SSA "Rep Payee" Reform Report Issued

On July 30, 2007, the National Research Council released a report, entitled "Improving the Social Security Representative Payee Program: Serving Beneficiaries and Minimizing Misuse", that examines ways in which the Social Security Administration can improve its "Representative Payee Program" to minimize misuse of funds handled by institutional or individual representatives as payees for the benefit of recipients who are unable to manage funds personally.

This is its "sound byte" summary of findings:

Although most people who receive and manage Social Security benefits on behalf of other individuals are performing their duties well, the Social Security Administration's "representative payee" program should take steps to better prevent and detect the misuse of funds, says a new report from the National Research Council.

Data systems also need improvement, and key processes -- such as the way representatives account for the money they spend -- need to be revised.

The NRC had posted a list of study committee members on May 13, 2005. After more than two years of research & preparation, the committee's report was announced in a Press Release dated July 30, 2007, entitled "Most Social Security 'Representative Payees' Perform Duties Well, But Changes Needed to Better Prevent and Detect Misuse of Funds".

Such a report from the NRC should carry significant weight to the SSA. According to its website, the NRC is one of four organizations that comprise the United States National Academies, which are private, nonprofit institutions providing science, technology, & health policy advice under a congressional charter dating to 1916.

Abuses in the prior form of the SSA's "Representative Payee Program" had been highlighted in "Social Security Testimony Before Congress" presented on September 9, 2003, to the Senate Special Committee on Aging, by Fritz Streckewald, SSA Assistant Deputy Commissioner, Disability & Income Security Programs.

That program then became the subject of significant reforms enacted on March 2, 2004, when President Bush signed into law H.R. 743, the "Social Security Protection Act of 2004" (Public Law 108-203). See: President Signs into Law H.R. 743, the Social Security Protection Act of 2004, posted by the SSA.

Current publications by the SSA about the Representative Payee Program now reflect those changes. See: "A Guide For Representative Payees".

According to the NRC's Report, further changes are needed to prevent fraud & abuse in application of the substantial federal funds disbursed.

These are some key points from the Report, as quoted from the recent Press Release:

• More than 7 million recipients of Social Security benefits -- most of them children and disabled or elderly adults -- have a representative payee to receive and manage their funds; the representative can be an individual or an organization such as a group home. Each month, SSA distributes almost $4 billion to over 5.3 million representative payees.
• A national survey conducted as part of the study found that almost 95 percent of beneficiaries are "satisfied" or "very satisfied" with their representative payees. And both representatives and beneficiaries understand representatives' basic responsibilities, which include managing funds to help meet beneficiaries' needs for food, clothing, and shelter.
• However, many representatives are unaware of SSA's requirement that any unused funds must be placed in a special savings account for beneficiaries. SSA should enforce this requirement and encourage representative payees to conserve funds, the report says.
• Formal training also should be provided to representatives, along with better long-term support through field staff, toll-free telephone numbers to call for assistance, Web-based information, and other avenues.
• Based on [current abuse reporting] sources, SSA has reported the number of representative payees who misuse funds to be less than 0.01 percent of the payee population. The methods SSA uses to detect misuse of benefits are not reliable, however, the committee found.
• Although the annual accounting form may serve as a psychological deterrent to misuse, the current monitoring process is essentially an "empty threat" that can easily be subverted by a representative who fills out the form with plausible but inaccurate information.
• The form should be redesigned to obtain meaningful accounting data and representative payee characteristics that would help SSA evaluate the risk of misuse, the report says; this information should be stored in a database suitable for analysis by agency staff and researchers.
• In addition, the agency should test a system in which representative payees would use special debit cards linked to accounts with beneficiaries' funds -- an approach that would produce a continually updated electronic record of expenditures.
• SSA also should establish protocols for handling accusations of representatives' misspending made by beneficiaries or other concerned parties. Currently, local staff often respond to such allegations by finding a new representative without formally determining whether misuse took place. Those who are alleged to have misused funds are frequently not formally investigated and identified, and therefore could be reappointed as representatives in the future.
• Most importantly, SSA should shift from auditing a random sample of representative payees to conducting more targeted audits of those most likely to misspend funds, the report says. * * * The agency should establish specialized teams of auditors who can investigate samples of those at high risk of misusing funds.
• The report adds that special scrutiny should also be given to recipients of large lump-sum payments -- retroactive benefits for many months that are awarded in one payment. Such payments are unmonitored and appear to be misspent more often than regularly received payments.
• The report also recommends that SSA standardize the process for selecting representative payees, which currently varies across field offices. The agency should screen potential representatives, including organizations, for characteristics that raise the risk of misuse -- particularly credit problems and criminal backgrounds.
• It is difficult to find representative payees for certain populations of beneficiaries -- people with mental illness or substance abuse problems, for example, and those who are homeless. Professional payees who are compensated for their services might be better equipped to deal with the challenges these beneficiaries present, the report says.
  
• SSA should expand the fee-for-service part of its program to include small organizations and individuals. And to help mitigate the shortage of representatives, SSA should create a program to identify and train a pool of volunteers who can serve temporarily.

For more detail, you can access sections of the Report free through its Table of Contents, with extensive links, provided by the National Academies Press, or you can place a pre-publication order for the printed version of "Improving the Social Security Representative Payee Program: Serving Beneficiaries and Minimizing Misuse".

For those already administering funds as a SSA-designated "representative payee", be aware: The activities of that role will be scrutinized more carefully in the future; and violations can be federal crimes.

Update: 09/10/07:

This posting became an article, which was published in the Fall, 2007, issue of the Pennsylvania Bar Association's Elder Law Section Newsletter. See: PBA Elder Law Section's Fall, 2007 Newsletter (09/10/07).