Multi-State Public Assistance Fraud Pilot Shows Promise

A consortium of five states were able to thwart cross-border, dual participation in the food stamp (SNAP) program by detecting fraud in real time.

by / August 26, 2015
A woman pays for her groceries using an Electronic Benefit Transfer card.(AP/Seth Wenig)

A coalition of five states just completed a year-long pilot of a new system designed to address the growing challenge of public assistance fraud. 

Led by Mississippi and supported by a grant from the USDA Food and Nutrition Service, the coalition established the National Accuracy Clearinghouse (NAC), a contributory system of beneficiary information that utilizes advanced linking technology and identity analytics to detect whether Supplemental Nutrition Assistance Program (SNAP) applicants are receiving benefits in another state.
 
The U.S. budget for SNAP exceeds $80 billion annually and the program serves more than 45 million Americans. 
 
“Prior to the NAC, states were operating SNAP and D-SNAP (the supplemental nutrition program for disaster refugees) independently within each state,” said Joel Savell, NAC project director. “In many cases, due to a lack of resources and other issues, there was no way to identify whether an applicant was already receiving assistance in another state.”
 
According to Savell, the problem of dual participation came to a head following Hurricane Katrina in 2005. D-SNAP benefits had been issued to multiple states affected by the disaster, including Georgia, Mississippi, Louisiana, Alabama and Florida, and officials realized that individuals were crossing state lines and applying for disaster assistance in multiple states. 
 
“Those states are so close in proximity that people could actually apply for benefits in two or three states in one day,” said Savell. “It became a program integrity issue. We realized we needed to share data and we needed to be able to act on that data.”
 
The five states consequently put together a working group to examine how they might collaborate on a regional scale. They ultimately landed on a clearinghouse concept wherein states could push data to a centralized repository. When someone applied for benefits in one state, that state could then query the repository in real time and instantly receive an alert if the applicant was already receiving assistance in one of the other states.
 
While states have previously employed a range of approaches to help detect fraudulent SNAP claims, including the mandated Public Assistance Reporting Information System (PARIS), until now, none of them have had the ability to work in real time. Using PARIS, for example, state agencies are required to submit information on all participants to a national system that looks for basic data matches and sends results back to states for action. As a result, the data is often not timely, with reporting lagging distribution of benefits and forcing agencies to focus on recovery tactics. But because the NAC solution uses advanced linking and identity resolution, it uses a “prevention approach” that reduces the occurrence of dual participation and overpayment in the first place.
 
Savell said the coalition put the concept together and pitched it to the federal Office of Management and Budget (OMB), which had funding set aside for program integrity improvement projects. OMB approved the project and provided funding for the states to begin developing it.
 
The coalition then went looking for a technology partner. Following a competitive bid, it selected LexisNexis Risk Solutions. 
 
The pilot project launched in June 2014 and concluded in May 2015. While a final report from Public Consulting Group, the company hired as an independent evaluator for the NAC project, is due at the end of August, early data indicates positive results around reduction in dual participation, prevention of dual participation and program cost savings. 
 
Alabama and Mississippi, for example, saw a 74 percent and 71 percent decrease respectively in the average number of dual participants per month when compared to pre-implementation statistics. Meanwhile, Mississippi has been able to prevent 95 percent of the individuals matched by the NAC from becoming dual participants. Based on program data, in Mississippi alone the NAC is identifying and preventing more than 300 dual participants on average each month for a total savings of more than $161,000 monthly or $1.9 million annually.
 
Based on its success and interest from other states thus far, NAC now has the potential to go national. 
 
“A lot of the bordering states to the southeast, particularly Texas, Arkansas, Tennessee and South Carolina, are very interested in joining the NAC to be able to gain what the five pilot states have gained out of this,” said Savell. “But there are also states in different regions that are interested in joining. So we're putting together a plan on how we would roll this out nationally.”
 
Once a final report is available, it will go to the USDA Food and Nutrition Service, which plans to prepare a report for Congress by Nov. 30. Congress will then decide whether it will back a national expansion of NAC.
 
“We're expecting a decision shortly after the first of the year,” Savell said. “For now, we’re having discussions with the states that are interested and helping them get in a position to move forward so they can get NAC into their pipelines as far as their technology projects might be concerned. It will take the average state nine to 12 months to implement this. In the meantime, we want to tell them everything they need to know from beginning to end on what to expect so they can make an informed decision.”
 
Should the project move forward on a national scale, states joining the NAC would enter into an agreement of participation, pay a fee to join, and be guided through a comprehensive onboarding process based on best practice models identified from the existing five-state consortium. Each state would learn how to build a contribution file, test file formats, process data, integrate the NAC solution into its existing business processes, and undergo staff training for daily use of the solution. 
 
Should the NAC go national, there’s also potential that a similar approach could be used for other benefits programs.
 
“One good thing about this solution is it's not only viable for SNAP and D-SNAP, it's also a viable solution for Medicaid, TANF, unemployment insurance and any other benefit program administered by a state or local government,” said Reshma Khatkhate, state policy coordinator for NAC.
 
Justine Brown Contributing Writer