Foster Care Program:

Improved Processes Needed to Estimate Improper Payments and Evaluate Related Corrective Actions

GAO-12-312, Mar 7, 2012

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Susan Ragland
(202) 512-8486
raglands@gao.gov

 

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What GAO Found

Although ACF has established a process to calculate a national improper payment estimate for the Foster Care program, the estimate is not based on a statistically valid methodology and consequently does not reflect a reasonably accurate estimate of the extent of Foster Care improper payments. In addition, the estimate deals with only about one-third of the federal expenditures for Foster Care, and is therefore incomplete. ACF’s methodology for estimating Foster Care improper payments was approved by the Office of Management and Budget (OMB) in 2004 with the understanding that continuing efforts would be taken to improve the accuracy of ACF’s estimates of improper payments in the ensuing years. ACF, however, continued to generally follow its initial methodology which, when compared to federal statistical guidance and internal control standards, GAO found to be deficient in all three phases of ACF’s estimation methodology—planning, selection, and evaluation. These deficiencies impaired the accuracy and completeness of the Foster Care program improper payments estimate of $73 million reported for fiscal year 2010.

ACF has reported significantly reduced estimated improper payments for its Foster Care maintenance payments, from a baseline of 10.33 percent for fiscal year 2004 to a 4.9 percent error rate for fiscal year 2010. However, the validity of ACF’s reporting of reduced error rates is questionable. GAO found that ACF’s ability to reliably assess the extent to which its corrective actions reduced improper payments was impaired by weaknesses in its requirements for state-level corrective actions. For example, ACF used the number of cases found in error rather than the dollar amount of improper payments identified to determine whether or not a state was required to implement corrective actions. As such, some states with higher improper payment dollar error rates were not required to implement actions to reduce these rates. GAO also found deficiencies in ACF’s Audit Resolution Tracking and Monitoring System that limited its ability to efficiently track and compare trends across states’ Single Audit findings.

Why GAO Did This Study

Each year, hundreds of thousands of the nation’s most vulnerable children are removed from their homes and placed in foster care. While states are primarily responsible for providing safe and stable out-of-home care for these children, Title IV-E of the Social Security Act provides federal financial support. The Administration for Children and Families (ACF) in the Department of Health and Human Services (HHS) is responsible for administering and overseeing federal funding for Foster Care. Past work by the HHS Office of Inspector General (OIG), GAO, and others have identified numerous financial deficiencies associated with the Title IV-E Foster Care program. GAO was asked to determine the extent to which (1) ACF’s estimation methodology generated a reasonably accurate and complete estimate of improper payments across the Foster Care program and (2) ACF’s corrective actions reduced Foster Care program improper payments. To complete this work, GAO reviewed HHS’s fiscal year 2010 improper payments estimation procedures, conducted site visits, and met with cognizant ACF officials.

What GAO Recommends

GAO is making seven recommendations to help improve ACF’s methodology for estimating improper payments for the Foster Care program and its corrective action process. HHS agreed that its improper payment estimation efforts can and should be improved, and generally concurred with four of the recommendations and agreed to continue to study the remaining three recommendations. GAO reaffirms the need for all seven recommendations.

For more information, contact Susan Ragland at (202) 512-8486 or raglands@gao.gov.

Status Legend:

More Info
  • Review Pending-GAO has not yet assessed implementation status.
  • Open-Actions to satisfy the intent of the recommendation have not been taken or are being planned, or actions that partially satisfy the intent of the recommendation have been taken.
  • Closed-implemented-Actions that satisfy the intent of the recommendation have been taken.
  • Closed-not implemented-While the intent of the recommendation has not been satisfied, time or circumstances have rendered the recommendation invalid.
    • Review Pending
    • Open
    • Closed - implemented
    • Closed - not implemented

    Recommendations for Executive Action

    Recommendation: To help ensure corrective action strategies effectively reduce Foster Care program improper payments, the Secretary of Health and Human Services should direct the Assistant Secretary for the Administration for Children and Families to enhance Audit Resolution Tracking and Monitoring System (ARTMS) reporting capabilities to provide data on the status of actions taken to address Single Audit findings concerning states’ Foster Care program payments, such as providing reporting capabilities to allow ARTMS users to search for specific audit findings by type of finding, grantee, state, region, or across years.

    Agency Affected: Department of Health and Human Services

    Status: Review Pending

    Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

    Recommendation: To help ensure corrective action strategies effectively reduce Foster Care program improper payments, the Secretary of Health and Human Services should direct the Assistant Secretary for the Administration for Children and Families to establish and implement procedures requiring periodic assessments of state-level improper payment target levels, including targets associated with Title IV-E secondary reviews, for the Foster Care program for which states are to implement and report on corrective actions.

    Agency Affected: Department of Health and Human Services

    Status: Review Pending

    Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

    Recommendation: To help ensure corrective action strategies effectively reduce Foster Care program improper payments, the Secretary of Health and Human Services should direct the Assistant Secretary for the Administration for Children and Families to develop and implement procedures requiring states to implement and report on corrective actions whenever a state’s estimated improper payment dollar error rate exceeds a specified target level for the program.

    Agency Affected: Department of Health and Human Services

    Status: Review Pending

    Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

    Recommendation: In order to more accurately and completely estimate improper payments for the Foster Care program and ensure that its methodology is statistically valid, the Secretary of Health and Human Services should direct the Assistant Secretary for the Administration for Children and Families to revise existing procedures for calculating a national improper payment estimate for the Foster Care program to include a statistically valid method for aggregating state-level margins of error to derive an overall, inflation adjusted, program estimate.

    Agency Affected: Department of Health and Human Services

    Status: Review Pending

    Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

    Recommendation: In order to more accurately and completely estimate improper payments for the Foster Care program and ensure that its methodology is statistically valid, the Secretary of Health and Human Services should direct the Assistant Secretary for the Administration for Children and Families to develop and implement procedures to provide a statistically valid methodology for estimating and reporting Foster Care program improper payments based on complete and accurate payment data.

    Agency Affected: Department of Health and Human Services

    Status: Review Pending

    Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

    Recommendation: In order to more accurately and completely estimate improper payments for the Foster Care program and ensure that its methodology is statistically valid, the Secretary of Health and Human Services should direct the Assistant Secretary for the Administration for Children and Families to augment procedures for estimating and reporting Foster Care program improper payments, to include administrative costs.

    Agency Affected: Department of Health and Human Services

    Status: Review Pending

    Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

    Recommendation: In order to more accurately and completely estimate improper payments for the Foster Care program and ensure that its methodology is statistically valid, the Secretary of Health and Human Services should direct the Assistant Secretary for the Administration for Children and Families to augment guidance to teams gathering state-level Foster Care program improper payment estimate data to include specific procedures to follow in identifying and reporting any underpayments and duplicate or excessive payment errors.

    Agency Affected: Department of Health and Human Services

    Status: Review Pending

    Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.