Welfare Payment Reduced:

An Improved Method for Detecting Erroneous Welfare Payments

GGD-78-107: Published: Feb 5, 1979. Publicly Released: Feb 5, 1979.

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The Department of Health, Education, and Welfare (HEW) requires that all Aid to Families with Dependent Children (AFDC) welfare cases be reviewed every 6 months to determine continued eligibility and correctness of payments. According to the District of Columbia (D.C.), limited staff allowed only 20 percent on its AFDC cases to be reviewed. It needed an effective method to identify potential error cases to permit more efficient use of manpower, to increase the number of error cases reviewed, and to materially reduce errors and incorrect payments.

Working with the D.C. Department of Human Resources, GAO developed three formulas that assign computer-derived numerical scores to cases that need to be reviewed and rank them in order of their error potential. The methods will help D.C. make better use of staff by having them concentrate their reviews on cases most likely to be in error, remove ineligible recipients from the welfare rolls, correct overpayments and underpayments to eligible recipients, and accumulate information to increase caseworker productivity and generally improve welfare program administration. D.C. reviewed only 15 percent of its welfare cases from May 1977, when it started using one of the formulas, through April 1978. During that period, erroneous welfare payments were reduced by $3.5 million, or nearly double the amount that was possible using previous methods. Other results will be reductions in Medicaid and food stamp benefits paid to erroneous AFDC cases. Because conditions change over time, the formula must be updated to ensure its continued usefulness in identifying welfare cases with high potential for error. The formula should be used as a supplement, and not a substitute, for complying with HEW regulations requiring all cases to be reviewed every 6 months.

Recommendation for Executive Action

  1. Status: Closed

    Comments: Please call 202/512-6100 for additional information.

    Recommendation: The Secretary, HEW, should distribute this report to state and local governments and emphasize to them that using formulas similar to the ones GAO developed could help in reducing incorrect welfare payments.

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