    [House Hearing, 112 Congress]
    [From the U.S. Government Publishing Office]

                    HUMAN RESOURCES SUBCOMMITTEE HEARING ON
                      THE USE OF DATA MATCHING TO IMPROVE
                      CUSTOMER SERVICE, PROGRAM INTEGRITY,
                              AND TAXPAYER SAVINGS

    =======================================================================

                                    HEARING

                                   before the

                          COMMITTEE ON WAYS AND MEANS
                         U.S. HOUSE OF REPRESENTATIVES

                          ONE HUNDRED TWELFTH CONGRESS

                                 FIRST SESSION

                                   __________

                                 March 11, 2011

                                   __________

                               Serial No. 112-HR2

                                   __________

             Printed for the use of the Committee on Ways and Means

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                          COMMITTEE ON WAYS AND MEANS

                             GEOFF DAVIS, Kentucky

    ADRIAN SMITH, Nebraska               LLOYD DOGGETT, Texas
    ERIK PAULSEN, Minnesota              JIM MCDERMOTT, Washington
    RICK BERG, North Dakota              JOHN LEWIS, Georgia
    TOM PRICE, Georgia                   JOSEPH CROWLEY, New York
    DIANE BLACK, Tennessee
    CHARLES W. BOUSTANY, JR., Louisiana

                           Jon Traub, Staff Director

                      Janice Mays, Minority Staff Director

                                C O N T E N T S

                                   __________
                                                                       Page

    Advisory of March 11, 2011 announcing the hearing................     2

                                   WITNESSES

    The Honorable Patrick P. O'Carroll, Jr., Inspector General,
      Social Security Administration.................................     7
    Sundhar Sekhar, Principal, National Health and Human Services
      Practice Leader, DeloitteConsulting............................    15
    Joseph Vitale, Director, Information Technology Systems Center
      (ITSC), National Association of State Workforce Agencies
      (NASWA)........................................................    35
    Elizabeth Lower-Basch, Senior Policy Analyst, Center for Law and
      Social Policy..................................................    46
    Ron Thornburgh, Senior Vice President of Business Development,
      NIC............................................................    54

                       HUMAN RESOURCES SUBCOMMITTEE HEAR-
                       ING ON THE USE OF DATA MATCHING TO
                       IMPROVE CUSTOMER SERVICE, PROGRAM
                        INTEGRITY, AND TAXPAYER SAVINGS

                                  ----------

                             FRIDAY, MARCH 11, 2011

                 U.S. House of Representatives,
                           Committee on Ways and Means,
                                                        Washington, DC.
        The Subcommittee met, pursuant to notice, at 10:01 a.m., in
    Room B-318, Rayburn House Office Building, the Hon. Geoff Davis
    [Chairman of the Subcommittee] presiding.
        [The advisory of the hearing follows:]

    HEARING ADVISORY FROM THE COMMITTEE ON WAYS AND MEANS

                   Davis Announces Hearing on the Use of Data

                     Matching to Improve Customer Service,

                    Program Integrity, and Taxpayer Savings

    March 4, 2011

    By (202) 225-1025

        Congressman Geoff Davis (R-KY), Chairman of the Subcommittee on
    Human Resources of the Committee on Ways and Means, today announced
    that the Subcommittee will hold a hearing on the use of data matching
    to improve the administration of government benefit programs. The
    hearing will take place on Friday, March 11, 2011, in Room B-318
    Rayburn House Office Building, beginning at 10:00 A.M.

        In view of the limited time available to hear witnesses, oral
    testimony at this hearing will be from invited witnesses only.
    Witnesses will include public and private sector experts on how data
    matching is currently used to effectively administer public sector
    benefits as well as efficiently provide private goods and services.
    However, any individual or organization not scheduled for an oral
    appearance may submit a written statement for consideration by the
    Committee and for inclusion in the printed record of the hearing.

    BACKGROUND:

        Data matching has long been employed in an effort to effectively
    administer public benefits such as Temporary Assistance for Needy
    Families, Child Support Enforcement, Unemployment Insurance, and other
    programs in the Human Resources Subcommittee's jurisdiction. For
    example, the 1996 welfare reform law (P.L. 104-193) created the
    National Directory of New Hires to improve the effectiveness of child
    support and related programs through the use of a database of newly
    hired individuals and their wages, facilitating more immediate and
    reliable wage garnishment when necessary. Subsequent legislation gave
    States expanded access to this data to improve the administration of
    housing (P.L. 108-199), unemployment (P.L. 108-295), and food stamp
    (P.L. 109-250) benefits, achieving additional program savings and
    reducing administrative expense and complexity.
        Despite these advances, some public benefit programs continue to
    rely on program applicants or recipients to accurately report
    information that could affect their eligibility for and amount of
    benefits. Reliance on such self-reports can undermine program
    integrity, increase program spending, and compromise public confidence
    in the effective administration of benefits. By providing access to the
    latest information on an applicant, data matching can make eligibility
    determinations more timely and accurate, allowing individuals in need
    to more quickly access benefits while ensuring that those who do not
    satisfy eligibility criteria do not receive taxpayer-funded benefits
    for which they do not qualify. And by reducing the manual burden on
    caseworkers, more effective data matching can free caseworkers to spend
    more time with applicants and beneficiaries whose cases are more
    complicated.
        Beyond better utilizing data to improve customer service, data
    matching can help achieve program savings both at the State and Federal
    levels. For example, the Public Assistance Reporting Information System
    (PARIS) project is designed to match State enrollment data for the
    TANF, food stamps, Medicaid, and child care programs with data from
    other participating States and from a selected group of Federal
    databases. In the State of Colorado, the return on investment for PARIS
    has been 40 to 1, while New York State annually saves an average of $62
    million through its participation in PARIS. At the Federal level, the
    Social Security Administration compares Supplemental Security Income
    and Social Security benefit rolls against a regularly updated list of
    State and local prisoners; from 1997 to 2009, this system identified
    over 720,000 incarcerated individuals who should not have been
    receiving program benefits, resulting in an average savings of $1.2
    billion per year.
        In announcing the hearing, Chairman Davis stated, ``Firms in the
    private sector have learned to use data to deliver better products and
    services at lower costs for their customers. This hearing will review
    how some public sector programs have also been able to effectively use
    data to administer benefits. We will ask public and private sector
    experts how the use of such systems can be improved and expanded to
    provide even better services for benefit applicants and recipients and
    at a lower cost to taxpayers.''

    FOCUS OF THE HEARING:

        The hearing will focus on the use of data matching to improve
    public benefit programs under the Subcommittee's jurisdiction.

    DETAILS FOR SUBMISSION OF WRITTEN COMMENTS:

        Please Note: Any person(s) and/or organization(s) wishing to submit
    for the hearing record must follow the appropriate link on the hearing
    page of the Committee website and complete the informational forms.
    From the Committee homepage, http://waysandmeans.house.gov, select
    ``Hearings.'' Select the hearing for which you would like to submit,
    and click on the link entitled, ``Click here to provide a submission
    for the record.'' Once you have followed the online instructions,
    submit all requested information. ATTACH your submission as a Word
    document, in compliance with the formatting requirements listed below,
    by the close of business on Friday, March 25, 2011. Finally, please
    note that due to the change in House mail policy, the U.S. Capitol
    Police will refuse sealed-package deliveries to all House Office
    Buildings. For questions, or if you encounter technical problems,
    please call (202) 225-1721 or (202) 225-3625.

    FORMATTING REQUIREMENTS:

        The Committee relies on electronic submissions for printing the
    official hearing record. As always, submissions will be included in the
    record according to the discretion of the Committee. The Committee will
    not alter the content of your submission, but we reserve the right to
    format it according to our guidelines. Any submission provided to the
    Committee by a witness, any supplementary materials submitted for the
    printed record, and any written comments in response to a request for
    written comments must conform to the guidelines listed below. Any
    submission or supplementary item not in compliance with these
    guidelines will not be printed, but will be maintained in the Committee
    files for review and use by the Committee.

        1. All submissions and supplementary materials must be provided in
    Word format and MUST NOT exceed a total of 10 pages, including
    attachments. Witnesses and submitters are advised that the Committee
    relies on electronic submissions for printing the official hearing
    record.

        2. Copies of whole documents submitted as exhibit material will not
    be accepted for printing. Instead, exhibit material should be
    referenced and quoted or paraphrased. All exhibit material not meeting
    these specifications will be maintained in the Committee files for
    review and use by the Committee.

        3. All submissions must include a list of all clients, persons and/
    or organizations on whose behalf the witness appears. A supplemental
    sheet must accompany each submission listing the name, company,
    address, telephone, and fax numbers of each witness.

        The Committee seeks to make its facilities accessible to persons
    with disabilities. If you are in need of special accommodations, please
    call 202-225-1721 or 202-226-3411 TTD/TTY in advance of the event (four
    business days notice is requested). Questions with regard to special
    accommodation needs in general (including availability of Committee
    materials in alternative formats) may be directed to the Committee as
    noted above.
        Note: All Committee advisories and news releases are available on
    the World Wide Web at http://www.waysandmeans.house.gov/.

        Chairman DAVIS. The hearing will now come to order. Before
    we begin the official proceedings, as many of you may be aware,
    tragedy has struck the Pacific Rim with a record earthquake and
    tsunami that has devastated our friends in Japan, and is
    sweeping across the Pacific as we speak. And I would just like
    to ask you all to join us here in the dais in a moment of
    silence for the victims and their families.
        [Moment of silence.]
        Chairman DAVIS. Today's hearing is about how the government
    can use data and information technology to better prevent fraud
    and abuse, increase the efficiency of benefit programs, and
    produce savings for U.S. taxpayers. That's an ambitious set of
    goals.
        We are going to start by asking how current efforts to use
    data and technology are working to improve program
    administration and benefit accuracy. Then we will expand on
    that by asking public and private experts how we can use data
    to provide better services for benefit recipients and at a
    lower cost to taxpayers.
        One key goal would involve preventing improper payments.
    And, as the chart shows, we've got a lot of work to do. In
    2010, total improper payments by the Federal Government reached
    a staggering $125 billion. That reflects payments that went to
    the wrong recipient, in the wrong amount, or that were used in
    a fraudulent manner.
        It reflects many different streams of thoughts and issues
    related to payments, not singling out any single cause, but we
    have disconnected processes, disconnected systems that don't
    communicate effectively together, and it's a disservice both to
    the taxpayer, to the employees and the agencies who try to
    manage these difficult programs, and also to the recipients of
    benefits.
        I am alarmed to note that $125 billion in improper payments
    is an average of over $1,000 per household in the United
    States. Two of this subcommittee's programs, unemployment
    insurance and supplemental security income, accounted for
    almost one-fifth of those improper payments, costing taxpayers
    over $23 billion last year. To address those types of errors
    and improve administrative efficiency, government needs to work
    a lot smarter.
        So, we have asked lots of smart people here today to help
    us learn about the current state of data matching and its
    potential for making major strides in program efficiency and
    effectiveness in the future. For example, we have seen the
    private sector find ways to use data to more efficiently detect
    patters of misuse, such as when credit cards are lost or stolen
    and streamline backend payment processing. We want to apply
    those same sorts of lessons, proven private sector concepts, in
    our programs, as well.
        We have seen some of those lessons already applied in
    states like Utah and Florida. They are using data matches to
    fill application forms with reliable and verified data,
    reducing the manual burden on case workers, and increasing
    payment timeliness and accuracy. This also allows caseworkers
    more time to spend with their beneficiaries, handling more
    complex cases, as they should.
        On the federal level, a data match success story involves
    legislation crafted by this subcommittee related to prisoners
    who should not be collecting disability checks. As a result of
    that legislation, the Social Security Administration now has a
    system by which they collect timely prisoner data from state
    and local jails, rather than relying on the honesty of inmates,
    literally, to end their own benefits.
        From 1997 to 2009, the system helped identify over 720,000
    incarcerated individuals who should not have been receiving SSI
    benefits, contributing to billions of dollars in savings each
    year. It has been so successful that this data is now shared
    with the child support enforcement and food stamp programs.
        Looking forward, we are interested in promoting the
    development of a more common set of data elements across all
    programs in the government. This will improve efficiency and
    savings in our programs, as well as other costly benefit
    programs like food stamps and Medicaid that many of our program
    recipients collect simultaneously.
        These issues stretch beyond our subcommittee's borders to
    include laws like the Computer Matching and Privacy Protection
    Act of 1988. That means we will have to work with other
    committees to achieve real and value-adding changes, like
    making updates for current technology, and allowing for
    computer matching agreements to be completed in a more timely
    manner.
        Ultimately, improving data matching will help us to better
    measure the effectiveness of multiple programs, and more
    efficiently target resources to achieve goals like promoting
    more work and earnings, reducing poverty, and ending dependence
    on government benefits. These are goals that we should all
    agree on.
        We look forward to all of our witnesses' testimony. Without
    objection, each member will have the opportunity to submit a
    written statement and have it included in the record at this
    point. And I will now yield to my friend, Mr. Doggett from
    Texas, if he would like to share an opening statement.
        Mr. DOGGETT. Thank you, Mr. Chairman. And I believe these
    are goals that we do all agree on. Use of government programs,
    whether done by a pharmaceutical manufacturer or a defense
    contractor--I will try that again.
        These are goals that we all agree on. And abuse of
    government programs, whether a pharmaceutical manufacturer, a
    defense contractor, or a food stamp recipient, are all
    unacceptable, especially when there are so many Americans in
    need of genuine help. Taxpayers have a right to expect that
    public benefits go only to those to whom they are entitled, and
    that we seek to eliminate all types of improper payments,
    misuse of the taxpayers' monies.
        Today we are appropriately exploring the extent to which
    improved sharing of data can help in achieving that objective.
    Most public assistance programs already use data from a variety
    of sources to verify an applicant's eligibility.
        For example, welfare and unemployment agencies routinely
    check wage data which is collected both by state and national
    databases in determining initial and continued eligibility.
    Another example is the Social Security Administration, which
    cross-references bank account information for those who are
    applying for Supplemental Security Income, or SSI.
        Such information is obviously sensitive, so we need to
    ensure that, as we data-share, we have safeguards to maintain
    appropriate confidentiality and prevent use for unauthorized
    purposes.
        Additionally, applicants and recipients need to be given an
    opportunity to correct any incorrect, any false information or
    out-of-date information.
        Just as data-sharing can detect individuals who should not
    be receiving benefits, I believe they can also be used to
    improve outreach to Americans who are eligible for assistance,
    but who are not receiving it. We still have a significant
    number of poor seniors, for example, who have never accessed
    the assistance that they need, the extra help that they need,
    on prescription drugs under Part D of Medicare. I favor using
    data-sharing to both reduce fraud, and increase access to those
    who need help.
        One example of where this appears to be working is in the
    City of Philadelphia, where seniors who may be eligible for but
    not receiving both food assistance from the SNAP program and
    help from the Medicare prescription drug coverage, are checked
    on the basis that they are enrolled in other programs with
    similar eligibility standards.
        A couple years ago, in 2009, the President issued an
    executive order directing federal agencies to intensify their
    efforts to reduce improper payments of the type to which the
    chairman referred. One element of this effort is a new
    partnership fund to help the states establish pilot programs to
    identify new and innovative ways to reduce fraud and abuse, and
    to test better methods of improving program integrity, such as
    reducing overpayments in the Earned Income Tax Credit and in
    the TANF program, as well as unemployment insurance.
        Unfortunately, the Republican spending plan that is before
    Congress at present for the remainder of this year would cut
    funding for this very worthwhile effort to reduce fraud and
    abuse. This is reminiscent of our first subcommittee hearing on
    unemployment. Since that time, the same Continuing Resolution
    that has been proposed by the Republican Leadership would,
    according to the folks I talked to in Texas, eliminate about
    two-thirds of our workforce centers in Texas, and I'm sure have
    a similar effect in the rest of the country.
        I look forward to hearing from each of our witnesses about
    how to ensure that these public assistance programs assist only
    those who are intended to benefit from them, and do so in the
    most effective and efficient way, free of abuse, that we
    possibly can have.
        Thank you very much, Mr. Chairman.
        Chairman DAVIS. Thank you very much, Mr. Doggett. Before we
    move on to our testimony, I would like to remind our witnesses
    that you are limited to five minutes of oral testimony.
    However, without objection, all of the written testimony will
    be made part of the permanent record.
        On our panel this morning we will be hearing from a
    distinguished group of people who are living in the real world
    on this issue from a variety of perspectives in government, the
    private sector, and bridging both. And we appreciate your
    valuable ideas and insights.
        Our first is The Honorable Patrick O'Carroll, Jr.,
    inspector general of the Social Security Administration;
    Sundhar Sekhar, Principal and National Health and Human
    Services Practice Leader at Deloitte Consulting; Joseph Vitale,
    Director the Information Technology Support Center at the
    National Association of State Workforce Agencies; Elizabeth
    Lower-Basch, senior policy analyst at the Center for Law and
    Social Policy; and Ron Thornburgh, senior vice president of
    business development at NIC.
        Inspector General, please proceed with your testimony.

      STATEMENT OF PATRICK P. O'CARROLL, JR., INSPECTOR GENERAL,
                     SOCIAL SECURITY ADMINISTRATION

        Mr. O'CARROLL. Good morning, Chairman Davis, Mr. Doggett,
    and Members of the Subcommittee. Thank you for this invitation
    to testify today.
        Data matches have proven to be effective tools for SSA to
    improve payment accuracy and protect government funds. For many
    years, my office has recommended that SSA pursue data matches
    among Federal, State, and local agencies, to make sure that the
    right person receives the right payment at the right time.
        SSA and agencies across the government have renewed their
    focus on reducing improper payments since President Obama
    signed the Improper Payments Elimination and Recovery Act of
    2010. To comply with the act, my office is working with SSA,
    OMB, and other inspectors general to identify program
    vulnerabilities and develop solutions to reduce improper
    payments.
        One of our earliest reports on data matching involved
    prisoners receiving Social Security benefits. SSA's data
    matching with prisons has prevented billions of dollars in
    overpayments. We determined SSA lacked agreements with
    thousands of local and county corrections facilities to obtain
    prisoner information. The absence of these agreements led to
    significant overpayments to prisoners who were not eligible to
    receive benefits.
        On our recommendation, SSA pursued legislation that
    eliminated the need to enter into data-matching agreements for
    prisoner records. Today, SSA receives prisoner information on a
    monthly basis, and matches it against benefit records. SSA's
    most recent estimate puts the savings from this initiative at
    over $580 million per year for the Title II program alone.
        SSA's Access to Financial Institutions project, or AFI, is
    another data-matching initiative we recommended years ago that
    helps the Agency prevent payment errors that had been
    commonplace. AFI allows SSA to receive financial account
    information electronically, rather than rely on beneficiaries
    to report assets that may reduce or eliminate their benefits.
    Self-reporting is a leading cause of payment errors. The Agency
    expects to save $100 million in Fiscal Year 2011 because of the
    AFI program. The system is present in 25 states, and SSA plans
    to implement AFI in the remaining states this year.
        Those are two success stories, and my office has made other
    data-matching recommendations to SSA. Those recommendations
    include: working with State bureaus of vital statistics to
    obtain death information electronically, as well as information
    on beneficiaries' marital status; exploring exchanges with
    states that maintain automated workers' compensation databases;
    and assessing the costs and benefits of obtaining vehicle
    information from states to verify resources of SSI recipients.
        We also have planned reports on potential matches of SSA
    beneficiary information related to unreported property,
    pensions, and marital status. We in OIG use data matches in our
    work, as well, but the Computer Matching and Privacy Protection
    Act requires formal computer matching agreements that can take
    years to complete. This prolonged process can delay or derail
    time-sensitive audit and investigative projects.
        In 2010, the Department of Health and Human Services
    obtained a legislative exemption for data matches designed to
    identify fraud, waste, or abuse. We are pursuing a similar
    exemption, which could serve as a vital tool to our
    organization as we combat fraud in SSA's programs and
    operations.
        In conclusion, data matching serves as one piece of a large
    integrity puzzle for SSA and other agencies. As Chairman Davis
    has suggested, data matches across the Federal Government could
    reduce improper payments and improve service to the American
    public. Just as SSA strives for payment accuracy, so too should
    all other government agencies.
        My office will continue to work with this subcommittee and
    SSA in an effort to improve customer service, ensure program
    integrity, and increase taxpayer savings.
        Thank you again for this invitation to testify, and I will
    be happy to answer any questions.
        [The prepared statement of The Honorable Patrick P.
    O'Carroll, Jr., follows:]

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        Chairman DAVIS. Thank you very much, Inspector General.
        Mr. Sekhar?

      STATEMENT OF SUNDHAR SEKHAR, PRINCIPAL, NATIONAL HEALTH AND
          HUMAN SERVICES PRACTICE LEADER, DELOITTE CONSULTING

        Mr. SEKHAR. Good morning. Thank you, Chairman Davis, Mr.
    Doggett, and distinguished Members of the Subcommittee, for
    inviting me to testify today. As I explained in detail in my
    testimony, there are three primary challenges in today's human
    service daily exchange environment. And I believe the data
    exchange concepts and models followed in the private sector
    could offer opportunities for human service programs to
    consider. I will go over them briefly now.
        Number one. In the administration of human service
    programs, often caseworkers spend significant portions of their
    time in collecting and verifying information manually of the
    client benefit application, reviewing their proof of
    verifications and validations such as income assets.
        In the private sector, institutions such as banks and
    health care companies rely on advanced data exchange models
    using consumer-to-business and business-to-business exchanges
    that minimize workers' manual activity in the initial
    application processing and the verification steps. In a typical
    bank model, the majority of these verifications and validations
    are performed in an automated fashion, relying on sophisticated
    data brokers that are available with information about a
    client.
        This model has really good parallels in the human service
    environment. By automating data exchanges based on information
    available from federal and state exchanges, the human service
    systems can pre-fill application information already known
    about a client or a household, and verify some of their proof
    automatically.
        Number two. While every human service programs shown on the
    chart use some form of data exchanges for verification and
    validation, there is no single data standard across these
    programs. In addition, how the data exchange information is
    defined, processed, and how automation is applied to use these
    results are not consistent, either.
        In the private sector, many of the data exchange
    transaction formats have been standardized. This allows for
    them to collaborate across the private sector entities such as
    employers and banks, and also rely on credit check processes as
    the basis for verification. Usually their underlying
    infrastructures are able to handle real-time exchanges. And
    each entity determines how to apply the data exchange
    information that they receive. As a result, they are able to
    use event-based processes, and also some predictive techniques
    that can trigger automatic events instead of worker action.
        This also has many parallels in the human service
    environment. The state and the Federal Government could define
    standard code sets for commonly-transacted human service data
    elements, such as change in income or change in address. By
    doing so, they bring consistency to data standards, and also
    common expectations on what needs to be done, based on those
    changes. And this can be done not just within a state, but also
    across states at a federal level.
        Using that standard as a base, the states could consider
    moving to a human service collaboration exchange, as shown on
    the chart, that shares federal, state, and other publicly-
    available information exchange for human service programs. The
    human service programs operating at a state level working with
    the federal agencies could subscribe to that exchange, and also
    contribute to that exchange. And their access would be limited,
    based on what's allowable for security and privacy controls.
    Ultimately, this helps the state agencies gain access to a
    common set of data exchange information that they can use to
    maintain program integrity.
        And, number three, in human service programs, often the
    service delivery model is still high-touch, meaning case
    workers often interact with clients, irrespective of whether
    they follow a normal business process or they need additional
    assistance for their benefit processing. This causes a
    significant workload impact to the case worker.
        In the private sector, the prevailing model is most of the
    common transactions are automated, using data exchanges, and
    performed without worker intervention. Whether you want to shop
    online or check your bank accounts or report change in
    information, the initial interaction is really with that worker
    intervention. Workers are only assigned to cases that require
    further review.
        Again, this has parallels to the human service environment,
    as well. They face similar challenges in terms of shortage and
    case workers, and also increases in workload. As a result, a
    high-touch model is expensive and not really practical for all
    consumers when you're serving. Automating federal and state
    data exchanges could drive normal day-to-day transactions
    directly to customers, using a citizen-to-government model or
    using business-to-business transactions.
        And finally, as you see in private sector, there are
    additional data mining, data predictive modeling, and other
    newer concepts that are being explored, which could have
    parallels to the human service environment. This will
    ultimately help to proactively manage program integrity, reduce
    worker time, and improve customer service, ultimately resulting
    in taxpayer savings.
        Thank you. And I will be happy to answer any questions you
    may have.
        [The prepared statement of Sundhar Sekhar follows:]

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        Chairman DAVIS. Thank you very much, Mr. Sekhar.
        Mr. Vitale?
        Mr. VITALE. Thank you. Good morning, Chairman Davis,
    Ranking Member Doggett, and Members of the Subcommittee. NASWA
    represents the workforce of development agencies of all 50
    states, the District of Columbia, and Puerto Rico. Today,
    states face aging IT systems processing UI claims and
    collecting wage data. And in the past few years, workloads in
    the unemployment insurance agencies are at an all-time high.
    Consequently, customer service and program integrity have
    suffered. And the UI overpayment rate has not improved.
        The U.S. Department of Labor estimated the overpayment rate
    at 10.6 percent for fiscal year 2010. As Figure 1 highlights,
    the major types of overpayments are: lack of timely or accurate
    information on reasons for separation; claimant failure to
    timely report a return to work; and unmet work search
    requirements. These account for almost 70 percent of all
    overpayments.
        To help reduce the first two types of overpayments, U.S.
    DoL, with NASWA, funded a consortium of six states, multi-state
    employers, and employer agents, to create a technology
    solution: the State Information Data Exchange System. SIDES
    enables states and employers to securely transmit requests and
    responses for separation information over the Internet, using a
    standard data exchange format. Currently, most states request
    separation information from employers using a manual and paper-
    based process through the mail. SIDES automates this process.
    States receive more timely and accurate, detailed information
    from employers, resulting in more timely and accurate benefit
    determinations.
        As Figure 2 shows, SIDES is in production in four states:
    Colorado, Georgia, Ohio, and Utah. Eighteen additional states
    have received funding from USDOL to integrate SIDES into their
    UI IT benefit system.
        A second SIDES data exchange format, the earnings
    verification, has the potential to reduce overpayments
    resulting from a failure of claimants to timely and accurately
    report their return to work. The SIDES earning verification,
    format will enable states to augment hire information received
    from the National Directory of New Hires with information from
    employers on an individual's start date and earnings.
        SIDES is an example of a data exchange and matching
    technology that will address several UI areas: administration,
    customer service, administrative costs, and overpayments.
    NASWA's National Labor Exchange Initiative offers the promise
    to reduce overpayments stemming from a failure to meet the work
    search requirements. The NLX is a free advanced job search
    engine used by employers and job seekers nationwide.
        The NLX has been adopted by 49 state workforce agencies and
    the District of Columbia, offered in partnership with Direct
    Employers Association, composed of 550 Fortune 1,000 employers,
    the NLX has provided more than 9,000,000 job postings since
    2007. NLX helps UI claimants meet their work search criteria,
    and hopefully return to work more quickly. Further, NLX uses
    USDOL's occupational coding system. States coding UI claimants'
    most recent work experience are able to generate matches to
    NLX-provided jobs.
        Both SIDES and NLX offer great potential in reducing UI
    overpayments and improving customer service. However, many
    states will be slow to adopt these technologies, because of
    their aging core UI IT systems. Figure 3 shows that the average
    state UI benefits and tax system is 23 years old. Many states
    use outmoded, less flexible 1970s mainframe technologies.
    Systems over 40 years old are still in operation today.
        States urgently need to modernize their core IT systems.
    However, undertaking this effort as a single state has shown to
    be challenging, resource-intensive, and very expensive.
    Recently, USDOL awarded two groups of four states each funding
    to explore the feasibility of building a common UI IT system.
    The pooling of resources through state consortia potentially
    offers states a more cost-effective option to upgrade their UI
    systems, and participate in data exchange initiatives, such as
    those discussed here.
        In closing, I would like to inform the subcommittee of an
    exciting proposal for an applicant director and exchange system
    that NASWA recently submitted to the OMB Partnership Fund for
    Program Integrity Innovation. Based on the SIDES technology and
    architecture and standard data exchange format, this system
    would create a potential index of applicants for predefined
    social programs such as UI, TANF, SNAP, and Medicare, etc.
        Operating as a data exchange system and not a data
    warehouse, it would serve as the single source of customer data
    for use in determining program eligibility. The goal is not
    only more accurate benefit eligibility, but also better
    customer service.
        I appreciate your time, and I am happy to respond to your
    questions.
        [The prepared statement of Joseph Vitale follows:]

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        Chairman DAVIS. Thank you, Mr. Vitale.
        Ms. Lower-Basch.

      STATEMENT OF ELIZABETH LOWER-BASCH, SENIOR POLICY ANALYST,
                    CENTER FOR LAW AND SOCIAL POLICY

        Ms. LOWER-BASCH. Thank you. I am honored by the opportunity
    to testify today. I am at CLASP, a national non-profit engaged
    in research and advocacy for policies that improve the lives of
    low-income people. We appreciate your holding this hearing. We
    share your concern with reducing error rates and fraud in order
    to save taxpayer funds, preserve funding for those who are
    truly eligible, and protect public support for programs.
        Data matching can also reduce administrative costs and
    improve customer service. All states are already required to
    participate in certain data exchange systems, including the
    Income and Eligibility Verification System, and the Public
    Assistance Reporting Information System, or PARIS, to match
    against federal and state public assistance records, as well as
    federal wage and veterans records.
        I am going to highlight a few programs that are taking it
    to the next level, and using data matching proactively to help
    ensure that eligible people are getting benefits.
        Washington State uses the PARIS system to identify Medicaid
    recipients who are eligible for veterans health insurance and
    vet coverage and benefits, but aren't getting it. For example,
    disabled veterans who are in a nursing home receive a reduced
    benefit of just $90 a month. Upon discharge from the nursing
    home, they are supposed to go back to their usual benefit. But
    that sometimes doesn't happen. And Washington can look in the
    PARIS system and identify these cases, and make sure they get
    their full benefit restored.
        Another example is the Benefits Data Trust, which you
    mentioned before, which cross-references data from a range of
    sources to identify senior citizens who appear to be eligible,
    but are not enrolled in public benefit programs, and then can
    do targeted outreach and application assistance to just those
    individuals. And this is one of the most cost-effective ways to
    enroll seniors in the low-income supplement program under
    Medicare.
        I also did want to mention the OMB Partnership Fund for
    Program Integrity Innovation, which is designed to identify
    innovative ideas like this, and conduct rigorous demonstrations
    of their ability to reduce administrative costs and error rates
    without denying access to qualifying individuals. This fund has
    spent about a year now soliciting and refining proposals, and
    they have just started to fund the first projects. And the
    first one they have selected is that the IRS is going to work
    with at least one state, maybe more, to look at the public
    assistance information to validate EITC eligibility, because
    that has the information about family relationships that
    Treasury does not always have.
        I did want to draw attention to some cautions that need to
    be kept in mind. Data matching is only as good as the data that
    goes in. And we all know that people can have similar names.
    And that's how late Senator Ted Kennedy got stopped on the no
    fly list. Social Security numbers are unique, but we all know
    people make mistakes entering them in, and that can cause
    errors.
        When a matching system flags a discrepancy, this should
    definitely be a basis for further investigation. But it doesn't
    automatically disqualify someone, or mean that they were trying
    to do fraud. And the CHIPRA match for Social Security records
    to verify citizenship offers a good model for due process
    protections. If Social Security doesn't report a match, clients
    get 90 days to prove their citizenship through another
    mechanism before they lose their benefits. And this is
    important.
        Alabama reports that in the first year of doing this, they
    got over 1,000 applications where SSA did not find a match on
    the first try. But all but 28 of those did get documented as
    citizens, they just either needed to fix errors and resubmit or
    document it in a different way.
        It's also worth noting that income can be highly volatile,
    particularly for hourly workers. You can earn different amounts
    each week, depending on how many hours you work. And so,
    someone might say $280, the data match is going to come back
    with $292. And that's not fraud, and it shouldn't also trigger
    constant adjustment of benefits, because that's just an
    administrative nightmare for both programs and the recipients.
    It makes sense to ignore variations under a certain amount, and
    most states use their policy discretion to do so.
        So, thank you.
        [The prepared statement of Elizabeth Lower-Basch follows:]

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        Chairman DAVIS. Thank you very much.
        Mr. Thornburgh.

    STATEMENT OF RON THORNBURGH, SENIOR VICE PRESIDENT OF BUSINESS
                            DEVELOPMENT, NIC

        Mr. THORNBURGH. Mr. Chairman, Mr. Doggett, Members of the
    Subcommittee, thank you for the opportunity to discuss how
    well-designed technology systems are helping government
    agencies match data to improve customer service, uphold the
    integrity of programs, and save taxpayer dollars.
        My name is Ron Thornburgh, I am the senior vice president
    of business development for NIC. NIC partners with 23 states
    around the country, providing official government portals, as
    well as online services. Prior to joining NIC, I served as the
    Kansas Secretary of State for 16 years, and was very involved
    in my home state's drive to enhance states' digital government
    services at that time.
        I commend the subcommittee for examining how government can
    use data matching to more efficiently and effectively deliver
    services to its citizens. It's important for you to know
    forward-thinking leaders are doing this at all levels of
    government today, as we speak.
        The states we serve focus on using cost-effective means of
    bringing together key data sets that are managed by different
    agencies, housed in IT systems that often do not talk to one
    another effectively and, quite frankly, if at all.
        For example, we have helped the State of Montana build an
    e-government solution called Montana Connections. This service
    allows Montana residents in need of public assistance to apply
    with the single online application for Medicaid, children's
    health insurance, temporary assistance for needy families, and
    supplemental nutritional assistance.
        Prior to the use of this new online service, approximately
    half of all paper applications were rejected due to
    ineligibility or unanswered questions. Montana Connections
    ensures that every application is 100 percent complete before
    it is sent to the appropriate state and county office. These
    actions alone have dramatically reduced the incomplete and
    misrouted application submissions that needlessly take up
    agency caseworker time.
        We also built a technically similar system in Arkansas to
    help the state's department of higher education more
    effectively make financial aid available to students. This
    service aggregates the state's 21 scholarship, grant, and loan
    programs, and allows citizens to provide basic screening
    information to determine eligibility, and submit applications
    to any of the programs through a single online form.
        As a result of this data matching solution, financial aid
    applications increased 440 percent, and more than $150 million
    was distributed in the program's first year. By comparison, the
    state was unable to match all of the money in the program with
    the deserving students before the online system was in place.
        Now we need to talk about overcoming barriers. These are
    just two examples of successful data matching programs. Like
    others, they have proven that the structural, cultural,
    technical, financial, and design barriers to interagency
    cooperation can be and have been addressed successfully.
        First, structural. Any program involving more than one
    agency in a single IT system will require collaboration. Agency
    leaders, while ensuring financial and efficiency benefits to
    their own agency, must agree to work together to reach a common
    goal. This is an absolute requirement for any data matching
    program to succeed.
        Next, cultural. Online technology solutions are removing
    the perceived stigma of applying for social services. People
    who previously may have been too uncomfortable or unable to go
    to a government office to apply for support in Montana now do
    so, thanks to the privacy and security afforded by the online
    system.
        Technical. Shared business rules are an essential component
    of a successful data matching initiative. In Montana, for
    example, all the agencies simply work together--I say
    ``simply''--work together to identify a common language and set
    of requirements--and this is important--without sacrificing
    their own unique agency requirements.
        Financial. Paying for a new system is a challenge every
    government faces. Many of the states we work with have used a
    self-funded approach to build systems and services without
    requiring any appropriation. Modest transaction fees applied to
    a limited number of commercially-valuable services, primarily
    business-to-government, are used to fund the development of e-
    government systems like the data matching solutions referenced
    in Montana and Arkansas, without cost to the citizens or the
    agencies. We have successfully used this model with another
    departmental level federal data system, and believe the similar
    funding approach could support the types of data matching
    solutions the subcommittee is discussing today.
        Lastly, design. Data matching systems are only effective
    when constituents use them, and successful solutions place a
    high priority on developing straightforward, user-friendly
    interfaces on a variety of delivery platforms.
        Mr. Chairman and Members of the Subcommittee, states are
    using data matching successfully. I believe you can, too. The
    projects that I have described will continue to provide
    opportunities to link diverse systems together in ways that
    provide real-time eligibility screens and approvals that
    improve service levels and save money, increase constituent
    satisfaction, and, very importantly, eliminate fraud, waste,
    and abuse.
        Thank you, Mr. Chairman. I look forward to taking your
    questions.
        [The prepared statement of Ron Thornburgh follows:]

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        Chairman DAVIS. Thank you. Your time has expired. We are
    going to move on to questions now. And just before we get into
    that, I want to comment on one perspective.
        As often happens in the government, Washington, D.C. is the
    lagging indicator with legislation versus where technology in
    the rest of the country is. The Computer Matching and Privacy
    Protection Act of 1988 went into action at a time that we lived
    in a different technology world, with different methods of
    sharing information. The fax at the time was the radical new
    concept for rapid sharing of information, business-to-business,
    and at a personal level, as well.
        And realistically, when we look at this, and trying to tie
    this information together--and I am going to highlight
    something that Ms. Lower-Basch had shared--that matching done
    right, in an integrated fashion, will free capacity to manage
    by exception, instead of having to spend an inordinate amount
    of time. My own wife, in fact, is on one of those same lists
    that the late Senator Kennedy was on, after being through
    numerous security clearances in the military with me.
        We have disconnected processes, and that can't be fixed in
    the current data environment. And we have many of our citizens,
    many frustrated agency workers that are trying to be good
    stewards of the taxpayers' money that lose this in process.
        And I am simply going to throw out, for those who are here
    and for our fellow Members, there are three basic kinds of
    activities: those that add value, those that add business
    value, and those that add no value. Unfortunately, businesses
    learned this in the competitive transitions of the 1980s and
    the 1990s, that there are more non-value-adding activities than
    we realize in our day-to-day lives. Often, 80 or 90 percent of
    the things that are performed, often out of necessity, to get
    the job done don't really add value to our customer at the end
    of the day, to our client, or serve the taxpayer necessarily,
    as well as possible.
        Let's take somebody who is a social worker. I spent many
    years involved with an organization known as CASA [Court
    Appointed Special Advocates], working with children, trying to
    be kept from falling through the cracks as a result of neglect
    and abuse. A volunteer or a social worker, case worker, is
    dealing directly with that client. That's a value-adding
    activity, being able to counsel, to directly document clinical
    information that is necessary to help that young person move
    forward.
        However, we move into business value adding, those are the
    statutory required measurements that have to be submitted. And,
    yes, some of those may be questionable, but those are the
    things that can't necessarily be changed in the near term.
        But what we find with many of our folks in the agency
    community, as well as those who measure and try to account for
    this, as well as the clients themselves in many cases, is that
    they're chasing data, trying to find that lost information,
    spending hours and hours and hours of time. And every hour that
    is spent trying to find a missing piece of information is one
    hour that is not adding value, or one hour that could be given
    back to the country, to the taxpayers, or dollars that would
    not necessarily be wasted.
        So, as Mr. Doggett and I have talked, we have common ground
    on this, we want to work together to find ways to integrate
    this so that we can have a comprehensive discussion.
        This week we learned that government payouts, including
    Social Security, Medicare, and unemployment insurance, make up
    more than a third of total wages and salaries of the U.S.
    population. It's a record figure that will only increase in the
    years ahead. I ask unanimous consent to insert an article
    providing more detail about that in the record.
        [No response.]
        Chairman DAVIS. Without objection, that is so ordered.
        [The information The Honorable Geoff Davis follows:]

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        Chairman DAVIS. The committee has jurisdiction over some of
    the largest of those programs, including Social Security and
    Medicare. This subcommittee has jurisdiction over somewhat
    smaller, but no less significant programs like welfare,
    unemployment, and SSI.
        Let me be clear. I am not making an evaluation of the
    recipients of those benefits, or the benefits that are paid
    out. That is a separate discussion from what we are talking
    about today. What we are talking about is a process that
    largely, across much of our economy, has a significant impact
    if we have these data problems that can contribute to waste,
    poor accounting, or improperly matched information.
        My question pertains to the idea that programs should use a
    common set of data, programs in our jurisdiction that use that
    common data set today, and always verify data provided by
    applicants to ensure we're paying the right people for the
    right benefits. Do you feel that the systems that we have under
    our jurisdiction are accomplishing that mission?
        In addition to that, for example, is the way that we ask
    for and confirm someone's identity a best practice in each of
    our programs? How about their current work and earnings or
    savings and other resources? Or a place of residence,
    citizenship, and even continued presence in the U.S.?
        In short, I would like the panel to think about what we do
    today across the range of programs under the Ways and Means
    Committee's jurisdiction, and especially this subcommittee, and
    help us review whether the data that we collect to administer
    the programs is the right data, whether what we collect can be
    and is confirmed in a systematic way, and whether those
    programs share that data to ensure we're paying the right
    people the right amount of benefits across programs and states.
        Would anyone care to comment? And since this is a big
    question, I welcome responses for the record describing needed
    improvements in significant detail. Inspector General?
        Mr. O'CARROLL. Mr. Chairman, I will take the first crack at
    it. There are multiple facets to this issue. Probably the one
    that you're talking about is the sharing of information across
    government agencies. You also mentioned the need for computer
    matching agreements. I think these issues are parallel.
        Each government agency has to apply for the computer
    matching agreements. And, as a result, each agency, every two-
    and-a-half years, is renewing individual matching agreements.
    There is not any coordination among government agencies. And,
    under the Computer Matching Act, one agency can't share with
    another agency without an agreement.
        And, as you said, I think it would be better if there was a
    way that we could allow all federal agencies to share data back
    and forth, at least if the purpose is for making sure the right
    person gets the right benefit, and to make sure that there
    isn't any duplication across the government. So----
        Chairman DAVIS. Great, thank you. Anybody else? Mr. Sekhar?
        Mr. SEKHAR. Mr. Chairman, I have two concepts, based on
    your questions, that might be relevant here.
        One is when you look at the application information that is
    required for the different human service programs, there is a
    fair bit of commonality on the kind of questions that is being
    asked of a client. So, if there is a way to standardize the
    common elements across TANF--child care, child welfare, or
    even, in some cases, Medicaid--so that will reduce some strain
    of the data capture on the worker side.
        And the second piece is, back to the exchange with SSA, I
    think there is an opportunity for the states to consolidate
    their request of SSA to exchange, as opposed to each of the
    programs exchanging independently. So that also brings a level
    of standardization for what they would do with that
    information.
        Chairman DAVIS. Great, thank you. Ms. Lower-Basch?
        Ms. LOWER-BASCH. Yes. I would say there are certainly
    places and examples where it's working well. But, by and large,
    there is a lot of challenges, and people having to bring the
    same information that they have just told to one case worker to
    the next worker two weeks later, and no talking. So I would say
    more gloomy than positive, overall.
        Chairman DAVIS. In the current, you're saying.
        Ms. LOWER-BASCH. In the current. In the current, yes. I
    think there is certainly potential, but we're not there yet.
        Chairman DAVIS. I think about how we can cross data across
    organizations when we buy things currently in the retail
    environment. It's probably a more ideal model of where we would
    like to be at the end of the day. Mr. Vitale?
        Mr. VITALE. Well, validation of the data in the
    unemployment insurance program varies from state to state. And
    many of the same agencies within the state are validating the
    same identity of that individual.
        For instance, in my home state of New Jersey, we validate
    the individual by going against the motor vehicle system and
    the Social Security Administration. And once we have that
    information validated, that should be available to other
    agencies within the state. And currently, it is not. And that's
    the same with state-to-state.
        Chairman DAVIS. Thank you. Last, but not least, Mr.
    Thornburgh.
        Mr. Thornburgh. Thank you, Mr. Chairman. If I might, I may
    go back to my service as secretary of state in the state of
    Kansas, because I faced many of these very same challenges at
    that time.
        We were in the process of developing a system, just a--what
    I viewed as a simplistic one-stop business services. The thing
    that always amazed me is that a business person would want to
    come and hire people and create jobs and do great things for my
    home state, and we would make them march from agency to agency
    to agency. And the really neat thing was that we all asked the
    same questions: who are you, where do you live, what do you
    want to do? But we treated it like nuclear secrets, and then
    we're unable to share that information across agencies. So we
    finally got everybody together and we were able to do that.
        The second example would be motor-voter. We matched the
    state voter registration database with the state motor vehicle
    driver's license database so that when an individual applied
    for a driver's license, they automatically updated their voter
    registration status, as well. So when they moved, their voter
    registration moved with them as well.
        It was a vastly more difficult process than I thought it
    should have been at that time to create the incentives for all
    the different agencies, because incentive has to be--you've got
    to make it better for that agency, as well as for the
    constituent, in order for them to want to come along and work
    together with that.
        So, there is a lot of work to be done with that. But I go
    back to my opening statement. It is being done time and time
    and time again right now. It's certainly time for us to
    continue at this level, as well.
        Chairman DAVIS. Great. Thank you very much. I would like to
    yield to my good friend from Texas, Mr. Doggett.
        Mr. DOGGETT. Thank you, Mr. Chairman. And thanks to our
    witnesses for your helpful responses to the important questions
    that the chair just raised.
        Our role here is, of course, not just to legislate, but to
    exercise oversight and to try to nudge along some bureaucracies
    that are sometimes a little lethargic and slow-moving.
        And I gather, Mr. Thornburgh, just to pick up where you
    left off, that while there are a number of things that can be
    done, none of them are free. They require allocating resources
    to accomplish these objectives when people hire the services of
    your company in Montana and the other states that you
    mentioned.
        Mr. THORNBURGH. Thank you. Thank you, Mr. Doggett. I would
    be happy to answer that, in that I could take quite a bit of
    time talking about the self-funded model that we use at the
    state level. And I won't take all of the committee's time
    talking about that----
        Mr. DOGGETT. Actually, I want to ask you one specific
    question about that.
        Mr. THORNBURGH. Okay.
        Mr. DOGGETT. But all I'm asking you now is we would always
    want there to be a cost benefit ratio that would yield a
    reduction in cost for the money spent. But to undertake the
    initiatives that you're talking about require the expenditure
    of funds, don't they?
        Mr. THORNBURGH. Well, no, sir.
        Mr. DOGGETT. They're free?
        Mr. THORNBURGH. No, sir.
        Mr. DOGGETT. Okay.
        Mr. THORNBURGH. The----
        Mr. DOGGETT. In Montana, for example, you mentioned that
    one way that you financed this was to charge a transaction fee
    to the businesses involved.
        Mr. THORNBURGH. If I could expand on that----
        Mr. DOGGETT. Sure.
        Mr. THORNBURGH [continuing]. just for a moment, because we
    have to look at the entire statewide enterprise. The Access
    Montana, which is the state government portal, essentially what
    happens is we will have a multiple of hundreds of different
    applications working through a number of different agencies.
        Let's say--and I apologize, I don't know the exact number
    in Montana, but let's say there are 400 applications in
    Montana. Of those 400 applications, probably 20 will be
    associated with some kind of financial transaction. And then,
    those 20 different transactions, or those 20 different
    applications, will provide the funding for the other 380
    applications.
        So, in an instance like this, with a data-sharing model,
    the enterprise would fund the development of that model, so
    there is no cost to the agency, there is no cost to the citizen
    using those services. There are commercially viable
    transactions throughout the enterprise of government in which
    businesses make a business decision as to whether or not they
    want to file or retrieve data electronically. When they do so,
    there is a convenience fee, a small fee, that is attached to
    that. And then that is what is reinvested to the other
    applications.
        Mr. DOGGETT. Increase a fee, then, to the businesses that
    access this service to help pay for this?
        Mr. THORNBURGH. Not necessarily driven to that--for
    instance, with this data sharing, it may not be a fee directly
    associated with this particular data set.
        Mr. DOGGETT. I think I understand. And, Mr. Vitale, you
    indicated that you have some ideas already underway, and one of
    them is proposed to this new fund. Right? And I gather from
    what you're saying, and as you describe the states, that it's
    not so much a matter of our passing new laws here--though some
    may need to be tweaked--as it is having adequate resources to
    do the things that the states would like to do.
        Mr. VITALE. Let me address the two questions.
        Mr. DOGGETT. Sure.
        Mr. VITALE. First, the application to the fund. Yes, we
    have a proposal in to the OMB Partnership Fund for Integrity
    Innovation, and I think some of the questions from the chair
    could be addressed by that fund--by that proposal, as an
    interim step in getting to this common database or common
    definitions.
        Our proposal calls for going to the agency that first
    collects that data, and making that the main source of the
    data, and not bringing it into a common repository, but have a
    pointer to that as sort of an index file housed centrally, so
    the next agency that comes in looking for that data knows
    exactly where to go. They hit that file, and they know that
    this person----
        Mr. DOGGETT. Do you think the chances of accomplishing that
    will be improved by slashing the Partnership Fund by a third?
        Mr. VITALE. I----
        Mr. DOGGETT. And I also received a message from the
    organization that you are here representing, indicating their
    great concern about the proposal in the same Continuing
    Resolution to eliminate all funding for the Workforce
    Investment Act. I know you're principally in the technology
    field, but I gather you join your agency----
        Mr. VITALE. Sure.
        Mr. DOGGETT [continuing]. in opposing that.
        Mr. VITALE. Sure, yes. That would have a dramatic impact on
    the one-stop career centers that currently serve the hard-to-
    employ----
        Mr. DOGGETT. Right.
        Mr. VITALE [continuing]. those with barriers to employment.
        Mr. DOGGETT. That's why I'm----
        Mr. VITALE. Today our unemployment insurance offices no
    longer exist in most states. So the one-stop career centers are
    the only place people that are not readily job-ready have to go
    to.
        Mr. DOGGETT. Mr. Chairman, since my time is up, I was going
    to suggest that perhaps the Inspector General might advise the
    Committee. He said he had a number of recommendations in this
    data sharing area. If those are being accepted--I know you
    visited with him--if those are being accepted, or perhaps--some
    of them are relatively new, and I haven't had time to review,
    but I think it would be helpful for us to know whether these
    various ideas that he wasn't able to explore in full are
    getting adopted. And perhaps some of them provide us models for
    other agencies, too.
        Chairman DAVIS. I agree. I think there are good benefits--
    --
        Mr. DOGGETT. Okay, just follow up in writing.
        Chairman DAVIS. If you could get back to us----
        [The prepared statement of The Honorable Patrick P.
    O'Carroll, Jr., follows:]

    [GRAPHIC] [TIFF OMITTED] T5570.047

    [GRAPHIC] [TIFF OMITTED] T5570.048

        Mr. DOGGETT. Thank you.
        Chairman DAVIS.--and potentially sit down with us for a
    follow-up meeting that would be quite helpful. I think when we
    get into this question of cost associated with it, as we fund
    legacy programs, those--and I'm speaking of the information
    technology disconnects that we have--it's kind of like pumping
    blood into somebody who has got a bleeding artery. What we want
    to do is clamp that artery and get it fully integrated.
        Mr. Thornburgh's point, I know professionally I have seen
    many of these systems, if they're properly implemented, pay for
    themselves very quickly. The real issue, though, is process
    change within government, that will be our problem, from a
    statutory standpoint. But I appreciate your question.
        Now we are going to turn to Ms. Black from Tennessee.
        Ms. BLACK. Thank you, Mr. Chairman. Mr. O'Carroll, I want
    to go back to a statement that you made just a few moments ago,
    and make sure that I heard you right when you talked about
    there being a sharing--that there were some concerns about the
    privacy issues. Can you talk about that a little bit further?
        Mr. O'CARROLL. Yes, Congresswoman. One of the biggest
    issues that we're having is that, under the Computer Matching
    and Privacy Protection Act, agencies have to enact single-
    purpose agreements to gain access to the data. To give you an
    example, the Department of Transportation has a significant
    file on anybody with a commercial driver's license.
        Well, as an example with SSA, we would like to be able to
    access that commercial driver's license database, and run it
    against SSA's disability and SSI records to see if the people
    are, in fact, in need of that type of a benefit. And because of
    the Computer Matching Act, we can't access that type of data.
    It takes an application--it usually takes several years before
    it's approved. And that's one of the issues with the Matching
    Act and the privacy concerns that we would like to be able to
    streamline.
        And in the case of HHS, Health and Human Services, their
    inspector general was able to get a waiver on that type of a
    matching agreement, so that when the data match was going to be
    to determine eligibility for a program, or detect fraud, waste
    or abuse, that HHS can match the data and be able to see if the
    person was, in fact, entitled to it.
        Ms. BLACK. And since I'm not familiar with that act, is
    that act just on a federal level, that this only applies to
    those issues on a federal level of the data matching? Is that
    correct?
        Mr. O'CARROLL. Yes, Congresswoman. It's a federal law, and
    it only affects executive offices in the government. One agency
    can't share with another; it's a federal act.
        Ms. Black. Okay. And I think maybe we need to visit that
    particular issue as well, as we're talking about access to
    information that will help you to do your job.
        I want to turn to Mr. Thornburgh then, and ask, as you are
    dealing with states like Montana--and I know you are doing work
    in the State of Tennessee----
        Mr. THORNBURGH. Yes, ma'am.
        Ms. BLACK. Do you have that same barrier there, that there
    is not an ability to be able to share this information from one
    department to the other?
        Mr. THORNBURGH. The short answer is no. But not quite, in
    that there are certain restrictions that certainly will apply.
    But to be quite candid, it seems to be more difficult at the
    federal level than at the state level to share data
    effectively. We have a number of cases in which we move data
    between the states up to the federal level, and the structures
    and requirements are significant to allow that to happen.
        Ms. BLACK. I go to Mr. Sekhar. And I am very impressed by
    your model of being able to share information between all these
    departments. Have you had any experience in any states where
    this model has been applied?
        Mr. SEKHAR. The model you are looking at is more of a model
    of each of the human service programs on how they perform data
    exchanges today.
        But I think the challenges we typically face at a state
    level is raising it one level above, and getting a level of
    standard. And states have made, for example--and I work in the
    Commonwealth of Pennsylvania--they do share information across
    the programs. But our suggestion is more on having a standard
    that can be applied across human services.
        Ms. BLACK. I know that in our state of Tennessee, that
    there was a significant change when the Department of Labor
    shared with the Department of Human Services folks who had
    jobs, and then paying for child support. And it was very
    effective, and that has been done.
        But I know that also in our state I have been very
    concerned about the amount of money that is spent on IT, and
    then it goes on for years and years, that it's not complete yet
    and we have to put more money into it and, oh, we have to
    upgrade it and it's just never quite right. And there is a
    tremendous amount of money that is spent, I know, at the state
    level. I don't know how much is being spent at the federal
    level with this data mining and sharing information.
        Can any of you talk about how the dollars are being spent,
    and whether you believe that the dollars are being spent in a
    way that is financially good for our state, and the dollars
    that are being spent?
        [No response.]
        Ms. BLACK. Maybe Mr. O'Carroll. Do you have that experience
    with IT and the money that is being spent----
        Mr. VITALE. So one suggestion--in our presentation we talk
    about the model of a consortium. Instead of every state trying
    to build their own unemployment insurance system, and we have
    to spend somewhere between $30 million and $60 million times
    50, if we get the states together and we build it as a group,
    and then they can share a common code base, and then that code
    base can be added on to customize for your 20 percent that's
    unique to your state, so that would be a good model to
    implement, to help bring down the cost, and at the same time
    upgrade the infrastructure of these core UI systems.
        Chairman DAVIS. Thank you. The gentlewoman's time has
    expired. I would like to recognize Mr. Berg from North Dakota.
        Mr. BERG. Thank you, Mr. Chairman, and welcome. I--you
    know, this is a great quest. Obviously, it is a bipartisan
    quest, it's a quest to try and become more efficient with our
    dollars so they are going to, again, the people that are--need
    those, and also to prevent those that don't deserve them from
    getting them. I mean it's pretty simple.
        There are two things that I want to talk about from North
    Dakota. One is there is a--I will call it a scam that's been
    going on recently where people are filing income tax in
    multiple states, and they're filing, like, $25, paying $25 of
    income tax. The next year they're applying for a refund of
    $200, or $500, or $1,000. And a lot of the states are trying to
    very rapidly get the refunds back out to people. And so,
    mistakenly, a lot of checks are going out. And again, they are
    going out with fraudulent--I shouldn't say fraudulent
    addresses, but addresses that allow these people to collect the
    money, but then kind of disappear.
        So, I mean, I kind of raise that because I think this
    problem is not only at the real big picture that we're talking
    about, but also at the small level. And, you know, it kind of
    occurred to me we've got an issue with the funding that I'm not
    quite sure--you know, years ago that was passed, and we said we
    want to really link workforce with--or, excuse me--education
    with workforce. And some of the feedback I'm getting back from
    my state are we're tracking the education part but, because of
    privacy, we can't get their Social Security numbers. And so, we
    can't really track whether or not they're working.
        And, you know, I've spent a lot of time trying to bring
    agencies together and, you know, we've got all these different
    silos that are asking business and people for the same
    information. The next one is asking for the same information.
    And so, I guess I'm kind of going around about the way, but it
    really comes down to the crux, in my mind, of this issue is
    getting this information, whether it's a Social Security number
    or something very basic, you know, across party lines.
        And so, two questions, quick questions. One is, do you
    agree with that as being the core problem here? And if so, how
    would you propose to fix that?
        Mr. O'CARROLL. Since you brought up Social Security, Mr.
    Berg, I will answer first. I agree that it is a sharing issue.
    As you brought up, it's that every agency is in its own silo.
    We're not sharing, amongst other things, the wage information,
    address information, all the other information that is inter-
    related.
        And I'm thinking that, in many cases, the whole purpose of
    the Privacy Act was to protect everybody's privacy to keep your
    Social Security number and your personal information out of the
    public domain. But there are so many other issues to consider.
    I think, as an example, with any of the benefit programs, you
    are giving up some of that privacy to receive the benefit.
        And maybe with some of these things, at least on the
    benefit side, there could be a waiver for anybody who completes
    that type of an application, that you're giving up some
    privacy, and that we will be going to other government
    agencies, asking for your information.
        So, from my perspective, we're looking for more freedom
    with regard to sharing information when you're going to be
    receiving a benefit from the government.
        Mr. BERG. Please.
        Mr. THORNBURGH. If I may, Mr. Berg, to simplify the
    question a little bit, ``How do you make this happen,'' I think
    it needs to go back to the agency level.
        There has to be an incentive for the agency to make the
    system better. And that incentive not only has to be financial,
    they have to be able to show that they're going to save money
    and be more effective and more efficient during that time. But
    at the same time, they also have to make sure that services are
    delivered in a more timely and effective way, as well.
    Ultimately, what we all want to do is provide the services to
    those who are in need of services.
        This functionality makes it work for both ends. I guess, in
    my experience, what I have seen is that the sledge hammer is
    not very effective in requiring agency heads to--``Thou shalt
    go forth and cooperate'' has not been very effective. But when
    you find the incentive and provide the opportunity for them to
    be more efficient and save taxpayer dollars, that's a huge
    benefit for everyone.
        Mr. BERG. The sledge hammer only works in Kansas, I think.
        [Laughter.]
        Mr. THORNBURGH. Yes, sir.
        Mr. BERG. Well, if you were king for the day, what
    incentive would you create for the Agency?
        Mr. THORNBURGH. I think the incentive would have to be
    financial and beneficial. They have to--we all know the giant
    wrestling match for dollars appropriations. And so there has to
    be a financial incentive that allows them to save taxpayer
    dollars, and ultimately they have to have the opportunity to
    provide benefits more effectively.
        Chairman DAVIS. Thank you. The gentleman's time has
    expired. If you would like to submit some more information in
    writing specifically outlining this in detail, you are more
    than welcome to do so.
        [The prepared statement of Ron Thornburgh follows:]

        [GRAPHIC] [TIFF OMITTED] T5570.046

        The chair would like to recognize the gentleman from
    Washington, Mr. McDermott, for five minutes.
        Mr. McDERMOTT. Thank you, Mr. Chairman. I commend you on
    having this hearing, because it's a real problem. And I am
    pleased to hear systems being suggested that sound like Denmark
    and Norway and Sweden, where they have identity and they can
    collate data, and whatever.
        My problem is--and I want to ask you if this is the crux of
    the problem--I went into the veterans hospital in Seattle and
    was talking to some doctors. And you're sitting in a doctor's
    office, and he has two computer screens. One of them is the
    military, the Defense Department's health care record. And the
    other is the Veterans Administration health care record.
        The Veterans Administration health care record was designed
    by and built by the Veterans Administration. Very efficient.
    Doctors like to use it. The military, the Defense Department
    one, was done by a private contractor. And there is no way to
    connect the two. So you have to sit with two computer screens.
        I spent more than a year fighting--here we've got kids
    coming back from Afghanistan, blown all to pieces. They go to a
    hospital in Ramstein, Germany. They are taken care of. They are
    clearly not going back to active duty, so they are transferred
    over to the Veterans Administration. Their records don't go
    with them, except in paper form.
        Now, I said, ``What in the world is wrong with a country
    that has all the capacity we do, and we will not take care of
    our veterans?'' And they said, ``Well, we have this private
    contractor who made this Defense Department program, and
    somehow they can't figure out how to connect it to the VA.''
    Are you telling me that this law, this privacy law, is what
    they're hiding behind?
        I had generals and admirals sitting in front of me, and I
    couldn't get any straight answer out of why they couldn't fix
    this. And kids were getting poor treatment because when they
    left Ramstein it wasn't immediately transferred by wire to
    Seattle Veterans Hospital. I could not--they couldn't give me a
    decent explanation. So I want to hear if this is what you think
    is the reason for that.
        Mr. O'CARROLL. Well, first, Mr. McDermott, I applaud your
    concern for veterans and our armed forces. I do hope that they
    get the best of treatment.
        I've got to tell you that you're hitting it on the head. I
    can't so much talk about Defense and Veterans, obviously,
    because that's not under my purview. But I do know, as an
    example, SSA's sharing information with Veterans Affairs is
    very difficult, because of these matching agreements that I had
    mentioned before. A person can be on VA benefits, and be
    qualified for SSA benefits, and not even know it.
        So, there are a lot of data exchanges between the two
    agencies that are not only going to help identify benefits that
    go to people, we're also trying to make sure it's the right
    person getting the right payment.
        Mr. McDERMOTT. Sounds like what you're talking about, a
    matching contract, or whatever that thing is----
        Mr. O'CARROLL. Matching agreement.
        Mr. McDERMOTT [continuing]. Is really an unmatching, they
    have an agreement not to match, so that they will never come
    together. Is that what you're----
        Mr. O'CARROLL. I think a few years ago, the thought was,
    for the sake of privacy, they didn't want agencies matching
    data with each other because it could infringe on privacy. But
    as we're seeing here in this hearing, it's not so much a
    privacy issue you're eligible for, but in many cases, it's that
    you're not receiving your benefits you're eligible for. The
    government is missing information that could help, as well as
    detect people that are getting benefits that shouldn't be.
        So, I agree. I think the whole Computer Matching and
    Privacy Protection Act has to be looked at again. We've got to
    be considering the idea that all federal agencies should be
    able to match with each other.
        And then the other issue, which is a much more difficult
    part--and Ms. Black brought it up before--is that funding is
    also a big factor, in that the states all have different
    systems. The federal agencies have different systems. And
    trying to merge them all is a major undertaking.
        Mr. McDERMOTT. I was a state ways and means chairman in the
    state legislature, and I saw us put out millions of dollars for
    computer systems that never went into effect. And I wondered
    what was--but you're saying it's all--it's fundamentally
    privacy questions that stops the government----
        Mr. O'CARROLL. From talking to each other.
        Mr. McDERMOTT [continuing]. From talking to each other.
        Mr. O'CARROLL. And then the second step is, once I think
    agencies started talking to each other, the next step would be
    talking in the same language, which would be the matching of
    the systems.
        Mr. McDERMOTT. COBOL probably.
        [Laughter.]
        Mr. O'CARROLL. Well, unfortunately, that's a concern for
    SSA, is that they've been using COBOL for quite a long time,
    almost too long.
        Mr. McDERMOTT. My brother works for Boeing, and is one of
    the last living COBOL people.
        Mr. O'CARROLL. If he wants to talk to a COBOL programmer, I
    will give him a number of somebody at SSA.
        Mr. McDERMOTT. Thank you.
        Ms. LOWER-BASCH. I do think the technical issues are real
    at the state level, that it's not just laws, that we've got a
    lot of legacy systems.
        Chairman DAVIS. Regarding this issue that Mr. McDermott
    brought up, the one thing I would say--and this is just as an
    observation--systems don't implement effectively if the
    processes are not changed to be able to conform to the system.
    And that's usually the root of the problem.
        And the statutory limitation is one problem that contractor
    faced--having been very involved in that specific issue prior
    to joining Ways and Means--and the other part of the problem
    is, the requirement that the Agency gives to the contractor is
    so precise that they are not allowed to deviate outside of that
    when, in many cases, they recognize this. It led to some of the
    challenges that we had with the Walter Reed situation a few
    years ago, in fact.
        The chair now recognizes Mr. Boustany from Louisiana.
        Mr. BOUSTANY. Thank you, Mr. Chairman. I appreciate this
    hearing, and I want to thank our panel for being here today.
        I want to focus on the unemployment insurance program for a
    moment. Earlier this year there was a newspaper article in my
    home state. It was the Advocate, a Baton Rouge newspaper, and
    it talked about the Louisiana unemployment insurance fund being
    highlighted as being one of the best in the nation. And, in
    fact, the National Association of State Workforce Agencies
    listed Louisiana as having one of the healthiest funds in the
    country. That's the good news.
        Now, despite that, I am very concerned about the amount of
    overpayments. And we have got some additional reports out
    there--there are a series of them--that list Louisiana, for
    instance, as having the--as being the worst state in the union
    with regard to overpayments in the UI program.
        So--and in fact, I will give you some statistics. 2007,
    Louisiana's overpayment rate was 46.5 percent. And I believe,
    Mr. Vitale, you said overall, nationwide, it's about 10.6
    percent. So this is a significant overage. In 2008 it improved
    a little bit, it went down to 34.9 percent, then went back up
    to 41.5 percent. And just to sort of put it in perspective, the
    2008 overpayments were estimated to be around $69 million.
        Mr. VITALE. Correct.
        Mr. BOUSTANY. Now, this is really unacceptable. And in
    effect, it's penalizing hard-working businesses in our state
    and in other states who are seeing these kinds of overpayments.
        So, Mr. Vitale, I was listening to your testimony, and you
    talked about modernization being needed, but being expensive
    when looking at our IT systems. And in the discussion we've had
    today it's sort of like we're always chasing a moving goal, you
    know. You spend more money on IT, and then you still don't have
    what you need, and you go further and you go further, and this
    continues.
        I want to talk a little bit about--and I want your
    perspective on--the cost versus the overpayments, and sort of
    that equation. And give us some perspective on that. I mean,
    you know, if Louisiana is $69 million, what would be the cost,
    in your mind, basic general terms, to get to an IT system that
    the state would need that could interface, you know, with other
    different programs to prevent these kind of overpayments?
        Mr. VITALE. Sure. So--it's not an exact cost. Louisiana
    does have one of the old UI IT systems. So they would need to
    upgrade their entire core system. These technologies that we
    talked about today are peripheral to the core system.
        The core systems reside in the states that pay unemployment
    insurance benefits and collect UI tax. The technologies that we
    talked about today to help in the overpayment area need to
    interface with those core systems. And because of the old
    technology that is in place in the states, it's difficult and
    costly for them to integrate, for instance, an imaging system
    to old mainframe technology system.
        I would estimate that if a state wanted to do it by
    themselves, it would take somewhere in the neighborhood of $30
    million to $50 million to rebuild their entire system and re-
    engineer their business processes, etc.
        So I hope that answers your question.
        Mr. BOUSTANY. Yes, yes. And what--and you mentioned pooling
    earlier in your testimony. What would be the cost impact if we
    had some sort of pooling mechanisms?
        Mr. VITALE. Sure, that dramatically reduces the cost. You
    can pool resources, you can pool funding. If you take four
    states and each one would take $30 million to $50 million to
    build it separately, you can build one system that is the
    Cadillac, probably, for around $50, $60 million--I mean, I'm
    giving ballpark figures here--and that would address 80 percent
    of the functionality in the 4 states. Then each state would
    have to customize the core system to address their unique
    needs, about 20 percent of the functionality is unique.
        So, you are leveraging the resources, you are leveraging
    the shortage of business subject matter experts and IT experts
    in the states by pooling them all together, instead of each
    state building their own system.
        Mr. BOUSTANY. And how do you stimulate the states to do
    this?
        Mr. VITALE. Well, USDOL has a--recently awarded two grants
    to four different groups of states: Arizona, Wyoming, North
    Dakota, and Idaho is one group; and North Carolina, South
    Carolina, Georgia, and Tennessee is the second group. Those two
    groups of states got funding to determine the feasibility of
    building a common system and determining if they work together.
    And can they develop common requirements for a large part of
    the system.
        They're at the point now where they're almost finished that
    two-year project, and they have discovered that they can work
    together, and their differences are not that great, and that
    they have documented their common requirements.
        Mr. BOUSTANY. It took them two years to get to that point
    to agree to work together.
        Mr. VITALE. But it's not that easy. So the next step is
    they need the funding to go on to actually build the common
    system, which, at this point in time, is up in the air.
        Mr. BOUSTANY. Thank you. I yield back.
        Chairman DAVIS. I thank the gentleman. Now Mr. Smith from
    Nebraska is recognized for five minutes.
        Mr. SMITH. Thank you, Mr. Chairman. Mr. Thornburgh, thank
    you for joining us from America's Heartland. The--I know that
    you have talked about electronic filing or, you know, using
    technology, online filing versus paper-based. Now you generally
    handle the online filing and you don't have much say--your
    company doesn't have much say over the paper-based. Would that
    be accurate?
        Mr. THORNBURGH. Yes, sir.
        Mr. SMITH. Okay. Where do you find, or how often do you
    find kind of a bias within public policy that taxpayers would
    absorb the cost of paper-based filing, but taxpayers would not
    absorb the cost of electronic filing? Do you see where I'm
    going with this?
        Mr. THORNBURGH. I think so. And so I will take a swing at
    it. And if I don't, I am sure you will correct me.
        And so you're right, there seems to be a--I won't even say
    ``institutional''--perhaps statutory bias, as the open record
    statutes and kind of the structure behind that was written,
    quite frankly, prior to the electronic age, in many cases. And
    so, while there has been an acceptance of the difficulties of
    paper filing, to craft a policy that encourages electronic
    filing--I mean again, I'm going to go back to my service as
    secretary of state.
        I can tell you that when someone filed a uniform commercial
    code document by paper, it cost me approximately $9 to $10 to
    process that piece of paper. If they threw bits and bytes my
    way, it cost me about $1.27. So I wanted to create policies to
    encourage people to file electronically. And, in doing so, we
    were ultimately able to get to a 90 percent adoption rate for
    those uniform commercial code filings, simply by a policy
    change in charging less for electronic filings than we charged
    for paper filings. If someone wants to throw paper our way,
    they had to pay full freight for that thing.
        So, there are some policy discussions that can certainly
    craft electronic filing incentives that will encourage agencies
    to move in that direction.
        Mr. SMITH. And then, moving further on--in terms of
    accuracy and errors, how would you be able to point to the
    difference in the error rate?
        Mr. THORNBURGH. Well, I will use two examples for that. One
    is I have always thought--and again, in the case of uniform
    commercial code, the banks certainly had an incentive to make
    sure the filing was correct. And they perhaps have a greater
    incentive than the clerk who was working for me to ensure that
    that was correct.
        And then, the Montana Connections. What we have found is
    that we can place edits within the software development within
    the code that will ensure that every line is complete, every
    line is accurate and consistent, before it's applied to the
    system, before the application actually takes place.
        What we have found with a paper-based system, if there was
    an error, it will be returned two, three, four times. So that
    same person is going to be handling all of those times. In an
    electronic system, it gets handled once and it's correct.
        Mr. SMITH. Okay. Thank you, Mr. Chairman. I yield back.
        Chairman DAVIS. I thank the gentleman. The chair now
    recognizes the gentleman from New York, Mr. Crowley.
        Mr. CROWLEY. Thank you very much, Mr. Chairman, for the
    hearing. I apologize for not being here for your testimony, but
    we have your written testimony, and we have perused it prior to
    coming today. And I want to just piggy-back a little bit on my
    colleague from Washington State in reference to the VA.
        And one of the key areas that can benefit from data
    matching is veterans care. Our veterans, I believe, and I think
    everyone on this panel believes, deserve the best of possible
    health care. And we know that health IT has the potential to
    greatly increase the quality of the care provided to our
    nation's veterans.
        Much of the medical information that veterans provide
    serves dual purposes for both their doctors, as well as for the
    Department of Veterans Affairs. And that's why I have supported
    efforts to encourage electronic medical records to include
    questions on whether a patient is a veteran.
        John Rowan, who happens to be the president of the Vietnam
    Veterans of America, is not only a constituent of mine, but a
    long-term friend. He also happens to be someone who believes
    very strongly that including veteran information in electronic
    health records can have a great benefit.
        Connecting medical records to veterans status helps doctors
    to diagnose certain health complications that may only be
    veteran-oriented, such as the Gulf War Syndrome. It can also
    help the VA to match up claims information with beneficiary
    records, as well as track health trends that may be developing
    among veterans of a certain conflict. The VA itself is clearly
    aware of the benefits electronic medical records can provide,
    as in November 2010--as of 2010, they announced a pilot program
    to speed the process for veterans to collect their private-
    sector medical records. Under this new initiative, a contractor
    would retrieve the veteran's records from the health care
    provider, scan them into a digital format, and send the
    material to the VA on a secured transmission.
        I am interested in hearing from a number of you--and I have
    an additional question, so if you could, be short--to hear your
    thoughts on how you think data matching could be further used
    to improve the connections between the veterans the VA and,
    very importantly, the private sector medical care they're
    receiving, as well. Does anyone have any comment on that?
        Ms. LOWER-BASCH. I will just note that a number of states
    are copying the Washington State model that I referenced in my
    testimony of using PARIS to flag people who look like they
    should be getting veterans coverage and are not.
        Mr. CROWLEY. Anyone else?
        [No response.]
        Mr. CROWLEY. Ms. Lower-Basch, since you chose to answer the
    question, you actually are the focus now of my second question.
        You mentioned in your testimony several examples of data
    matching programs already in widespread use. One promising new
    initiative is the administration's Partnership Fund for Program
    Integrity Innovation, which is designed to help states create
    pilot projects to reduce improper payments without reducing
    participation amongst eligible populations. Every project must
    save at least as much as it costs.
        Ironically, the House-passed CR for the remainder of this
    fiscal year would cut funding for this fund by nearly one-
    third, $10 million rescinded from 37.5 million appropriation.
    Can you talk about the promise of this new initiative, and the
    detriment to data matching if these cuts go forward and go into
    effect?
        Ms. Lower-Basch. Sure. I think the fund does two things
    that would probably not happen in the absence of it. One is it
    does provide some of this little seed money to get things
    started because, as we have discussed, that even if things wind
    up saving money down the road, it usually does require some up-
    front investment.
        It also includes rigorous evaluation, which, while I think
    highly of a lot of the things that are already happening, they
    have not been rigorously evaluated. It would be great to
    actually capture some of the data on what the payoff to the
    investment is. And that will lead people forward.
        I would also say it probably brings people to the table,
    these sort of interstate things which I think everyone agrees,
    in theory, makes sense. But getting everyone to do it is
    sometimes a challenge.
        Mr. CROWLEY. Thank you. Thank you all for your testimony,
    and I yield back.
        Chairman DAVIS. I appreciate the gentleman's comments on
    veterans issues, something I have been involved in for many
    years.
        And one thing I would point out. The VA has state-of-the-
    art data systems in their medical records. One of the
    challenges is that the VA itself was its own worst enemy, and
    the very sharing thing that Mr. Crowley and I would like to see
    happen, when its general counsel issued an opinion on privacy
    protection. It prevented their doctors from, in fact, collating
    some related records on some very critical issues related to
    prescription medication.
        And the reason I bring this up, before we go to our last
    questioner, is as our dialogue continues, I think it's very
    important that we come back to the root issues, which are not
    partisan, they're not ideological. These are just simply
    processes, where sometimes the left hand, with very good
    intentions, puts in place a process that the right hand doesn't
    know, and it creates secondary and tertiary effects that create
    additional costs, and the folks we want to help don't get
    helped in that process. So we appreciate your counsel and
    perspective on that.
        For our final question I would like to recognize the
    gentleman from Minnesota, Mr. Paulsen, and thank him for his
    Job-like patience as we have gone through this.
        Mr. PAULSEN. Thank you, Mr. Chairman. And, Mr. O'Carroll, I
    was going to ask you a question, actually. You had, I think,
    recently--I guess your office had recently completed a request
    by a member of the Ways and Means Committed to review SSA's
    online application system, iClaim.
        And I want to--just might expand on that. I think there was
    some concern that having an online application, claimants might
    not be receiving the necessary level of service from SSA to
    complete their applications. And I think your first review that
    you went through focused on retirement applications, in
    particular. And presumably, I mean, that's, you know, an age
    group that doesn't have as much access to the Internet, for
    instance, or might not have as much exposure to the opportunity
    for those types of applications.
        But you found a pretty healthier 96 percent, I think,
    return or rate of the online filing experience as being
    excellent or very good. Can you elaborate on that review? And
    what are some of the lessons, I guess, learned from
    implementing a solid online application? How does it complement
    the existing face-to-face or telephone services that the Agency
    already offers?
        Mr. O'CARROLL. Yes, Mr. Paulsen. At a recent hearing with
    one of our committees here, that issue came up--there was some
    question as to whether or not, by using the online system,
    potential beneficiaries would be getting the same level of
    service as if they came into an SSA office. Everyone is so
    concerned with the backlogs, and the waiting time in offices,
    that really, the future is going to be through electronic
    service.
        So, we examined the iClaim process. We looked at a sample
    of people who applied using iClaim, to ask what their
    experiences were. We found a very, very high--in the 95
    percentile--rate of satisfaction on it. We asked how easy was
    it to use, did you find it difficult, did you have any
    questions on it. Applicants were the most satisfied with the
    follow-up that Social Security Administration did.
        So, in other words, if applicants had any doubts when they
    were doing it, if they didn't have the right type of
    identification or information or anything else, and there was a
    question left in the electronic application, SSA contacted
    them. And they were very happy with those SSA contacts.
        One interesting thing we found from talking to them and
    from talking to SSA employees in a second study that we did,
    was the telephone numbers that most people gave when they made
    their initial application weren't always good. And one of the
    suggestions from the employees was to have multiple contact
    numbers so that when they try to reach out and talk to the
    person during business hours, that they would be able to get a
    hold of them.
        I think that is going to add even more to the success of
    this program, if SSA can contact claimants easily and quickly,
    it will help a lot. So I think this is a great success story
    for SSA, in terms of the service to the public.
        Mr. PAULSEN. And from your perspective, can you elaborate
    if there were any concerns, as a part of that study, at least
    initially, where you saw that maybe fraud or abuse concerns
    from online applications were a component? Or, you know, is
    there worry about that? Or are there advantages or
    disadvantages from other methods of filing for benefits?
        Mr. O'CARROLL. I will tell you on that one, of course we
    always have a great concern. We work closely with SSA as they
    are rolling out their programs, to see if they are going to
    have any vulnerability to fraud.
        The retirement side of SSA has probably the lowest level of
    fraud of the programs because, pretty simply, SSA has all of
    your earnings information, it's a relationship that you have
    had with the retiree for years. There is a lot of trusted
    information, so you know who the person on the other end of the
    application is.
        So, in SSA's retirement programs, we don't have very many
    concerns in relation to fraud. We are continuing to monitor
    that. But at the moment, our level of trust is pretty high.
        When we start taking a look at disability iClaims, where
    there are going to be more documents and more information
    provided, and it is harder to double-check information, we may
    have more concerns. I will let you know what we find.
        Mr. PAULSEN. Thank you very much. Thank you, Mr. Chairman.
        Chairman DAVIS. I thank the gentleman. I would like to
    thank all of you for taking the time, investing the time for
    preparation, and coming in and patiently walking through the
    hearing process. Some of these issues can appear to many
    viewing as awfully esoteric. But as Yogi Berra said, ``Baseball
    is just a simple game of throwing and catching and hitting,''
    and it's in those basics that you all have worked in for so
    many years that, I think, lie the seeds of our solutions.
        If Members have any additional questions, I would ask that
    they submit them to you directly in writing. And we would
    appreciate your responses to them, so that we can insert them
    in the official record, as well, for others to read.
        I thank you again. I thank my friend from Texas, the
    ranking member. And with that, the committee stands adjourned.
        [Whereupon, at 11:29 a.m., the subcommittee was adjourned.]

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