This report evaluates the effectiveness and efficiency
of SSAs representative payee accounting review process.
Overview of the Representative Payee Program
The SSA administers two programs under The Social
Security Act--title II (RSDI) and title XVI (SSI). These
two programs provide monthly benefit payments of about $25 billion
to approximately 49.2 million beneficiaries and recipients who
are aged, disabled, or survivors.
Approximately 6.6 million beneficiaries, or slightly
more than 13 percent, cannot manage their own finances. If beneficiaries
cannot manage their own finances, Congress has authorized SSA to
pay the benefits to other individuals or organizations on their behalf.
The SSA calls these individuals and organizations representative
payees (hereinafter called payees).
Sections 205(j)(1) and 1631(a)(2) of The Social
Security Act authorize the Commissioner of SSA to appoint payees.
Payees may include, but are not limited to, parents with or without
custody of children, spouses, other relatives, legal guardians,
friends who show strong concern for the beneficiary`s welfare,
and institutions with or without custody of the beneficiary.
Payees` responsibilities include:
monitoring the beneficiary`s well-being;
SSA of situations that affect the beneficiary`s entitlement
to or amount of benefits (e.g., work); and
3. informing SSA of
in the payee`s own circumstances that would affect the payee`s
A major payee responsibility is to submit an annual
accounting form to SSA describing their use of benefits. Payees
receive the booklet, A Guide For Representative Payees,
during the SSA interview which describes a payee`s responsibilities
and the appropriate use of benefits. The booklet includes a worksheet
to record the use of benefits and a sample accounting form.
The Jordan Court and the Establishment of the
Annual Accounting Process
Prior to 1983, SSA did not have a mandate to conduct
accountings of funds that payees received on behalf of beneficiaries.
The Agency relied on its own initiative to create an accounting system.
In 1979, Ms. Jeanne Jordan brought a certified class action suit
against SSA challenging how it monitored payees. (Ms. Jordan alleged
that her payee was not using her SSA benefits properly to meet her
needs.) In its 1983 decision, the Jordan Court decided that
payees should be required to give a full accounting of how they spend
and save title II and title XVI benefits on behalf of beneficiaries.
Subsequently, Congress amended The Social Security Act to
require annual accounting of all payees except State mental institutions
participating in the onsite review program.
The SSA, in consultation with the Jordan court,
designed an annual accounting process--including the look and content
of the accounting form--to gather data from payees. The data helps
1. the continuing suitability of the payee,
2. the continuing need for representative payment,
3. whether the payee used benefits properly during
the 12-month report period.
The Annual Accounting Forms
To handle a high volume of annual accounting, SSA developed
standardized accounting forms--the SSA-623 and the SSA-6230. The
SSA-623 asks how payees used the funds for:
1. food and shelter;
2. other items such as clothing, education, personal items, and
medical and dental expenses; and
The form also asks
1. changes in the beneficiary`s
2. whether the payee or another person controlled the use
of the SSA benefits; and
3. their own felony convictions during
In July 1990, SSA introduced the SSA-6230 accounting
form for parents and, later, stepparents and grandparents
with custody of minor children receiving title II benefits. These
payees may report
their use of benefits for up to four children on the same
Since parents, stepparents, and grandparents represent the
of payee category, most title II payees now receive the SSA-6230.
The SSA-6230 differs from the SSA-623 primarily in:
(1) the payees` ability to account for up to four children on
the same form; and (2) the wording of the questions on custody and
use of benefits. Also, questions about funds on the SSA-6230 are
more general. Payees report: (1) the expenses for care and support
of the children; and (2) savings.
The Accounting Review Process
Each month, SSA uses its computerized beneficiary data
bases (the Master Beneficiary Record and the Supplemental Security
Record) to identify payees who are to receive annual accounting forms.
The SSA usually schedules payees to receive forms on the anniversary
of the month they were selected to be the payee, although SSA and/or
payees may designate an alternate report period. As a result of this
selection process, SSA sends initial accounting forms to approximately
one-twelfth of all payees each month.
The SSA uses a contractor to mail accounting forms
payees. If payees have not returned accounting forms within
3 months of the first mailing, the contractor mails a second request.
If the payees fail to respond to the second request, SSA staff attempt
to contact payees directly to obtain a completed accounting.
When payees return the mailed accounting requests,
SSA`s Wilkes-Barre Data Operations Center in Pennsylvania completes
the initial screening, data verification, and review of the returned
forms. The staff use a computer program to review the accounting
forms and decide whether the responses are acceptable or need further
review and/or explanation. (Responses requiring further review and/or
explanation are referred to as "exceptions.") If all responses
are acceptable and there are no relevant remarks, no further action
The SSA has undertaken initiatives to strengthen the
entire annual accounting process. To assist in this effort, SSA requested
that the OIG conduct a series of inspections to review and recommend
improvements to the annual accounting process. This report is one
in the series of reports that assess the risk of misuse of benefits
associated with various categories of payees. Other reports will
present data concerning demographics of payees; demographics of beneficiaries;
misuse or questionable use of benefits by payees; poor performance
by payees; the types, frequencies, and causes of exceptions to the
annual accounting forms; and nonresponding payees. A roll-up report
will provide overall recommendations for improving the accounting
Previous Department of Health and Human Services/Office
of the Inspector General (HHS/OIG) Studies
In 1994, the HHS/OIG released two reports on the effectiveness
and efficiency of SSA`s payee accounting process. We interviewed
various SSA staff in headquarters, program service centers, and field
offices to gather their experiences with and impressions of the process.
We also reviewed the process at the Wilkes-Barre Data Operations
Center in Pennsylvania. We found:
- the accounting review process may deter, but rarely
detects, misuse of SSA benefits;
- some aspects of the process are duplicative, inefficient,
- the SSA staff are frustrated by large workloads
and the time needed to resolve questionable accounting forms; and
- based on our recommendations, SSA increased some
responsibilities for the accounting review process for the Wilkes-Barre
Data Operations Center.
SSA`s Administrative Costs and Initiatives
in Annual Accounting
The cost of annual accounting has almost doubled over
the last 5 years. In Fiscal Year (FY) 1991, SSA spent approximately
$33.2 million to administer the accounting process. For FY 1996,
SSA estimated that it would spend almost $66.0 million for annual
To combat rising costs, SSA initiated several activities
to improve the payee accounting process:
- The SSA introduced the SSA-6230 accounting form
tailored for parents, stepparents, and grandparents with custody
of minor children who receive title II benefits.
- The Omnibus Budget Reconciliation Act of 1990 required
SSA to undertake several initiatives concerning representative
payees. A major initiative was the 1992 implementation of a new
computerized payee data base--the Master Representative Payee File.
It contains information about payees and their beneficiaries, and
SSA can access the data to identify trends in payee activity.
- Independent of the OIG`s work, SSA formed the
Quality Improvement Team, an internal advisory group of headquarters
and processing center staff. In 1993, the team analyzed the Wilkes-Barre
Data Operations Center`s processes. The team recommended changes
in the accounting forms, scanning equipment, and processes to reduce
manual workloads and streamline the process.
- The SSA also formed an external Representative
Payee Advisory Committee in June 1995. This group is studying
all aspects of the accounting process from payee selection through
monitoring payee performance. The Committee reported its findings
and recommendations to the Commissioner of SSA in November 1996.
We combined data collection from SSA`s computerized
beneficiary data bases and in-person interviews to determine payees` performance.
In September and October 1994, SSA prepared computerized files of
title II and title XVI beneficiaries with payees scheduled to receive
initial accounting forms in October 1994. From these files, we extracted
a sample of 3,010 payee cases for our study. These cases were roughly
1. relatives and nonrelatives;
2. custodial and noncustodial
3. title II and title XVI programs.
For our sample cases, we mailed out accounting forms
and, upon their return, determined the type and frequency of exceptions.
In addition, SSA staff attempted to interview every payee as well
as beneficiaries, custodians, and collateral contacts as appropriate
and possible. Interviewers attempted to conduct all interviews face-to-face
and in the respondents` homes. Interviewers used structured guides
during these interviews.
We used the collected information to describe: (1)
payees` experiences with the accounting review process; and (2)
payees` difficulties in completing the annual accounting form.
Appendix B contains a detailed description of our methodology. We
weighted our results to the universe of beneficiaries with payees
scheduled to receive initial accounting forms in October 1994.
This inspection was conducted in accordance with the Quality
Standards for Inspections issued by the President`s
Council on Integrity and Efficiency.
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