Legislation Needed To Improve Program for Reducing Erroneous Welfare Payments

HRD-76-164: Published: Aug 1, 1977. Publicly Released: Aug 1, 1977.

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Some financial incentive is needed to assure that States continue to seek appropriate corrective actions to the high number of erroneous payments made to recipients of aid-to-families-with-dependent-children.

Although error rates have declined since 1973, nearly $500 million a year in Federal funds is being misspent. The Department of Health, Education, and Welfare (HEW) presently lacks the means for withholding funds and will continue to encounter problems in implementing any financial incentive provision administratively. Through 1976, HEW has overstated accomplishments in reducing errors. Changes in administrative practices reduced errors, but they did not necessarily reduce welfare payments.

Matter for Congressional Consideration

  1. Status: Closed

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

    Matter: Congress should enact legislation to establish an incentive to encourage better administration and cost control for the program. Such legislation should provide for a payment error rate rather than a case error rate as the basis for measuring State accomplishments in reducing error.

Recommendation for Executive Action

  1. Status: Closed

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

    Recommendation: To improve the quality control program administration, the Secretary of HEW should revise the HEW basis for determining program accomplishments so that savings are determined on the basis of valid statistical projections and by considering only error reductions that directly reduce program costs; base HEW reporting of State errors on dollar amounts rather than case error rates; and assist States in identifying cost-effective corrective actions.

    Agency Affected:


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