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Audit Report - A-09-96-64209


Office of Audit

Monitoring Representative Payee Performance: The Accounting Review Process - A-09-96-64209 - 1/6/97

TABLE OF CONTENTS

EXECUTIVE SUMMARY

INTRODUCTION

FINDINGS

The Accounting Review Process is Neither Effective Nor Efficient in Identifying Problems

The Felony Question Produces Limited Results

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

CONCLUSION

APPENDICES

A: Copies of Accounting Forms

B: Detailed Methodology

C: List of Contributors

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EXECUTIVE SUMMARY 

PURPOSE

This report evaluates the effectiveness and efficiency of the Social Security Administration`s (SSA) representative payee accounting review process.

BACKGROUND

The SSA administers two programs under The Social Security Act--title II (Retirement, Survivors, and Disability Insurance (RSDI)) and title XVI (Supplemental Security Income (SSI)). These two programs provide monthly benefit payments of about $25 billion to approximately 49.2 million beneficiaries who are aged, disabled, or survivors. If beneficiaries cannot manage their own finances, Congress has authorized SSA to pay the benefits to other individuals or organizations on their behalf. The SSA calls these individuals and organizations representative payees (hereinafter called payees).

Payees` responsibilities include submitting an annual accounting report to SSA. The SSA uses the data collected from these reports to determine the continuing suitability of payees, the continuing need for representative payment, and whether payees used benefits properly during the 12-month report period. The SSA staff use a computer program to review the accounting forms and decide whether the responses are acceptable or need further review and/or explanation. (Responses requiring further review and/or explanation are referred to as "exceptions.") If all responses on an accounting form are acceptable, no further action is necessary.

The SSA has undertaken initiatives to strengthen the entire annual accounting process. To assist in this effort, SSA requested that the Office of the Inspector General (OIG) conduct a series of inspections to review and recommend improvements to the annual accounting process. This report is one in the series of reports that assess the risk of misuse of benefits associated with various categories of payees. Other reports will present data concerning demographics of payees, demographics of beneficiaries, misuse or questionable use of benefits by payees, poor performance by payees, and nonresponding payees. A roll-up report will provide overall recommendations for improving the accounting process.

We combined data collection from SSA`s computerized beneficiary data bases and in-person interviews to determine payees` performance. In September and October 1994, SSA prepared computerized files of title II and title XVI beneficiaries with payees scheduled to receive initial accounting forms in October 1994. From these files, we extracted a sample of 3,010 payee cases for our study. We used all collected information (e.g., accounting forms, interviews) to describe: (1) payees` experiences with the accounting review process; and (2) payees` difficulties in completing the annual accounting form.

FINDINGS

The Accounting Review Process is Neither Effective Nor 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. (See page 8.)

CONCLUSION

Problem cases often are not identified through the accounting review process. The 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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INTRODUCTION

PURPOSE

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

BACKGROUND

Overview of the Representative Payee Program

The SSA administers two programs under The Social Security Act--title II (RSDI) 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.

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 SSA calls these individuals and organizations representative payees (hereinafter called payees).

Sections 205(j)(1) and 1631(a)(2) of The Social Security Act authorize 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.

Payee Responsibilities

Payees` responsibilities include:

1. frequently monitoring the beneficiary`s well-being;
2. notifying SSA of situations that affect the beneficiary`s entitlement to or amount of benefits (e.g., work); and
3. informing SSA of changes in the payee`s own circumstances that would affect the payee`s performance.

A major payee responsibility is to submit an annual accounting form to SSA describing their use of benefits. Payees receive the booklet, A Guide For Representative Payees, during the SSA interview which describes a payee`s 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 Establishment of the Annual Accounting 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 certified 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 onsite review program.

The SSA, in consultation with the Jordan court, designed an annual accounting process--including the look and content of the accounting form--to gather data from payees. The data helps 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.

The Annual Accounting Forms

To handle a high volume of annual accounting, SSA developed standardized accounting forms--the SSA-623 and the SSA-6230. The SSA-623 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. savings.

The form also asks payees about:

1. changes in the beneficiary`s custody;
2. whether the payee or another person controlled the use of the SSA benefits; and
3. their own felony convictions during the previous 12 months.

In July 1990, SSA introduced the SSA-6230 accounting form for parents and, later, stepparents and grandparents with custody of minor children receiving 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.

The SSA-6230 differs from the SSA-623 primarily in: (1) the payees` ability to account for up to four children on the same form; and (2) the wording of the questions on custody and use of benefits. Also, questions about funds on the SSA-6230 are more general. Payees report: (1) the expenses for care and support of the children; and (2) savings.

The Accounting Review Process

Each month, SSA uses its computerized beneficiary data bases (the Master Beneficiary Record and the Supplemental Security Record) to identify payees who are to receive annual accounting forms. The 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.

The SSA uses a contractor to mail accounting forms payees. If payees have not returned accounting forms within 3 months of the first mailing, the contractor mails a second request. If the payees fail to respond to the second request, SSA staff attempt to contact payees directly to obtain a completed accounting.

When payees return the mailed accounting requests, SSA`s Wilkes-Barre Data Operations Center in Pennsylvania completes the initial screening, data verification, and review of the returned forms. The staff use a computer program to review the accounting forms and decide whether the responses are acceptable or need further review and/or explanation. (Responses requiring further review and/or explanation are referred to as "exceptions.") If all responses are acceptable and there are no relevant remarks, no further action is necessary.

The SSA has undertaken initiatives to strengthen the entire annual accounting process. To assist in this effort, SSA requested that the OIG conduct a series of inspections to review and recommend improvements to the annual accounting process. This report is one in the series of reports that assess the risk of misuse of benefits associated with various categories of payees. Other reports will present data concerning demographics of payees; demographics of beneficiaries; misuse or questionable use of benefits by payees; poor performance by payees; the types, frequencies, and causes of exceptions to the annual accounting forms; and nonresponding payees. A roll-up report will provide overall recommendations for improving the accounting process.

Previous Department of Health and Human Services/Office of the Inspector General (HHS/OIG) Studies

In 1994, the HHS/OIG released two reports on the effectiveness and efficiency of SSA`s payee accounting process. We interviewed various SSA staff in headquarters, program service centers, and field offices to gather their experiences with and impressions of the process. We also reviewed the process at the Wilkes-Barre Data Operations Center in Pennsylvania. We found:

  • the accounting review process may deter, but rarely detects, misuse of SSA benefits;
  • some aspects of the process are duplicative, inefficient, and costly;
  • the SSA staff are frustrated by large workloads and the time needed to resolve questionable accounting forms; and
  • based on our recommendations, SSA increased some responsibilities for the accounting review process for the Wilkes-Barre Data Operations Center.

SSA`s Administrative Costs and Initiatives in Annual Accounting

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

To combat rising costs, SSA initiated several activities to improve the payee accounting process:

  • The SSA introduced the SSA-6230 accounting form tailored for parents, stepparents, and grandparents with custody of minor children who receive title II benefits.
  • The Omnibus Budget Reconciliation Act of 1990 required SSA to undertake several initiatives concerning representative payees. A major initiative was the 1992 implementation of a new computerized payee data base--the Master Representative Payee File. It contains information about payees and their beneficiaries, and SSA can access the data to identify trends in payee activity.
  • Independent of the OIG`s work, SSA formed the Quality Improvement Team, an internal advisory group of headquarters and processing center staff. In 1993, the team analyzed the Wilkes-Barre Data Operations Center`s processes. The team recommended changes in the accounting forms, scanning equipment, and processes to reduce manual workloads and streamline the process.
  • The SSA also formed an external Representative Payee Advisory Committee in June 1995. This group is studying 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 combined data collection from SSA`s computerized beneficiary data bases and in-person interviews to determine payees` performance. In September and October 1994, SSA prepared computerized files of title II and title XVI beneficiaries with payees scheduled to receive initial accounting forms in October 1994. From these files, we extracted a sample of 3,010 payee cases for our study. These cases were roughly divided for:

1. relatives and nonrelatives;
2. custodial and noncustodial payees; and
3. title II and title XVI programs.

For our sample cases, we mailed out accounting forms and, upon their return, determined the type and frequency of exceptions. In addition, SSA staff attempted to interview every payee as well as beneficiaries, custodians, and collateral contacts as appropriate and possible. Interviewers attempted to conduct all interviews face-to-face and in the respondents` homes. Interviewers used structured guides during these interviews.

We used the collected information to describe: (1) payees` experiences with the accounting review process; and (2) payees` difficulties in completing the annual accounting form. Appendix B contains a detailed description of our methodology. We weighted our results to the universe of beneficiaries with payees scheduled to receive initial accounting forms in October 1994.

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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FINDINGS

THE ACCOUNTING REVIEW PROCESS IS NEITHER EFFECTIVE NOR EFFICIENT IN IDENTIFYING PROBLEMS

The accounting review process is intended to provide SSA with information about changes in payees` and beneficiaries` status as well as assess the payees` performance. We found that the accounting review process does not effectively produce these desired outcomes and places an undue administrative burden on the Agency.

The SSA`s Current Policies and Procedures Rarely Detect Poor Performance or Misuse and/or Questionable Use of Benefits

Prior to conducting any interviews, we asked interviewers to follow SSA`s current procedures for processing accounting forms. This included reviewing accounting forms with exceptions and contacting the payees if necessary. Based on this review alone, we asked interviewers to determine if problems were indicated.

After all interviews were conducted, we again asked interviewers to determine if problems were indicated. Based on all collected information, SSA staff determined that 11,661 cases from the October 1994 universe of payees scheduled to receive initial accounting forms exhibited poor performance and 4,454 cases exhibited misuse and/or questionable use of benefits. Based solely on SSA`s accounting review process, interviewers identified only 15.0 percent of these same poor performance cases and 3.3 percent of the misuse and/or questionable use cases. We found that:

  • The 39.0 percent of the poor performance cases and 11.0 percent of the misuse and/or questionable use cases were associated with accounting forms that had exceptions.
  • The 29.1 percent of the poor performance cases and 58.6 percent of the misuse and/or questionable use cases were associated with accounting forms that had no exceptions. The SSA does not conduct additional reviews of accounting forms without exceptions.
  • The 31.9 percent of the poor performance cases and 30.5 percent of the misuse and/or questionable use cases were associated with unreturned accounting forms. Therefore, the lack of accounting forms often is more significant than returned accounting forms.

Attempts to Identify Problems Require Significant Administrative Effort

For accounting forms with exceptions, SSA staff review the forms and/or contact the payees directly. Based on these reviews and contacts, we found that many exceptions were the result of payees` confusion rather than payees` attempts to inform SSA of changes in the payees` or beneficiaries` status. This confusion drastically increases the effort SSA must expend to identify each status change. For example:

  • The SSA contacted 9,958 payees--52.9 percent of the payees who claimed that the beneficiaries` had changed custody during the report period--to learn that the beneficiaries had not changed custody.
  • The 75.9 percent of payees who stated that they did not decide how the benefits were spent or saved actually did decide how the benefits were used.
  • The 60,367 accounting forms had remarks, but only 20,650 had remarks from payees who responded to prompts on the front of the accounting form (e.g., the accounting form asks payees who claim that they have been convicted of a felony to explain the conviction on the back of the accounting form). The remaining 39,717 accounting forms had remarks from payees who were not responding to prompts on the front of the accounting form. Actual remarks ranged from requests for additional benefits to gratitude expressed for SSA`s help. One payee even changed the questions on the front of the accounting form to correspond with what he wished to answer. This payee also filled the entire back of the form with remarks about a variety of subjects. It took several minutes to review this individual form.

Although SSA identifies some situations that might indicate problems or the need for a new payee, a great deal of additional work is necessary to achieve the desired result.

Some Exceptions Are Not Detected Automatically

The review process at the Wilkes-Barre Data Operations Center uses scanning equipment to review the responses given on the front of the accounting form. The SSA staff must manually review all responses on the back of the accounting form (e.g., remarks, accuracy of the signature, relationship information) to determine if there are any exceptions.

THE FELONY QUESTION PRODUCES LIMITED RESULTS

Although 703 payees stated that they had been convicted of a felony during the report period, we found that none actually had been. Payees often believed the question referred to the beneficiary or the payees made a mistake. Based on interviews with payees, we found that 1.0 percent of all payees had ever been convicted of a felony or a misdemeanor reduced from a felony. Therefore, it is unlikely that this question would produce significant results.

THE ACCOUNTING REVIEW PROCESS DOES NOT ADDRESS PROBLEMS WITH TITLES ON FINANCIAL ACCOUNTS

The accounting review process only checks the accuracy of the account title if the amount of conserved funds listed is over $500. Only 9.9 percent of payees who returned accounting forms--8.5 percent of all payees--listed more than $500 in conserved funds. Therefore, SSA does not check the accuracy of the account titles for 90.1 percent of payees who returned accounting forms.

During the interviews, we asked payees to provide information regarding the titles on accounts they used to hold beneficiaries` benefits. We found that only 13.6 percent maintained benefits in properly entitled accounts. Approximately 33.8 percent of payees maintained funds in incorrectly titled financial accounts. The rest either did not use any account--37.5 percent--or did not provide information regarding the account title--15.1 percent. Many of the improperly entitled accounts:

  • did not have the beneficiary`s name listed;
  • had individuals other than the payee and beneficiary listed on the account--provides access to the benefits to persons other than the payee; or
  • had the beneficiary`s name listed in a manner which gave the beneficiary direct access to the account.

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CONCLUSION

Problem cases often are not identified through the accounting review process. The 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.

APPENDIX A

COPIES OF ACCOUNTING FORMS

The following pages contain copies (front and back) of the SSA-623 and SSA-6230.

(FORMS SSA-623 and SSA-6230 are not available at this time.

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APPENDIX B

DETAILED METHODOLOGY

We combined information from the Social Security Administration’s (SSA) pre-existing computerized data bases with in-person, in-the-home interviews to provide data on the relative risk of misuse and poor performance for all categories and types of payees and beneficiaries.

Sample Selection

1. We requested data from SSA on all beneficiaries with payees from the Master Beneficiary Record (MBR) and the Supplemental Security Record (SSR). Data included, but was not limited to, beneficiary`s name; payee`s name, address, and telephone number; payee category or type; and payment data. We analyzed the universe of payees to identify characteristics such as payee category, beneficiary type, and district office code.

2. After preliminary analysis of the universe, we selected a random sample of SSA district offices. We initially selected 150 offices from the MBR, but 1 office code was invalid and 5 offices were outside the continental United States. Therefore, we used 144 offices for our study.

3. From the computerized files SSA used to produce the October 1994 annual accounting forms, we selected all beneficiaries’ records containing the sampled district office codes. This resulted in 29,155 title II cases and 13,520 title XVI cases.

4. For each of the programs (title II and title XVI), we grouped the beneficiaries’ records into five strata according to type of payee coding. The strata are: (1) parents; (2) nonparent relatives; (3) institutions; (4) financial institutions, public officials, and social agencies; and (5) payees coded "other." We then grouped the records within each stratum by custody code (payee with or without custody of the beneficiary). The title II records had two additional strata, one for the "W" payee code and another for missing or miscellaneous codes. Therefore, we had 12 title II strata and 10 title XVI strata.

5. We randomly selected up to 145 cases from each of our 22 strata. If there were less than 145 cases in the strata, we selected the universe of cases. Our final sample included 3,010 cases--1,584 title II cases and 1,426 title XVI cases. The chart on the following page shows the sample distribution by strata.

TABLE 1: LIST OF 22 SAMPLE STRATA

 STRATUM

PROGRAM

PAYEE

IN PAYEE’S
CUSTODY

SAMPLE
CASES

1

SSI

Parent

Yes

145

2

SSI

Parent

No

145

3

SSI

Other relative

Yes

145

4

SSI

Other relative

No

145

5

SSI

Institution

Yes

145

6

SSI

Institution

No

121

7

SSI

Agency/official

Yes

145

8

SSI

Agency/official

No

145

9

SSI

Other

Yes

145

10

SSI

Other

No

145

11

OASDI

Parent

Yes

144

12

OASDI

Parent

No

145

13

OASDI

Other relative

Yes

145

14

OASDI

Other relative

No

145

15

OASDI

Institution

Yes

145

16

OASDI

Institution

No

34

17

OASDI

Agency/official

Yes

145

18

OASDI

Agency/official

No

145

19

OASDI

Other

Yes

145

20

OASDI

Other

No

145

21

OASDI

Unknown*
(Code="W")

All custody
types

145

22

OASDI

Unknown
(Other codes)

All custody
types

101

 Total

     

3,010

*The SSA assumes that these payees are parents with custody.

Data Collection

1. We mailed the SSA-623 or SSA-6230 accounting forms to our sampled payees. For all returned forms, we entered the information into corresponding data bases and evaluated the data using SSA`s "four-phase" logic program.

2. We established folders on all sampled payees that SSA field staff used during the interviews. The folders contained: (1) the completed SSA-623 or SSA-6230, if received; (2) results of the four-phase analysis of the accounting form; (3) any exceptions needing follow-up with the payee; (4) the names, addresses, and telephone numbers of the payee and beneficiary; and (5) hard copy data produced at the time of selection from the MBR, SSR, and Master Representative Payee File.

3. We developed structured discussion guides for payees, beneficiaries, and custodians based on the SSA-624-F5 (Representative Payee Evaluation Report). We also developed structured guides for collateral contacts and a case summary. Collateral contacts would objectively verify self-reported information given by payees, beneficiaries, and custodians. Information included, but was not limited to:

a. biographical information about the payee and beneficiaries;

b. the relationship between the payee and the beneficiary;

c. the relationship between the beneficiary and the custodian;

d. the beneficiary`s level of satisfaction with the payee`s performance;

e. from the payee and beneficiary, details about how benefits were spent and/or saved on behalf of the beneficiary;

f. the extent of record keeping performed by the payee; and

g. whether the payee is responsible for accounting or reporting to any other government or private organizations about the benefits expended.

The case summary allowed interviewers another venue to analyze and highlight information not captured directly in the discussion guides. Interviewers often provided their overall professional impression of each case. In addition, interviewers drew from the interviews and collected information to determine if benefit misuse was indicated.

4. We trained SSA staff in nine sessions at five locations around the country. The training consisted of an introduction to the study, review of the discussion guides, and role-playing to identify potential questions about administering the guides. We also trained more staff by telephone using a condensed version of the onsite training.

5. The SSA staff--under our direction--conducted in-person or telephone interviews with payees, beneficiaries, custodians, and collateral contacts where applicable.

Data Analysis

1. We developed a computerized data entry system allowing us to record information from the accounting forms and each of the discussion guides and case summary sheets. If interviewers were not able to obtain completed forms or interviews, we indicated why.

2. Once interviewers returned virtually all cases (3,005 of 3,010 sampled cases as of April 1996), we validated the data entered into the data bases. We reviewed the data bases to identify and correct mis-keyed data.

3. Using a computerized statistical software package, we analyzed the resulting data to identify significant findings. We determined that the type of payee and custody data may be incorrect for some cases (see Monitoring Representative Payee Performance: Assessment of Risk--Demographic Characteristics of Payees, A-09-96-64206). We continued to analyze data based on the original strata because it provides the most accurate information about the payees and beneficiaries whose records currently contain a given type of payee and custody code combination.

4. We developed weights that we applied to each sampled case. This allowed us to make projections to the universe of beneficiaries with payees scheduled to receive an initial accounting form in October 1994.

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APPENDIX C

LIST OF CONTRIBUTORS

This inspection report was prepared by the Office of Audit in San Francisco under the direction of Scott Patterson, Director, Division of Evaluations and Technical Services. Project staff included:

Deborah Harvey, Senior Evaluator
Brian Pattison, Senior Evaluator
Alan Stubbs, Senior Evaluator
Nellie Wong, Auditor

Special thanks to Robert Gibbons, Wm. Mark Krushat, Sc.D., and Linda Moscoe from HHS/OIG for their contributions during the initial development of this project.

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