OFFICE OF
THE INSPECTOR GENERAL
SOCIAL SECURITY
ADMINISTRATION
FOLLOW-UP ON THE SOCIAL
SECURITY ADMINISTRATION’S
PRISONER INCENTIVE
PAYMENT PROGRAM
August 2009 A-01-09-19029
AUDIT
REPORT
Mission
By conducting independent and
objective audits, evaluations and investigations, we inspire public confidence
in the integrity and security of SSA’s programs and operations and protect them
against fraud, waste and abuse. We
provide timely, useful and reliable information and advice to Administration
officials, Congress and the public.
Authority
The Inspector General Act created
independent audit and investigative units, called the Office of Inspector
General (OIG). The mission of the OIG,
as spelled out in the Act, is to:
m Conduct
and supervise independent and objective audits and investigations relating to
agency programs and operations.
m Promote
economy, effectiveness, and efficiency within the agency.
m Prevent
and detect fraud, waste, and abuse in agency programs and operations.
m Review
and make recommendations regarding existing and proposed legislation and
regulations relating to agency programs and operations.
m Keep
the agency head and the Congress fully and currently informed of problems in
agency programs and operations.
To
ensure objectivity, the IG Act empowers the IG with:
m Independence to determine
what reviews to perform.
m Access
to all information necessary for the reviews.
m Authority
to publish findings and recommendations based on the reviews.
Vision
We strive for
continual improvement in SSA’s programs, operations and management by
proactively seeking new ways to prevent and deter fraud, waste and abuse. We commit to integrity and excellence by
supporting an environment that provides a valuable public service while
encouraging employee development and retention and fostering diversity and
innovation.
MEMORANDUM
Date: August 20, 2009 Refer To:
To: The
Commissioner
From: Inspector General
Subject: Follow-up on the Social Security Administration’s Prisoner
Incentive Payment Program (A-01-09-19029)
OBJECTIVE
Our objective was to assess the accuracy
of incentive payments to prisons.
BACKGROUND
The Social Security
Act
(Act) allows the Social Security Administration (SSA) to make incentive
payments to State and local correctional institutions that provide inmate data
to SSA. The incentive payment provisions
in the Act were established to encourage the reporting of inmate data that
would allow SSA to suspend Old-Age, Survivors and Disability Insurance (OASDI)
and Supplemental Security Income (SSI) benefits to prisoners in a timely
manner.
Incentive payments are
authorized in the following amounts:
- $400
for information received within 30 days after the individual’s date of
confinement due to conviction for an OASDI beneficiary or confinement for
an SSI recipient;
- $200
for information received after 30 days but within 90 days after the
individual’s date of confinement due to conviction for an OASDI
beneficiary or confinement for an SSI recipient; or
- $0 for
information received on or after the 91st day following the
individual’s date of confinement due to conviction for an OASDI
beneficiary or confinement for an SSI recipient (see Appendix B for
additional background information).
SSA programmed its incentive payment system to issue $400
for inmate information received by the end of the month following the month of
incarceration and $200 for information received by the end of the 3rd
month after the month of confinement. In
addition, the system has a built-in delay of 1 calendar month before the
payment is issued. If, during the next
month, it is determined that benefits should not be suspended because of
incarceration, the incentive payment will not be released. SSA’s policies and procedures state that if
an incentive payment was released, but benefits should not have been suspended because
of incarceration, the payment cannot be recovered.
If SSA inadvertently pays a facility because of an SSA error
(for example, SSA keyed incorrect incarceration data into the computer system),
SSA will not litigate to recoup the erroneous payment. The Agency will ask the correctional
institution to return the payment. If the correctional institution agrees to
refund the incentive payment, SSA will take action to recoup the payment. If SSA pays an incentive payment to the wrong
facility, it will issue the incentive payment to the correct institution at the
earliest possible opportunity.
In
our prior audit, we
reviewed incentive payments made between March 1997 and August 2003; and we
estimated that about 86,000 incentive payments were issued incorrectly,
resulting in approximately $19.0 million in OASDI and SSI funds that
should not have been paid. Therefore, we
recommended that SSA
- pay incentive payments in accordance
with the Act provisions, and
- provide
refresher training to employees to reduce the number of erroneous
incentive payments due to clerical errors.
SSA
generally agreed with our recommendations.
Specifically, SSA agreed there was a discrepancy between the incentive
payment provisions included in the Act and
how the Agency was paying incentive payments, and agreed to provide staff training.
To
perform our follow-up review, we identified 346,970 incentive payments made
from September 2003 through May 2008. We
randomly selected 275 cases from this population for detailed analysis. (See Appendix C for our sampling
methodology.)
RESULTS OF REVIEW
SSA’s procedures do not ensure that incentive payments to institutions
that provide inmate information are being made in accordance with the
provisions in the Act. Based on our
review of 275 sample cases, we estimate about 119,862 incentive payments
were issued incorrectly, resulting in approximately $30.3 million in OASDI
and SSI program funds that should not have been paid. Specifically, our review of 275 sample
cases found that
·
180 incentive payments (65 percent) were
paid properly;
·
66 incentive payments totaling $13,200 (24 percent)
were improperly paid to prison facilities because the information was not
received within the timeframe established by law but was received within the
timeframe implemented by SSA; and
·
29 incentive payments (11 percent) totaling
$10,800 should not have been paid.
Incentive Payments Not Made in Accordance with the Social Security Act
The laws that amended the Act
to establish incentive payments included timeframes for the issuance and amount
of payments. However, when implementing
the incentive payment process, SSA established payment criteria that were inconsistent
with those laws. As a result, $13,200 was overpaid in our
incentive payment sample cases.
The following is an example
of an incentive payment incorrectly paid because SSA did not follow the
requirements in the Act.
·
SSA received a report from an institution on June
18, 2007 showing a date of confinement of May 4, 2007 (45 days from confinement
to receipt of information).
·
SSA issued an incentive payment on August 1,
2007 for $400, as the prisoner information was received before the end of the
month following the month of confinement.
·
The institution was overpaid $200, as only $200,
not $400, should have been paid for information received 45 days after
confinement.
The following table shows detailed information on the incorrect payments
made for our sample cases that exceeded the 30-day and 90-day limits
established in the Act.
|
Timeframe
of Receipt of Inmate Information and Amount of Incentive Payment
|
Number
of Cases
|
Amount
of Each
Incorrect
Incentive
Payment
|
Total
Amount of Incorrect Incentive Payments
|
Portion
of Incorrect Incentive Payments
|
|
$400 paid for information received 1 to 5 days after
the 30-day time limit
|
30
|
$200
|
$6,000
|
45%
|
|
$400 paid for information received 6 to 10 days after
the 30-day time limit
|
16
|
$200
|
$3,200
|
24%
|
|
$400 paid for information received 11 to 15 days after the
30-day time limit
|
10
|
$200
|
$2,000
|
15%
|
|
$400 paid for information received 16 to 20 days
after the 30-day time limit
|
5
|
$200
|
$1,000
|
8%
|
|
$400 paid for information received 21 to 25 days
after the 30-day time limit
|
1
|
$200
|
$200
|
2%
|
|
$400 paid for information received 26 to 60 days
after the 30-day time limit
|
2
|
$200
|
$400
|
3%
|
|
$200 paid for information received after the 90-day time limit
|
2
|
$200
|
$400
|
3%
|
|
Total
|
66
|
|
$13,200
|
100%
|
Incentive
Payments Issued Erroneously
In 29 sample cases, SSA should
not have made incentive payments totaling $10,800.
·
In 23 cases, the recipient was released from
prison before the date benefits would have been suspended, and no incentive
payment should have been made. This
resulted in overpayments totaling $8,800.
·
In five cases, the person identified by SSA’s
computer matching program was not the correct person, and SSA personnel did not
verify the identity before issuing the payment.
This resulted in overpayments totaling $1,600.
·
In one case, the prisoner was not convicted and
therefore no payment was due to the prison.
This resulted in an overpayment totaling $400.
The following are two examples of incentive payments that
should not have been paid.
(1)
An incentive payment was paid for the
wrong beneficiary.
·
SSA received a report from an institution on September 22, 2003
showing a date of confinement of August 1, 2003.
·
SSA suspended the reported prisoner’s benefits
without determining whether the correct beneficiary had been identified.
·
SSA later found this individual was never in the
institution that sent the inmate information.
(2)
An incentive payment was paid although
incarceration was too short to suspend SSI payments.
·
SSA received a report from an institution on August
11, 2003 showing a date of confinement of July 11, 2003.
·
SSA suspended the prisoner’s benefits.
·
The beneficiary was not incarcerated for 1 full
calendar month. Therefore, benefits
should not have been suspended.
·
The SSA technician did not post a release date
to show the beneficiary was released before 1 full calendar month expired.
·
Posting of a release date would have suppressed
the incentive payment.
SSA’s Efforts
to Reduce Incorrect Incentive Payments
SSA informed us that, in June
2004, the Agency developed a technical amendment that, if enacted, would align
the Act with how SSA programmed its
systems to pay prisoner incentive payments. The agency never submitted the proposal to
Congress. According to SSA, the specific
proposal was to change the language in sections 202(x)(3)(B)(i)(II) and
1611(e)(1)(I)(i)(II) of the Act to conform existing statute with agency
policy.
·
$400 if the institution furnishes the
information to SSA by the end of the month following the month of confinement
that the individual is confined in the institution;
·
$200 if the institution furnishes the
information more than 1 month after the month of confinement through the end of
the month following 2 months after the confinement; and
·
$0 if reported anytime thereafter.
In
March 2009, SSA informed us that it implemented a new Web-based process to
receive prisoner information more timely.
This new process is intended to help eliminate the lag time associated
with mailing prisoner reports.
CONCLUSION AND
RECOMMENDATIONS
SSA did not adhere to incentive payment provisions included
in the Act when making payments to facilities that reported inmate
information. Therefore, SSA incorrectly
paid them. By making correct incentive
payments in the future, SSA can ensure funds are not inappropriately expended
from either the Social Security Trust Fund or the General Fund.
To prevent improper payments, we recommend that SSA implement
a system to pay incentive payments according to the Act to facilities reporting
inmate information.
AGENCY
COMMENTS
SSA generally agreed with our
recommendation. Specifically, SSA agreed
that there is a discrepancy between the incentive payment provisions included
in the Social Security Act and how the Agency is paying incentive payments. SSA developed a technical amendment to bring
the language in the Social Security Act in line with its incentive payment
policy. SSA plans to include the amendment
in a package of draft legislation it will consider for the next legislative
cycle. SSA’s comments are included in Appendix
D.
/s/
Patrick P. O’Carroll, Jr.
APPENDIX A – Acronyms
APPENDIX B
– Background
APPENDIX C
– Scope, Methodology and Sample Results
APPENDIX D
– Agency Comments
APPENDIX E – OIG Contacts and Staff
Acknowledgments
Appendix A
Acronyms
|
Act
|
Social Security Act
|
|
OASDI
|
Old-Age,
Survivors and Disability Insurance
|
|
POMS
|
Program
Operations Manual System
|
|
Pub. L.
No.
|
Public
Law Number
|
|
SSA
|
Social
Security Administration
|
|
SSI
|
Supplemental
Security Income
|
|
U.S.C.
|
United States Code
|
Appendix B
Background
Title II
Section 402 of the Ticket
to Work and Work Incentives Improvement Act of 1999
amended section 202(x)(3) of the Social
Security Act to provide for incentive payments from Title II program funds
to State and local correctional institutions and certain mental health
institutions that report inmate information to the Social Security
Administration (SSA). The Law authorized
payment to an institution for information about an inmate if the inmate was
receiving a Title II benefit for the month that preceded the first month in
which the inmate was in the institution and became ineligible for such benefit.
Effective April 1, 2000, this law authorized SSA to pay the Title II
incentive payment in the following amounts:
- $400
for information received within 30 days after the individual’s date of
confinement for conviction;
- $200
for information received after 30 days but within 90 days after the individual’s
date of confinement for conviction; or
- $0 for
information received on or after the 91st day following the
individual’s date of confinement for conviction.
Title XVI
Section 203 of the Personal
Responsibility and Work Opportunity Reconciliation Act of 1996
amended section 1611(e)(1) of the Social
Security Act to provide for incentive payments from Title XVI program funds
to State and local correctional institutions and certain mental health
institutions that report inmate information to SSA. The Law authorized payment to an institution
for information about an inmate if the inmate was receiving a Title XVI payment
for the month that preceded the first month throughout which the inmate was in
the institution and became ineligible for such benefit.
Effective March 1, 1997, this law authorizes SSA to pay the
Title XVI incentive payment in the following amounts:
- $400
for information received within 30 days after the individual’s date of
confinement;
- $200
for information received after 30 days, but within 90 days, after the
individual’s date of confinement; or
- $0 for
information received on or after the 91st day following the
individual’s date of confinement.
Appendix C
Scope, Methodology and Sample Results
To accomplish our objective, we:
§
Reviewed applicable
sections of the Social Security Act
and other relevant legislation, as well as the Social Security Administration’s
(SSA) regulations, rules, policies, and procedures.
§
Reviewed prior Office
of the Inspector General reports.
§
Obtained a file from
SSA’s Prisoner Update Processing System of 346,970 incentive payments totaling $129.4
million made from September 2003 through May 2008.
§
From this population,
we selected a random sample of 275 cases.
For each sample case, we:
ü
Reviewed the Master
Beneficiary and/or Supplemental Security Record and SSA’s prisoner system
information related to the incentive payment.
ü
Analyzed information
to determine whether the incentive payments were appropriate according to the
provisions in the Social Security Act. For cases in which we could not determine
whether incentive payments should have been made, we asked SSA to determine whether
the payments were correct.
We performed
our audit between February and May 2009 in Boston, Massachusetts.
We tested the data obtained for our audit and determined
them to be sufficiently reliable to meet our objective. The entity audited was the Office of
Income Security Programs under the Deputy Commissioner for Retirement and
Disability Policy. We conducted this performance audit in
accordance with generally accepted government auditing standards. Those standards require that we plan
and perform the audit to obtain sufficient, appropriate evidence to provide a
reasonable basis for our findings and conclusions based on our audit
objectives. We believe the evidence
obtained provides a reasonable basis for our findings and conclusions based on
our audit objectives.
|
Table C-1: Sample Results and Projections
|
|
Population size
|
346,970
|
|
Sample size
|
275
|
|
Attribute Projections
|
|
Number of incentive payments paid incorrectly
|
95
|
|
Point estimate of incorrect payments in the population
|
119,862
|
|
Projection
lower limit
|
103,365
|
|
Projection
upper limit
|
137,229
|
|
Dollar Projections
|
|
Amount of incentive payments paid incorrectly
|
$24,000
|
|
Point estimate of amount of incentive payments paid
incorrectly in the population
|
$30,281,018
|
|
Projection
lower limit
|
$25,757,493
|
|
Projection
upper limit
|
$34,804,543
|
All projections are at the 90 percent confidence level.
|
Table C-2: Overpaid Incentive Payments by Year
|
Calendar Year
|
Number of Cases in Sample
|
Number of Improperly Paid Cases
|
Amount of Improper Incentive Payments
|
2003
(Sept. – Dec.)
|
18
|
5
|
$1,400
|
2004
|
54
|
20
|
$5,600
|
2005
|
52
|
17
|
$4,200
|
2006
|
63
|
24
|
$5,800
|
2007
|
70
|
24
|
$5,800
|
2008
(through May)
|
18
|
5
|
$1,200
|
Total
|
275
|
95
|
$24,000
|
Appendix D
Agency Comments
|
Date:
|
August 11, 2009 Refer
|
Refer To: S1J-3
|
|
To:
|
Patrick P. O’Carroll, Jr.
Inspector General
|
|
From:
|
Margaret J. Tittel /s/
Acting Chief of Staff
|
|
Subject:
|
Office of the Inspector
General (OIG) Draft Report, “Follow-up: The Social Security Administration’s
Prisoner Incentive Payment Program” (A-01-09-19029)--INFORMATION
|
Thank you for the opportunity to review and comment on the draft
report. We appreciate OIG’s efforts in
conducting this review. Attached is our
response to the report findings and recommendation.
Please let me know if we can be of further assistance. Please direct staff inquiries to
Ms. Candace Skurnik, Director, Audit Management and Liaison Staff,
at extension 54636.
Attachment:
SSA Response
COMMENTS ON THE OFFICE OF THE
INSPECTOR GENERAL (OIG) DRAFT REPORT, "FOLLOW-UP ON THE SOCIAL SECURITY
ADMINISTRATION’S PRISONER INCENTIVE PAYMENT PROGRAM" (A-01-09-19029)
Please
find below our response to the recommendation and some technical comments to
enhance the accuracy of the report.
Recommendation
Implement a system to pay incentive payments
according to the Act to facilities reporting inmate information.
Comment
We
agree there is a discrepancy between the incentive payment provisions in the
statute and the procedures we follow to issue incentive payments.
Sections 202(x)(3)(B)(i)(I) and 1611(e)(1)(I)(i)(I) of the Social Security Act
(“the Act”) require correctional and mental health institutions to
report their inmate information to us on a monthly basis. For information
that results in a suspension of an inmate's benefit payments, sections
202(x)(3)(B)(i)(II) and 1611(e)(1)(I)(i)(II) of the Act state we will pay
the institution $400 if the institution furnishes the information to us within
30 days after the date the individual is confined in the institution, and $200
if the institution furnishes the information after 30 days, but within 90 days
of the date of confinement.
For an
institution to obtain the maximum incentive payment of $400, the institution
would have to report their inmate data to us at least twice a month
instead of monthly. To avoid this potential hardship on institutions
and to encourage full participation in the incentive payment program, we accept
reports made in the month following the month of confinement as meeting the
30-day requirement. This interpretation facilitated successful
recruitment of correctional institutions to the program and keeps them
participating.
The
prisoner reporting operation is one of the most efficient and effective
computer-matching operations to prevent benefit overpayments and fraud, waste,
and abuse of both trust fund and general fund resources. We have agreements with 99 percent of
the State and local institutions that house prisoners. Those institutions
that do not participate generally hold inmates less than one full calendar
month or consider the program a resource burden. Since 1997, we have
suspended benefit payments to 719,000 inmates. For this fiscal year, we
estimate saving approximately $1.2 billion in overpayments due to prisoner
benefit suspensions. The administrative time allowance we
currently provide to correctional institutions ensures that they report inmate
information to us monthly as prescribed by law.
Their continued participation in our prisoner reporting operation is
critical to suspending benefits as quickly as possible, protecting both the
trust funds and the general fund.
In
June 2004, we developed a technical amendment to bring the language in the
Social Security Act in line with our incentive payment policy. However,
we did not include this proposal in an agency bill to Congress. We do plan to include the proposal in a
package of draft legislation that we will consider for the next legislative
cycle. We believe it is the most
appropriate approach to solve the discrepancy between the Act and our
policy. The technical amendment would change the law to allow
correctional institutions to report inmate information to us by the end of the
month following the month of confinement.
We considered requiring
institutions to report confinements within the specified time required by the
Act in order to receive the $400 payment.
However, we believe that this reporting change would create a
significant administrative burden on institutions. Given other competing
priorities and finite systems resources for both the correctional
institutions and us, we believe a technical amendment remains
the most effective solution.
[In
addition to the information listed above, SSA also provided technical comments
which have been addressed, where appropriate, in this report.]
Appendix E
OIG Contacts and Staff Acknowledgments
OIG Contacts
Judith
Oliveira, Director, Boston
Audit Division
David
Mazzola, Audit Manager
Acknowledgments
In addition to those named above:
Kevin
Joyce, IT Specialist
Katie
Toli, Auditor
Brennan
Kraje, Statistician
For additional copies of this
report, please visit our web site at www.socialsecurity.gov/oig
or contact the Office of the Inspector
General’s Public Affairs Staff Assistant at (410) 965-4518. Refer to Common
Identification Number
A‑01‑09‑19029.
DISTRIBUTION SCHEDULE
Commissioner of Social Security
Office of Management and Budget, Income Maintenance Branch
Chairman and Ranking Member, Committee on Ways and Means
Chief of Staff, Committee on Ways and Means
Chairman and Ranking Minority Member, Subcommittee on
Social Security
Majority and Minority Staff Director, Subcommittee on
Social Security
Chairman and Ranking Minority Member, Committee on the
Budget, House of Representatives
Chairman and Ranking Minority Member, Committee on
Oversight and Government Reform
Chairman and Ranking Minority Member, Committee on
Appropriations, House of Representatives
Chairman and Ranking Minority, Subcommittee on Labor,
Health and Human Services, Education and Related Agencies, Committee on
Appropriations,
House of Representatives
Chairman and Ranking Minority Member, Committee on
Appropriations, U.S.
Senate
Chairman and Ranking Minority Member, Subcommittee on
Labor, Health and Human Services, Education and Related Agencies, Committee on
Appropriations, U.S.
Senate
Chairman and Ranking Minority Member, Committee on Finance
Chairman and Ranking Minority Member, Subcommittee on
Social Security Pensions and Family Policy
Chairman and Ranking Minority Member, Senate Special
Committee on Aging
Social Security Advisory Board
Overview of the Office of the Inspector General
The Office of the Inspector General (OIG) is comprised of an
Office of Audit (OA), Office of Investigations (OI), Office of the Counsel to
the Inspector General (OCIG), Office of External Relations (OER), and Office of
Technology and Resource Management (OTRM).
To ensure compliance with policies and procedures, internal controls,
and professional standards, the OIG also has a comprehensive Professional
Responsibility and Quality Assurance program.
Office of Audit
OA conducts financial and performance audits of the Social Security
Administration’s (SSA) programs and operations and makes recommendations to
ensure program objectives are achieved effectively and efficiently. Financial audits assess whether SSA’s
financial statements fairly present SSA’s financial position, results of
operations, and cash flow. Performance
audits review the economy, efficiency, and effectiveness of SSA’s programs and
operations. OA also conducts short-term
management reviews and program evaluations on issues of concern to SSA,
Congress, and the general public.
Office of Investigations
OI conducts investigations related to fraud, waste, abuse, and
mismanagement in SSA programs and operations.
This includes wrongdoing by applicants, beneficiaries, contractors,
third parties, or SSA employees performing their official duties. This office serves as liaison to the
Department of Justice on all matters relating to the investigation of SSA
programs and personnel. OI also conducts
joint investigations with other Federal, State, and local law enforcement agencies.
Office of the Counsel to the Inspector General
OCIG provides independent legal advice and counsel to the IG on
various matters, including statutes, regulations, legislation, and policy
directives. OCIG also advises the IG on
investigative procedures and techniques, as well as on legal implications and
conclusions to be drawn from audit and investigative material. Also, OCIG administers the Civil Monetary
Penalty program.
Office of External Relations
OER manages OIG’s external and public affairs programs, and serves
as the principal advisor on news releases and in providing information to the
various news reporting services. OER
develops OIG’s media and public information policies, directs OIG’s external
and public affairs programs, and serves as the primary contact for those
seeking information about OIG. OER
prepares OIG publications, speeches, and presentations to internal and external
organizations, and responds to Congressional correspondence.
Office of Technology and Resource Management
OTRM supports OIG by providing information management and systems
security. OTRM also coordinates OIG’s
budget, procurement, telecommunications, facilities, and human resources. In addition, OTRM is the focal point for
OIG’s strategic planning function, and the development and monitoring of
performance measures. In addition, OTRM receives
and assigns for action allegations of criminal and administrative violations of
Social Security laws, identifies fugitives receiving benefit payments from SSA,
and provides technological assistance to investigations.
