Testimony of Fritz Streckewald, Acting Assistant Deputy
Commissioner for Disability and Income Security Programs, Social Security
Administration, before the House Committee on Ways and Means Subcommittee
on Social Security
May 10, 2001
Mr. Chairman, Congressman Matsui, members of the Subcommittee, thank
you for inviting me here today to talk to you on a variety of issues that
affect Social Security programs. I want to discuss some recent
improvements we have made to strengthen our representative payee program
as well as some legislative changes the subcommittee has considered that
would improve protections for beneficiaries with payees. Additionally, I
want to provide our perspective on legislative proposals that would:
- Require States to report death information to SSA in a more timely
manner; and
- Apply the current Supplemental Security Income (SSI) fugitive felon
provisions to the Old Age, Survivors, Disability Insurance (OASDI)
program.
The Social Security Administration places great importance on our role
as stewards of the OASDI and SSI programs and in ensuring that only those
who are entitled to benefits receive them for any given month. The
public's trust in the Social Security program is vitally important to us.
Because of the importance of this trust, we have devoted significant
resources and attention to strengthening and maintaining the integrity of
the Social Security program; $1 out of every $4 in SSA's administrative
budget is dedicated to program stewardship and program integrity.
Representative Payments
SSA is deeply committed to protecting the 6.5 million Social Security
and SSI beneficiaries who are paid $30 billion per year through
representative payees. Our goal is to select the most qualified individual
or organization to serve as representative payee. All payees are
investigated before being selected. If an interested family member or
friend cannot be found (or willing to serve), SSA will ask a qualified
organization willing to perform the duties of representative payee.
When appointed, all payees receive information on their
responsibilities and duties as payees. Further, to provide additional
support for organizational payees, we recently revised a publication
(Guide for Organizational Payees) that we developed and sent last year to
all organizational payees. The newly revised version will be distributed
in June and will also be available on our web site. When a suitable payee
has been appointed, we also provide the beneficiary with information
explaining why they have a payee, how we selected their payee, what to do
if they want to appeal our selection of payee, what they should expect of
their payee and what they should tell their payee.
Once selected, all payees must maintain records of the beneficiary's
income and expenses. SSA requires annual accounting of all of the benefits
received and how they were spent for every beneficiary. If this
information is not received or is incomplete, we follow up with the payee.
If SSA has cause to believe that an organization is not using benefits
properly, we have an additional review procedure that focuses on the
organization's records and includes contact with the beneficiary and staff
of the organization, as well as vendors.
We believe this oversight process works well; misuse of funds occurs in
less than one-hundredth of one percent of all cases. However, we are
constantly seeking ways to improve the process.
Monitoring Initiatives
Last year, we described to you our plans for improving safeguards for
our most vulnerable beneficiaries-those who need assistance from a
representative payee. We have made great strides towards implementing
those representative payee program improvements. Let me briefly describe
our initiatives and then provide you with the status. Triennial
Onsite Reviews of all Fee-for-Service and Volume Payees
We have begun a review of the approximately 825 fee-for-service
representative payees on a triennial cycle. We are also performing
triennial reviews of all organizational payees serving 100 or more
beneficiaries, which we refer to as "volume" payees, and of all individual
payees serving 20 or more beneficiaries. This review includes an
assessment of the payee's record keeping, and we interview a sample of
beneficiaries in order to assess whether their needs are being met.
Expenses may be corroborated with providers of services. In addition, we
contact vendors to ensure that beneficiaries' bills are being paid. Over
the last year, approximately 540 of these reviews have been conducted.
While the incidence of misuse found has been minimal, we have found
problems with commingling of funds and incorrect titling of accounts. We
have taken corrective actions in those cases. Annual
Verification of Bonding or Licensing
Currently, in order to collect a fee from a beneficiary's check, the
non-governmental fee-for-service organization must be either licensed or
bonded to serve as representative payee. This is a statutory requirement.
Beginning in June 2000, we began an annual re-certification of these
organizations to ensure the bonding or licensing requirement continues to
be met. To date, we have completed 693 re-certifications of the 825
fee-for-service payees.
For those fee-for-service payees that are bonded, there is no
requirement that specifies the minimum amount of the bond that would be
paid in the event of misuse (e.g., $600 of coverage for each beneficiary).
However, we are drafting a regulation that will give guidance on the level
of bonding needed by fee-for-service organizations. We anticipate
publishing this regulation in early 2002. A 6-Month Review for
All Newly Appointed Fee-for-Service Payees
Beginning with fee-for-service payees newly appointed in January 2000,
we began site visits 6 months after their initial appointment as payee.
This visit ensures that they fully understand their duties and
responsibilities, and are on the right track with respect to record
keeping and reporting. We focus on their accounting procedures so that
they are able to account for beneficiaries' funds as well as comply with
our requests for review. To date, 17 visits have been made for those
fee-for-service payees newly appointed since January 2000. Random
Reviews of Volume and Fee-for-Service Payees
Each year SSA will conduct a random sample of 30 percent of volume
payees and fee-for-service payees that have not already been selected for
review. Of the cases selected, we will review a sample of beneficiary
records for compliance with our policies and procedures. We issued
instructions needed to implement this initiative in December 2000, and
this program began this Spring.
In addition, we continue to monitor for "trigger" events. That is, we
conduct reviews of payees in response to third-party reports of misuse,
complaints from vendors of failure to receive payment, and similar
reports. Over the last year, we have done 26 reviews due to trigger
events. We believe that our expanded onsite review program will:
- protect vulnerable beneficiaries by quickly reacting to questionable
indications;
- deter payee misconduct;
- provide a strong oversight message to payees;
- ensure that fee-for-service payees continue to be qualified under
the law; and
- establish good lines of communication and promote good payee
practices.
Contracts Relating to Monitoring Initiatives and Background Checks
We are currently developing a contract proposal for an independent
audit firm to review the revised monitoring process and offer suggestions
for improvement. This includes a review of instructional materials as well
as onsite review processes. The contractor will provide a report with any
recommendations for corrective changes as deemed appropriate. We expect to
obtain bids by this Summer and start the audit in the Fall of 2001.
We are also in the process of awarding a contract to obtain the
assistance of an expert consultant to explore options available for
criminal and credit background checks for fee-for-service payee
organizations. This effort is consistent with OIG's suggestion that we put
more emphasis on the selection of our representative payees. Contractor
bids were due by April 16 and we expect to award the contract by early
June. We expect the contractor to complete its work in about 6 months and
hope to have a final report of recommendations by the end of the year.
Demonstration Project
We have undertaken a demonstration project to obtain expert assistance
in our onsite reviews in two regions. We have contracted with an
accounting and management firm to provide support to our review teams when
they conduct site reviews. This support will continue through September
2001. The purpose of this demonstration is to assess the value of using
contractors with expertise in accounting practices to assist the SSA teams
in conducting the site reviews. To date, the contractor has assisted our
field review teams in 35 site reviews in our Chicago and Philadelphia
Regional Office areas, and is on schedule under the terms of the contract.
While no misuse of benefits was found in these reviews, they revealed
record keeping problems and that some of the organizational payees have a
weak financial position. We will continue to monitor these payees.
Recruitment and Education Campaign
We have new projects either well underway or completed to help our
field offices recruit and educate new and existing organizational payees.
As previously noted, we revised our "Guide for Organizational
Representative Payees" and we expect distribution by June. This booklet
provides guidelines and suggestions to assist organizations in
understanding the principles of the representative payment program and
their responsibilities.
We have produced a training video which can by used by the field
offices when training organizational payees. Both the video and the guide
will become part of a "training kit" which includes a lesson plan for
training organizational payees, a power point presentation, and CDs. We
plan to release this kit to our regions in June. These educational
products will assist our field offices when providing training for
organizational payees and also serve as tools for payees to refer to when
questions arise or when the organizational payee has staffing changes.
Changes to Representative Payee System and Related Systems
The Representative Payee System (RPS) is an integral part of the
representative payee application process as well as a centralized computer
file containing information about individuals and organizations providing
representative payment services and the beneficiaries that they serve.
While there have been some problems with the RPS, especially with regard
to the way the RPS interacts with other SSA systems, it has been useful
for investigating fraud, suitability of payee applicants, and identifying
trends. The RPS contains a number of investigative features, for
example, the RPS:
- Automatically verifies the representative payee's Social Security
number against SSA's Numident file;
- automatically checks the database for a history of misuse/fraud;
- does not permit the selection of a person convicted of a violation
under section 208 or Section 1632 of the Social Security Act (penalties
for fraud) to serve as payee.
The RPS is our most effective investigative tool in assisting our field
office employees in making appropriate representative payee selections.
While the RPS provides many benefits, it needs to be strengthened. An
internal systems workgroup undertook a comprehensive review of the RPS and
related systems and developed a project that includes a number of
improvements to the RPS and the accounting processes. The project will
result in:
- A redesign of the accounting systems,
- additional systems' support for an expanded monitoring process, and
- a comparison of databases to assure payee suitability.
We plan to implement improvements for both the RPS and the accounting
processes in three phases. The improvements will provide additional
information for use in determining the suitability of the payee,
additional information for use in monitoring payee performance, and
additional control and consistency of the Title II and Title XVI
accounting processes. For the RPS, the first phase, targeted for
implementation at the end of 2001, will involve database record clean-ups
(including the updating of the RPS to reflect terminated benefit records
involving prior payees) and the collection of additional data for
fee-for-service payees (e.g., license or bonding information such as the
amount of the bond and expiration dates). The next phase, targeted to
begin towards the end of 2002, will develop and/or improve several alert
processes and provide additional representative payee data. The final
phase will be a complete redesign of our current accounting process. The
timing of that redesign depends on the completion of Phases 1 and 2 and
the availability of resources.
By the fall of 2001, we also expect the RPS to contain additional
information needed to assist the expanded monitoring program. For example,
we plan to store the date of our site visit, the date and reason why an
organization is no longer authorized to charge a fee and information
regarding bonding and licensing of the organization. We will have the
capability of updating the information and storing it. This will provide a
historical record on each of the fee-for-service organizations.
Legislation
We recognize that administrative actions alone are not sufficient to
address all of the issues and concerns that have been identified with our
representative payee program. Last year the Ways and Means Committee
adopted H.R. 4857, a bill that would strengthen our recovery of misused
funds by payees and, more importantly, restore misused funds to our
beneficiaries.
Currently, when any payee has been determined to have misused an
individual's benefits, SSA can reissue the benefits only in cases where
there has been negligent failure on our part to investigate or monitor the
payee. In virtually all other cases, the individual loses his or her funds
unless SSA or the beneficiary can obtain restitution of the misused
benefits from the payee. Additionally, SSA can seek restitution only
through a civil action if the representative payee refuses to return the
misused funds.
To facilitate restitution of misused funds to beneficiaries, provisions
contained in H.R. 4857 would require SSA to reissue benefit payments
(including any respective fees for fee-for-service payees) in all cases
when an organizational payee is found to have misused a beneficiary's
funds, without either a finding of negligence on SSA's part or restitution
from the organizational payee. Requiring re-issuance of such misused
benefit payments, including any fees that were deducted from the
beneficiary's benefit, would provide important protection to the most
vulnerable of beneficiaries-those who have no family or friends willing or
able to be a payee.
Such authority would enable us to restore benefits that have been
misused by an organizational representative payee, thereby reducing the
hardship that can be caused by such a loss. SSA would, through all
available avenues of legal recourse, continue to seek restitution of the
misused funds from the former representative payee.
In addition to this change, provisions such as those found in H.R. 4857
would provide increased safeguards for beneficiaries with representative
payees. Although SSA does not have a formal position on these provisions,
they would:
- Require non-governmental fee-for-service organizational payees to be
bonded and licensed, provided that licensing is available under State or
local law. (The requirement under current law is bonding or licensing.)
State licensing provides some oversight by the State into the
organization's business practices, and bonding provides some assurance
that a surety company has investigated the organization and approved it
for the level of risk associated with the bond. The proceeds from
redeemed bonds would reduce the costs to the program when re-issuing
benefits in cases of representative payee misuse.
- Require SSA to conduct periodic onsite reviews of all
non-governmental fee-for-service representative payees, any other
organization serving 50 or more beneficiaries, and individual payees
serving 15 or more beneficiaries.
- Provide that when an organization has been found to have misused an
individual's benefits, the organization shall not qualify for the fee
from that individual's benefits for months the payee misused the funds.
Requiring payees to return the fees charged for periods of misuse is
reasonable because the payee was clearly not properly performing the
service for which the fee was paid. Permitting the organization to
retain the fees is tantamount to rewarding the payee for violating his
or her responsibility to use the benefits for the individual's current
and future needs.
- Provide that misused benefits (including any respective
representative payee fees) would be treated as an overpayment to the
organizational or individual representative payee and, therefore,
subject to current SSA overpayment recovery authority. Although SSA has
been given expanded authority in the recovery of overpayments (such as
tax refund offset, referral to contract collection agencies, notifying
credit bureaus, and administrative offset of future federal
benefit/payments), these tools cannot be used to recoup benefits misused
by a representative payee. Providing that benefits misused by any
representative payee would be an overpayment to the payee would provide
SSA with additional means for recouping the misused payments.
- Extend civil monetary penalty provisions to representative payees
that misuse benefits. As it pertains to representative payees, this
provision would allow SSA to impose administrative penalties and
assessments against representative payees who misuse benefits. This
would improve our ability to ensure that individuals who commit this
type of fraud against SSA are penalized, even if such individuals are
not prosecuted criminally.
- Disqualify an individual from serving as representative payee if he
or she has been convicted of an offense resulting in more than one year
of imprisonment, unless the Commissioner of Social Security determines
such certification to be appropriate not withstanding such conviction.
- Provide authority to redirect Social Security benefits to field
offices when the representative payee fails to provide an annual
accounting of benefits. Notifying the payee of this possibility, and
redirecting benefits to the field office, would provide an extremely
effective tool for increasing the number of payees who return the annual
accounting form, while providing the field offices the flexibility to
take the most appropriate action in a particular case.
SSA supports the Subcommittee's efforts to provide increased safeguards
for beneficiaries with representative payees and will work with the
Subcommittee staff to bolster the other efforts SSA has initiated to help
prevent misuse by payees.
Status of OIG Recommendations
In the mid-1990s, SSA requested the OIG to review and make
recommendations to improve the representative payee program. We requested
these reviews in order to better meet the needs of the changing
demographics of our representative payee population.
OIG made several recommendations -- from how to select a representative
payee to the kind of monitoring program needed. SSA evaluated the
recommendations within the framework of our competing priorities and
resource limitations. We have implemented several recommendations
including:
- Issuing instructions to field offices to screen payees more
thoroughly.
- Conduct periodic reviews of selected payees.
- Changing the focus of the current process from accounting to
monitoring and compliance.
In addition, we have the following OIG recommendations in process:
- Develop an accounting form tailored to organizational payees.
- Expand our automated Representative Payment System.
- Improve the ability to retrieve accounting forms when they are
needed for subsequent review.
Deceased Beneficiaries
Another important area I want to discuss is timely termination of
benefits to deceased beneficiaries. We process over 2 million death
reports annually. Our agency compiles and maintains a comprehensive
database, the death master file (DMF), which contains death information.
We receive reports from family members, funeral homes, all 50 States, the
District of Columbia, some territories, the Department of Veterans
Affairs, the Health Care Financing Administration, the postal authority,
financial institutions, and other sources. We independently verify reports
from third parties (such as other government agencies) before we terminate
benefits.
We are always looking for ways to strengthen and improve our death
termination process and we are interested in ways to improve the
timeliness with which we receive and process death reports. Last year you
considered a proposal that would have required States to report death
information to SSA within 30 days of when they receive it. Overpayments
may occur when a spouse or a representative payee negotiates a check after
the Social Security beneficiary has died, or when the benefit is
electronically deposited into a joint or payee account. Timely reports of
death help prevent such overpayments. We will continue to work with the
subcommittee to explore ways to improve our death termination process.
SSA has identified ways to improve its death report processing. These
improvements will be implemented through system enhancements, such as
modifying the Death Alert, Control and Update System and, when completed,
will strengthen the processes we use to terminate deceased beneficiaries'
benefits.
Within the next two months, we will pilot a project on Electronic Death
Registration under an agreement with the State of New Jersey. This project
will enable us to cooperatively test a process designed to provide SSA
with more accurate and up-to-date death data.
Fugitive Felons
Under current law, it is illegal for fugitive felons to collect SSI
payments. A fugitive felon is an individual who is:
- fleeing to avoid prosecution for a crime which is a felony under the
laws of the place from which a person flees;
- fleeing to avoid custody or confinement after conviction of a crime
which is a felony under the laws of the place from which the person
flees; or
- violating a condition of probation or parole imposed under Federal
or State law.
Working with the IG on what we call the Fugitive Felon Project, we have
identified over 22,000 fugitives receiving SSI during FY 1998-2000. Using
information provided by SSA, the IG and other law enforcement agencies
apprehended more than 2,800 of these fugitives. While the monetary savings
have been significant, just as important, is the positive impact on public
safety resulting from the apprehension of these individuals.
This Fugitive Felon Project utilizes a multi-faceted approach that
requires extensive and cooperative efforts of many law enforcement
agencies throughout the United States. SSA and our IG are actively
involved in this project by identifying and taking action against fugitive
felons collecting SSI payments.
This project identifies individuals who are prohibited under the law
from receiving SSI benefits by conducting computer matches with available
sources of warrant information, which include the Federal Bureau of
Investigation's (FBI) National Crime Information Center (NCIC) and the
States. The NCIC is a major national repository for information on felons
and other offenders. We also have signed agreements with the U.S. Marshals
Service and the FBI, giving us access to all federal warrants.
Unfortunately only about 30 percent of all outstanding warrants are
reported to the NCIC because the reporting of such information is
voluntary and selective. Eleven States report all of their warrants to the
NCIC. These States are Connecticut, Maine, New Hampshire, Alabama,
Florida, Georgia, North Carolina, Arkansas, New Mexico, Kansas, and
Missouri. The remaining 39 States report some, but not all warrant
information to the NCIC.
In a joint effort to develop comprehensive sources of warrant
information, SSA and the IG are actively pursuing matching agreements with
those States that only provide some of their warrants to the NCIC. SSA
currently has signed matching agreements with Alaska, California,
Colorado, Delaware, Kentucky, Nebraska, Massachusetts, New Jersey, New
York, Rhode Island, South Carolina, Tennessee, and Washington to obtain
the additional warrant information that is not reported to the NCIC. In
addition, we have agreements with four major metropolitan police
departments, New York City, Baltimore City, Baltimore County, and
Philadelphia.
Negotiating these individual State and local agreements is a major
undertaking. We need to address State and local variations in records,
incompatible formatting of data, privacy concerns, and the lack of State
and local central reporting repositories. Our regional fugitive
coordinators and field office staff are working to negotiate matching
agreements with all State and local authorities. We expect to have
negotiated matching agreements with all outstanding States within the
year. Every effort is being made to automate the matching operations
necessary to identify SSI recipients that have outstanding warrants.
One of the difficulties with such matches is that law enforcement
agencies frequently do not have accurate identifying information for
fleeing felons. Felons often use aliases and the law enforcement agency
may not have an accurate Social Security Number (SSN). Therefore, their
correct identification may be difficult. Unlike prisoners, fugitive felons
are not incarcerated and may not have been convicted of a crime. For these
reasons our matching operations are carefully designed to determine that
the person being sought by law enforcement is the same individual
receiving SSI. In order to protect individuals from unwarranted invasions
of their privacy resulting from collections and use of information about
them, all of our data matches and exchanges are done pursuant to
agreements that comply with Privacy Act requirements, and we take security
measures to limit access to the data.
When we obtain warrant information from the NCIC or from any other
source, these records are first matched against SSA's files to verify
identity information, such as name, date of birth, and SSN. Once the
records are verified then a second match is conducted against our SSI
recipient files to determine which of the fugitives are receiving SSI
benefits. The results of the second match are then forwarded to the IG for
processing. The two-step matching process performed by SSA takes four to
ten days, from the time the warrant information is obtained from a
participating federal, State or local agency until the information is
forwarded to the IG.
The IG must conduct thorough investigations of the warrant information
matches to ensure that the fugitive felon warrants are valid and that the
appropriate individuals are brought to justice. The IG works with the FBI
Information Technology Center (ITC) to verify that the felony, probation
or parole violation warrant is active. The ITC provides the address
information about each SSI recipient to the appropriate law enforcement
agency so that they can apprehend the individual.
After action by the appropriate law enforcement agency, the IG refers
their findings to SSA for appropriate action. SSA also provides feedback
to the IG reflecting the actions taken and any overpayment that may have
occurred.
Even though SSA is working to expand the number of matches through
agreements with local authorities, much of the investigative process
cannot be automated. Verification of warrant information requires direct
contact with the local law enforcement personnel who issued the warrant.
If the felon is no longer in the jurisdiction of the originating law
enforcement agency, then additional contacts must be made with law
enforcement personnel in the new jurisdiction in order to facilitate the
fugitive's apprehension.
SSA needs to be very careful when reviewing warrants to make sure they
are accurate, up-to-date, and that it pertains to the correct person. To
arrest or to suspend benefits of the wrong individual would have severe
consequences.
In their report dated August 2000, the IG recommended that SSA pursue
legislation prohibiting payment of OASDI benefits to fugitive felons. That
recommendation is worth exploring. We would be happy to work with the
Subcommittee to develop a fugitive felon provision for the OASDI
program.
ConclusionSSA continues to strive to improve our programs through
procedural and technology changes and by supporting and proposing
legislative solutions. We are committed to our role as stewards of the
trust funds. We look forward to working with this subcommittee to assure
public confidence in our programs.
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