the problems specific to the DA&A populations.

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MONITORING REPRESENTATIVE PAYEE PERFORMANCE: ACCOUNTING REVIEW PROCESS AT THE WILKES-BARRE DATA OPERATIONS CENTER (OEI-09-92-00858/JUNE 1994)

PURPOSE

This inspection analyzed SSA`s representative payee program accounting review process at WBDOC.

FINDING

Some Aspects of the Current Accounting Review Process are Duplicative, Inefficient, and Costly

The processing centers and field offices duplicate the WBDOC process by reviewing and analyzing the accounting forms before contacting payees to resolve exceptions.

For FY 1993, field offices cost 60.7 percent more and program service centers, which are part of the processing centers, cost 17.1 percent more than WBDOC. WBDOC averaged $27,942 per workyear, while field offices averaged $44,900 and the program service centers averaged $32,716.

RECOMMENDATIONS

  • WBDOC should manage the entire accounting review process and refer to field offices only those cases that require face-to-face contact with payees

SSA would save as much as $5.7 million annually by transferring most of the routine functions from the processing centers and field offices to WBDOC. The processing centers` role would be reduced to processing actions such as suspensions, reinstatements, and adjudicative decisions.

  • SSA should examine the cost-effectiveness of optical scanning technology for the accounting review process

Although the use of a more sophisticated scanner may improve the recognition of handwritten characters, WBDOC staff may still need to manually review accounting forms.

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CONCURRENTLY ENTITLED SSA BENEFICIARIES WITH REPRESENTATIVE PAYEES (OEI-09-92-00859/JUNE 1995)

PURPOSE

This report reviews SSA`s accounting and data collection efforts for beneficiaries who: (1) have representative payees; and (2) are concurrently entitled to SSI and OASDI benefits.

FINDINGS

More Than 50,000 Concurrently Entitled Beneficiaries With Payees Have Differing Payee Arrangements

Approximately 10 percent (more than 50,000) of concurrently entitled beneficiaries with payees have payees for only one program or different payees for both programs. These arrangements are of special concern to SSA because they may impact the accounting system`s effectiveness and increase administrative burdens.

SSA Does Not Account for $57 Million in Annual OASDI Benefits Managed by Payees

Because of SSA`s current procedures, many payees do not receive annual accounting forms. If beneficiaries do not have payees for their SSI benefits, SSA does not send an accounting form to their OASDI payees. These beneficiaries receive $42.6 million in annual OASDI benefits. If beneficiaries have different payees for OASDI and SSI, the SSI payees cannot account for the OASDI benefits and the OASDI payees do not receive accounting forms. These beneficiaries receive $14.5 million in annual OASDI benefits.

SSA Staff Initiate More Than 32,000 Extra Mail, Telephone, and In-person Contacts Each Year

SSA procedures require that payees account for at least 90 percent of the total amount paid on behalf of the beneficiaries. If payees are unaware of how other payees or the beneficiaries spend the remaining benefits--which is the case for 32,640 beneficiaries--payees fail to meet the 90 percent threshold. SSA must contact these payees for additional information.

SSA Data Bases Contain Inaccurate Type of Payee and Custody Coding

One-fifth of concurrently entitled beneficiaries have an inaccurate type of payee code and one-third have an inaccurate custody code in the MBR and/or Supplemental Security Record (SSR). Accurate data are essential if SSA chooses to develop an accounting system based on relative payee risk.

RECOMMENDATIONS

  • SSA should assure that the same payee is selected for both programs unless the case meets the compelling reasons test.

We suggest a couple of options SSA can pursue to assure the selection of the same payee:

  • Apply the "compelling reason" test during SSI redeterminations.
  • Replicate the methods we used in this inspection to identify the remaining beneficiaries with differing payee arrangements.
  • SSA should send an accounting form to all payees

In those cases where SSA finds compelling reasons to select two different payees or a payee for only one program, it should send an accounting form to all payees managing benefits.

  • Other matters of concern: data accuracy

Accurate data are essential if SSA chooses to modify the accounting system based on the findings from our inspection on risk assessment, which is now underway. We offer the following options if SSA chooses to address the issue prior to the completion of the risk inspection:

  • matching records between the MBR and SSR to identify and eliminate inconsistencies;
  • asking payees to describe their relationships to beneficiaries on all forms mailed to payees and compare these responses to current data, or
  • verifying and updating all information concerning payees whenever SSA staff make changes or additions to beneficiaries` records.

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MONITORING REPRESENTATIVE PAYEE PERFORMANCE: MISUSE OF BENEFITS (A-09-96-64203/SEPTEMBER 1996)

PURPOSE

This inspection determined the relative risks of misuse and/or questionable use of Social Security benefits by category and type of representative payee.

FINDINGS

Misuse or Questionable Use of Benefits Exists in 1.1 Percent of All Cases in Which Beneficiaries Have Payees

We found that 1.1 percent of beneficiaries have payees who misused benefits, used benefits in a questionable manner, or gave indications that misuse or questionable use of benefits occurred. These payees (hereinafter called potential misusers) managed an average of $2,889 in benefits--$12.9 million total--during the October 1993 to September 1994 report period.

The Number and Frequency of Misuse or Questionable Use Cases Vary by Type of Payee

Parents, who represent the largest group of payees (68.8 percent of the payee universe), are most likely to be potential misusers based on volume (63.6 percent of all potential misusers). Payees coded "other" are most likely to be potential misusers based on frequency--1.1 percent of the universe are potential misusers while 3.0 percent of payees coded "other" are potential misusers.

Two Main Characteristics are Associated With Potential Misusers

We found that two main characteristics--failing to complete annual accounting forms and falsifying custody information--are associated with potential misusers, while many characteristics believed to be associated with potential misusers are not (e.g., payees with limited income).

CONCLUSION

From the 4,454 cases of misuse and/or questionable use of benefits that interviewers identified, we found that certain types of payees are more likely to be potential misusers. Two of the stronger indications of misuse or questionable use of benefits appear to be payees who: (1) do not complete accountings for benefits received; and (2) falsify information about the custody arrangement of beneficiaries.

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MONITORING REPRESENTATIVE PAYEE PERFORMANCE: THE ACCOUNTING FORM (A-09-96-64204/JANUARY 1997)

PURPOSE

This report identifies the types, frequencies, and causes of representative payee generated exceptions to SSA`s annual accounting forms.

FINDINGS

Approximately 86 Percent of Payees Responded to Mailed Accounting Requests

While more than 75 percent of payees responded to the first accounting request and 10 percent responded to the second accounting request, more than 14 percent of payees had to be contacted directly regarding completion of the accounting forms.

More Than 35 Percent of Responders Completed Accounting Forms in a Manner That Produced Exceptions

Common exceptions included: (1) failing to account for 90 percent of the total accountable amount; (2) providing relationship information that did not correspond to SSA`s data bases or failing to answer the relationship question; (3) stating that the beneficiary had changed custody during the report period; and (4) payees stating that they did not decide how all benefits were spent or saved.

Payees Expressed Difficulties in Completing the Accounting Forms

Incorrect responses were often the result of payees` confusion. This confusion may be the result of payees`: (1) limited understanding of the accounting process and their responsibilities; (2) difficulty understanding what specific questions are asking; or (3) failure to maintain information necessary to complete the accounting forms.

Exception Rates Vary by Accounting Form

Payees completing the SSA-6230 (parents, stepparents, and grandparents with custody of title II child beneficiaries) were less likely to produce exceptions than payees completing the SSA-623.

CONCLUSION

Although the majority of payees respond to mailed accounting requests, SSA still must contact a large number of payees directly. Some contacts are to obtain missing or incomplete responses, while others are to clarify payees` responses. Many of the latter contacts are necessitated by payees` confusion over completing the accounting forms. SSA`s efforts to make the SSA-6230 a simpler and more direct form have proven successful, with payees completing the SSA-6230 generating fewer exceptions than payees completing the SSA-623.

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MONITORING REPRESENTATIVE PAYEE PERFORMANCE: POOR PAYEE PERFORMANCE (A-09-96-64205/SEPTEMBER 1996)

PURPOSE

This report describes the frequency and characteristics of payees who exhibit poor performance.

FINDINGS

Poor Performance Exists in 2.9 Percent of All Cases in Which Beneficiaries Have Payees

Examples of poor performance include, but are not limited to, failure to perform payee duties and responsibilities, acting merely as a conduit for benefits rather than overseeing the use of benefits, and payees acting in an elusive, uncooperative, or vague manner. We also found that 1.5 percent of beneficiaries have payees who exhibit other forms of questionable performance, but interviewers were unable to determine if poor performance exists because they could not collect sufficient information to make a determination.

Poor Performance Varies by Type of Payee and Custody Arrangement

The frequency of poor performing payees varies depending on the relationships between payees and beneficiaries. For example, payees coded "other" account for 3.4 percent of the universe but 13.4 percent of poor performing payees. Payees without custody account for only 14.1 percent of the universe but 33.8 percent of poor performing payees.

Selected Characteristics Help Detect Poor Performing Payees

Although many general characteristics of poor performing payees largely reflect the payee universe, selected characteristics vary between these two groups. For example, poor performing payees are more likely to provide no accounting of benefits, express that they would rather not remain payee, or have been convicted of a felony.

CONCLUSION

Poor payee performance impacts the effectiveness of the payee program. Payees who fail to fulfill their responsibilities create overpayments or do not ensure that beneficiaries receive proper care. Conduit payees eliminate the payee "safeguards" of the program. Payees who act in a vague, uncooperative, and elusive manner increase the burden on SSA to determine if beneficiaries are receiving proper care. Our findings suggest that targeted reviews of selected payees, especially those who do not respond to requests for accountings, may identify poor performing payees.

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MONITORING REPRESENTATIVE PAYEE PERFORMANCE: DEMOGRAPHIC CHARACTERISTICS OF PAYEES

(A-09-96-64206/SEPTEMBER 1996)

PURPOSE

This report describes the demographic characteristics of representative payees who received initial accounting forms in October 1994.

FINDINGS

Payees are Usually Unemployed, Moderately Educated, Middle-aged Relatives

We found that most payees have custody of beneficiaries, and payees have known their beneficiaries an average of 18 years.

Few Payees Exhibit Characteristics That Should Automatically Exclude Them From Serving as Payees

Although 1.0 percent of payees have been convicted of a felony or a misdemeanor reduced from a felony, none of the payees in our sample had been convicted of Social Security fraud.

Most Payees are Willing to Serve as Payees

Most payees want to continue as payee for their beneficiaries. Payees often stated their own advancing age, poor health, or other personal commitments as reasons for not wanting to continue as payees.

Almost One-half of Payees Have Served as Payee for More Than One Beneficiary

We found that 46.9 percent of all payees had, at one time, served as payees for beneficiaries other than those in our sample. For payees who served more than one beneficiary between October 1993 and September 1994, individuals averaged 2.0 beneficiaries, while institutions and agencies averaged 163.5 beneficiaries.

Interview Data Differed From Data Contained in SSA`s Data Bases

We found that more than: (1) 223,000 beneficiary records contain incorrect type of payee data; (2) 100,000 beneficiary records for beneficiaries with the same payees have inconsistent type of payee data; and (3) 422,000 beneficiary records contain incorrect custody data.

CONCLUSION

Most payees are relatives willing to accept the challenge of being payees and many represent more than one beneficiary. Most payees also are willing to speak about their experiences, and few exhibit characteristics that automatically raise concern.

An area that continues to concern OIG is that SSA’s data is incorrect and incomplete. We have recommended previously that SSA improve its data related to payees and beneficiaries. Since this report is one in a series of reports designed to improve the entire accounting process, we have chosen to avoid further recommendations about SSA’s data until we have completed the series of reports. We will make comprehensive recommendations on all areas related to the payee accounting process when we have completed our work.

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MONITORING REPRESENTATIVE PAYEE PERFORMANCE: THE NEED FOR PAYEES--DEMOGRAPHIC CHARACTERISTICS OF BENEFICIARIES (A-09-96-64207/SEPTEMBER 1996)

PURPOSE

This report describes the demographic characteristics of beneficiaries with representative payees scheduled to receive initial accounting forms in October 1994.

FINDINGS

Beneficiaries With Payees Need Assistance Managing Their Financial Affairs

Payees and beneficiaries agree that beneficiaries lack the capability to manage their own financial affairs. Approximately 82 percent of payees for beneficiaries over age 15 believe that beneficiaries still needed payees. More than 65 percent of the interviewed beneficiaries do not believe that they could manage their own benefits.

Beneficiaries` Need for Payees Varies by Type of Payee and Custody Arrangement

Beneficiaries` circumstances and the need for payees varied among the beneficiaries. Parents with custody primarily represent minor children whom SSA requires to have payees. Parents without custody primarily represent adults who usually require payees due to a disabling condition. Beneficiaries in the custody of agencies are often children. Beneficiaries in the custody of institutions are almost never children. More than 60 percent of SSA`s institutionalized beneficiaries are medically or physically incapacitated.

Payees Play an Essential Role in the Lives of Beneficiaries

Payees play a larger role in the beneficiaries` lives than merely managing title II and title XVI benefits. Payees often manage other income or act as legal guardians. Many payees mentioned that they include beneficiaries in the decision-making process to give beneficiaries more control over their lives or to assist them in becoming more independent.

Payees Mentioned Few Problems Presented by Beneficiaries

More than 90 percent of beneficiaries do not cause problems according to payees. Payees who mentioned problems also stated that such behavior is expected due to beneficiaries’ conditions or is not sufficient to make them wish to stop being payees for the beneficiaries.

CONCLUSION

Our report affirms the belief that payees play a vital role in the lives of beneficiaries. Almost 80 percent of beneficiaries cannot manage their own financial affairs because of their age or severe mental and/or physiological limitations. Of the remaining 20 percent, few beneficiaries demonstrated the skills necessary to manage their own financial affairs. Payees not only fill this vital need, but many do far more. Approximately 28 percent of beneficiaries have no one other than the payees interested in their well being or willing to act on their behalf.

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MONITORING REPRESENTATIVE PAYEE PERFORMANCE: NONRESPONDING PAYEES (A-09-96-64208/DECEMBER 1996)

PURPOSE

This report identifies how many representative payees did not respond to requests for an annual accounting of benefits for the report period October 1993 through September 1994.

FINDINGS

SSA Does Not Receive an Accounting for Approximately $1.2 Billion in Annual Benefits

We found that SSA had not received approximately 316,000 accounting forms from payees between October 1994 and October 1995. These payees receive approximately $1.2 billion in benefits on behalf of beneficiaries. Annual benefits for nonresponding payees averaged $3,934, with almost 74 percent managing between $1,200 and $7,200 during the report period.

SSA Does Not Maintain Systematic Information About Nonresponding Payees

SSA`s present computerized file does not retain any history of payees` return of accounting forms. Payees who fail to respond to the accounting process receive no further centralized systematic scrutiny after 1 year has elapsed. SSA overwrites the computerized file of nonresponding payees when it mails accounting forms for the following year.

Nonresponding Payees are Usually Relatives With Custody

Approximately 76 percent of nonresponding payees are parents and other relatives with custody of the beneficiaries. We found that the greatest number of nonresponding payees live in States with large general populations (California, New York, Texas, and Florida), while Puerto Rico, with a relatively small general population, also has a large number of unreturned accounting forms.

Agencies and Institutions are the Most Common High-Volume Nonresponding Payees

We found 12 instances in which agency or institutional payees did not return 10 or more accounting forms. The number of unreturned forms for each payee ranged from 10 to 56, with an average of 18.2 forms. Approximately 74 percent of all nonresponding agency or institutional payees have custody of beneficiaries.

RECOMMENDATION

  • SSA should develop an improved system for tracking nonresponding payees

Since the present system does not have any history of nonresponding payees, we suggest that SSA maintain data on nonresponding payees that it currently overwrites. We also suggest that, as a means to develop a more complete and effective tracking system, SSA:

  • Determine why selected payees (e.g., high-volume agency or institutional payees and payees in Puerto Rico) fail to complete accountings.
  • Determine whether field office or processing center staff are properly processing the nonresponder alerts.
  • Develop a more immediate and appropriate method (e.g., suspension of benefits, immediate change of payee with final accounting by former payee) to be used in conjunction with the tracking system to obtain accountings. Additionally, SSA should annotate the Master Representative Payee File to indicate that the payee failed to respond to a request for accounting and should not be considered as payee for other beneficiaries.

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MONITORING REPRESENTATIVE PAYEE PERFORMANCE: THE ACCOUNTING REVIEW PROCESS (A-09-96-64209/JANUARY 1997)

PURPOSE

This report evaluates the effectiveness and efficiency of SSA`s representative payee accounting review process.

FINDINGS

The Accounting Review Process is Not Effective or Efficient in Identifying Problems

The accounting review process rarely detects poor performance or misuse and/or questionable use of benefits, and the information that SSA does collect comes as the result of extensive administrative effort.

The Felony Question Produces Limited Results

The 703 payees who stated that they had been convicted of a felony misunderstood the question or believed that it referred to the beneficiary. Since few payees have ever been convicted of a felony, it is unlikely that this question will produce significant results.

The Accounting Review Process Does Not Address Problems With Titles on Financial Accounts

Information collected during interviews with payees suggests that many use improperly titled accounts to hold beneficiaries` benefits, but SSA`s current procedures do not attempt to identify this problem in most cases.

CONCLUSION

Problem cases often are not identified through the accounting review process. SSA expends extensive administrative effort to discover that many exceptions are the result of confusion and misunderstanding rather than actual status changes. Some questions, such as the felony question, produce virtually no results, while other questions, such as those about financial account titles, do not identify the true magnitude of the problem.

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REPRESENTATIVE PAYEE ACCOUNTING: SYSTEMS ISSUES (A-13-96-52002/SEPTEMBER 1996)

PURPOSE

This report describes deficiencies with SSA`s computerized data systems used to select and produce representative payee accounting forms.

FINDINGS

The Accounting System Generates Forms Incorrectly

The Accounting System Fails to Properly Adjust to Situations Involving Beneficiaries Concurrently Entitled to Social Security and Supplemental Security Income Benefits

The Accounting System Generates Forms With Incorrect or Incomplete Information

RECOMMENDATION

  • SSA should correct the deficiencies in the automated data systems that it uses to select and produce the representative payee accounting forms

If the identified deficiencies are not addressed, the accounting system will continue to generate forms incorrectly, fail to properly address concurrently entitled beneficiaries, and generate forms with incorrect or incomplete information. Therefore, we recommend that SSA make needed systems changes.

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