HHS Ability To Effectively Implement Incentive Funding for State Information Systems in the Aid to Families With Dependent Children Program

HRD-81-119: Published: Jun 29, 1981. Publicly Released: Jun 29, 1981.

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New legislation authorized the Federal Government to begin paying 90 percent of the costs incurred by States for the planning, design, development, or installation of Statewide mechanized claims processing and information retrieval systems for administering the Aid to Families with Dependent Children (AFDC) program. Currently, the Federal Government pays 50 percent of both development and operating costs related to these systems. The legislation contains several specific conditions for obtaining increased Federal funds. To meet these requirements, the Department of Health and Human Services (HHS) has developed a general systems design, the Family Assistance Management Information System (FAMIS), which provides a standard approach for State AFDC systems development activities. FAMIS is to serve as a system standard that States must meet to be eligible for the increased Federal matching funds. Because FAMIS has not been pilot tested to demonstrate its feasibility, GAO has expressed concern that the FAMIS requirements: (1) have not been shown to be cost beneficial for all State systems, (2) do not contain sufficiently specific performance standards for evaluating the quality of State developed systems, (3) do not adequately address the internal controls needed to ensure that State systems function as mandated by legislation, and (4) do not facilitate compatibility of State AFDC systems with systems used to administer other welfare programs. Therefore, GAO reviewed HHS policies and procedures for approving the administration of Federal incentive funding of State AFDC systems and discussed their implementation with HHS officials.

The cost benefit analysis conducted to demonstrate that savings would result from implementation of FAMIS on a state-by-state basis was based on unsupported assumptions and very general data which do not consider the diversity among states in quality of program administration, size, and complexity. GAO does not believe that there is adequate cost-benefit analysis justification for FAMIS. The performance standards currently included in the FAMIS general systems design are inadequate for assisting the states in meeting the basic requirements of the law to design efficient and effective systems to administer the AFDC program. In addition, the performance standards are inadequate for evaluating whether state systems are performing efficiently and effectively. The general systems design fails to address or inadequately addresses the internal controls that states should design into their systems in order to produce timely and reliable information. Although the legislation also requires that state AFDC systems must be compatible with systems used to administer social service programs and Medicaid, GAO believes that FAMIS does not facilitate the development of integrated systems and thus, does not provide guidance to states on how FAMIS can be incorporated into integrated systems in existence or under development.

Recommendations for Executive Action

  1. Status: Closed - Not Implemented

    Comments: HHS believes that the FAMIS general system design and its regulation guidelines contain functional performance standards; it disagrees that they should be translated into quantifiable performance standards; states would view them as overly restrictive. GAO believes that without quantification, neither HHS nor the states would have a means to measure system efficiency or effectiveness.

    Recommendation: The Secretary of Health and Human Services should direct that HHS develop performance standards for assisting states' system development activities and for evaluating state systems developed in accordance with the FAMIS general systems design.

    Agency Affected: Department of Health and Human Services

  2. Status: Closed - Not Implemented

    Comments: HHS believes that its regulation guidelines provide adequate internal controls for system and data security and that certain internal processing controls GAO advocates are unnecessarily detailed and overly prescriptive for what are essentially standard data processing practices. GAO believes that the FAMIS internal controls are inadequate to ensure that systems function reliably.

    Recommendation: The Secretary of Health and Human Services should direct that HHS expand the FAMIS general systems design to include adequate internal controls which would assist the states in meeting the requirements of the law.

    Agency Affected: Department of Health and Human Services

  3. Status: Closed - Not Implemented

    Comments: HHS believes that this recommendation would require an additional benefit analysis beyond that already addressed in the law. GAO believes the HHS cost-benefit analysis to meet the requirements of P.L. 96-265 was based on unsupported assumptions and very general data that did not consider state diversity and used national error rate reductions as the sole benefit basis for estimation.

    Recommendation: The Secretary of Health and Human Services should direct that HHS develop cost-benefit data on the FAMIS that applies to states with different caseloads and error rates.

    Agency Affected: Department of Health and Human Services

  4. Status: Closed - Not Implemented

    Comments: HHS believes that this recommendation is contrary to the provisions of law by abrogating the rights of states to funds provided under law and that if Congress wanted it to conduct pilot demonstrations before implementation, it would have so specified funds. GAO believes that, until FAMIS has been fully tested, there is no assurance that it will meet the requirements of P.L. 96-265.

    Recommendation: The Secretary of Health and Human Services should defer implementing P.L. 96-265 nationwide until the FAMIS general systems design is fully tested in several states which have differences in program complexity, caseload size, and program administration.

    Agency Affected: Department of Health and Human Services

  5. Status: Closed - Not Implemented

    Comments: HHS believes that principles developed will prevent duplicative county implementation and expenditures. To minimize the impact of county differences on FAMIS development in states with county-administered programs, requirements should be developed that include provisions for predeveloped assessments of differences and formal state-county agreements for a statewide FAMIS-type system.

    Recommendation: The Secretary of Health and Human Services should direct HHS to develop requirements to prevent expensive county-by-county implementation of state systems.

    Agency Affected: Department of Health and Human Services

  6. Status: Closed - Not Implemented

    Comments: HHS believes that the FAMIS design accommodates integration, as evidenced by state planning documents proposing integrated systems and by identification of requirements for enhancements to facilitate integrated systems development. GAO believes that, until FAMIS has been fully tested as an integrated system, there is no assurance that it will function as intended at an acceptable cost.

    Recommendation: The Secretary of Health and Human Services should direct that HHS identify ways to enhance the FAMIS general systems design so that it can be used as an integrated system for processing AFDC, Medicaid, Food Stamps, and social services program activities.

    Agency Affected: Department of Health and Human Services

 

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