oversight

Computer Matching: Need for Guidelines on Data Collection and Analysis

Published by the Government Accountability Office on 1990-04-17.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

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GAO                   -~
                       Iic3port to the I)irwt,or, W’f’iw 01’
                       Management and I3udget
                                                                                                     ’*




A;,riI   1990
                       COMPUTER
                       MATCHING
                       Need for Guidelines on
                       Data Collection and
                       Analysis

                                                                                                     S
                                                                                     141142
                                                                                                 I




--
GAO/HRD-90-30
 ,



      United States
GAO   General Accounting Office
      Washington, D.C. 20648

      Human Resources Division

      B-239066
      April 17,lQQO

      The Honorable Richard G. Darman
      Director, Office of Management
        and Budget
      Dear Mr. Darman:

      This report discussesthe need for the Office of Management and Budget
      (OMB) to (1) work with federal agenciesto develop guidance on data col-
      lection and reporting for evaluating the cost effectiveness of the Income
      and Eligibility Verification System (IEW) and (2) coordinate that guid-
      ance with OMB’Sregulations for cost-benefit analysis under the Com-
      puter Matching and Privacy Protection Act of 1988 (P.L. 100-503).

      The purpose of IEVSis to reduce inappropriate payments made under
      certain benefit programs. IEVSrequires states to verify data provided by
      program applicants and recipients with Internal RevenueService (IRS)
      and Social Security Administration data, and to do so in a cost-effective
      manner. This verification process,which is automated, is often referred
      to as “computer matching.” IEVSwas established by the Congressas part
      of the Deficit Reduction Act, after a presidential commission reported
      that federal and state governments spent more than $4 billion during
      1982 on ineligible claims or inappropriate payments by certain welfare
      programs.

      In 1988, the Congressenacted the Computer Matching and Privacy Pro-
      tection Act. This act requires cost-benefit analyses of computer match-
      ing efforts, such as state matching under IEVS,when a federal database
      is needed.
      Our review objectives were to determine whether states have data col-
      lection and reporting systems that allow (1) federal and state program
      officials to determine if the IEVSprogram is meeting its intended purpose
      of saving dollars and (2) state officials to make informed decisionson
      how to target their computer matching operations on areas where sav-
      ings are most likely to occur. A third objective was to determine whether
      IEVSdata collection requirements conform with the cost-benefit require-
      ments of the computer matching act. Without such conformity, states
      could be burdened with separate, and possibly duplicate, data collection
      and reporting requirements. (The scopeand methodology of our review
      are discussedin app. I.)




      Page 1                                       GAO/HI&D-90-30 Computer Matching
 C’


                       B239055




                       regulation, published in 1986, instructed the states to delay establishing
                       their own IEVSreporting systems until detailed data collecting and
                       reporting guidelines were issued by all three agencies.OMBdid not con-
                       tinue to coordinate the development of IEVSregulations with the agen-
                       cies, however, and each has since separately developed and issued
                       additional regulations. Although these regulations contained varying
                       requirements for cost-effectivenessjustifications, none of the issued reg-
                       ulations covered the collection and reporting of data necessaryto pre-
                       pare the justifications. In its January 1990 comments on our draft
                       report, however, HHSstated that HCFAhad drafted IEVSrecordkeeping
                       and reporting requirements that met its requirements for performance
                       data.

                       In addition to cost-effectivenessjustifications required by IEVS,the com-
                       puter matching act requires states to provide information that will per-
                       mit federal agenciesto assessthe benefits and costs of their matching
                       efforts. The Congressincorporated cost-benefit provisions in the act
                       becausethe cost effectiveness of computer matching had not been
                       clearly demonstrated.
                       OMBprepared and, in    June 1989, published regulations implementing the
                       computer matching act. These regulations included reporting require-
                       ments. OMBofficials said the reporting requirements are general; how-
                       ever, as states and federal agenciesbecomemore familiar with
                       conducting cost-benefit analyses,OMBplans to increasethe require-
                       ments’ specificity to improve data quality and consistency.

                       As of February 1990, none of the federal agencieswe reviewed had
Need for Uniform       developed final guidelines for data collecting and reporting for the IEVS
Data Collection and    computer matching program. As a result, data are not available to (1)
Reporting Guidelines   assessthe effectiveness of the IEVSprogram, (2) develop strategies for
                       focusing state resourceson areas where savings are most likely to occur,
                       or (3) prepare various cost-benefit studies required by the program
                       Annual performance reviews conducted by HCFAin 1987 and 1988, and a
                       1987 study by a managementconsultant under contract with HHS,found
                       that most states had not collected sufficient cost and benefit data to
                       enable (1) federal and state officials to assesswhether IEVShas been
                       successfulin meeting its intended purpose or (2) state officials to make
                       informed targeting decisions.For example, upon examining five states
                       believed to be relatively advancedin IEVSimplementation, the consultant



                       Page 3                                       GA0/HRD90-30   Computer Matding
      ,
 4’
                  E239055




                  they did not know if they would be involved in coordinating the IEVS
                  requirements with the cost-benefit analysis requirements of the com-
                  puter matching act. In its January 31,1990, letter commenting on our
                  draft report, however, HI% stated that the group will develop uniform
                  data collection and reporting guidelines for IEVSand the act.
                  OMBofficials stated that if duplication is a problem, there may be a need
                  to coordinate the data collection and reporting requirements for IEVSand
                  the computer matching act, and that OMBshould be responsible for this
                  coordination.

                  Uniform data collection and reporting guidelines are neededfor the col-
Conclusion        lection of state data that will satisfy both the requirements of IEVSand
                  the computer matching act. These data are neededto determine whether
                  IEVSis meeting its intended purpose of saving dollars. The guidelines
                  should also provide for the collection of information that will allow
                  states to (1) assesstheir operations and (2) target their resourcesto
                  areas where the greatest savings are likely to occur. We believe that OMB
                  needsto work with the responsible agenciesto assurethat such guide-
                  lines are developed.


                  We recommendthat you work with HCFA,FSA,and FNSto develop uni-
Recommendation    form data collection and reporting guidelines that will satisfy IEVSpro-
                  gram requirements and conform with the requirements of the computer
                  matching act. These guidelines should also provide for the collection of
                  information that will allow states to (1) make informed decisions about
                  where to focus their resourcesand (2) conduct appropriate analyses of
                  their program performance.

                  OMBconcurred with    our recommendation that uniform data collection
Agency Comments   and reporting guidelines be developed, and stated that an interagency
                  work group should carry out this task and that it would assumea coor-
                  dinating role within the group (see app. 11).OMBalso stated that it is
                  developing additional guidance for cost analysis under the computer
                  matching act. OMBfurther stated that the matching required by IEVSand
                  the act should use the same criteria, and that it intends to promulgate a
                  standard methodology to ensure that this happens.

                  HHSagreed with the substanceof our recommendation (see app. III). It
                  stated that the HCFA,FSA,and FNSinteragency income verification work


                  Page 6                                       GAO/HRD4O4O Computer Matching
.




    Page7   GAO/HRD-9030ComputerMatding
    l



,




        Page 9   GAO/IiRMNMO   Computer Matching
     .

A&ndix   II

Comments From the Office of Management
and Budget


                  /-p**
                  d
                  ,&!q
                  -,.y”ip    fl< :i:
                                                  EXECUTIVE
                                                     OFFICE
                                                                OFFICE OF THE PRESIDENT
                                                              OF MANAGEMENT
                                                               WASHINGTON,



                                                                JAN   26
                                                                                 AND BUDGET
                                                                            0 C 20503



                                                                           1:__

                  Ms. Linda            C. Morra
                  Director
                  Intergovernmental    and Management
                     Issues
                  U.S. General Accounting    Office
                  Washington,     D.C. 20548
                  Dear Ms. Morra:
                  We appreciate      the opportunity    to comment on the General
                  Accounting    Office's    (GAO) draft    report entitled   **Computer
                  Matching:     Need for Guidelines       on Data Collection    and
                  Analysis   (GAO/HRD-90-30)."
                  As    you know, the report          recommends that the Director            of the
                  Office    of Management and Budget (OMB) work with the Health
                  Care Financing         Administration,      the Family Support
                  Administration,          and the Food and Nutrition         Service to
                  develop uniform          data collection      and reporting     guidelines
                  that will      satisfy     the Income and Eligibility          Verification
                  System (IEVS) program requirements               and conform with the
                  requirements        of the Computer Matching         and Privacy        Protection
                  Act of 1988 (P.L. 100-503, which is contained                   in the Privacy
                  Act).     The report        further    recommends that the guidelines
                  should provide         for the collection       of information        that will
                  allow States to:            1) make informed decisions         about where to
                  focus resources:          and, 2) conduct appropriate          analyses      of
                  their    performance       with the IEVS program.
                   In general,       we concur with the recommendations                  of the
                  report.       We believa        that requiring       benefit-cost        analyses     for
                  State targeting           schemes is an important            and sound first        step
                   in assessing        the   viability      of the IEVS program as a whole.
                  We further        believe     that the development           of uniform      data
                  collection        and reporting        guidelines      will   enhance such
                  analyses,       and ensure that the information                collected      by the
                  Federal agencies           is useful.       Our authorities         under the
                  Paperwork Reduction             Act (44 U.S.C. Chapter 35) speak clearly
                  on the need for such uniformity                   in Federal     information
                  policies      and practices          to the extent      it is practicable         and
                  appropriate.           We therefore,       concur with the recommendation
                  that uniform         data collection         and reporting       guidelines      be
                  developed       in this area.          OMB will     recommend to the affected
                  agencies      that the interagency             income verification          work group
                  established        for the purpose of developing               such guidance be
                  reactivated,         and that OMB assume a coordinating                  role within
              Y   this group.




                            Page 11                                                           GAO/~SO-30   Computer Matching
Apdendix III

CommentsFrom the Department of Health and
Human Services


                   DEPARTMENT
                            OFHEALTH& HUMANSERVICES                               Ollioe 01 lnopeclor General

                                                                                  W88hlngton.   D.C.   20201




                                                        JAN 31 1990




               Mr. Lawrence   Ii. Thompson
               Assistant   Comptroller  General
               United States General
                 Accounting     Office
               Washington,     D.C.      20548
               Dear Mr. Thompson:
               Enclosed are the Department's    comments on your draft        report,
               "Computer Matching:     Weed for Guidelines    on Data Collection         and
               Analysis."   The comments represent     the tentative    position      oi' the
               Department and are subject    to reevaluation     when the final       version
               of this report   is received.
               The Department appreciates   the opportunity           to comment on this
               draSt report  before its publication.
                                                      Sincerely   yours,
                                                 ,/   -\,
                                                            /
                                                      :$LL      ilu   L(.L.XJ
                                                      Richard P. Kusserow
                                                      Inspector     General
               Enclosure




                     Page 13                                               GAO/HRD-@O-30
                                                                                     Computer Matching
             5239Oss




             The purpose of IEVSis to reduce lossesin the Medicaid, Aid to Families
Background   with Dependent Children, and Food Stamp programs by requiring states
             to conduct computer matches to help verify applicants’ eligibility for
             these programs. These programs are administered by the Health Care
             Financing Administration (HCFA), the Family Support Administration
             (FSA),componentsof the Department of Health and Human Services
             (HHS), and the Food and Nutrition Service (FNS),a component of the
             Department of Agriculture.
             The IEVSprocessbegins when a county or local caseworker forwards
             information collected from applicants to the state. After the information
             is entered into a master client file, the state sendsa computer tape to the
             appropriate federal or state agenciesfor matching. If, for example, a
             Medicaid applicant earned interest in an unreported savings account,
             the account and interest should be detected when the file is matched
             with IRSinformation. This is commonly referred to as a “hit.” IRSwill
             return a tape to the state, with the individual’s account number, the
             name and address of the financial institution paying the interest, and
             the year the income was reported.

             IEVSallows   each state either to investigate all computer hits or to screen
             out those hits least likely to result in a changein a recipient’s eligibility
             status. If a state decidesto use a screening strategy, known as targeting,
             federal regulations require the state to support the decision with a cost-
             benefit analysis or someform of “reasonable” justification demonstrat-
             ing that the strategy will be cost effective.
             The state distributes the information obtained from federal agenciesto
             the appropriate county or local office for follow-up. Caseworker follow-
             up on the IRSexample cited would consist of determining whether the
             information was properly disclosedby the applicant. If it was not, the
             caseworker would investigate and make a decision about the recipient’s
             eligibility.
             “The Paperwork Reduction Act of 1980 makes OMBresponsible for
              approving information collection requests by federal agenciesand
              ensuring that the information is necessaryand will be useful to the
              requesters, Under the 1980 act and Executive Order 12291 OMBmay also
              eliminate duplication and inconsistenciesin federal data collection
              requirements.

             After IEVSwas established, OMBworked with HCFA,FSA,and FNSto
             develop a single implementation regulation for all three programs. This


             Page 2                                         GAO/HRD90-30 Computer Matching
reported that due to a lack of information on program performance,
targeting was arbitrary and subject to significant uncertainty.

In a nationwide survey, states cited lack of coordination among federal
agenciesas having a “major impact” on IEVSimplementation. This sur-
vey, conducted by the American Public Welfare Association (a national
association that represents state interests), criticized federal agencies’
inability to develop uniform expectations and requirements for the
states.
Our discussionswith representatives of state interests (seep. 10) and
officials responsible for IEVSimplementation in three states, and our
work at one state, also pointed to a need for federal guidance.
As discussedabove, both IEVSand the computer matching act require
states to provide cost and benefit data. Under IEVSstates are required to
report these data to HCFA,FSA,and FNS.Under the computer matching
act, states are required (effective July 1990) to report cost and benefit
data concerning their IEVScomputer matching to IRSand the Social
Security Administration. If HCFA,FSA,and FNSdo not take into account
the reporting requirements of the act as they implement the IEVSpro-
gram, states may be required to develop separate, and possibly dupli-
cate, reporting systems. For example, states could be required to report
cost information in different formats, based on different cost elements,
or to use different methods for computing cost elements in satisfying the
two reporting requirements.

Although HCFA,FBA,and FNSofficials have stated that they want to mini-
mize states’ reporting burden, little progress has been made to consoli-
date the collecting and reporting of data to meet the requirements of
IEVSand the computer matching act.

We discussedthe need for uniform data collection and reporting guide-
lines with officials from OMB,HCFA,F&X,and FNS.The HCFA,FM, and FNS
officials indicated that they are aware of problems with the collection
and reporting of cost-benefit data and of the need to coordinate their
efforts. As a result, the agencieshave established an interagency income
verification work group. The group was created to provide (1) a forum
to discuss and help resolve IEVSissuesand problems common to the pro-
grams and (2) a focal point that states can contact to raise issuesand
problems common to the three programs. In October 1989, we met with
representatives of this group and were informed that they had met only
once and were still determining the scopeof their mission. At that time


Page 4                                        GAO/HRD-90-30 Computer Matching
B239066




group will develop uniform data collection and reporting guidelines for
IEVSand the requirements of the computer matching act. HHScommented
it expected OMBto assumean ongoing support and coordination role
through its existing paperwork and regulatory review and approval
process.

As you know, 31 USC. 720 requires the head of a federal agency to
submit a written statement on actions taken on our recommendationsto
the House Committee on Government Operations and the SenateCom-
mittee on Governmental Affairs not later than 60 days after the date of
the report and to the House and SenateCommittees on Appropriations
with the agency’s first request for appropriations made more than 60
days after the date of the report.

Copiesof this report are being sent to interested Senateand House com-
mittees and subcommittees,the Secretary of Health and Human Ser-
vices, the Secretary of Agriculture, and other interested parties. Copies
will be made available to others on request.
If you have any questions regarding this report, you may call me on
(202) 276-1666. Other major contributors to this report are listed in
appendix IV.

Sincerely yours,




Linda G. Morra
Director, Intergovernmental
  and Management Issues




Page 6                                       GAO/HRD-90-30 Computer Matching
Contents



Appendix I
Scopeand
Methodology
Appendix II
Comments From the
Office of Management
and Budget
Appendix III
Comments From the
Department of Health
and Human Services
Appendix IV                                                                    16
Major Contributors to
This Report




                        Abbreviations

                        FNS       Food and Nutrition Service
                        FSA       Family Support Administration
                        HCFA      Health Care Financing Administration
                        HHS       Department of Health and Human Services
                        IEVS      Income and Eligibility Verification System
                        IRS       Internal RevenueService
                        OMB       Office of Managementand Budget


                        Page 8
Appendix I

Scopeand Methodology


             To accomplish our objectives, we reviewed laws and regulations regard-
             ing the implementation of IEVSand the computer matching act. We
             obtained copies of (1) reviews conducted by HCFAheadquarters and
             regional offices on state compliance with IEVSregulations, (2) available
             independent studies on IEVSimplementation, and (3) studies that provide
             guidance on assessingthe costs and benefits of computer matching
             activities.

             We also visited Kentucky to observe how IEVSwas being implemented
             and to discuss additional collection and reporting requirements that
             might result from implementation of the computer matching act. Our
             review there included determining whether Kentucky was maintaining
             data related to the costs and benefits associatedwith computer match-
             ing efforts.
             We discussedthese matters with officials at HCFA,FNS,FSA,and OMB;
             state Medicaid and other public assistanceofficials in Kentucky; and
             representatives for state interests from the National Governors’ Associ-
             ation and the American Public Welfare Association. Much of our review
             focused on the collection and reporting of IEVSdata under the Medicaid
             program; however, IEVSand the computer matching act, and therefore
             much of the discussion contained in this report, apply to the Aid to Fam-
             ilies with Dependent Children and Food Stamp programs as well.

             Our work was done in accordancewith generally acceptedgovernment
             auditing standards between July 1988 and September 1989.




             Page 10                                     GAO/HRDBO-30 Computer Matching
   AppendlxR
   CommenbFrom     theOfYkeofManagement
   and Budget




With regard to computer matching and the provisions      of the
Privacy   Act of 1974, as amended, OMB is in the process of
developing a benefit-cost    analysis  appendix to guidance
issued on June 19, 1989 implementing     the Computer Matching
and Privacy   Protection  Act of 1988.   We agree that the
matching that is required    be IEVS and by the Computer
Matching Act should use the same criteria,      and it is our
intention   to promulgate  a standard methodology   to ensure
that thir, happens.
Again,   we appreciate    the opportunity      to comment on this
report.    While we concur with recommendations           presented      in
this report     and offer   our assistance     in implementing     them,
we temper this concurrence       with the recognition        that the
affected   Federal   agencies have the greatest        incentive     to
ensure that guidelines       are developed which are practicable
and reasonable.      OWR staff   atands willing     and eager to
assist   in the pursuit     of a policy    that is satisfactory        to
both the States and the Federal government.
                                     Sincerely,



                                   VJames E. MacRae, Jr.
                                     Acting Administrator
                                        and Deputy Administrator
                                     Office  of Information
                                        and Regulatory    Affairs




   Page 12                                              GAO/HlUMW3O Computer Mat&ing
       Appendix III
       CemmenteFromtheDepartmentofHeaUh
       and Human Servicea




       TS OF T-NT                     OF BEAU3.i AND lE%&B SERVICES ON m
      GENERAL ACCOUNT                                                  FOB


These comments address the GAO's findings           and recommendation       on
the need for uniform data collection          and reporting     guidelines
that will   satisfy     both the requirements    of the Income and
Eligibility   Verification      System (IEVS) program for performance
data, and of the Computer Matching and Privacy             Protection     Act of
1988 for cost and benefit        analyses of State computer matches with
Federal data bases.
!aQ Recommendation :
That the Director      of OMB work with      HCFA, FSA, and FNS to develop
uniform data collection       and reporting     guidelines      that will
satisfy    IEVS program requirements       and conform with the
requirements     of the computer matching act.           These guidelines
should also provide       for the collection     of information       that will
allow States to (1) make informed decisions              about where to focus
their   resources   and (2) conduct appropriate          analyses    of their
program performance.


The Department        agrees   with   the   substance   of the GAO
recommendation.
As  the GAO report        states,    Department officials       are  aware of
problems with the collection              and reporting    of IEVS cost-benefit
data, and of the need for HCFA, FSA and FNS coordination
regarding     the development        of uniform data collection        and
reporting     guidelines      which meet IEVS and computer matching
requirements.         To this end, FSA, HCFA and FNS have agreed to, and
identified,      a single     coordinator     to coordinate     the activities       of
an interagency        income verification        work group which will         address
these problems and coordinate              IEVS activities     across the
agencies.       The coordinator       is an FSA staff      person, which is
consistent      with FSA's lead agency role in the State systems area.
The work group members are representatives                 from FSA, HCFA and FNS
program and systems areas.
One activity    of this interagency     work group is to develop uniform
data collection    and reporting    guidelines   for the IEVS and the
requirements    of the Computer Matching and Privacy       Protection Act
of 1988.
Prior to the formation      of the work group, HCFA developed           IEVS
record keeping and reporting        requirements     which are in HCFA*s
final  clearance    process and scheduled       for issuance shortly.        HCFA
has agreed to participate       with the interagency        work group to
amend their    record keeping and reporting         requirements    for IEVS
and to develop uniform      interagency     requirements     that meet




       Page 14
    .
f


                Appendlrm
                CemmeatsFromtheDepartmentofHealth
                andHumanServicee




                                                -2-
        the additional        requirements     of the Computer Matching       and   Privacy
        Protection      Act of 1988.       HCFA currently      has OMB approval     to
        collect    the IEVS record keeping and reporting             requirements
        through April       1992.     The interagency     work group has held       meetings
        to discuss the need for uniform             standards,    and subseguent
        meetings,     including      State representatives,       are scheduled     to begin
        the development         of these uniform standards.
        Finally,    we have had preliminary         discussions   with OMB regarding
        their    support in the development         of solutions   to problems
        relating    to the coordination       of record keeping and reporting
        requirements       for IEVS and the Computer Watching and Privacy
        Protection     Act    of 1988.   We fully     expect those preliminary
        discussions     will    lead to an ongoing support and coordination           role
        for OMB through        OMB8s existing     paperwork and regulatory     review
        and approval       process.




                Page16
Appendix IV

Major Contributors to This Report


                   Donald R. Baiardo, Assignment Manager, (202) 623-9131
Human Resources
Division,
Washington, DC.
                   Richard M. Johnson, Evaluator-in-Charge
Atlanta Regional   Laura L. Reiter, Staff Member
Office




              Y




(202681)           Page 16
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