[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:]

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    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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