oversight

Follow-up on Transferring Supplemental Security Income Overpayments from Prior Records to the Current Record for Recovery

Published by the Social Security Administration, Office of Inspector General on 2021-06-03.

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

MEMORANDUM

Date:   June 3, 2021

To:     Andrew Saul
        Commissioner

From:   Gail S. Ennis
        Inspector General

Subject: Follow-up on Transferring Supplemental Security Income Overpayments from Prior Records to
        the Current Record for Recovery (A-01-17-50226)

        The attached final report presents the results of the Office of Audit’s review. The objective was
        to determine whether the Social Security Administration (1) transferred overpayments from
        terminated Supplemental Security Income records to current records for recovery and (2) took
        corrective action to recover the Supplemental Security Income overpayments we identified in our
        2009 audit.

        If you wish to discuss the final report, please call me or have your staff contact
        Michelle L. Anderson, Assistant Inspector General for Audit, at 410-965-9700.




                                                        Gail S. Ennis

        cc: Trae Sommer

        Attachment
     Follow-up on Transferring Supplemental Security Income
Overpayments from Prior Records to the Current Record for Recovery
                        (A-01-17-50226)
Failure to close out an overpayment on a terminated Supplemental Security Income (SSI) record
and transfer it to the current record results in a lost opportunity to recover the funds because
adjustment of ongoing payments is the most effective method of overpayment recovery. The
Social Security Administration (SSA) developed an automatic reconciliation process to transfer
overpayments, but field office staff is responsible for manually transferring the overpayment in
certain situations. In a similar 2009 audit, 1 we estimated that SSA should have transferred
approximately $9.4 million in overpayments to 3,075 SSI recipients’ current SSI records (from a
population of 3,705 recipients). We conducted this audit to determine whether SSA
(1) transferred overpayments from terminated SSI records to current records for recovery and (2)
took corrective action to recover the SSI overpayments we identified in our 2009 audit.

To accomplish our objective, we reviewed applicable criteria and identified 4,482 SSI recipients
in current pay status, as of April 2020, with overpayments on terminated SSI records that SSA
had not transferred to current records. Of these 4,482, we randomly selected 200 cases for
detailed analysis. From our 2009 audit population of 3,705 SSI recipients, we identified 1,574 in
current pay status as of November 2019. Of the 1,574, we randomly selected 200 cases to
determine whether SSA transferred the SSI overpayments on prior terminated SSI records to
current records.

We found that SSA did not ensure staff (a) transferred outstanding overpayments from
terminated SSI records to current records for recovery and (b) took corrective action to recover
the SSI overpayments for some of the cases we identified in our 2009 audit. We estimate SSA
should have transferred approximately $14.8 million in SSI overpayments to 2,936 recipients’
current records for recovery. Had SSA transferred the $14.8 million, it could have recovered
approximately $8.1 million as of November 2020. 2 In addition, SSA did not transfer
approximately $3.5 million in SSI overpayments we identified for 905 recipients in our 2009
audit for recovery. 3 See Appendix 1 for Background and Appendix 2 for Methodology and
Sample Results.




1
 SSA, OIG, Follow-Up: Controls over Recording Supplemental Security Income Overpayments, A-01-09-19126
(August 2009). We also completed a similar audit in 2001. See SSA, OIG, Controls over Recording Supplemental
Security Income Overpayments, A-01-00-10005 (May 2001).
2
  We assumed a 10-percent recovery rate from the recipients’ monthly SSI payments. Section 1631(b)(1)(B) of the
Social Security Act limits the rate of recovery to the lesser of 10 percent of the recipient’s total monthly income
(countable income plus SSI and State supplementary payment) or the recipient’s entire monthly benefit. 42 U.S.C.
1383(b)(1)(B) govinfo.gov (2018).
3
  According to Standards for Internal Control in the Federal Government, “Management completes and documents
corrective actions to remediate internal control deficiencies on a timely basis. These corrective actions include
resolution of audit findings.” Government Accountability Office, Standards for Internal Control in the Federal
Government, GAO-14-704G, p. 68 (September 2014).


Transferring SSI Overpayments from Prior Records to the Current Record for Recovery (A-01-17-50226)                   1
For example, SSA terminated a recipient’s SSI record in August 2017. At that time, the recipient
had a $1,645 overpayment for January 2012 through February 2013. On the terminated SSI
record, SSA annotated the outstanding overpayment as transferred. In August 2017, SSA created
a new record, but the Agency never transferred the overpayment to the new record for recovery.
We referred this case to SSA in July 2020. In September 2020, SSA confirmed the SSI
overpayment did not transfer because of an automatic reconciliation exclusion and because staff
failed to follow the procedures for transferring the overpayment manually. Had staff transferred
the overpayment to the current record, SSA could have recovered $1,645 from the recipient’s
September 2017 to November 2020 SSI payments.

During automatic reconciliation of overpayments, most overpayments transfer to current records.
However, the system has a number of exclusions that prevent automatic reconciliation, and SSA
staff needs to take manual actions, which do not always occur.

SSA does not plan to update its SSI systems to address the exclusions that prevent automatic
reconciliation of overpayments. The reason, according to SSA, is that they are highly complex
to automate, they involve a small universe of cases, and therefore the effort would not be cost-
beneficial. SSA stated, “After the . . . [August 2009] audit, we funded a project to address the
exclusions in 2010. As a part of that process, we built the weekly reconciliation process, which
selects specific records for transfer. During that effort, we examined each exclusion and
determined it existed for a sound reason.”

Because the estimated $14.8 million we identified is a small fraction (0.33 percent) of the
$4 billion in outstanding SSI overpayments, we concur with SSA’s assessment that the
exclusions to the automated reconciliation process are valid, and we do not recommend any
further improvements to SSA’s automated process. However, we do recommend SSA:

1. Review the remaining cases we identified for our current population and 2009 audit
   population that have outstanding overpayments on prior terminated SSI records and take
   corrective action to transfer the overpayments to current records for recovery.

2. Issue a reminder to staff to follow its policy to manually process SSI overpayments that are
   not automatically transferred to the current record.

SSA agreed with the recommendations; see Agency Comments in Appendix 3.




Transferring SSI Overpayments from Prior Records to the Current Record for Recovery (A-01-17-50226)   2
                                                                                             Appendix 1
                                                                                             Page 1 of 2

BACKGROUND
The Social Security Administration (SSA) creates a Supplemental Security Income (SSI) record
for each recipient, but, if the recipient becomes ineligible for SSI, SSA suspends payments.
After 12 consecutive months in non-payment status, the SSI record can terminate. If the
individual becomes eligible for payments again, SSA creates a new SSI record.

In July 1999, SSA started transferring overpayments through an automated reconciliation
process, but the field office staff is still responsible for identifying whether the automated
reconciliation process or manual processing should be used. 1 For manual processing, SSA staff
must determine the correct overpayment amount to be transferred, balance and close out the
overpayment on the terminated record, and transfer the overpayment information to the current
record for recovery.

During the automated reconciliation process, SSA’s Modernized SSI Claims System determines
the amount of outstanding overpayment(s) on the terminated SSI record and posts an entry on the
terminated record indicating the overpayment(s) was reconciled and transferred. On the current
SSI record, the Modernized SSI Claims System creates an entry related to the outstanding
overpayment(s) from the prior record to set up recovery. There are certain exclusions to the
automated reconciliation process. For example, SSA’s automated reconciliation process will not
transfer the overpayment if there is also an underpayment on the prior terminated SSI record.
When automated reconciliation is not available to reconcile an overpayment on a terminated
record, the Modernized SSI Claims System will generate an alert for SSA staff to resolve it
manually. See Figure 1.




1
    SSA, POMS, SI 02220.011, B (December 3, 2012).


Transferring SSI Overpayments from Prior Records to the Current Record for Recovery (A-01-17-50226)
                                                                                             Appendix 1
                                                                                             Page 2 of 2

 Figure 1: SSA Process for Transferring Overpayments to Current Records for Recovery




Transferring SSI Overpayments from Prior Records to the Current Record for Recovery (A-01-17-50226)
                                                                                                      Appendix 2
                                                                                                      Page 1 of 4


METHODOLOGY AND SAMPLE RESULTS
Methodology
To accomplish our objective, we:

   Reviewed applicable sections of the Social Security Act and Social Security Administration’s
    (SSA) regulations, rules, policies, and procedures.
   Reviewed prior Office of the Inspector General reports related to Supplemental Security
    Income (SSI) overpayments.
   Identified a population of 4,482 individuals who (1) were receiving SSI payments as of
    April 2020 with SSI overpayments on terminated SSI records that appeared to not have been
    transferred to current records for recovery, (2) had an SSI overpayment decision date of
    January 1, 2010 or later, and (3) had a total outstanding overpayment amount of $500 or
    greater.
   Randomly selected and reviewed a sample of 200 cases from our population of
    4,482 recipients to determine whether SSA transferred the outstanding overpayments on
    terminated SSI records to current records.
   Identified 1,574 recipients from our 2009 audit population of 3,705 recipients who were in
    current pay status as of November 2019. 1
   Randomly selected and reviewed a sample of 200 cases from our population of
    1,574 recipients to determine whether SSA took corrective action (that is, transferred
    overpayments on terminated SSI records to current records for recovery) after our 2009 audit.
   Referred cases from both samples to SSA for review.
   Analyzed information from SSA based on its review of sample cases where it appeared the
    Agency did not transfer the overpayment from the prior record to the current record.
   Analyzed information SSA provided in response to our questions related to its processing of
    SSI overpayment cases.
   Estimated, for both samples, the number of recipients who did not have outstanding SSI
    overpayments transferred to current records and estimated the amount of overpayments not
    transferred.




1
  We removed from this audit population the 200 sample cases from our 2009 audit, along with any recipients not in
current pay status for SSI payments as of November 2019. For our 2009 audit population, we identified
3,705 individuals who (1) were receiving benefits as of January 2008 with overpayments on terminated SSI records
not transferred to currents records, (2) had an overpayment decision date of January 1, 2001 or later, and (3) had a
total outstanding overpayment amount of $500 or greater. SSA, OIG, Follow-up: Controls Over Recording
Supplemental Security Income Overpayments, A-01-09-19126, p. B-1 (August 2009).


Transferring SSI Overpayments from Prior Records to the Current Record for Recovery (A-01-17-50226)
                                                                                              Appendix 2
                                                                                              Page 2 of 4

   Estimated, for our current sample, the amount SSA could have recovered—assuming a
    10-percent recovery rate from monthly SSI payments—had it transferred the SSI
    overpayments on prior terminated records to current records for recovery.
We assessed the significance of internal controls necessary to satisfy the audit objective. This
included an assessment of the five internal control components, including control environment,
risk assessment, control activities, information and communication, and monitoring. In addition,
we reviewed the principles of internal controls associated with the audit objective. We identified
the following component and two principles as significant to the audit objective.
   Component 5: Monitoring
       Principle 16: Perform monitoring activities
       Principle 17: Remediate deficiencies

The entities audited were SSA field offices under the Office of the Deputy Commissioner for
Operations and the Office of Benefit Information Systems under the Office of the Deputy
Commissioner/Chief Information Officer for Systems. We tested the data obtained for our audit
and determined them sufficiently reliable to meet our objective.

We conducted our review between June 2020 and January 2021 in Boston, Massachusetts. 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 findings and conclusions based on our
audit objectives. We believe that the evidence obtained provides a reasonable basis for our
findings and conclusions based on our audit objectives.

Sample Results
   Population: 4,482

   Sample Size: 200

        Table 1: SSI Overpayments Not Transferred to Current Records for Recovery
                                                   Number of SSI           Total of SSI
                          Description
                                                    Recipients            Overpayments
                   Sample Results                      131                     $662,441
                   Point Estimate                     2,936                 $14,845,298
                   Projection Lower Limit             2,676                 $11,717,591
                   Projection Upper Limit             3,180                 $17,973,005
                  Note: All projections were calculated at the 90-percent confidence level.




Transferring SSI Overpayments from Prior Records to the Current Record for Recovery (A-01-17-50226)
                                                                                                          Appendix 2
                                                                                                          Page 3 of 4

                        Table 2: SSI Overpayments SSA Could Have Recovered
                                                                      Recovered
                                      Description
                                                                     Overpayments
                            Sample Results                                  $360,857
                            Point Estimate                                $8,086,806
                            Projection Lower Limit                        $6,952,017
                            Projection Upper Limit                        $9,221,595
                          Note: All projections were calculated at the 90-percent confidence level.

Table 3 compares our current audit to our 2009 audit. The average overpayment not transferred
to the current record for recovery was higher in the current audit than in the prior audit ($5,057
versus $3,056). However, the average SSI payment increased from $498.75 in 2009 to $565.69
in 2019. 2

                             Table 3: Current Audit Compared to 2009 Audit
                              Description                                  Current Audit              2009 Audit
    Population                                                                 4,482                    3,705
    Projected Number of Recipients with Overpayments Not
                                                                                2,936                    3,075
    Transferred to Current Records for Recovery
    Projected Overpayments Not Transferred to Current
                                                                            $14.8 million             $9.4 million
    Records for Recovery
    Average Overpayment Not Transferred to Current
                                                                                $5,057                  $3,056
    Record for Recovery
    Median Overpayment Not Transferred to Current
                                                                                $2,361                  $2,083
    Record for Recovery
    Highest Amount of Overpayment Not Transferred to
                                                                               $42,492                  $15,250
    Current Record for Recovery
    Lowest Amount of Overpayment Not Transferred to
                                                                                 $516                     $29
    Current Record for Recovery




2
    SSA, Annual Statistical Supplement to the Social Security Bulletin, 2020, Table 7.A5 (February 2021).


Transferring SSI Overpayments from Prior Records to the Current Record for Recovery (A-01-17-50226)
                                                                                                   Appendix 2
                                                                                                   Page 4 of 4

Of the 200 sample cases we reviewed, we determined 131 recipients had outstanding
overpayments on prior terminated records not transferred to current records for recovery. For the
131 recipients, one recipient’s overpayment was coded as automated reconciliation, and the
remaining 130 recipients’ overpayments were coded as manual reconciliation. See Table 4.

         Table 4: Type of Reconciliation Used for Overpayment on Terminated Record 3
                   OIG Case Conclusion                           Automated            Manual        Total
    Overpayment Not Transferred to Current Record                    1 (2%)          130 (84%)     131 (66%)
    Overpayment Transferred to Current Record                       7 (15%)           18 (12%)      25 (12%)
    Overpayment Determined to be Not Valid                         38 (83%)            6 (4%)       44 (22%)
    Total                                                         46 (100%)         154 (100%)    200 (100%)

For the one overpayment coded as automated reconciliation but not transferred to the current
record, a systems error occurred during the automated reconciliation process. The case did not
meet the exclusion criteria. SSA informed us this is a very rare situation, and the Agency is not
aware of any efforts to address this issue.

For the remaining cases, the field office technicians did not complete the manual process of
moving the overpayments to the current records. According to SSA, “Absent documentation
from the technician, we cannot state for certain if the technician attempted to process the manual
transaction . . . or speculate as to why someone did or did not do something.” The cases
occurred throughout the United States and were not specific to a particular region or field office.

     Population of 2009 Audit: 1,574

     Sample Size: 200

                  Table 5: SSI Overpayments Not Transferred to Current Records
                                                       Number of SSI           Total of SSI
                              Description
                                                        Recipients            Overpayments
                       Sample Results                      115                     $448,150
                       Point Estimate                      905                   $3,526,941
                       Projection Lower Limit              816                   $2,928,546
                       Projection Upper Limit              991                   $4,125,335
                      Note: All projections were calculated at the 90-percent confidence level.




3
    We calculated the percentages based on the total for each column.

Transferring SSI Overpayments from Prior Records to the Current Record for Recovery (A-01-17-50226)
                                                                                                     Appendix 3
                                                                                                     Page 1 of 1


        AGENCY COMMENTS



                                         SOCIAL SECURITY
                                            Office of the Commissioner

MEMORANDUM


Date:   May 19, 2021                                                                  Refer To: TQA-1

To:     Gail S. Ennis
        Inspector General




From:   Scott Frey
        Chief of Staff

Subject: Office of the Inspector General Draft Report “Follow-up on Transferring Supplemental Security
        Income Overpayments from Prior Records to the Current Record for Recovery”
        (A-01-17-50226) – INFORMATION

        Thank you for the opportunity to review the draft report. We agree with the recommendations.

        Please let me know if we can be of further assistance. You may direct staff inquiries to
        Trae Sommer at (410) 965-9102.




        Transferring SSI Overpayments from Prior Records to the Current Record for Recovery (A-01-17-50226)