Push to Curb Payments to Dead Beneficiaries Intensifies

Despite recent progress on curbing improper payments, the federal government continues to send an unacceptably high number of checks to ineligible deceased beneficiaries, a Senate panel asserted on Wednesday.

Lawmakers, auditors and agency officials embraced a series of remedies to improve accuracy of the Social Security Administration’s Death Master File included in the “program integrity” proposals in President Obama’s fiscal 2014 budget.

“Federal agencies made an estimated $108 billion in improper payments for fiscal year 2012, a small reduction from previous years,” noted Sen. Tom Carper, D-Del., chairman of the Homeland Security and Governmental Affairs Committee. “But such payments remain at unacceptably high levels, and mistakes are made at greater rates than businesses or families would tolerate. There’s a need for a governmentwide strategy to get rid of red ink, make taxpayers happy and all be proud of our work.”

Ranking member Sen. Tom Coburn, R-Okla., said the actual amount of wasted payments is higher than the official estimate and worried that one of the Obama administration’s key anti-fraud tools, the Do Not Pay list set up by the Treasury Department in April 2012 to monitor contractors, does not enjoy full access to the central SSA database. “We will put the Obama proposals in legislative language and they will have bipartisan support,” he said, promising to help federal agencies that share data to communicate better to create efficiencies, and to overcome some obstacles presented by privacy laws in order to access more state data on deaths.

The senators on Tuesday lauded a new report from the SSA inspector general that found that more than 180,000 deceased individuals had not been added to the Death Master File, even though these same individuals had been reported as deceased to the SSA Supplemental Security Records. A Government Accountability Office report last year found 130 records where the date of birth was after the date of death, and 1,295 records in which the age of death was between 111 and 129.

The administration is taking an “aggressive approach,” said U.S. Controller Danny Werfel, noting that the improper payment rate had dropped from 5.42 percent in fiscal 2009 to 4.35 percent in 2012. He announced that Obama’s goal is to achieve a 97 percent accuracy rate by 2016.” Werfel praised the use of “data analytics” to cross-check records at Treasury’s Do Not Pay initiative , the Center for Medicare and Medicaid Services’ new anti-fraud command center in Baltimore, the Internal Revenue Service’s new push to combat identify theft and the Labor Department’s new unemployment insurance processing center in New York State.

Told by Coburn that private businesses would never operate with a 3 percent error rate, Werfel said, “I’d be a little suspicious if we ever claimed we had 100 percent accuracy because there is something inherent in government operations” that makes it inefficient to spend $2 to capture the final dollar.

Patrick P. O'Carroll Jr., SSA inspector general, reported on a survey of IGs showing that 27 agencies had fully complied with requirements under the 2010 Improper Payments Elimination and Recovery Improvement Act to conduct claim risk assessments, publish their improper payment rates and take corrective actions. Eleven had not complied. `He noted that privacy and computer matching laws impede some agencies from obtaining full data to cross check claims. At SSA, the people working on “the three main databases don’t talk to one another,” he said, adding that fuller funding for improving such databases to curb improper payments was a high priority among IGs governmentwide.

Treasury has “made significant progress” in turning the Do Not Pay list into a “robust and flexible” data portal and a business center for data analytics, said Richard Gregg, the department’s fiscal assistant secretary. “The key issue is access to data,” he added, calling for an expansion to include data from the Health and Human Services Department’s National Directory of New Hires, updated prisoners’ lists and state death data.

Daniel Bertoni, the GAO’s director of education, workforce, and income security issues, also stressed the importance of using modern software to proofread claim and identity data entered by human hands. He noted that the SSA receives 7 million death reports a year from families, funeral directors and states, but that it only verifies the ones considered less accurate. Only six federal agencies, Bertoni added, are eligible to receive SSA’s full data because of privacy restrictions. Some request only partial databases and some must pay SSA to receive them.

The eligible agencies include the Office of Personnel Management, the Defense and Veterans Affairs departments, the IRS, CMS, and the Railroad Retirement Board, along with parts of Energy and Agriculture, according to GAO and Marianna LaCanfora, acting deputy commissioner for retirement and disability policy. Because of a decades-old Freedom of Information Act request, a shorter, public version of the Death Master File is released by the Commerce Department’s National Technology Information Service -- “three years late, so that criminals can’t use it to file fraudulent tax returns,” she said.

LaCanfora expressed support for Obama budget’s $1.2 billion proposals to work to boost the use of electronic death registration tools -- now used by 33 states -- which under current law may not be shared outside of the SSA’s full Death Master File. She said SSA in the past had not performed double-checks on data on records for people not collecting social security, but as of December, “knowing that other agencies may use the data, we now spend more time editing in place” to avoid transferring a record containing a discrepancy.

That drew a response from Sen. Claire McCaskill, D-Mo., who asked, “Why are the agencies charged? To save money, we should all be falling all over ourselves to make sure all of government is keeping [bad] money from going out the door. If there’s a choice between furloughing and buying a Death Master File,” she said, “that’s not a good choice in today’s world.”