APPENDIX V VI Letter dated April 11, 1980, from the Letter dated April 15, 1980, from the Page 53 56 CHAPTER 1 INTRODUCTION Erroneous payments to Aid to Families With Dependent Children (AFDC) program recipients have continued to concern both the Congress and the Department of Health and Human Services (HHS). 1/ According to HHS, over $900 million in overpayments to eligible recipients and payments to ineligible recipients were made in fiscal year 1978. HHS has attempted to encourage error reduction by requiring States to implement quality control (QC) programs. The congressional conference on the 1979 supplemental appropriations bill attempted to encourage States to reduce errors by directing HHS to withhold Federal funds for erroneous payments above certain tolerances based on QC findings. This report discusses improvements needed in the QC program to make it more useful to managers for reducing errors. It is in response to a request from the Chairman, Senate Finance Committee, who expressed concern about the validity and administrative usefulness of QC error rates. Some of the questions he asked us were: --Are QC program rules and procedures comparable among --What are the views of State welfare directors toward sanctions? --Are QC findings useful to program administrators THE AFDC PROGRAM The AFDC program, authorized by title IV of the Social Security Act (42 U.S.C. 601), provides for cash assistance and social services to needy dependent children and their parents or other relatives. The program is intended to encourage the care of children in their own homes or in relatives' homes. 1/On May 4, 1980, a separate Department of Education was created. The part of the Department of Health, Education, and Welfare responsible for the activities discussed in this report became the Department of Health and Human Services. Other program objectives are to maintain and strengthen family life and to help parents and relatives gain or retain the capacity for support. AFDC is a program for needy families. Grant amounts under the program vary depending on need. Family size, income, and resources are some of the factors considered in determining need. AFDC is one of the largest federally aided public assistance programs. In fiscal year 1979, about 10.3 million persons in 3.5 million families received program benefits. Welfare payments under the program amounted to about $10.7 billion in fiscal year 1979, with the Federal share being about $5.8 billion. During the same period, AFDC administrative costs were about $1.3 billion of which the Federal share was about $650 million. The States must administer AFDC in accordance with the act and HHS regulations. Within HHS, the Social Security Administration's (SSA's) Office of Family Assistance (OFA) is responsible for overseeing the States' administration of the program. OFA reviews State AFDC program plans to assure that they are in compliance with the act and related Federal regulations and provides technical assistance to the States. OFA also conducts studies to improve program administration. SSA's Office of Assessment is responsible for the operation of the QC review system. THE AFDC QC SYSTEM The current QC system was established in 1973 to identify and measure incorrect payments for the purpose of giving management information for developing corrective actions to reduce errors. The system is operated mainly by States and the HHS regional QC staffs review and monitor State QC systems. HHS headquarters staff oversees the QC efforts and compiles national error rate statistics. HHS estimates that it and the States spend about $22 million annually to administer the QC system. The first step in the QC process is for each State to select and review a statistically valid sample of its AFDC cases every 6 months. The samples vary in size from about 150 cases in the States with fewer than 10,000 AFDC cases to about 1,200 cases in States with more than 60,000 AFDC cases. About 45,000 cases are reviewed nationwide in each 6-month sample. |