Supplemental Security Income: Incentive Payments Have Reduced Benefit
Overpayments to Prisoners (Letter Report, 11/01/1999, GAO/HEHS-00-2).

Pursuant to a congressional request, GAO provided information on the
impact incentive payment legislation for correctional facilities had on
the Social Security Administration's (SSA) Supplemental Security Income
(SSI) program, focusing on: (1) how many correctional facilities signed
incentive payment agreements, how many benefit suspensions did SSA make,
and what amount of overpayments did SSA identify and prevent at these
facilities; (2) how many of the incentive payment agreements represented
new reporting commitments that SSA did not have before the authorization
of incentive payments, and what were the results at facilities that made
these new commitments; and (3) what other benefits has the legislation
produced.

GAO noted that: (1) since the legislation was passed, SSA has signed
incentive payment agreements with 3,115 correctional facilities; (2)
between the date each facility signed an incentive payment agreement and
November 27, 1998, the most recent date for which GAO has comprehensive
data, SSA made a total of 39,137 SSI benefit suspensions at these
facilities; (3) by suspending benefits, SSA identified $32.1 million of
potentially recoverable SSI overpayments that it had already made and
prevented approximately $37.6 million in future erroneous SSI payments;
(4) SSA made incentive payments of almost $10 million to facilities, as
required by the incentive agreements; (5) as a result of the
legislation, SSA now receives more prisoner information than before; (6)
GAO's analysis showed that 210 of the 3,115 incentive agreements were
new commitments, that is, 210 facilities had not agreed to provide
inmate data to SSA before the incentive agreement legislation; (7) at
the facilities that made new commitments, SSA made 4,597 suspensions,
identified about $3.3 million in overpayments that it had made to
inmates, and prevented future overpayments of about $3.6 million; (8)
the legislation also produced other benefits; (9) SSA made 871
suspensions, identified +$1.4 million of past overpayments, and
prevented about $1.6 million of future overpayments in SSA's Old Age and
Survivors Insurance program and Disability Insurance program; (10)
moreover, other federal and state assistance programs, such as the Food
Stamp program, now have access to this enhanced inmate information,
which may help them improve the accuracy of their payments; (11) in
addition, after signing the agreements, some correctional facilities
began to report confinements more frequently and in an electronic format
that SSA can process more efficiently; (12) this resulted in prevention
of at least $2.7 million in future overpayments; and (13) SSA developed
several new computer systems to facilitate operations, improve the
control and monitoring of facility reporting and prisoner suspensions,
and account for incentive payments.

--------------------------- Indexing Terms -----------------------------

 REPORTNUM:  HEHS-00-2
     TITLE:  Supplemental Security Income: Incentive Payments Have
	     Reduced Benefit Overpayments to Prisoners
      DATE:  11/01/1999
   SUBJECT:  Income maintenance programs
	     Correctional facilities
	     Prisoners
	     Federal social security programs
	     Social security benefits
	     Overpayments
	     Internal controls
	     Management information systems
	     Eligibility determinations
	     Reporting requirements
IDENTIFIER:  Old Age Survivors and Disability Insurance Program
	     Social Security Disability Insurance Program
	     Food Stamp Program
	     SSI Program
	     SSA Incarceration Report Control System
	     SSA Prisoner Update Processing System

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Cover
================================================================ COVER

Report to Congressional Committees

November 1999

SUPPLEMENTAL SECURITY INCOME -
INCENTIVE PAYMENTS HAVE REDUCED
BENEFIT OVERPAYMENTS TO PRISONERS

GAO/HEHS-00-2

Impact of Prisoner Incentive Payments

(207033)

Abbreviations
=============================================================== ABBREV

  DI - Disability Insurance
  IRCS - Incarceration Report Control System
  OASI - Old Age and Survivors Insurance
  OIG - Office of the Inspector General
  PRWORA - Personal Responsibility and Work Opportunity
  Reconciliation Act of 1996
  PUPS - Prisoner Update Processing System
  ROAR - Recovery of Overpayments, Accounting and Reporting System
  SSA - Social Security Administration
  SSI - Supplemental Security Income

Letter
=============================================================== LETTER

B-279541

November 22, 1999

The Honorable William V.  Roth, Jr.
Chairman
The Honorable Daniel Patrick Moynihan
Ranking Minority Member
Committee on Finance
United States Senate

The Honorable Bill Archer
Chairman
The Honorable Charles B.  Rangel
Ranking Minority Member
Committee on Ways and Means
House of Representatives

The Supplemental Security Income (SSI) program, administered by the
Social Security Administration (SSA), is the largest cash assistance
program in the United States.  In 1998, SSI paid about $29 billion to
needy aged, blind, or disabled individuals.  People who are confined
in prisons or correctional facilities for at least 1 full month are
ineligible for SSI benefits.  Despite this prohibition, SSA's Office
of the Inspector General (OIG) and we have reported that SSA has paid
millions of dollars of SSI benefits to ineligible inmates.\1

In November 1995, SSA began a major effort to obtain commitments from
correctional facilities to report inmate information.  These efforts
were extremely successful.  We estimate that, by August 1996, SSA had
obtained reporting commitments from the Federal Bureau of Prisons and
about 4,500 of approximately 5,500 state and local correctional
facilities. 

On August 22, 1996, federal welfare reform legislation provided SSA
with a new way to identify ineligible prisoners receiving SSI.  The
legislation authorized SSA to contract with correctional facilities
to pay them a maximum of $400 for timely information that resulted in
suspension of an ineligible inmate's benefits. 

The legislation required that we study and report on the impact of
these incentive payments on the SSI program.  Specifically, this
report addresses the following questions:  (1) How many correctional
facilities signed incentive payment agreements, how many suspensions
did SSA make, and what amount of overpayments did SSA identify and
prevent at these facilities; (2) how many of the incentive payment
agreements represented new reporting commitments that SSA did not
have before the authorization of incentive payments, and what were
the results at facilities that made these new commitments; and (3)
what other benefits has the legislation produced? 

We used SSA's computerized data to identify facilities that signed
incentive payment agreements with SSA and to determine the number of
suspensions and amount of overpayments identified and prevented at
those facilities.  We also identified and quantified certain costs of
implementing the incentive payment program.  We discussed the
incentive program with SSA officials and obtained their perspectives
on other benefits of the legislation.  We also sampled facilities
that had agreed to provide data to SSA before signing incentive
agreements to determine if these facilities improved their reporting
practices after signing. 

We conducted our work between April 1998 and September 1999 in
accordance with generally accepted government auditing standards. 
(See app.  I for a more detailed description of our scope and
methodology.)

--------------------
\1 SSA, OIG, Effectiveness in Obtaining Records to Identify Prisoners
(Washington, D.C.:  SSA, May 1996) and Supplemental Security Income: 
SSA Efforts Fall Short in Correcting Erroneous Payments to Prisoners
(GAO/HEHS-96-152, Aug.  30, 1996). 

   RESULTS IN BRIEF
------------------------------------------------------------ Letter :1

Since the legislation was passed, SSA has signed incentive payment
agreements with 3,115 correctional facilities.  Between the date each
facility signed an incentive payment agreement and November 27, 1998,
the most recent date for which we have comprehensive data, SSA made a
total of 39,137 SSI benefit suspensions at these facilities.  By
suspending benefits, SSA identified $32.1 million of potentially
recoverable SSI overpayments that it had already made and prevented
approximately $37.6 million in future erroneous SSI payments.\2 SSA
made incentive payments of almost $10 million to facilities, as
required by the incentive agreements. 

As a result of the legislation, SSA now receives more prisoner
information than before.  Our analysis showed that 210 of the 3,115
incentive agreements were new commitments; that is, 210 facilities
had not agreed to provide inmate data to SSA before the incentive
agreement legislation.  At the facilities that made new commitments,
SSA made 4,597 suspensions, identified about $3.3 million in
overpayments that it had made to inmates, and prevented future
overpayments of about $3.6 million. 

The legislation also produced other benefits.  First, SSA made 871
suspensions, identified $1.4 million of past overpayments, and
prevented about $1.6 million of future overpayments in SSA's Old Age
and Survivors Insurance (OASI) program and Disability Insurance (DI)
program.\3 Moreover, other federal and state assistance programs,
such as the Food Stamp program, now have access to this enhanced
inmate information, which may help them improve the accuracy of their
payments.  In addition, after signing the agreements, some
correctional facilities began to report confinements more frequently
and in an electronic format that SSA can process more efficiently. 
This resulted in prevention of at least $2.7 million in future
overpayments.  Finally, SSA developed several new computer systems to
facilitate operations, improve the control and monitoring of facility
reporting and prisoner suspensions, and account for incentive
payments. 

--------------------
\2 A suspension, which is usually retroactive, results in the
identification of an overpayment that SSA has already made, the
prevention of subsequent overpayments, or both.  For example, if a
correctional facility notifies SSA in early July that an individual
was confined in May, and that inmate is receiving SSI benefits, SSA
suspends benefits effective June 1, because June is the first full
month of confinement.  This suspension involves stopping the August
payment and beginning the process of collecting benefits paid
erroneously in June and July.  If the individual remains confined,
the August payment and any subsequent benefits not paid because of
the suspension are considered to be overpayments prevented. 

\3 Under OASI and DI, prisoners are ineligible for benefits under
certain conditions. 

   BACKGROUND
------------------------------------------------------------ Letter :2

SSA administers three of the nation's largest benefit programs:  SSI;
OASI, also known as Social Security; and DI.  Under SSI, the largest
cash assistance program in the United States and the subject of this
report, SSA provides cash assistance to needy individuals who are
aged, blind, or disabled.  Federal SSI benefits are funded by general
revenues and are based on financial need.  In 1998, SSA paid about
$29 billion in SSI benefits.  OASI provides monthly retirement
benefits to workers and their dependents and survivors to protect
them from the loss of wages resulting from retirement or death.  DI
provides monthly cash benefits to disabled workers and their
families.  OASI and DI are insurance programs funded through payroll
taxes, and benefits are based on the contributions of individual
workers and their employers.  In 1995, the OASI and DI programs paid
about $326 billion in benefits to about 43 million eligible
beneficiaries. 

The Social Security Act provides that, under certain circumstances,
prisoners are ineligible for SSI, OASI, or DI payments.  Individuals
are ineligible for SSI in any given month if throughout that month
they are housed in a public institution.  Individuals are ineligible
for OASI and DI if they are confined in a correctional facility as a
result of committing an offense punishable by imprisonment for more
than 1 year.  In the above cases, a confined recipient or a
representative payee (an individual or organization that receives
payments on behalf of SSI recipients who are unable to manage their
own affairs) is required to report the confinement to SSA, so that
benefits can be suspended. 

Despite the prohibitions in the act, ineligible prisoners have been
receiving SSI, OASI, and DI benefits.  In 1996, we reported that SSA
had made $3.9 million in erroneous SSI payments to over 2,300
prisoners in the 12 county jail systems that we reviewed.  Erroneous
payments occurred because confinements were not reported by SSI
beneficiaries, representative payees, or correctional facilities and
because SSA's efforts to periodically verify recipients' continued
eligibility for SSI were ineffective.  Also in 1996, SSA's OIG
reported that SSA had achieved only limited success in obtaining
prisoner information from federal, state, and local institutions and,
as a result, had continued to make payments to ineligible inmates. 

      SSA'S EFFORTS TO STOP
      PAYMENTS TO INELIGIBLE
      PRISONERS
---------------------------------------------------------- Letter :2.1

In November 1995, while our audit and that of the OIG were being
completed, SSA undertook a major effort to prevent erroneous payments
to prisoners.  First, SSA formed a work group that focused
exclusively on prisoner issues.  Second, it established a regional
prisoner coordinator in each SSA region to manage the effort at the
field level.  Third, SSA used its network of about 1,300 field
offices to identify and contact correctional institutions and obtain
commitments from them to report prisoner data.  Fourth, in March
1996, the SSA Commissioner appealed to all federal and state penal
institutions to send SSA a census of individuals who were confined in
their facilities. 

By August 21, 1996, SSA had successfully negotiated reporting
agreements with the Federal Bureau of Prisons covering 137 federal
facilities and with about 4,500 of approximately 5,500 state and
local correctional facilities.  During the period from January 1,
1996, through August 21, 1996, SSA suspended the benefits of about
30,203 prisoners.  As a result of these suspensions, SSA identified
about $151 million in overpayments already made and prevented about
$173 million in additional overpayments.  The agreements included
most state facilities, facilities in Puerto Rico and the District of
Columbia, and most large local facilities.  Although most facilities
began reporting, some reported on an irregular basis; in a less than
timely manner; or on paper rather than computer disk or tape, thus
making it more difficult for SSA to match files. 

      1996 LEGISLATION AUTHORIZING
      INCENTIVE PAYMENTS FOR
      PRISONER INFORMATION
---------------------------------------------------------- Letter :2.2

On August 22, 1996, the Personal Responsibility and Work Opportunity
Reconciliation Act of 1996 (PRWORA) was enacted, authorizing SSA to
enter into incentive payment agreements with interested state and
local correctional facilities in order to increase prison reporting
to SSA.\4 The agreement that SSA developed, and that must be in place
before SSA pays a facility, includes several reporting provisions. 
For example, each month the facility must provide SSA with a computer
tape, cartridge, or disk, in an SSA-prescribed format, showing new
inmates' names, Social Security numbers, dates of birth, and
confinement dates.  As part of the agreement, the facility must also
complete a direct deposit form and agree to accept payment from SSA
through direct deposit.  Finally, the facility must show the names,
Social Security numbers, and other information for its entire inmate
population in its initial report.  Under these agreements, SSA pays
facilities for timely information that enables SSA to suspend
ineligible prisoners' SSI benefits. 

PRWORA authorizes SSA to make different levels of incentive payments
on the basis of the timeliness of the data provided.  SSA is
authorized to pay $400 if it suspends SSI benefits on the basis of
information provided within 30 days after a prisoner's confinement. 
SSA is authorized to pay $200 if it suspends SSI benefits on the
basis of information provided between 31 and 90 days after
confinement.  SSA is not authorized to pay for information received
more than 90 days after confinement, even when it results in a
suspension. 

--------------------
\4 Federal correctional facilities are not eligible for incentive
payments. 

   SSA SIGNED INCENTIVE AGREEMENTS
   WITH MANY CORRECTIONAL
   FACILITIES AND SUSPENDED
   PAYMENTS TO THOUSANDS OF
   PRISONERS
------------------------------------------------------------ Letter :3

After the enactment of PRWORA, SSA negotiated and signed incentive
agreements with 3,115--almost 60 percent--of the approximately 5,500
state and local correctional facilities nationwide.  Between the time
each facility signed its incentive agreement and November 27, 1998,
SSA made about 39,000 SSI suspensions at these facilities.  As a
result of these suspensions, SSA identified approximately $32 million
in SSI overpayments it had already made to inmates and prevented
about $38 million in future overpayments.  SSA made incentive
payments to facilities of almost $10 million for the information they
provided. 

      SSA NEGOTIATED INCENTIVE
      AGREEMENTS
---------------------------------------------------------- Letter :3.1

Beginning in early 1997, SSA personnel contacted state and local
correctional facilities, including those that had already agreed to
report prisoner data, and offered them the opportunity to sign the
new incentive payment agreement.  SSA signed incentive agreements
with all 50 states, covering most state-run facilities; the District
of Columbia; all of the large local jail systems; and many of the
smaller local jails.  As of November 27, 1998, the most recent date
for which we have data, we estimate that incentive agreements covered
about 80 percent of all confined individuals. 

Although all 50 states and many local systems completed incentive
agreements, not all signed immediately.  About 66 percent of the
states signed during the first 6 months; most others signed by March
1998.  About 45 percent of the local facilities signed incentive
agreements.  According to SSA, there were two main reasons that 55
percent of the local facilities did not sign incentive agreements. 
First, in some cases the local facility would not have received the
incentive payment directly.  Rather, the payment would have gone into
the county's general fund or some other central treasury.  Second,
some facilities did not want to conform to the strict electronic
reporting requirements outlined in the incentive agreement. 
According to SSA, some of these local jails do not have computers. 

The fact that many local facilities did not sign incentive agreements
does not mean that these facilities are not providing inmate data to
SSA.  Many of these facilities have other types of reporting
agreements under which they provide data to SSA but do not receive
incentive payments.  There are, however, a limited number of
facilities that do not report.  (See app.  II for information on
other agreements that SSA has made with correctional facilities and a
summary of all SSA reporting agreements by state.)

      SSA MADE SUSPENSIONS,
      IDENTIFIED POTENTIALLY
      RECOVERABLE OVERPAYMENTS,
      AND PREVENTED FUTURE
      OVERPAYMENTS
---------------------------------------------------------- Letter :3.2

Between the time each facility signed its incentive agreement and
November 27, 1998, SSA made 39,137 SSI suspensions at the 3,115
facilities with incentive payment agreements.  SSA made about 25
percent of the suspensions at state-run facilities and about 75
percent at local facilities.  California, Florida, Louisiana, New
York, Ohio, and Texas together accounted for almost half of all
suspensions.  (See app.  III for a summary of SSI suspensions by
state and agreement type.)

As a result of these suspensions, SSA identified $32.1 million of
potentially recoverable overpayments it had already made.  It is
important that SSA identify overpayments to prisoners so that it can
initiate the various mechanisms available to collect them.  These
mechanisms include (1) withholding all or a portion of the legitimate
monthly SSI benefits of a former inmate who has reestablished
eligibility for SSI benefits, (2) withholding a portion of a former
prisoner's OASI or DI benefits, and (3) withholding an individual's
income tax refund.  Finally, if SSA is unsuccessful in collecting an
overpayment despite making all reasonable efforts to do so, the
agency may refer the overpayment to the Department of Justice for
recovery through civil action. 

More importantly, perhaps, the suspension of inmates' SSI benefits
also prevented about $37.6 million in future overpayments. 
Preventing overpayments is obviously far more effective than
detecting those already made because the government does not incur a
monetary loss that must be collected from the inmate.  For example,
when an overpayment is made, the government may not be able to
collect all of the money owed by the inmate.  Even if the overpayment
is recovered through one of the various mechanisms described above,
the government incurs certain administrative costs related to the
recovery and loses the interest on the investment of the outstanding
overpayment until it is recovered.  Further, preventing overpayments
maintains program integrity and, in turn, promotes public trust in
the program. 

      STATES RECEIVED VARYING
      AMOUNTS OF INCENTIVE
      PAYMENTS
---------------------------------------------------------- Letter :3.3

Between March 7, 1997, and November 27, 1998, SSA made incentive
payments totaling about $10 million (see table 1).  About 80 percent
of the payments were for the maximum $400, indicating that
correctional facilities provided information to SSA within 30 days of
the individual's confinement.  The remaining 20 percent were for
$200.  About 80 percent of the payments went to local correctional
facilities, and about 20 percent went to state facilities. 

Table 1 shows that six states received no incentive payments.  We
discussed this situation with SSA officials and identified two main
reasons for this:  three states were unable to provide data in the
reporting format that SSA requires, and three others did not complete
the required direct deposit form advising SSA where to deposit the
payments. 

                          Table 1
          
           Incentive Payments to State and Local
          Correctional Facilities, March 7, 1997-
                      November 27,1998

                                        Amount
                       Amount paid     paid to
State                     to state    locality       Total
--------------------  ------------  ----------  ----------
Alabama                     $1,800     $86,000     $87,800
Alaska                      35,600          \a      35,600
Arizona                     10,400     166,200     176,600
Arkansas                    56,200     132,800     189,000
California                 280,800   1,406,600   1,687,400
Colorado                     5,400      62,800      68,200
Connecticut                226,800          \a     226,800
Delaware                    23,200          \a      23,200
District of Columbia           200          \a         200
Florida                     34,800     485,400     520,200
Georgia                     40,200     142,400     182,600
Guam                             0           0           0
Hawaii                      40,800          \a      40,800
Idaho                        7,000      11,800      18,800
Illinois                    27,200     154,000     181,200
Indiana                     56,400      89,400     145,800
Iowa                             0      44,800      44,800
Kansas                           0      52,200      52,200
Kentucky                     4,000     294,200     298,200
Louisiana                  123,200     503,000     626,200
Maine                        7,000      55,000      62,000
Maryland                     5,800      34,600      40,400
Massachusetts               94,000     319,200     413,200
Michigan                    49,200     304,200     353,400
Minnesota                   45,200      17,000      62,200
Mississippi                 40,400      81,200     121,600
Missouri                    11,000     146,400     157,400
Montana                      2,200       6,000       8,200
Nebraska                         0       2,400       2,400
Nevada                           0       4,800       4,800
New Hampshire                7,000      40,800      47,800
New Jersey                  27,800     347,600     375,400
New Mexico                  12,800      40,400      53,200
New York                   164,000     960,400   1,124,400
North Carolina              36,800      53,400      90,200
North Dakota                 1,400       3,200       4,600
Ohio                        40,200     452,400     492,600
Oklahoma                    13,000      26,200      39,200
Oregon                       7,600      24,600      32,200
Pennsylvania                     0     175,600     175,600
Puerto Rico                      0           0           0
Rhode Island                99,000          \a      99,000
South Carolina              90,000      62,400     152,400
South Dakota                 1,400       2,800       4,200
Tennessee                    6,200     184,000     190,200
Texas                      165,000     426,000     591,000
Utah                           600      11,400      12,000
Vermont                          0          \a           0
Virginia                    15,600      54,400      70,000
Washington                  42,400      46,600      89,000
West Virginia                  800      30,400      31,200
Wisconsin                   48,800     176,200     225,000
Wyoming                        200           0         200
==========================================================
Total                   $2,009,400  $7,721,200  $9,730,600
----------------------------------------------------------
\a This state has an integrated state/county prison system; the
entire incentive amount, if any, is reported in the state column. 

   LEGISLATION PROMPTED SOME
   FACILITIES TO AGREE TO PROVIDE
   PRISONER DATA FOR THE FIRST
   TIME
------------------------------------------------------------ Letter :4

A total of 210 of the 3,115 incentive agreements were new commitments
by facilities that had not agreed to provide data to SSA before
PRWORA.  These 210 facilities provided SSA with information that
prompted the agency to make 4,597 of the 39,137 total SSI suspensions
under incentive agreements.  Information from these facilities
accounted for $3.3 million of the $32.1 million of overpayments
identified, and $3.6 million of the $37.6 million of overpayments
prevented.  Without the incentive payment legislation, these
facilities might not have reported their prisoner data to SSA. 

   INCENTIVE PROGRAM HAS PRODUCED
   OTHER BENEFITS
------------------------------------------------------------ Letter :5

The incentive payment program has resulted in several benefits beyond
additional SSI suspensions, overpayments identified, and overpayments
prevented.  Specifically, SSA now also uses information it receives
under incentive agreements to suspend benefits, identify
overpayments, and prevent future overpayments in its OASI and DI
programs.  SSA also makes prisoner information available to other
federal and state assistance programs to help them control their
payments.  Further, some state and local facilities report more
frequently or more efficiently than they did before signing incentive
agreements.  Finally, SSA has developed several new computer systems
to facilitate operations, improve the control and monitoring of
facility reporting and prisoner suspensions, and account for
incentive payments. 

      SSA PUTS SSI INMATE
      INFORMATION TO OTHER USES
---------------------------------------------------------- Letter :5.1

PRWORA authorizes SSA to provide information it obtains under the
incentive payment agreements to any federal or federally assisted
cash, food, or medical assistance program for eligibility
determination purposes.  SSA used information it received under new
incentive agreements to suspend the OASI and DI benefits of 871
recipients.  As a result of these suspensions, SSA identified almost
$1.4 million in overpayments it had already made and prevented almost
$1.6 million of additional OASI and DI overpayments. 

SSA also makes selected prisoner information available to states for
their use in controlling Food Stamp program benefits.  In addition,
SSA is negotiating to establish sharing agreements with the
Department of Veterans Affairs and the Department of Education in
order to help those agencies control their payments. 

      SOME STATE AND LOCAL
      CORRECTIONAL FACILITIES HAVE
      IMPROVED THEIR REPORTING
---------------------------------------------------------- Letter :5.2

According to SSA, before incentive payment agreements, all states,
the District of Columbia, and Puerto Rico were reporting information
to SSA.  Most were reporting monthly, some quarterly, and some only
sporadically.  In addition, some states and many of the larger local
facilities were reporting on paper, which is difficult for SSA to
process, rather than diskette or computer tape.  SSA staff told us
that, in some cases, after facilities signed incentive agreements
they began reporting more frequently and in electronic format, rather
than on paper. 

To determine the extent of reporting improvement, we reviewed a
sample of 69 reporters\5 consisting of the 50 states, the District of
Columbia, Puerto Rico, and 17 of the 25 largest county jail systems. 
We determined that 23 of the 69 improved their reporting frequency. 
For example, some began reporting monthly rather than quarterly or
semiannually or, if not monthly, then more frequently than they had
before signing the incentive agreement.  We estimated that as a
result of this more frequent reporting, SSA identified ineligible
inmates earlier and prevented about $2.7 million of overpayments at
the facilities we sampled.  Although we did not sample small local
facilities, we assume that some of these began reporting more
frequently after signing an incentive agreement and that, as a
result, SSA prevented overpayments at these facilities also.  In
addition, seven states that were reporting inmate data to SSA on
paper changed to some form of electronic reporting after signing the
agreement, which has reduced SSA's costs for operating the matches
and speeded up the suspension process. 

--------------------
\5 A reporter may report for one or more facilities.  For example, a
state department of corrections may report for all state prisons. 

      SSA HAS IMPROVED ITS
      MONITORING AND CONTROL OF
      PRISONER DATA
---------------------------------------------------------- Letter :5.3

Before implementing incentive payments, SSA was not effectively
monitoring and controlling prisoner agreements or prisoner data.  For
example, SSA did not renegotiate several state agreements in a timely
manner, did not have procedures to determine if it received prisoner
information in accordance with the terms of its agreements, and did
not have controls that provided reasonable assurance that inmate
information it received was processed in a timely manner. 

In conjunction with implementing incentive payments, SSA developed
the Incarceration Report Control System and the Prisoner Update
Processing System.  These systems have improved monitoring and
control of reporting agreements and prisoner information.  The first
system contains information about reporting agreements, reporters,
facilities, details of reports received, and information on incentive
payments.  This system continuously reviews the information it
contains and alerts the appropriate units in SSA when a reporting
agreement needs to be renegotiated, or when a reporter does not
provide inmate data as specified in the agreement.  The Prisoner
Update Processing System contains information on inmates.  It uses
this information to identify inmates who are receiving benefits and
alerts the appropriate SSA field office when a suspension may be
warranted.  This system also periodically determines if action has
been taken on the initial alerts and, if not, issues follow-up
alerts. 

   CONCLUSIONS
------------------------------------------------------------ Letter :6

The incentive payment legislation has produced significant benefits. 
SSA now receives prisoner information from 210 additional facilities,
which has resulted in the prevention of about $3.6 million in future
erroneous payments and the identification of approximately $3.3
million of potentially recoverable overpayments SSA has already made. 
In some cases, SSA now also receives prisoner data more frequently
and in a more usable format from facilities that had been reporting
data before the legislation.  As a result, SSA has been able to
prevent $2.7 million in erroneous SSI payments at the facilities we
sampled.  In its OASI and DI programs, SSA has prevented $1.6 million
in erroneous payments and identified $1.4 million of potentially
recoverable overpayments.  In addition, SSA has developed new
electronic monitoring and control systems for inmate data and makes
these data available to other federal and state agencies. 

Some might argue that the program's cost of $10 million is high in
relation to the savings realized.  Most institutions reporting
prisoner data today did so prior to the incentive program and might
have continued to do so without financial incentive.  Nonetheless,
the benefits described above are important outcomes that are likely
to enhance the operation of the SSI program and other federal
programs for years to come. 

   AGENCY COMMENTS
------------------------------------------------------------ Letter :7

We obtained comments on a draft of this report from the Commissioner
of Social Security, who concurred with our findings.  See appendix IV
for the full text of SSA's comments. 

---------------------------------------------------------- Letter :7.1

We are sending copies of this report to the Honorable Kenneth S. 
Apfel, Commissioner of Social Security, and other interested parties. 
We will also make copies available to others on request. 

If you or your staff have any questions regarding this report, please
contact me at (202) 512-7215 or Roland H.  Miller at (202) 512-7246. 
Harry Johnson, Joan Vogel, and Dennis Gehley also made key
contributions to this assignment. 

Barbara D.  Bovbjerg
Associate Director, Education, Workforce,
 and Income Security Issues

SCOPE AND METHODOLOGY
=========================================================== Appendix I

To measure the impact of the incentive payment legislation, we
identified all state and local facilities that signed incentive
payment agreements with the Social Security Administration (SSA) and
the suspensions, overpayments identified, and overpayments prevented
after signing the agreements.  We also determined the results of
agreements reached with facilities that had not agreed to provide
data to SSA until after incentives were authorized.  In addition, we
sampled facilities that had previously agreed to provide data to SSA
to determine if incentive agreements affected these facilities'
reporting practices and, in turn, the Supplemental Security Income
(SSI) program.  We relied heavily on SSA's various computer systems
for most of our information, but we did not independently verify
SSA's databases.  We also discussed the incentive program with SSA
officials to obtain their perspective on the impact of the
legislation. 

   FACILITIES WITH INCENTIVE
   AGREEMENTS
--------------------------------------------------------- Appendix I:1

We used SSA's Incarceration Report Control System (IRCS) to identify
facilities with incentive agreements.  IRCS, a central computer
system that was implemented after incentive payments were authorized,
contains information about correctional facilities.  In addition to
descriptive information (name, address, facility contact, and so on),
IRCS also shows the type of agreement SSA has with a facility, the
date the agreement was signed, how often the facility has reported,
and details about the reports received.  IRCS also contains
information about facilities that do not provide data to SSA,
including the reasons for their not reporting.  Some facilities are
included in IRCS more than once, and in some cases the agreement
information associated with those facilities is inconsistent.  We
spent a considerable amount of time eliminating duplicates from the
database.  However, when we could not determine which of the
duplicates to eliminate, we asked SSA's field offices to clarify the
situation for us. 

   FACILITIES THAT INITIALLY DID
   NOT AGREE TO PROVIDE DATA TO
   SSA BUT EVENTUALLY SIGNED
   INCENTIVE AGREEMENTS
--------------------------------------------------------- Appendix I:2

To identify these facilities, we determined their agreement status
before incentive payments and compared it with the agreement status
on November 27, 1998.  To determine a facility's agreement status
before incentive payments, we combined information from several
different SSA sources.  SSA field offices had negotiated agreements
with correctional facilities and sent copies of those agreements to
SSA headquarters.  We used this information to establish our initial
baseline data on agreements.  We supplemented our initial baseline
data with information from IRCS.  Although IRCS was established after
incentive payments were authorized, SSA had loaded IRCS with
information on agreements that existed prior to the legislation, and
some of that information remains in the system.  Finally, we asked
SSA's field offices to review the agreement information we developed
and verify its accuracy. 

   SUSPENSIONS, OVERPAYMENTS
   IDENTIFIED, AND OVERPAYMENTS
   PREVENTED
--------------------------------------------------------- Appendix I:3

We obtained suspension information from SSA's Prisoner Update
Processing System (PUPS), which identifies suspended inmates, the
facilities where the individuals are confined, confinement dates, the
type of benefit(s) suspended, and suspension dates.  We obtained
overpayment information from SSA's Recovery of Overpayments,
Accounting and Reporting System (ROAR).  ROAR controls the
overpayments recovery and collection activity of the Old Age and
Survivors Insurance (OASI) and Disability Insurance (DI) programs as
well as the portion of SSI overpayments being withheld from title II
benefits through cross-program recovery.  We estimated the amount of
overpayments prevented by using information from PUPS and two
databases:  the Supplemental Security Record and the Master
Beneficiary Record.  These two databases show the monthly benefits
the individual was receiving when he or she went to prison, and PUPS
provides the information noted above as well as data on actual or
estimated release dates. 

   REPORTING PRACTICES
--------------------------------------------------------- Appendix I:4

SSA officials told us that facilities that were reporting data to SSA
before the legislation reported more frequently and in a more
efficient format after they signed incentive agreements.  We used
various SSA internal reports that were prepared during calendar year
1996 to determine how often and in what format (for example, paper,
computer tape, disk, or fax) facilities were reporting to SSA before
incentive payments.  We compared the preincentive reporting data with
postincentive reporting data that we obtained from IRCS and from
various other SSA records to determine if reporting practices had
changed. 

   AMOUNT OF INCENTIVE PAYMENTS
--------------------------------------------------------- Appendix I:5

We used PUPS to determine the amount of incentive payments that SSA
made to correctional facilities.  PUPS calculates a facility's
incentive payment after it determines that the facility has met all
the requirements necessary to receive the payment.  PUPS also
maintains a record of these payments. 

SSA'S OTHER REPORTING AGREEMENTS
========================================================== Appendix II

SSA has nonincentive agreements with the Department of Justice,
covering federal correctional facilities, and with 1,742 state and
local correctional facilities.  Under these agreements, facilities
provide prisoner information to SSA, but SSA does not pay them for
it. 

Many of the 1,742 state and local facilities report under agreements
they made with SSA before the Congress authorized incentives.  Some
of these agreements are memorandums of understanding, some are
letters from correctional facilities agreeing to report data and
documenting their reporting procedures, and some are verbal
agreements.  Under these agreements, facilities have latitude in the
amount of information they provide and the way they provide it.  Most
facilities have agreed to provide data monthly directly to the field
office.  Reports may be made by mail, phone, or fax or may be
hand-delivered.  SSA processes the data and suspends SSI benefits
when appropriate but does not pay the facilities. 

Between March 7, 1997, and November 27, 1998, for the 1,742
facilities with nonincentive agreements, SSA made 8,316 SSI
suspensions, identified $6.4 million in overpayments, and prevented
$6.8 million of additional SSI overpayments.  In addition, SSA made
4,324 OASI/DI suspensions, identified $9.8 million in OASI/DI
overpayments it had already made, and prevented $10.6 million of
future OASI/DI overpayments. 

A total of 666 facilities do not provide any prisoner data to SSA,
and in most cases it would not be appropriate for them to do so. 
According to SSA's records, 446 facilities (67 percent) do not
provide inmate data because they hold inmates for less than 1 full
month.  A full month is the minimum time that an SSI beneficiary must
be confined before SSA can suspend benefits.  The other 220
facilities do not provide data for a variety of reasons:  74 claim
they lack the resources to assemble and provide prisoner data to SSA;
58 facilities, mostly juvenile, cite privacy laws that prohibit them
from providing juveniles' names; and 88 facilities simply refuse to
cooperate.  Table II.1 shows SSA reporting agreements by state. 

                         Table II.1
          
           Summary of SSA Reporting Agreements by
                           State

                       Incentive  Nonincentive          No
State\a                agreement     agreement   agreement
--------------------  ----------  ------------  ----------
Alabama                       85            35          29
Alaska                        60             0           0
American Samoa                 0             0           1
Arizona                       25            11          17
Arkansas                      75            24          31
California                   109            40          11
Colorado                      30            51          50
Connecticut                   21             0           2
Delaware                       8             0           0
District of Columbia           4             1           0
Florida                      236            55           2
Georgia                      174            91          13
Guam                           0             1           0
Hawaii                         8             1           0
Idaho                         25            20          12
Illinois                      97            60          35
Indiana                       64            55           8
Iowa                          10            87           8
Kansas                         5            92          10
Kentucky                      91            24           8
Louisiana                    109            15          49
Maine                         22             5           0
Marianas                       0             0           1
Maryland                      58            13           1
Massachusetts                 35            17           1
Michigan                     123            24          13
Minnesota                     31            52           8
Mississippi                   94            46           5
Missouri                      39            83           3
Montana                       14            37          18
Nebraska                      11            53           7
Nevada                         4            30           5
New Hampshire                 14             3           1
New Jersey                    49             5           0
New Mexico                    38             9          10
New York                     131            42           6
North Carolina               131            58          11
North Dakota                   5            16          12
Ohio                         200            42          25
Oklahoma                      96            17          52
Oregon                        20            23          19
Pennsylvania                  45            59           0
Puerto Rico                    0            38           0
Rhode Island                   1             2           0
South Carolina                71            72           6
South Dakota                  18            13          13
Tennessee                    131            25           4
Texas                        247           115         131
Utah                           7            15          12
Vermont                        0             9           0
Virginia                      98            50           0
Virgin Islands                 0             3           0
Washington                    47            24          13
West Virginia                 18            22           0
Wisconsin                     79            29           1
Wyoming                        2            28           2
==========================================================
Total                      3,115         1,742         666
----------------------------------------------------------
\a Also included are American Samoa; Guam; the Marianas; Puerto Rico;
the Virgin Islands; and the District of Columbia. 

   SOME SSI RECIPIENTS REPORT
   CONFINEMENTS THEMSELVES
-------------------------------------------------------- Appendix II:1

SSI recipients (or their representative payees) are responsible for
reporting confinements to SSA.  Although self-reporting does not
appear to be the norm, on the basis of reports from recipients, SSA
made 5,736 SSI suspensions, identified $1.1 million in SSI
overpayments, and prevented $1.3 million of future SSI overpayments
between March 7, 1997, and November 27, 1998. 

In addition, SSA made 3,915 suspensions, identified $1.3 million in
OASI/DI overpayments it had already made, and prevented $2.2 million
of additional OASI/DI overpayments on the basis of beneficiary
reports. 

SUMMARY OF SSI SUSPENSIONS BY
STATE AND AGREEMENT TYPE
========================================================= Appendix III

                                        SSI suspensions at facilities
                                          with incentive agreements
                                        ------------------------------
                                                                   SSI
                                                                suspen
                                                                 sions
                                                                    at
                                                                facili
                                                                  ties
                                                                withou
                                                                     t
                                                                incent     Total
                                                                   ive       SSI
                                                                agreem  suspensi
State\a                                  State   Local   Total    ents       ons
--------------------------------------  ------  ------  ------  ------  ========
Alabama                                    162     397     559      71       630
Alaska                                     112       0     112       0       112
Arizona                                     54     520     574     119       693
Arkansas                                   167     511     678      71       749
California                                 888   6,762   7,650     497     8,147
Colorado                                    34     210     244     133       377
Connecticut                                795       0     795       0       795
Delaware                                   101       0     101       0       101
District of Columbia                        10       0      10       0        10
Florida                                    413   1,605   2,018     865     2,883
Georgia                                    220     601     821     158       979
Hawaii                                     184       0     184       0       184
Idaho                                       35      43      78      45       123
Illinois                                   165     819     984     322     1,306
Indiana                                    190     286     476     396       872
Iowa                                         0     165     165     201       366
Kansas                                       0     174     174     318       492
Kentucky                                   123     989   1,112      91     1,203
Louisiana                                  525   1,652   2,177      38     2,215
Maine                                       18     182     200      10       210
Maryland                                    50     154     204      25       229
Massachusetts                              334   1,070   1,404      45     1,449
Michigan                                   248   1,049   1,297     324     1,621
Minnesota                                  133      63     196     256       452
Mississippi                                 79     360     439     250       689
Missouri                                    46     488     534     386       920
Montana                                      9      23      32      63        95
Nebraska                                     0      10      10      87        97
Nevada                                       0      19      19     144       163
New Hampshire                               27     163     190       1       191
New Jersey                                 290   1,028   1,318      96     1,414
New Mexico                                  51     153     204      60       264
New York                                   456   3,473   3,929     447     4,376
North Carolina                             412     183     595     183       778
North Dakota                                10       9      19       6        25
Ohio                                       548   1,593   2,141     205     2,346
Oklahoma                                    88      90     178      49       227
Oregon                                      39      86     125      99       224
Pennsylvania                                 0   1,061   1,061   1,009     2,070
Puerto Rico                                  0       0       0       3         3
Rhode Island                               299       0     299       9       308
South Carolina                             243     266     509      64       573
South Dakota                                17      13      30       9        39
Tennessee                                   31     661     692      58       750
Texas                                    1,071   1,535   2,606     255     2,861
Utah                                        34      13      47      16        63
Vermont                                      0       0       0      69        69
Virginia                                   175     492     667     111       778
Washington                                 139     204     343     112       455
West Virginia                               14     100     114      63       177
Wisconsin                                  186     635     821     159       980
Wyoming                                      2       0       2      35        37
Unknown\b                                    0       0       0     283       283
================================================================================
Total                                    9,227  29,910  39,137   8,316    47,453
--------------------------------------------------------------------------------
Note:  The 5,736 suspensions due to self-reporting are not included. 

\a Also included are Puerto Rico and the District of Columbia. 

\b The information we had did not identify the location of the
facility where the SSI recipient was confined. 

(See figure in printed edition.)Appendix IV
COMMENTS FROM THE SOCIAL SECURITY
ADMINISTRATION
========================================================= Appendix III

*** End of document. ***