Core Strategies to Reduce Improper Payments
The U.S. Department of Labor is implementing a number of strategies to help states address Unemployment Insurance (UI) improper payments. Reducing the improper payment rate requires strong federal-state collaboration and intense focus by the entire UI system. The Department announced a call to action to all states to ensure that payment integrity remains a top priority and to foster the development of state specific strategies to prevent improper payments. This call to action reinforced that "everyone owns integrity" across the UI system and provided the expectation that states continuously assess their root causes of improper payments and implement state-specific action plans to reduce their rates.
Core Strategies to Reduce Improper Payments
For Fiscal Year (FY) 2017, the Department is tracking state implementation of seven core strategies which can be used to effectively lower the rate of UI improper payments. Many states are already implementing these strategies, and the Department is working to highlight best practices, encourage states to replicate what works.
State Quality Service Plan (SQSP) / Strategic Plan Development — The SQSP is intended to be a dynamic document states use not only to ensure strong program performance, but also to guide key management decisions, such as where to focus resources. The SQSP should focus state efforts to ensure well-balanced performance across the range of UI activities. The SQSP also is designed to be flexible so as to accommodate, among other things, multi-year planning and significant changes in circumstances during the planning cycle. States can use this flexibility to incorporate the elements from the program Integrity strategic plans developed by their Cross-Functional Task Forces into the SQSP to address improper payments.
State Information Data Exchange System (SIDES) Implementation — SIDES is a web based system that allows electronic transmission of UI information requests from UI agencies to multi-state employers and/or Third Party Administrators, as well as transmission of replies containing the requested information back to the UI agencies. The current implementation of SIDES allows for the exchange of Separation and earnings verification information.
Treasury Offset Program (TOP) — Implementation of the U.S. Department of the Treasury's TOP to recover certain unemployment debts from Federal income tax refunds.
Claimant-Employer Messaging — Implementation of a statewide claimant-employer messaging campaign designed to: 1) improve claimants' awareness of their responsibility to report any work and earnings if they are claiming benefits, 2) improve claimants' understanding of work search requirements as a condition of eligibility for benefits, and 3) improve employers' awareness of their responsibility to respond to state requests for separation information and/or earnings/wage verifications. A detailed claimant-employer messaging toolkit was published in UIPL No. 11-12 with sample products for states to consider incorporating into their messaging campaigns.
Employment Service (ES) Registration — Implementing technology or other solutions designed to address improper payments due to a claimant's failure to register with the state's Employment Service or job bank in accordance with the state's UI law.
National Directory of New Hires (NDNH) Recommended Operating Procedures (ROP) — For several years, the Department has encouraged states' use of the NDNH to reduce improper payments in the UI program. The NDNH came about as a result of The Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (PRWORA) and include state directories of new hires (SDNH) and a national directory of new hires. These new hire directories, which were created for the purpose of child support enforcement, have allowed for improved access to wage data and data from other states regarding new hires and wages. Studies conducted about NDNH have concluded that the use of this tool results in earlier detection of improper payments, therefore increasing the likelihood of recovery. Detailed ROPs were published in UIPL No. 19-11 to provide states with information about best practices in conducting this match.
UI Integrity Center of Excellence - DOL has developed the successful state-driven UI Integrity Center of Excellence with the goal of promoting the development and implementation of innovative integrity strategies to support all states, including the prevention and detection of fraud, in the UI program. The Center is focused on the following activities:
- The Center completed the development of a secure portal to enable rapid exchange of information among states about UI fraud schemes. This portal was launched in May 2014 with information on successful state integrity practices, information about the Center and its deliverables, and ways for states to share integrity practices with the UI community. Enhancements were made in April 2016 to enable state fraud investigators to exchange encrypted information about ongoing and active cases to assist prevention efforts.
- The Center is working with a vendor and three states to pilot a data analytics and predictive modeling tool to enable the prioritization of cross-match data for the prevention and detection of improper payments. Following the completion of the pilot in the 1st quarter of CY 2017, the Center will disseminate information and training on the tool, which will be available to all states across the UI system.
- The Center has developed and is offering program integrity training for states through the UI Community of Practice website. These modules include instructor-led and self-paced content addressing improper payments prevention, fraud detection, eligibility determinations, and fact finding. The Center is also establishing a UI National Integrity Training Academy with self-paced and instructor-led training modules that can result in credentials. The Academy is planned to launch by the 4th quarter of FY 2017.
- DOL is working with the Center and eight states to design and build a secure data hub for state UI agencies to access characteristics of known UI fraud claims as well as incarceration data, death records, identity theft data, payroll deposit information, foreign travel records, employer quarterly Federal tax returns, fictitious employer schemes, and other data for cross-matching purposes. This data hub is planned to go live in the 3rd quarter of FY 2017.
- The Center will assist with states' internal control efforts by developing a model BPC blueprint. The Center has engaged states to conduct an assessment of current UI integrity efforts, to support implementation of an outreach strategy to solicit information on integrity issues, and create a model BPC blueprint. The information will also be used to highlight integrity practices that should be part of state UI IT Modernization efforts, including state successful practices, return on investment information, and "how-tos" in areas such as collections, fraud identification, cross matching, and identifying fictitious employers. These activities are due for completion in the 1st quarter of FY 2017.
- In September 2015, the Center hosted an integrity symposium with states to showcase products and tools that individual states are using to improve UI program integrity. The Center is planning its next national symposium for December 2016. This event will provide an opportunity to highlight the Center’s efforts directed at developing innovative tools and strategies, training, and a platform for sharing state best practices for reducing improper payments that will benefit the entire UI system.