USDA saves $800 million in improper payments from being made

Tuesday - 12/27/2011, 10:32am EST

Kevin Concannon, USDA under secretary

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By Michael O'Connell
@moconnellWFED
Web Editor
Federal News Radio

Some federal agencies are turning the tide on improper payments. The Agriculture Department's Supplemental Nutrition Assistance Program, formerly known as food stamps, says it prevented $800 million from going out in error.

"For many, many years ... the improper payment rate for the country ran anywhere from 8 to 10 percent," said USDA Under Secretary Kevin Concannon. "Now it's below 4 percent."

The improper or fraud payment side, which Concannon defined as someone selling their benefits or using the food stamps for something other than food, only accounts for about 1 percent of SNAP recipients. "But we're not satisfied with that because we think it should be zero or as close to zero as we can possibly make it," he told Federal News Radio's Ruben Gomez.

The USDA has also stepped up monitoring those receiving benefits and imposing penalties on individuals and retailers who are perpetuating food stamp fraud. Last year, 931 retailers were permanently removed from the program. "Penalties to stores amounted to about $5 million last year, as well as criminal charges where people go off to prison," Concannon said.

Even though those perpetuating fraud account for 1 percent or less of the people in the program, Concannon said that the USDA is targeting them to avoid jeopardizing the confidence of the 46 million people who depend on the program or the taxpayers who support it. "We know that people are paying for it," he said. "American taxpayers are having their challenges these days, so we owe it to them."

One way the USDA can track fraudulent transactions is by monitoring the electronic benefit cards SNAP participants use to access the program.

"Let's say the person's total monthly claim, let's say $200, is used up in one visit at what we know to be a small store," Concannon said. "That would surface to us as a suspicious claim. Where we see patterns or multiple redemptions of large amounts, again in a small store, would draw that kind of activity to our attention."

USDA has about 100 people across the U.S. who are dedicated to retailer oversight. Supermarkets tend to be involved in a small fraction of the fraudulent transactions, with smaller stores being the most prevalent places where fraud is found. So, it's important for USDA to enroll the smaller stores in the program and to monitor them to ensure that they are not conducting fraudulent transactions.

"We need to make sure as much as possible that we can identify stores and vendors that fraudulently participate," Concannon said. "But we also want to make sure that consumers, who are the recipients of the benefit, when they actively become part of that that they are made accountable as well."

Last year, nearly 900,000 persons participating in the program across the country were reviewed for possible improper actions or trafficking.

USDA relies on data from other federal agencies, such as the Social Security Administration, to monitor information about the location and income of SNAP participants.

"One of the most important and most effective ways for government agencies to make sure they reduce fraudulent or improper payments is to make the fullest use of even the existing federal databases," Concannon said.

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