Department of Health and Human Services
Departmental Appeals Board
AFDC QUALITY CONTROL REVIEW PANEL
SUBJECT: Missouri Department
of Social Services
Docket No. A-93-8
Decision No. QC35
DATE: January 12, 1993
DECISION
The Missouri Department of Social Services (State)
appealed the September
28, 1992 quality control (QC)
review determination of the Regional
Administrator of the
Administration for Children and Families (ACF) that an
Aid to Families with Dependent Children (AFDC) payment
selected for
review and determined correct by the State
should have been dropped from the
QC review process. ACF
determined that the State QC review did not
obtain
sufficient information to determine eligibility because
the
review failed to verify the recipient's banking
activity during the review
month. For the reasons
discussed below, we sustain ACF's
determination.
Background
Missouri's QC review determined that the assistance unit
(AU) received a
correct AFDC payment for the review month
of January, 1992.
Information considered in the State QC
review included a financial
information form from the
recipient's bank which indicated that she had a
checking
account with a balance of $7.64 as of January 1, 1992.
The federal QC reviewers twice requested additional
information from the
bank concerning activity in the
recipient's account but received no
response.
ACF contended that the case should have been dropped from
the QC review
process because the State QC review failed
to obtain information regarding
deposits or other banking
activity during the review month of January,
1992. ACF
asserted that the AFDC QC Manual (QCM) requires that
sample cases be dropped from the review when an element
of eligibility
cannot be verified and ineligibility has
not been established. Here,
ACF stated, the State was
unable to verify the recipient's banking activity
during
the review month as required by section 3544 of the QCM
and thus
could not determine whether or not the recipient
was ineligible based on
resources. The State argued that
it complied with the QCM's
requirement that bank contacts
cover the period of time necessary to
determine
eligibility and payment. The State asserted that it
complied with its permissible state practice (PSP) and
verified that the
checking account balance was under the
applicable resource limit as of the
review date. 1/
Applicable law
Title IV-A of the Social Security Act (Act) provides for
payments to
needy families with dependent children.
Section 406(b) of the Act
defines "aid to families with
dependent children" as money payments with
respect to a
dependent child including money payments to meet the
needs
of the relative with whom any dependent child is
living. Section
402(a)(7) of the Act requires states to
consider income and resources in
determining need for
assistance.
Section 408 of the Act established the AFDC QC system to
improve the
accuracy of payments and provided for Panel
review of difference cases,
defined as those cases which
the state's review determines to be correct but
for which
the federal review finds erroneous payments. Section
408(b)(3). Recently published regulations define a
"difference" as
a disagreement between state and federal
review findings that affect the
state's official AFDC
payment error rate, including a federal finding that a
sample case should be dropped from the QC review. 45
C.F.R. �
205.42(i) (final rule, 57 Fed. Reg. 46804,
October 13, 1992).
Analysis
As ACF noted, section 3240 of the QCM requires that a
case be dropped
from the QC review sample if an element
of eligibility cannot be verified
and there is
insufficient information to establish ineligibility. The
QCM requirements for verifying resources from a bank
account are found
at section 3544, "Bank Accounts or Cash
on Hand." In relevant portion,
section 3544 instructs
the reviewers to:
Obtain enough information to make a
determination as to whether any
member of the
AU had available to him/her, as of the review
month,
resources from a financial instrument.
. . .
Bank contact(s) must cover the period of time
necessary to
determine eligibility and payment,
and whether any error is PAL or regular.
. . .
Absent a PSP, the amount of resources
available for a month
is determined by (a)
obtaining the bank balance as of the first day
of
the month and adding to it any deposits made
to the account during that
month that represent
a resource or, (b) adding all deposits in a
month
to the amount of resources carried-over
from the previous month, subtracting
from this,
all deposits that represent part or all of the
recipient's
assistance check paid for this
month as well as any other income. If
resources in excess of the limit cause a
finding of ineligibility, the
reviewer must
determine when resources first exceeded the
limit. . .
.
If a bank account is reported by the recipient
or discovered by the
reviewer, the type of
account, account number, type or ownership,
banking activity, as needed (QCM 3557) and
balance for the review month
and previous
months, as required, must also be documented.
Be alert to deposits to bank accounts as an
indication of the
receipt of income, including
interest on the account (see QCM 3553 and
3569)! Document deposits made during the
review period in order to
determine whether
such deposits should have affected eligibility.
We concur with ACF that Section 3544 calls for the State
QC review to
obtain more information than merely the bank
balance as of the beginning of
the review month. The
section provides detailed instructions for
computing
resources in a bank account by adding to the beginning
balance
all of the deposits made during the month in
question. Missouri
asserted that these requirements
apply only "absent a PSP" and that it has a
PSP on
resources with which it complied. At the request of the
Panel, Missouri provided a copy of its PSP on resources,
which it cited
in its September 3, 1992 response to ACF's
initial difference letter as
Chapter I, Section II, page
12. This portion of the PSP, titled "cash
and
securities," is devoted primarily to defining the type of
funds
which are not included in determining a claimant's
equity in various
resources. Although it includes
procedures for verification, the PSP
does not specify the
period of time that bank account information must
cover,
and does not provide that a review is satisfied by
obtaining a
bank balance as of the first date of the
month. In the absence of any
guidance from the PSP on
the questions raised in this appeal, we conclude
that the
State was bound by the more specific instructions in
section
3544 of the QCM.
Additionally, other portions of section 3544 cited above
require the QC
review to document deposits made during
the review period, without reference
to the PSP. Thus,
section 3544 clearly contemplates receipt of
information
over a period of time, and not merely as of one day in
the
review month.
Section 3544 also requires that bank contacts cover "the
period of time
necessary to determine eligibility and
payment." For prospective
determinations of eligibility
and amount of assistance, that period of time
is the
entire review month (also the payment and, in prospective
budgeting states, the budget month). Section 3410 of the
QCM
requires state QC reviewers to calculate the total
income of the AU for the
entire month to determine
whether it exceeds 185% of the state standard of
need.
Section 3420 of the QCM, in effect prior to October, 1992
(AFDC Action Transmittal No. ACF-AT-91-26, August 22,
1991) also
provides that inherent in prospective
budgeting is the use of a "best
estimate" of income and
income-related factors to determine the amount of
payment
for current and/or future months. The QCM contemplates
that the financial eligibility and payment
determinations, and the
review of those determinations,
will be based on income and resources during
the entire
review month.
Thus, we conclude that the specific requirements of
section 3544 of the
QCM and the nature of the prospective
budgeting process require bank account
information beyond
the beginning month balance that the State provided here.
As the State did not obtain the information required to
review the
determination of eligibility, the case must be
dropped from the QC
review.
Conclusion
For the reasons discussed above, we conclude that the
State's QC review
failed to obtain sufficient information
about the recipient's banking
activity to determine
eligibility for the review month, and we sustain ACF's
finding that the sample case should be dropped from the
QC review.
Thomas D. Horvath
Maxine M. Winerman
Jeffrey A. Sacks
* * * Footnotes * * *
1. A large portion of the State's
argument was in
response to ACF's assertion in its initial difference
letter dated August 6, 1992 that the State should have
obtained bank
account information for not only the review
month but for the two preceding
months as well. ACF
cited an example in section 3544 of the QCM which
contains this requirement. As the State noted, the
example
concerns retrospective budgeting states that use
financial information from
one or two months prior to the
payment month to calculate assistance.
The State
reported, and ACF did not dispute, that it uses
prospective
budgeting and therefore does not consider
prior month information in
determining eligibility and
the amount of assistance. Although ACF
alluded to the
requirement for prior month information in its final
difference letter dated September 28, 1992, this argument
was not made
by ACF's counsel in reply to the State's
appeal request, and we do not
consider it here.