[Federal Register Volume 61, Number 176 (Tuesday, September 10, 1996)]
[Proposed Rules]
[Pages 47680-47690]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-22883]
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DEPARTMENT OF AGRICULTURE
Food and Consumer Service
7 CFR Parts 271 and 275
[Amdt No. 373]
RIN 0584-AB38
Food Stamp Program: 1995 Quality Control Technical Amendments
AGENCY: Food and Consumer Service, USDA.
ACTION: Proposed rule.
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SUMMARY: The Food and Consumer Service is proposing technical changes
to the Food Stamp Program's Quality Control System which will reduce
the workload on State agencies and improve the efficiency of the
quality control system.
DATES: Comments must be received by November 12, 1996, in order to be
assured of consideration.
ADDRESSES: Please address all comments to John H. Knaus, Branch Chief,
Quality Control Branch, Program Accountability Division, Food Stamp
Program, Food and Consumer Service, USDA, 3101 Park Center Drive,
Alexandria, Virginia 22302. All written comments will be open to public
inspection during regular business hours (8:30 a.m. to 5 p.m., Monday
through Friday) at Room 904, 3101 Park Center Drive, Alexandria,
Virginia.
FOR FURTHER INFORMATION CONTACT: John H. Knaus, at the above address,
or by telephone at (703) 305-2472.
SUPPLEMENTARY INFORMATION:
Executive Order 12866.
This proposed rule has been determined to be significant and was
reviewed by the Office of Management and Budget under Executive Order
12866. It has been determined that the following cost-benefits would
result from adoption of the provisions of this rule:
1. State agency sample size. The provision reducing the minimum
sample size for active and negative case reviews will benefit those
State agencies who will be required to review fewer cases. These are
States choosing the ``smaller range'' in their sample plans with
current minimum active or negative case sample sizes above the minimum
sample size. In Fiscal Year 1992, before the waiver was available,
States reviewed nearly 52,000 active and over 30,000 negative cases.
Assuming a 15 percent reduction in cases, under this provision, States
will be required to review nearly 8,000 fewer active cases and about
4,500 fewer negative cases. Assuming that each active case review costs
$180 and each negative case review costs $40 (taken from studies of
active and negative case reviews and adjusted to account for wage
inflation), total potential savings for States and FCS combined is an
estimated $1.6 million. Savings for States are estimated at $800,000.
2. Home visits. It is estimated that minimal savings in quality
control expenditures will result from this provision as it is expected
that State agencies will channel the resources into other aspects of
quality control operations.
3. Error dollar tolerance level. The provision to modify the
tolerance level from $5.00 to $10.00 for excluding small errors will
benefit those State agencies which qualify for enhanced funding. Based
on Fiscal Year 1995 data, State agencies would qualify for an
additional $562,811.
The Department has examined the impact on potential State agency
liability calculations from the combined effect of changing the error
dollar tolerance level and the case completion standard. Data from two
fiscal years has been analyzed to determine how these changes would
effect liability amounts. The data shows that in one year the potential
liability would have been higher, and in another year it would have
been lower. In both situations the amount of the change was under one
million dollars.
It is not anticipated that any other provisions of this rule will
have any significant impact on the costs or benefits to either the
State agencies or FCS.
Executive Order 12372.
The Food Stamp Program is listed in the Catalog of Federal Domestic
Assistance under No. 10.551. For the reasons set forth in the final
rule at 7 CFR part 3015, subpart V and related Notice (48 FR 29115,
June 24, 1983), this Program is excluded from the scope of Executive
Order 12372 which requires intergovernmental consultation with State
and local officials.
[[Page 47681]]
Executive Order 12778.
This proposed rule has been reviewed under Executive Order 12778,
Civil Justice Reform. This rule is intended to have preemptive effect
with respect to any State or local laws, regulations or policies which
conflict with its provisions or which would otherwise impede its full
implementation. This rule is not intended to have retroactive effect
unless so specified in the ``Effective Date'' section of this preamble.
Prior to any judicial challenge to the provisions of this rule or the
application of its provisions, all applicable administrative procedures
must be exhausted. In the Food Stamp Program the administrative
procedures are as follows: (1) For program benefit recipients--State
administrative procedures issued pursuant to 7 U.S.C. 2020(e)(10) and 7
CFR 273.15; (2) for State agencies--administrative procedures issued
pursuant to 7 U.S.C. 2023 set out at 7 CFR 276.7 (for rules related to
non-quality control liabilities) or Part 283 (for rules related to
quality control liabilities); (3) for program retailers and
wholesalers--administrative procedures issued pursuant to 7 U.S.C. 2023
set out at 7 CFR 278.8.
Regulatory Flexibility Act
This action has also been reviewed in relation to the requirements
of the Regulatory Flexibility Act of 1980 (5 U.S.C. 601 through 612).
William E. Ludwig, Administrator of the Food and Consumer Service, has
certified that this rule does not have a significant economic impact on
a substantial number of small entities. The requirements will affect
State and local agencies that administer the Food Stamp Program.
Paperwork Reduction Act
Agency Information Collection Activities: Proposed Collection; Comment
Request; FCS-380, Integrated Quality Control Review Worksheet
In accordance with the Paperwork Reduction Act of 1995, this notice
invites the general public and other public agencies to comment on the
proposal to extend approval for information collection used on form
FCS-380, the Integrated Quality Control Review Worksheet. The
provisions of this rule do not impact on the approved information
collection burden.
Written comments must be submitted on or before November 12, 1996.
Send comments and requests for copies of this information
collection to: John H. Knaus, Chief, Quality Control Branch, Program
Accountability Division, Food and Consumer Service, U.S. Department of
Agriculture, Room 904, 3101 Park Center Drive, Alexandria, VA 22302.
Comments are invited on: (a) Whether the proposed collection of
information is necessary for the proper performance of the functions of
the agency, including whether the information will have practical
utility; (b) the accuracy of the agency's estimate of the burden of the
proposed collection of information, including the validity of the
methodology and assumptions used; (c) ways to enhance the quality,
utility, and clarity of the information to be collected; and (d) ways
to minimize the burden of the collection of information on those who
are to respond, including through the use of automated, electronic,
mechanical, or other technological collection techniques or other forms
of information technology.
All responses to this notice will be summarized and included in the
request for OMB approval. All comments will also become a matter of
public record.
For further information contact: John H. Knaus, (703) 305-2474.
Title: Integrated Quality Control Review Worksheet.
OMB Number: 0584-0074.
Form Number: FCS-380.
Expiration Date: 03/31/97.
Type of Request: Extension of a currently approved information
collection.
Abstract: Quality Control monitors and reduces the rate of error in
determining basic eligibility and benefit levels for the Food Stamp
Program. The form FCS-380 serves as the source document from which
other reports are compiled by State officials to be sent to the federal
office in Washington, DC.
Affected Public: Individuals or households; State or local
governments.
Estimated Number of Respondents: 61,840.
Estimated Time per Response: 9 Hours.
Estimated Total Annual Burden: 558,019 Hours.
Background
Since 1988, the Food and Consumer Service (``FCS'') has published a
number of proposed and final rules, all of which implemented changes in
the Food Stamp Act of 1977, as amended, 7 U.S.C. 2011, et seq., (the
``Act''). These changes, required by the Hunger Prevention Act of 1988,
Pub. L. 100-435 (the ``HPA'') and/or the Mickey Leland Childhood Hunger
Relief Act of 1993, Chapter 3, Title XIII of the Omnibus Budget
Reconciliation Act of 1993, Pub. L. 103-66 (the ``Leland Act'')
affected the way FCS calculates liabilities and enhanced funding, and
the way State agencies may appeal those liabilities.
During this time, certain operational issues have arisen in quality
control (``QC''). This action proposes to resolve these issues. FCS'
intentions are to reduce the workload on both the State agencies and on
itself and to arrive at final review findings, error rates,
liabilities, and enhanced funding amounts more efficiently. The
proposed changes would: (1) Clarify the process for conducting a
quality control review of negative cases and add suspended cases, which
are cases that are certified for the Food Stamp Program (``Program'')
but do not receive benefits, to the sample universe of negative cases;
(2) permit State agencies to reduce their sample sizes; (3) clarify the
minimum size of the Federal subsample; (4) clarify State sampling
procedures; (5) change the formulas for calculating Federal subsample
sizes; (6) increase the current tolerance level for excluding small
errors; (7) modify the current requirement that requires that most
quality control interviews be conducted in the recipient's home; (8)
adjust the standard for the completion of quality control reviews from
the current standard of 100 percent to a 98 percent completion
requirement; and (9) clarify the circumstances under which the Federal
findings of subsampled reviews will be changed.
Negative Case Reviews
This action proposes to clarify issues surrounding the review of
negative cases and to expand the universe of cases to be reviewed.
These proposals are the culmination of an FCS look at the quality
control review process for negative cases, including an examination of
that process in response to Congress' request contained in the HPA, 7
U.S.C. 2025(d). As a result of that request, FCS entered into a
research contract with Abt Associates to develop and pilot test
alternative approaches to measuring the extent of nonpayments to
eligible households. In addition, prior to the study conducted by Abt
Associates, the General Accounting Office (GAO) was asked by the
Chairman, Subcommittee on Domestic Marketing, Consumer Relations, and
Nutrition, House Committee on Agriculture, to review the accuracy of
State reported error rates for improper denials and terminations. As a
result of its review, GAO made three recommendations: (1) That FCS
annually review a sample of each State's quality control reviews of
denials or terminations and adjust States' reported denial or
termination error rates accordingly; (2) that FCS examine alternatives
to encourage States
[[Page 47682]]
to reduce improper denial or termination error rates, including seeking
authority to hold States financially liable for their improper denials
or terminations; (3) that FCS monitor States' quality control review
practices to ensure that the appropriate cases are reviewed and the
required number of reviews are completed on time. Based on the results
of the study, FCS determined to strengthen monitoring of the negative
action review process, renew emphasis on corrective action to reduce
improper negative actions, and hold States accountable within existing
statutory and regulatory authorities.
With this background information in mind, FCS determined that
certain changes to the regulations governing negative case reviews are
warranted.
1. Federal Monitoring of State Agency Error Rates for Negative Case
Reviews
FCS is proposing to clarify the requirements and procedures for
Federal monitoring of the negative case reviews conducted by State
agencies. Currently under regulations at 7 CFR 275.3(c) FCS is required
to validate a State agency's negative case error rate only when the
State agency's payment and underissuance rate appear to entitle it to
enhanced funding and its reported negative case error rate is less than
the national weighted mean negative case error rate for the prior
fiscal year.
The regulation at 7 CFR 275.3(c) only provides the minimum level at
which case review and validation are required. In practice, as
circumstances warranted, review activity has been expanded. For
example, review activities were expanded in response to the GAO audit.
In addition, regional offices periodically review the quality of State
agencies' negative case review processes. Unlike the results of the
validation reviews, the results of these periodic reviews are not used
to determine eligibility for enhanced funding, but rather to ensure the
accuracy of States' procedures in conducting reviews. FCS is proposing
changes to clarify that FCS retains its authority to conduct these
periodic reviews, independent of the minimum validation activity
required by regulation. The proposal is to require validation when
both: (1) A State agency's reported negative case error rate is below
or within two percentage points above the national weighted mean
negative case error rate for the prior fiscal year; and (2) its payment
error rate appears to entitle it to enhanced funding. It is anticipated
that this increased validation activity will have a minimal impact on a
State agency's workload. It will increase the number of cases reviewed
by some FCS Regional offices. The proposed regulation clarifies that
FCS may review a portion or all of a State agency's cases as FCS deems
appropriate.
2. Inclusion of Suspended Cases in the Negative Sample Universe
The quality control system has two sampling universes: the active
case universe and the negative case universe. The universe for active
cases includes households which have been certified eligible for food
stamp benefits and which have received benefits for the sample month.
The negative case universe includes households whose applications for
food stamp benefits were denied or whose certification for
participation in the Program has been terminated.
In certain cases, State agencies are allowed or required to suspend
a food stamp household instead of denying its application or
terminating its participation in the Program. Suspended households are
certified for the Program, but do not receive any benefits. Households
under monthly reporting systems may be suspended for one month rather
than terminated if they become temporarily ineligible due to a periodic
increase in recurring income, such as receipt of a fifth weekly
paycheck during a month (7 CFR 273.21(n)(1)). Non-categorically
eligible households of three or more persons which are eligible but
entitled to zero benefits because of excess income may be certified and
suspended rather than denied, and categorically eligible households who
are entitled to zero benefits due to excess income must be suspended,
since they cannot be denied under the provisions of the Act 7 U.S.C.
2014(a) and regulations (7 CFR 273.10(e)(2)(iii)(B); 7 CFR
273.2(j)(2)(vii)(F); 7 CFR 273.2(j)(4)(iii)(C)).
Under current regulations, suspended cases are excluded from both
the active and negative case universes of the Program quality control
system. FCS believes that these cases should be reviewed because of the
potential for underissuances, and that it is more logical to review
these cases with denied and terminated cases (negative cases) rather
than with cases that received benefits (active cases). With this rule,
FCS is proposing to include suspended cases in the negative case
universe.
3. Use of the Action Date To Determine the Month in Which Negative
Cases Are Included in the Sample Universe; Clarification of Meaning of
``Break in Participation'' for Suspended and Terminated Cases
In order to have an accurate measure of the correctness of negative
actions, consistency in application of quality control procedures is
necessary. FCS is concerned that problems State agencies have
experienced in constructing the sample frame for negative cases may
have resulted in failure to include certain cases in the negative
sample universe. For example, in some cases when a household is denied
and subsequently reapplies and is certified, the initial denial or
denials have not been considered to be subject to review as negative
actions. FCS is also concerned that there be consistency in the
procedures used to determine whether an action to suspend or terminate
a household has actually resulted in a suspension or termination.
Current regulations include a negative case in the sample universe
for the month for which the denial or termination is effective. The
regulations exclude from the negative universe any negative actions
which were taken against a household which did not result in the
household actually being denied or terminated. Sampling problems occur
if States cannot sample the months for which the action is effective.
This occurs because the actions themselves may occur after, during, or
before the month for which the action is effective. FCS proposes to
allow State agencies to sample the action date rather than the
effective date to make sampling easier.
As a result of our review of these issues, FCS is proposing to
revise the regulations to include denied, suspended, and terminated
cases in the negative case universe in the month in which the action to
deny, suspend, or terminate food stamp benefits was taken, and clarify
that an action to terminate or suspend a household has actually
resulted in a suspension or termination if the household experiences a
break in participation in the program as a result of deliberate State
agency action. The intent of these changes is to allow State agencies
to construct consistent and reliable sampling plans for negative
actions, and to ensure that negative actions which have the result of
denying benefits to clients are subject to review, even if the actions
are subsequently reversed, unless the reversal occurs under specified
conditions and within specified timeframes.
[[Page 47683]]
FCS will allow State agencies to specify in their sampling plans
the date on which the negative action would be considered to have taken
place, and which would be considered the review date. Depending on the
characteristics of individual State systems, this could be the date on
which the eligibility worker makes the decision to suspend, deny, or
terminate the case, the date on which the decision is entered into the
data processing system, the date of the notice to the client, or the
date the negative action becomes effective. A State may choose to use
different dates as the date of the action for denials and suspensions/
terminations. For example, it may choose to sample denials based on the
date of the eligibility worker's decision, but sample suspensions and
terminations based on the date the action goes into effect, to avoid
sampling cases which are not subject to review because the negative
action was never implemented. FCS' concern is not with the particular
date which the State agency considers to be the action date, but rather
the identification of a specific date associated with each negative
action which can be applied consistently across all negative cases of a
given type, and which will allow the State agency to ensure that all
negative actions which are subject to review are included in the
negative sample frame. Thus, if the State agency elects to use a date
other than the decision date to construct its sample frame for negative
cases, it is possible that the review date for these cases may fall
outside the sample month. Negative cases shall not be dropped from the
sample frame because the review date falls outside the sample month.
4. FCS Will Not Establish a Dollar Loss Rate for Negative Cases
One aspect of negative case reviews that was of interest to
Congress was the establishment of a dollar loss rate. During its study,
Abt Associates looked at the possibility of developing a reliable
dollar loss figure. In its recommendations, Abt stated a partial
measure of loss could be determined by the frequency and amount of
benefits restored to improperly denied or terminated households. While
FCS recognizes the possibility of establishing a partial measure, it
does not believe that an effort to obtain such limited information is
warranted in light of the increased workload and reporting burdens that
would fall to the State agencies. In addition, FCS does not believe
that the use of restored benefit information translates directly to a
dollar loss figure for these cases. We have not proposed the
establishment of a dollar loss rate in this rulemaking.
State Agency Minimum Sample Sizes for Active and Negative Case
Reviews
FCS now requires each State agency to choose one of two ranges for
calculating its minimum sample size for active case reviews. One is a
range of 300 to 2400 reviews per year. The other, the ``smaller
range'', is a range of 300 to 1200 reviews per year. The exact size of
each State agency's minimum sample size for each range is determined by
formulas that base sample size on the size of State Program caseloads
(7 CFR 275.11(b)(1)).
If a State agency wants to choose the ``smaller range'' it must
include in its sampling plan a statement that it ``will not use the
size of the sample chosen as a basis for challenging the resulting
error rates'' (currently at 7 CFR 275.11(a)(2)(iv)). If a State agency
does not include that statement in its sampling plan, it must calculate
its minimum sample size for active case reviews using the 300 to 2400
review range.
The regulations now offer State agencies only one range for
determining minimum sample size for negative case reviews. That is a
range of 150 to 800 reviews (7 CFR 275.11(b)(2)).
There are no maximum sample sizes; a State agency may select and
review any number of cases above its minimum.
FCS has granted waivers of the regulations on minimum sample sizes
for active case reviews, in order to improve the efficiency of the
quality control system without significantly affecting the reliability
of quality control information. In order to make these temporary
reductions permanent and to determine the appropriate conditions for
these reductions, FCS is proposing to include the terms of these
waivers in the Food Stamp Program regulations. FCS is also proposing to
offer State agencies a choice of ranges to use in determining minimum
sample sizes for negative case reviews that is similar to the choice of
ranges for determining minimum sample sizes for active case reviews.
FCS is proposing to reduce the size of the ``smaller range'' for
minimum sample sizes for active case reviews. The proposed range would
be 300 to 1020 reviews, a 15 percent reduction at the top from the
current range.
In order to use the minimum sample size calculated from the 300 to
1020 case range, a State agency would still have to include in its
sampling plan the statement from current 7 CFR 275.11(a)(2)(iv) quoted
above. The purpose of the statement, as described in the February 17,
1984 preamble to the rule that established the requirement for the
statement, was to serve as ``a means of assuring that State agencies
consider what degree of reliability they need.'' (49 FR 6295).
There would be no other conditions on a State agency's use of the
revised ``smaller range''. It would be up to the State agency to
determine the most effective use of available resources.
FCS is not proposing to reduce the lower bound of the minimum
sample size ranges for active case reviews. For those State agencies
whose sample size is at the lower bound of the ranges, a reduction in
sample size would mean a reduction in reliability of quality control
information which would be unacceptable to FCS.
FCS is likewise also proposing the creation of a ``smaller range''
for minimum sample sizes for negative case reviews. The ``smaller
range'', representing a 15 percent reduction at the top from current
requirements, would be 150 to 680 reviews per year. The current
required range of 150 to 800 reviews per year would be retained as the
larger range for minimum sample sizes for negative case reviews.
If a State agency chose to use the ``smaller range'' to calculate
its minimum sample size for negative case reviews, it would be required
to include in its sampling plan the statement in proposed new
Sec. 275.11(a)(2)(iv) that it ``will not use the size of the sample
chosen as a basis for challenging the resulting error rates.'' If a
State agency did not include that statement, it would be required to
calculate its minimum sample size for negative case reviews according
to the larger range. As with active case reviews, the ranges would
define minimum sample sizes; State agencies could always select more.
FCS is not proposing to reduce the lower bound of the minimum
sample size ranges for negative case reviews. For those State agencies
whose sample size is at the lower bound of the ranges, a reduction in
sample size would mean a reduction in reliability of quality control
information which would be unacceptable to FCS.
Federal Sample Sizes
On November 27, 1991, FCS published a final rule entitled
``Miscellaneous Quality Control Provisions of the Hunger Prevention Act
of 1988'' (56 FR 60045). This rule permits FCS to select and to review
samples smaller than those indicated by the tables if the State agency
fails to complete its required sample.
FCS is proposing to change the headings to the tables which set out
the
[[Page 47684]]
formulas for calculation of the Federal subsample size. These tables
appear at 7 CFR 275.3(c)(1)(i) and 7 CFR 275.2(c)(3)(i) in current
regulations; they appear in paragraphs 275.3(c)(1)(i)(A) and (B) and
275.3(c)(3)(i) in the proposed rule. The phrase ``Federal subsample
target'' would appear, rather than the current phrase ``Federal annual
sample size''. This change would not permit FCS to select and to review
a smaller subsample for any reason other than a State agency's failure
to complete the minimum number of reviews in its required sample size.
State Sampling Procedures
FCS is proposing four sets of technical clarifications to the
sampling regulations so that the regulations will match the way State
agencies design and implement their sampling plans.
1. Selection of One-Twelfth of the Sample Each Month
Current regulations require State agencies to explain the basis of
each month's sample if it is ``other than one twelfth of the active and
negative sample sizes.'' Some State agencies have expressed concern
that the regulations require that the agency select exactly one-twelfth
of its sample in each month. This was never FCS' intent. It is
inevitable that caseloads will fluctuate, and that the number of
sampled households will rise and fall slightly each month. FCS' concern
is not with these variations, but rather with the accuracy and
integrity of the error rate estimate generated from the quality control
samples. FCS has reviewed this provision in conjunction with the other
regulatory provisions governing State sampling plans, and has
determined that provisions requiring that sampling procedures conform
to the standard principles of probability sampling and that state
samples produce estimates with an acceptable, mandated level of
reliability are sufficient to ensure that deviations, minor or
otherwise, from equal monthly sample sizes will not jeopardize the
validity nor the precision of those error rate estimates. Therefore, in
Sec. 275.11, FCS proposes to delete paragraph (a)(2)(iii) and renumber
paragraph (a)(2)(iv) as (a)(2)(iii). We are also making technical
corrections to regulatory references appearing in Sec. 275.11(b)(1)(ii)
and (b)(1)(iii). Each of these paragraphs currently contains an
erroneous reference to Sec. 275.11(a)(2)(viii), which should be to
current Sec. 275.11(a)(2)(iv). Since paragraph Sec. 275.11(a)(2)(iv)
will now be renumbered, the reference will be corrected to refer to
(a)(2)(iii).
2. Sampling Plans Must Conform to Accepted Statistical Theory
FCS is proposing to amend the regulations at 7 CFR 275.11(a)(3) to
require that all sample designs conform to commonly acceptable
statistical theory and application.
3. Basis for Final Sample Size
A State agency must calculate its required sample sizes at least
twice for each review period. The first calculation occurs before the
review period begins, when the State agency anticipates what its
average monthly caseload will be. The second calculation occurs after
the review period ends, when the State agency knows exactly what its
average monthly caseload was. FCS is proposing to delete the word
``anticipated'' from paragraph 275.11(b)(1)(iv) and current (b)(2)(ii)
(revised (b)(2)(iv)), to clarify that the final sample size depends
upon the State agency's actual average monthly caseload.
Current regulations at 7 CFR 275.11(b)(3) provide that FCS will not
penalize a State agency if its caseload increases by less than 20
percent from the estimated caseload number that the State agency used
to determine the size of its sample. FCS is proposing to clarify that
this estimated caseload number is the one initially used to determine
the sample size. Sample sizes will be found to be adequate if at least
the minimum required sample size for the estimated caseload is chosen,
and the actual caseload is no larger than 120% of the estimated
caseload.
4. Number of Households Subject to Review is the Basis for the Sample
Size
Currently, the tables that describe the State agency's required
sample sizes use the phrase ``average monthly active households'' and
``average monthly negative households''. However, the actual practice
is to use the ``average monthly reviewable caseload'' as the basis for
calculating minimum sample sizes for both active and negative case
reviews. Therefore, FCS is proposing to clarify the wording in the
headings in the tables in proposed 7 CFR 275.3(c)(1)(i) (A) and (B),
and in current 7 CFR 275.3 (c)(3)(i), 7 CFR 275.11 (b)(1) (ii) and
(iii), and proposed 7 CFR 275.11 (b)(2) (i) and (ii). Please see FNS
Handbook 311, section 3121.
Federal Subsample Size Formulas
For both active and negative case reviews, FCS reviews a subsample
of the State agency's completed reviews. The minimum Federal subsample
sizes are determined by formulas that are based on the number of
reviews that a State agency has completed. For example, if a State
agency completed 1000 active case reviews, FCS would select a minimum
subsample of 344 active case reviews. The range of the minimum
subsample size for active case reviews is 150 to 400. The range of the
minimum subsample size for negative case reviews is 75 to 160.
Because FCS is proposing a change in the number of cases that a
State agency is required to complete, use of the current formulas for
calculating subsample sizes would result in a decrease in the size of
the minimum Federal subsample for a State agency that chooses the
``smaller ranges'' which FCS has proposed. However, FCS does not intend
to reduce the size of the Federal subsample. Without a regulatory
change, the formula for determining FCS' minimum subsample sizes would
not accurately indicate the number of reviews that FCS would actually
select for the subsample.
So that the public is aware of FCS' actual minimum subsample sizes,
FCS is proposing revised formulas for the minimum active and negative
Federal subsamples. These proposed formulas, when applied to the new
proposed ``smaller ranges'' for State samples, would yield the current
ranges for the Federal subsample. Under FCS' proposal, Federal
reviewers could still select and review more cases than the minimum
subsample.
Error Dollar Tolerance Level
Current regulations at 7 CFR 275.12(f)(2), first published August
3, 1979 (44 FR 45887) provide that only overissuances or underissuances
to eligible households in an amount greater than $5.00 shall be coded
and reported in completing the quality control review of a sampled
case. In the proposed regulations published April 10, 1979 (44 FR
21517) the Department cited as one of the primary reasons for the
proposed $5.00 tolerance the intention to ``obviate the need to expend
funds to correct minor variations between the reviewer's and the
eligibility worker's allotment figures.'' Since its inception 15 years
ago the $5.00 tolerance figure has not been adjusted to take into
account either increases in the Thrifty Food Plan, upon which food
stamp allotments are based, or inflation in general. The Department has
determined that because of the inflation to food stamp allotments which
has occurred over the past 15 years an adjustment must be made to the
tolerance level figure, in order to insure that minor variations
between the reviewer's and eligibility worker's allotment figures
continue to be
[[Page 47685]]
excluded from the error determination process.
The Department proposes to raise the $5.00 tolerance level to
$10.00, in order to compensate for the inflation which has occurred
since the $5.00 tolerance was first established. Only those
overissuances to eligible households, or underissuances to eligible
households which exceeded the $10.00 tolerance figure would be reported
and coded in the completion of quality control reviews. Based on an
analysis of Fiscal Year 1993 quality control case review figures, an
increase of the tolerance level to $10.00 would have the overall effect
of decreasing the quality control National Average Payment Error Rate
by .17 percent, and an increase in total liability amounts of $650,000.
The slight increase in total liability amounts is due to the fact that
liability figures are based, in part, on the percentage that an
individual State agency's Payment Error Rate exceeds the National
Average Payment Error Rate.
Home Visit Requirement
Current regulations at 7 CFR 275.12(c)(1), first published August
3, 1979, (44 FR 45895) specify that a face-to-face, personal interview,
between the quality control reviewer and a responsible member of the
household under review, is a required component of all active quality
control reviews conducted. The regulations specify that most of these
personal interviews shall take place in the participant's home, what is
commonly referred to as a ``home visit''. The Department believes that
the need for the personal interview to take place in the participant's
home is no longer as great as it was when these provisions were first
implemented. This is due, in part, to the greater variety of
information sources, including computer data bases, which have been
developed over the years to aid the reviewer in verifying the
circumstances of the food stamp household under quality control review.
The Department is proposing to amend the requirement for personal
interviews to simply require a face-to-face personal interview. It is
expected that the personal interview would take place at an appropriate
State agency certification office, in the participant's home, or at a
mutually agreed upon alternative location. The State agency would
determine the best location for the interview to take place, but would
be subject to the same provisions as those regarding certification
interviews at 7 CFR 273.2(e)(2). These regulations provide that an
office interview shall be waived under certain hardship conditions (for
example, if all household members are disabled or elderly). Under such
hardship conditions the quality control reviewer would conduct the
personal interview either with an authorized representative (if one has
been appointed by the household) or conduct the personal interview in
the participant's home.
Conducting Quality Control Reviews Against Federal Regulations
Current regulations at 7 CFR 275.3(c) for Federal validation
reviews, published February 4, 1987 (52 FR 3402) and 7 CFR 275.10(a)
for quality control reviews conducted by the State agencies, published
February 17, 1984, (49 FR 6294) specify that all active and negative
quality control reviews shall be conducted by ``reviewing against the
Food Stamp Act and the regulations, taking into account any FNS-
authorized waivers to deviate from specific regulatory provisions.''
This provision was made because the Department no longer had authority
to require approval of State agency manuals prior to their use. It was
the intent of the Department to eliminate the use of the State agency
manuals in the quality control review process. In the preamble to the
February 17, 1984, final rulemaking it is stated that although the
Department no longer had the authority to require approval of manuals
prior to their use, the rule did not prohibit their use for quality
control review purposes. The Department expected that most State
agencies would continue to use their manuals as the basis for quality
control reviews. Commenters pointed out that this would result in
Federal quality control reviewers finding errors in manuals before
State agencies were otherwise notified of them, and that these errors
would affect the regressed error rates. The commenters objected to this
use of quality control reviews and requested that State agencies be
given time to correct manuals before an error is counted. These
comments were not adopted because the Department believed that if State
agencies were not liable for certification errors resulting from manual
materials from the date those materials were in effect, there would
have been less of an incentive to implement regulations on time and in
conformance with the regulations.
The Department believes that changes over the years in other areas
of the regulations, including the provisions at 7 CFR 275.12(d)(2)(vii)
published November 23, 1990, (55 FR 48831) which provide a variance
exclusion for the timely implementation of new regulations, provide the
incentive to the State agencies to implement regulatory changes in a
timely manner. Therefore, the Department is considering amending
regulations in order to provide a variance exclusion for any erroneous
payments which result from the State agency having followed State
agency policies or directives, provided that these policies or
directives were provided to FCS prior to implementation and FCS had not
notified the State agency that these policies were contrary to Federal
law or regulations. This would not encompass situations where a State
agency might knowingly violate Federal law or regulations. This
variance exclusion could include changes in the computer programming of
any State agency automated certification system. Providing a variance
exclusion in this area, whether cited by State agency or Federal
quality control reviewers, would have the effect of holding the State
agency harmless from any errors resulting from inaccurate instructions
appearing in State manuals. At the same time, maintaining the current
practice of conducting quality control reviews against the Food Stamp
Act and regulations would assist the State agencies and FCS in
identifying, for corrective action, any erroneous instructions
contained in State agency manuals, policies, or directives.
The Department wishes to solicit comments from all interested
parties on the appropriateness and potential consequences such a
variance exclusion would have on the administration of the Program.
Quality Control Review Case Completion Standard
Current regulations at 7 CFR 275.23(e)(7)(iii), first published
February 17, 1984 (49 FR 6292) provide that an adjustment be made to a
State agency's regressed error rates any time that the State agency
fails to complete 100 percent of its required sample size by assigning
two standard errors of the estimated error rates added to the regressed
error rates, to those cases not completed. (This was ``two standard
deviations'' in prior regulations and has been changed to use the
correct terminology for the adjustment that is done. Standard deviation
refers to the true error rate, while the standard error refers to the
estimate of the error rate.) Prior to the publication of the February
17, 1984 rule the completion standard had been 95 percent. It was the
belief of the Department that the 100 percent completion standard was
the only standard which would minimize any bias which incomplete cases
could cause. In addition, because of changes which reduced the types of
cases which would be considered incomplete, it was
[[Page 47686]]
believed that many State agencies would complete such a high percentage
of their minimum sample size that the impact from the 100 percent
completion standard would be minimal. However, experience has shown
that there remain categories of cases which State agencies are unable
to complete despite all efforts to do so on the part of the quality
control reviewers. These cases include those in which the household
under review refuses to cooperate with the quality control reviewer
despite repeated attempts on the part of the State agency, including
disqualification of the household from the Food Stamp Program, to gain
the household's cooperation. An additional category is cases in which
the reviewer is unable to verify the actual circumstances of the
household for the time period under review, despite repeated attempts
to do so.
The Department proposes to amend the current requirement that a
State agency complete 100 percent of its minimum required sample size.
The new standard for State agency completion will be 98 percent of its
minimum required sample size. In the event that a State agency fails to
complete 98 percent of its minimum required sample size, error rates
would be adjusted using the current regulatory formula which is based
on a 100 percent completion requirement.
Changing Federal Case Findings and Disposition
In active reviews, a finding is the determination of the accuracy
of the State agency's authorized allotment for the household for the
sample month. If the allotment was erroneous, the finding includes the
amount of the error. In negative reviews, a finding is the
determination of the validity of the State agency's decision to deny or
terminate participation in the Food Stamp Program. For both active and
negative reviews the disposition is the determination of whether the
circumstances of the review meet the standards to be considered
completed, not completed, or not subject to review.
Current regulations, FNS Handbook 315, and current administrative
practices describe the following as a typical (although not mandatory)
way to handle a subsampled case that the Federal reviewer has
completed. (1) FCS informs the State agency of the Federal findings and
disposition for the case. This is done within seven days of the
completion of the Federal review. (2) The State agency requests
arbitration if it disagrees with some aspect of the FCS findings or
disposition of the review. Under current regulations the State agency
has 28 days to request arbitration. (3) During the same 28 day period
the State agency may request that FCS reconsider the Federal findings
or disposition in the case. (4) If FCS changes the Federal findings or
disposition during the 28 day period because of the reconsideration,
the new Federal findings/disposition are transmitted to the State
agency, and a new 28 day period to request arbitration is provided for.
There are circumstances under which FCS will currently change
Federal findings/disposition after the 28 day deadline for requesting
arbitration. Generally the reason for any changes are to arrive at
correct Federal findings.
The Department is proposing to codify into regulations the policies
and practices which dictate when, and under what circumstances, FCS
will change the Federal findings or disposition for a specific case.
The Department has two goals in this proposal. First, the Department
wishes to clarify the circumstances under which FCS will change Federal
findings/disposition in order to promote clear, consistent application
of its policies. The second goal in proposing these changes is to
ensure the accurate determination of the error rates for all State
agencies. The proposed changes are as follows:
1. Informal Resolution
FCS would change the Federal findings or disposition if, as a
result of the informal resolution process, both the State agency and
FCS agreed on a new finding or disposition. The informal resolution
process should begin in the period prior to the 28 day deadline which a
State agency has for requesting arbitration. The informal resolution
process may also take place after the 28 day deadline, but prior to any
formal decision by an arbitrator, provided that the State agency has
timely requested arbitration of the case. It should be noted that the
28 day timeframe specified in this proposal is based on current
regulations which provide State agencies with 28 days to request
arbitration. Program changes mandated by the Leland Act regarding the
timeframes for completing all review work and resolving all differences
in review findings may require a modification of the timeframes for
State agencies to request arbitration. If such a modification of the
timeframes for requesting arbitration is made, it will be necessary in
the final rule to adjust the timeframes for informal resolution.
2. Ruling by an Arbitrator
FCS would change the Federal findings or disposition whenever an
arbitrator's decision requires that a change be made.
3. Implementation of a Regulation, Law, or Waiver
Whenever a change in Federal findings or dispositions is the only
way to implement a change in regulations, an amendment to the Food
Stamp Act, or retroactive provisions to a waiver, FCS would make the
change.
4. Correct any Application of Incorrect Written Policy
Current regulations at 7 CFR 275.12(d)(2)(viii) exclude ``any
variance resulting from incorrect written policy that a State agency
acts on that is provided by a Departmental employee authorized to issue
Food Stamp Program policy and that the State agency correctly
applies.'' The regulations go on to describe written policy as that in
regulations, notices, handbooks, category three and four policy
memoranda, and regional policy memoranda. The exclusion of these
variances is required by section 16(c)(3)(B) of the Food Stamp Act (7
U.S.C. 2025).
The Department would change a Federal finding/disposition whenever
it became aware that a variance which had been cited was the result of
correct State application of an incorrect written policy provided by a
Departmental employee authorized to issue FSP policy. It is likely that
the State agency and FCS will not become aware of the problem until
well after the State agency's deadline for requesting arbitration. This
is because almost all parties involved, State agency quality control
and certification policy staff, as well as FCS's regional office staff,
will think that the written policy that they are following is correct.
Therefore, in order to ensure that the State agency is not harmed by
the Department's incorrect policy, the Department is proposing that the
variance exclusion at 7 CFR 275.12(d)(2)(viii) may be made in the
Federal findings at any time that the problem is discovered.
FCS would not make a change based upon new factual information. The
Department is taking this position for three reasons. First, it is the
responsibility of the State agency to obtain all necessary information
at the time the State quality control reviewer conducts the review.
Even if the Federal reviewer obtains conflicting information, the State
reviewer has two more opportunities to resolve
[[Page 47687]]
conflicting information- when the State agency requests regional
arbitration, and again if the dispute moves to national arbitration.
Second, if the household's circumstances were not reasonably
certain at the time of the State agency's review, the case should have
been disposed of as not completed. It does not seem likely that
reasonably verified information would be contradicted at a later time.
Third, the Department recognizes the need for final closure at some
point in the resolution process. Section 13951 of the Leland Act
specifies that ``no later than 180 days after the end of the fiscal
year, the case review and all arbitrations of State-Federal difference
cases shall be completed.'' The Department believes that without
providing some limits on the resolution process this mandated deadline
cannot be achieved.
5. Conflict in a Federal Finding/Disposition
If, for any reason, the Federal findings or disposition in the
Integrated Quality Control System's (IQCS) data base conflicted with
the finding letter which had been transmitted to the State agency, FCS
would ensure the IQCS data base was correct. If the IQCS coding was
incorrect, it would be corrected. If the finding letter was incorrect,
it would be corrected. Either way, FCS would transmit a new finding
letter to the State agency explaining what had occurred. There would be
a new finding letter because the State agency would be entitled to know
that a change in official error rates would be taking place.
If, in any of the five circumstances which have been specified, FCS
were to make changes to the findings and dispositions of a case these
changes would be made regardless of the effect on the amount of error
in the case. A State agency would be notified of the change and
entitled to arbitration of the new Federal findings or disposition,
with one exception. If FCS changed the Federal findings or disposition
to comply with the decision of a national arbitrator, the State agency
would have no further right to arbitration. This is because the
national arbitrator's decisions are final, with two exceptions. The
first would be to implement a change in law or regulations. The other
would be if FCS learned that it had not properly implemented the
decision of the arbitrator.
Miscellaneous Technical Correction
FCS is taking advantage of the publication of this proposed rule to
eliminate redundant regulatory language at 7 CFR 275.12(g)(2). Six of
the 10 subparagraphs in this paragraph, which lists active cases which
are eliminated from the sample universe during the review process, also
appear at 7 CFR 275.11(f)(1). Therefore, FCS is proposing to (1) revise
paragraph 275.12(g)(2) to reference Sec. 275.11(f); (2) remove
subparagraphs 275.12(g)(2) (i) through (iv), (vi) and (viii), and (3)
renumber the remaining subparagraphs in 275.12(g)(2). These revisions
parallel the proposed revisions to Sec. 275.13(e), which lists negative
cases which are eliminated from the sample universe during the review
process. In addition, FCS is taking advantage of the publication of
this proposed rule to eliminate obsolete regulatory language at 7 CFR
275.23(e)(5)(i). Section 13951(c)(4) of the Leland Act provides that
Administrative Law Judges, in considering a State agency's appeal of
quality control liability consider all grounds for denying the claim,
including the contention of a State agency that the claim should be
waived, in whole or in part, for good cause. This provision was
included in a final rulemaking published July 6, 1994 (59 FR 34553),
and supersedes the regulatory language contained in 7 CFR
275.23(e)(5)(i) dealing with good cause requests and the timing of the
issuance of billings. The Department is also proposing to move, without
change, the regulatory language in 7 CFR 275.23(e)(5)(i) dealing with
the methods of claim collection employed by FCS to 7 CFR 275.23(e)(8).
With the removal of the language dealing with billings from 7 CFR
275.23(e)(5)(i), paragraph (e)(8) becomes the proper location for the
provisions regarding the methods of bill collection to be employed by
FCS.
Implementation
FCS proposes all provisions would be effective with the 1998 fiscal
year, which begins with the October, 1997 sample month.
List of Subjects
7 CFR Part 271
Administrative practice and procedure, Food stamps, Grant programs-
social programs.
7 CFR Part 275
Administrative practice and procedure, Food stamps, Reporting, and
recordkeeping requirements.
For the reasons set out in the preamble, parts 271 and 275 of
Chapter II of Title 7 Code of Federal Regulations are proposed to be
amended as follows:
PART 271--GENERAL INFORMATION AND DEFINITIONS
1. The authority citation for Part 271 continues to read as
follows:
Authority: 7 U.S.C. 2011-2032.
2. In Sec. 271.2, the definitions of ``Error'', ``Negative case'',
``Negative case error rate'', ``Quality control review'', and ``Review
date'' are revised to read as follows:
Sec. 271.2 Definitions.
* * * * *
Error for active cases results when a determination is made by a
quality control reviewer that a household which received food coupons
during the sample month is ineligible or received an incorrect
allotment. Thus, errors in active cases involve dollar loss to either
the participant or the government. For negative cases, an ``error''
means that the reviewer determines that the decision to deny, suspend,
or terminate a household was incorrect.
* * * * *
Negative case means a household whose application for food stamp
benefits was denied or whose food stamp benefits were suspended or
terminated by an action in the sample month.
Negative case error rate means an estimate of the proportion of
denied, suspended, or terminated cases where the household was
incorrectly denied, suspended, or terminated. This estimate will be
expressed as a percentage of completed negative quality control reviews
excluding all results from cases processed by SSA personnel or
participating in a demonstration project identified by FCS as having
certification rules that are significantly different from standard
requirements.
* * * * *
Quality control review means a review of a statistically valid
sample of active and negative cases to determine the extent to which
households are receiving the food stamp allotments to which they are
entitled, and to determine the extent to which decisions to deny,
suspend, or terminate cases are correct.
* * * * *
Review date for quality control active cases means a day within the
sample month, either the first day of the calendar or fiscal month or
the day the household was certified, whichever is later. The ``review
date'' for negative cases is the date of the agency's decision to deny,
suspend, or terminate program benefits. For no case is the ``review
[[Page 47688]]
date'' the day the quality control review is conducted.
* * * * *
PART 275--PERFORMANCE REPORTING SYSTEM
3. The authority citation for Part 275 continues to read as
follows:
Authority: 7 U.S.C. 2011-2032.
4. In Sec. 275.3:
a. the introductory text of paragraph (c) is amended by revising
the third sentence and adding a new sentence between the third and
fourth sentences;
b. paragraph (c)(1)(i) introductory text is revised, and the table
following the introductory text is removed;
c. paragraphs (c)(1)(i)(A), (c)(1)(i)(B), and (c)(1)(i)(C) are
redesignated as paragraphs (c)(1)(i)(C), (c)(1)(i)(D), and
(c)(1)(i)(E), respectively, and new paragraphs (c)(1)(i)(A) and
(c)(1)(i)(B) are added;
d. newly redesignated paragraph (c)(1)(i)(C) is amended by removing
the words ``n is the'' and adding in their place the words ``n' is
the'';
e. paragraph (c)(3)(i) introductory text is revised, and the table
following the introductory text is revised;
f. paragraph (c)(3)(i)(A), introductory text, is amended by
removing the words ``n is the'' and adding in their place the words
``n' is the'';
g. paragraph (c)(3)(ii) is amended by adding the word ``,
suspend,'' between the words ``deny'' and ``or'';
h. a new paragraph (c)(6) is added.
The revisions and additions read as follows:
Sec. 275.3 Federal monitoring.
* * * * *
(c) Validation of State Agency Error Rates. * * * FCS must validate
the State agency's negative case error rate, as described in
Sec. 275.23(d), when the State agency's payment error rate for an
annual review period appears to entitle it to an increased share of
Federal administrative funding for that period as outlined in
Sec. 277.4(b)(2) of this chapter, and its reported negative case error
rate for that period is less than two percentage points above the
national weighted mean negative case error rate for the prior fiscal
year. However, this requirement will not preclude the federal review of
any negative case for other reasons as determined appropriate by FCS. *
* *
(1) Payment error rate. * * *
(i) FCS will select a subsample of a State agency's completed
active cases, as follows:
(A) For State agencies that determine their active sample sizes in
accordance with Sec. 275.11(b)(1)(ii), the Federal review sample for
completed active cases is determined as follows:
------------------------------------------------------------------------
Federal subsample target
Average monthly reviewable caseload (N) (n')
------------------------------------------------------------------------
31,489 and over........................... n'=400.
10,001 to 31,488.......................... n'=.011634 N+33.66.
10,000 and under.......................... n'=150.
------------------------------------------------------------------------
(B) For State agencies that determine their active sample sizes in
accordance with Sec. 275.11(b)(1)(iii), the Federal review sample for
completed active cases is determined as follows:
------------------------------------------------------------------------
Federal subsample target
Average monthly reviewable caseload (N) (n')
------------------------------------------------------------------------
60,000 and over........................... n'=400.
10,001 to 59,999.......................... n'=.005 N+100.
10,000 and under.......................... n'=150.
------------------------------------------------------------------------
* * * * *
(3) Negative case error rate. * * *
FCS will select a subsample of a State agency's completed negative
cases, as follows:
------------------------------------------------------------------------
Average monthly reviewable negative Federal subsample target
caseload (N) (n')
------------------------------------------------------------------------
5,000 and over............................ n'=160.
501 to 4,999.............................. n'=.0188 N+65.7.
Under 500................................. n'=75.
------------------------------------------------------------------------
* * * * *
(6) Changing Federal Findings. Once FCS has notified a State agency
of a Federal finding, FCS shall change that Federal finding only
according to the following procedures:
(i) FCS shall change a Federal finding only if:
(A) FCS informally resolves with a State agency the differences
between the State agency and Federal findings, and both parties agree
on a single Federal finding. The informal resolution process should
begin prior to the deadline for the State agency to request arbitration
of a case, and may continue after the arbitration deadline, provided
that arbitration of the case has been timely requested by the State
agency; or
(B) An arbitrator's decision necessitates a change; or
(C) A change is the only way to implement a regulation or an
amendment to the Food Stamp Act; or
(D) The change is solely attributable to the variance exclusion for
incorrect written policy, as described at Sec. 275.12(d)(2)(viii).
(ii) FCS shall notify the State agency that the Federal finding has
changed.
(iii) The State agency shall be entitled to arbitration in
accordance with paragraph (c)(4) of this section. However, if FCS
changed the Federal finding or disposition based on a national
arbitrator's decision, the State agency shall not be entitled to
further arbitration.
(iv) If FCS enters a Federal finding into the data base at the
National Computer Center but notifies the State agency of a different
Federal finding for the same case, FCS shall ensure the IQCS data base
contains the correct finding, notify the State agency of the
discrepancy in the IQCS data base and the finding letter, and inform
the State agency that it is entitled to arbitration in accordance with
paragraph (c)(4) of this section.
* * * * *
Sec. 275.10 [Amended]
5. In Sec. 275.10(a):
a. the second sentence is amended by adding the word ``,
suspended,'' between the words ``denied'' and ``or'';
b. the fifth sentence is amended by adding the word ``, suspend,''
between the words ``deny'' and ``or''.
6. In Sec. 275.11:
a. paragraph (a)(2)(iii) is removed, paragraph (a)(2)(iv) is
redesignated as (a)(2)(iii) and a new paragraph (a)(2)(iv) is added;
b. paragraph (a)(3) is revised;
c. in paragraph (b)(1)(ii), the table is revised, and the text is
amended by removing the reference to ``(a)(2)(viii)'' and adding in its
place the reference to ``(a)(2)(iii)'';
d. in paragraph (b)(1)(iii), the table is revised, and the text is
amended by removing the reference to ``(a)(2)(viii)'' and adding in its
place the reference to ``(a)(2)(iii)'';
e. in paragraph (b)(1)(iv) the third sentence is amended by
removing the word ``anticipated'';
f. paragraph (b)(2) is revised;
g. paragraph (b)(3) is revised;
h. the last sentence in paragraph (c)(1) is amended by adding the
word ``, suspension,'' between the words ``denial'' and ``or'';
i. paragraph (e)(2) is revised;
j. the introductory text of paragraph (f)(2) is revised;
k. paragraph (f)(2)(iv) is revised and paragraphs (f)(2)(v) through
(f)(2)(ix) are added.
The additions and revisions read as follows:
Sec. 275.11 Sampling.
(a) Sampling plan. * * *
(2) Criteria. * * *
(iv) If the State agency has chosen a negative sample size as
specified in paragraph (b)(2)(ii) of this section, include a statement
that, whether or not the sample size is increased to reflect an
[[Page 47689]]
increase in negative actions as discussed in paragraph (b)(3) of this
section, the State agency will not use the size of the sample chosen as
a basis for challenging the resulting error rates.
(3) Design. FCS generally recommends a systematic sample design for
both active and negative samples because of its relative ease to
administer, its validity, and because it yields a sample proportional
to variations in the caseload over the course of the annual review
period. (To obtain a systematic sample, a State agency would select
every kth case after a random start between 1 and k. The value of k is
dependent upon the estimated size of the universe and the sample size.)
A State agency may, however, develop an alternative sampling design
better suited for its particular situation. Whatever the design, it
must conform to commonly acceptable statistical theory and application
(see paragraph (b)(4) of this section).
* * * * *
(b) Sample size. * * *
(1) Active cases. * * *
(ii) * * *
------------------------------------------------------------------------
Minimum annual sample size
Average monthly reviewable caseload (N) (n)
------------------------------------------------------------------------
60,000 and over........................... n=2400.
10,000 to 59,999.......................... n=300+[0.042 (N-10,000)].
Under 10,000.............................. n=300.
------------------------------------------------------------------------
(iii) * * *
------------------------------------------------------------------------
Minimum annual sample size
Average monthly reviewable caseload (N) (n)
------------------------------------------------------------------------
60,000 and over........................... n=1020.
12,942 to 59,999.......................... n=300+[0.0153(N-12,941)].
Under 12,942.............................. n=300.
------------------------------------------------------------------------
* * * * *
(2) Negative cases.
(i) Unless a State agency chooses to select and review a number of
active cases determined by the formulas provided in paragraph
(b)(2)(ii) of this section and has included in its sampling plan the
reliability certification required by paragraph (a)(2)(iv) of this
section, the minimum number of negative cases to be selected and
reviewed by a State agency during each annual review period shall be
determined as follows:
------------------------------------------------------------------------
Average monthly reviewable negative Minimum annual sample size
caseload (N) (n)
------------------------------------------------------------------------
5,000 and over............................ n=800.
500 to 4,999.............................. n=150+[0.144 (N-500)].
Under 500................................. n=150.
------------------------------------------------------------------------
(ii) A State agency which includes in its sampling plan the
statement required by paragraph (a)(2)(iv) of this section may
determine the minimum number of negative cases to be selected and
reviewed during each annual review period as follows:
------------------------------------------------------------------------
Average monthly reviewable negative Minimum annual sample size
caseload (N) (n)
------------------------------------------------------------------------
5,000 and over............................ n=680.
684 to 4,999.............................. n=150+[0.1224 (N-683)].
Under 684................................. n=150.
------------------------------------------------------------------------
(iii) In the above formulas, n is the required negative sample
size. This is the minimum number of negative cases subject to review
which must be selected each review period.
(iv) In the above formulas, N is the average monthly number of
negative cases which are subject to quality control review (i.e.,
households which are part of the negative universe defined in paragraph
(e)(2) of this section) during the annual review period.
(3) Unanticipated changes. Since the average monthly caseloads
(both active and negative) must be estimated at the beginning of each
annual review period, unanticipated changes can result in the need for
adjustments to the sample size. FCS shall not penalize a State agency
that does not adjust its sample size if the actual caseload during a
review period is less than 20 percent larger than the estimated
caseload initially used to determine sample size. If the actual
caseload is more than 20 percent larger than the estimated caseload,
the larger sample size appropriate for the actual caseload will be used
in computing the sample completion rate.
* * * * *
(e) Sample frame. * * *
(2) Negative cases. The frame for negative cases shall list:
(i) all households whose applications for food stamps benefits were
denied by an action in the sample month except those excluded from the
universe in paragraph (f)(2) of this section. If a household is subject
to more than one denial action in a single sample month, each action
shall be listed separately in the sample frame; and
(ii) all households whose food stamp benefits were suspended or
terminated by an action in the sample month except those excluded from
the universe in paragraph (f)(2) of this section.
* * * * *
(f) Sample universe. * * *
(2) Negative cases. The universe for negative cases shall include
all households whose applications for food stamps were denied or whose
food stamp benefits were suspended or terminated by an action in the
sample month except for the following:
* * * * *
(iv) A household which is under active investigation for
Intentional Program Violation;
(v) A household which was denied, but subsequently certified within
the normal 30 day processing standard, using the same application form;
(vi) A household which was suspended or terminated but the
suspension or termination did not result in a break in participation
that is the result of deliberate State agency action. There would be no
break in participation if the household is authorized to receive its
full allotment in the month for which the suspension or termination was
effective other than continuation of benefits pending a fair hearing.
Pro rated benefits are not considered to be a full allotment;
(vii) A household which has been sent a notice of pending status
but which was not actually denied participation;
(viii) A household which was terminated for failure to file a
complete monthly report by the extended filing date, but reinstated
when it subsequently filed the complete report before the end of the
issuance month.
(ix) Other households excluded from the negative case universe
during the review process as identified in Sec. 275.13(e).
* * * * *
7. In Sec. 275.12:
a. paragraph (c)(1) introductory text is revised;
b. the first sentence of paragraph (f)(2) is amended by removing
the reference to ``$5.00'' and adding in its place a reference to
``$10.00'';
c. paragraph (g)(2) introductory text is revised.
The revisions and additions read as follows:
Sec. 275.12 Review of active cases.
* * * * *
(c) Field investigation. * * *
(1) Personal interviews. Personal interviews shall be conducted in
a manner that respects the rights, privacy, and dignity of the
participants. Prior to conducting the personal interview, the reviewer
shall notify the household that it has been selected, as part of an
[[Page 47690]]
ongoing review process, for review by quality control, and that a
personal face-to-face interview will be conducted in the future. The
method of notifying the household and the specificity of the
notification shall be determined by the State agency, in accordance
with applicable State and Federal laws. The personal interview may take
place at an appropriate State agency certification office, at the
participant's home, or at a mutually agreed upon alternative location.
The State agency shall determine the best location for the interview to
take place, but would be subject to the same provisions as those
regarding certification interviews at 7 CFR 273.2(e)(2). These
regulations provide that an office interview shall be waived under
certain hardship conditions. Under such hardship conditions the quality
control reviewer shall either conduct the personal interview with the
participant's authorized representative, if one has been appointed by
the household, or with the participant in the participant's home.
Except in Alaska, when an exception to the field investigation is made
in accordance with this section, the interview with the participant may
not be conducted by phone. During the personal interview with the
participant, the reviewer shall:
* * * * *
(g) Disposition of case reviews. * * *
(2) Cases not subject to review. Active cases which are not subject
to review, if they have not been eliminated in the sampling process,
shall be eliminated in the review process. In addition to cases listed
in 275.11(f)(1), these shall include:
* * * * *
8. In Sec. 275.13:
a. paragraph (a) is revised;
b. the first sentence of paragraph (b) is revised;
c. the third sentence of paragraph (b) is amended to add the word
``, suspension,'' between the words ``denial'' and ``or'';
d. the first sentence of paragraph (c)(1) is amended by adding the
word ``, suspended,'' between the words ``denied'' and ``or'';
e. the second sentence of paragraph (c)(1) is amended by adding the
word ``, suspend,'' between the words ``deny'' and ``or'';
f. the first sentence of paragraph (c)(2) is amended by adding the
word ``, suspended,'' between the words ``denied'' and ``or'';
g. paragraph (e)(1) is amended by adding a heading to the
paragraph;
h. paragraph (e)(2) is revised;
i. the first sentence of paragraph (f) is amended by adding the
words ``suspended or'' between the words ``been'' and ``terminated''.
The addition and revisions read as follows:
Sec. 275.13 Review of negative cases.
(a) General. A sample of households whose applications for food
stamps benefits were denied or whose food stamp benefits were suspended
or terminated by an action in the sample month shall be selected for
quality control review. These negative cases shall be reviewed to
determine whether the State agency's decision to deny, suspend, or
terminate the household, as of the review date, was correct. For
negative cases, the review date shall be the date of the agency's
decision to deny, suspend, or terminate program benefits. The review of
negative cases shall include a household case record review; an error
analysis; and the reporting of review findings, including procedural
problems with the action regardless of the validity of the decision to
deny, suspend or terminate.
(b) Household case record review. The reviewer shall examine the
household case record and verify through documentation in it whether
the reason given for the denial, suspension, or termination is correct
or whether the denial, suspension, or termination is correct for any
other reason documented in the casefile. * * *
* * * * *
(e) Disposition of case review. * * *
(1) Cases reported as not complete. * * *
(2) Cases not subject to review. Negative cases which are not
subject to review, if they have not been eliminated in the sampling
process, shall be eliminated in the review process. In addition to
cases listed in Sec. 275.11(f)(2), these shall include:
(i) A household which was dropped as a result of a correction for
oversampling;
(ii) A household which was listed incorrectly in the negative
frame.
* * * * *
9. In Sec. 275.23:
a. paragraph (c)(4) is amended by adding the word ``, suspension,''
between the words ``denial'' and ``or'';
b. paragraph (e)(5)(i) is amended by removing everything but the
first sentence;
c. the introductory text of paragraph (e)(7)(iii) is amended by
removing the word ``all'' and adding in its place the words ``98
percent''.
d. paragraph (e)(8) is revised.
The revision reads as follows:
Sec. 275.23 Determination of State agency program performance.
* * * * *
(e) State agencies' liabilities for payment error rates. * * *
(8) FCS Timeframes. FCS shall notify State agencies of their
payment error rates and payment error rate liabilities, if any, within
nine months following the end of each fiscal year reporting period to
which they pertain. FCS shall initiate collection action on each claim
for such liabilities before the end of the fiscal year reporting period
in which the claim arose unless an appeal relating to the claim is
pending. Such appeals include arbitration cases, requests for good
cause waivers, and administrative and judicial appeals pursuant to
Section 14 of the Food Stamp Act. While the amount of a State's
liability may be recovered through offsets to their letter of credit as
identified in Sec. 277.16(c), FCS shall also have the option of billing
a State directly or using other claims collection mechanisms authorized
under the Federal Claims Collection Act, depending upon the amount of
the State's liability. FCS is not bound by the timeframes referenced in
this subparagraph in cases where a State fails to submit QC data
expeditiously to FCS and FCS determines that, as a result, it is unable
to calculate a State's payment error rate and payment error rate
liability within the prescribed timeframe.
* * * * *
Dated: August 28, 1996.
Ellen Haas,
Under Secretary, Food, Nutrition, and Consumer Services.
[FR Doc. 96-22883 Filed 9-9-96; 8:45 am]
BILLING CODE 3410-30-P
