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Chafee releases report on benefits fraud, waste

Michelle r. Smith and David Klepper, Associated Press

PROVIDENCE, R.I. (AP) -- A report released Wednesday by the governor's office on Rhode Island's social services benefits programs found widespread inefficiencies in state government, as well as "substantial avenues of waste and fraud" by those receiving benefits, as well as retailers and medical providers.

The report describes suspicious occurrences ranging from homeless food-stamp recipients ordering gourmet mail-order meat to retailers suspected of buying food stamp cards from recipients and using them to stock their own shelves.

According to the report, 800 people living in publicly subsidized housing in Providence who received food stamps — a benefit that factors into eligibility— had underreported an estimated $1.7 million in nutritional assistance benefits annually.

The 16-page document also said more than 60 prison inmates received food stamps which were later used in stores and cases in which dead people received food stamp benefits that were later used.

The report cases in which the authors believe retailers were buying food stamp cards from beneficiaries at a discount, then using them to buy groceries they could resell.

Gov. Lincoln Chafee released a redacted version of the report Wednesday after initially withholding it, citing concerns it could jeopardize potential criminal investigations. He faced a Wednesday deadline under a state law that gives government agencies 10 days to respond to open records requests, as well as a storm of criticism from open government advocates and some lawmakers who said it should be public. Specific instances of alleged fraud were blacked out.

Chafee said his administration was working aggressively to respond to problems uncovered by the report, and said work continues with Ken Block, his former gubernatorial opponent, whose Simpatico Software Systems prepared the report for free.

"There are abuses, but we're going after them," he said.

But one lawmaker said she had "grave concerns" about a report that she said reinforced unfair stereotypes about food stamp recipients. She said some of the report appeared to be based more on speculation than fact.

"I don't see a single thing in this report that shows me that there is widespread abuse among recipients," said state Rep. Maria Cimini, a Providence Democrat, who works as a food stamp coordinator. "I don't want people to abuse the system either, because its resources need to be available for the many who need the help.

Indeed, Chafee and members of his administration said there may be valid reasons for some of the apparent wrongdoing. As an example, Department of Human Services Director Sandra Powell said inmates are allowed to continue to collect benefits if they are imprisoned less than 30 days. She said heads of household who are imprisoned may also still be listed as receiving benefits if members of their household continue to receive them, even if the individual inmate is not getting a benefit.

Many of the problems highlighted in the report were tied to inefficiencies in state government including outdated computers and failures by state agencies to share information. The report detailed problems getting information from the federal government on the food stamp program, including information about retailers, something the state says it is working on fixing.

There are also problems within state computer systems: The report said the state's 39 cities and towns are listed 400 different ways in the data it received, for example.

The governor plans to introduce legislation that would make it easier for state agencies to share information. Powell said better collaboration and technology are key.

"In order to beat the scammers, we have to work smarter," she said.

Republican House Minority Leader Brian Newberry said the state must move faster and more aggressively against fraud in state programs, and said he hoped the report would embolden such efforts.

The state is also in the process of setting up a fraud unit designed to identify cases of potential abuse within social service programs.

Fraud wasn't the only issue the report targeted. It suggests the state could save millions simply by changing the way it reimburses Medicaid providers for dental services. Currently the state pays community health centers a flat fee for visits by Medicaid recipients but could save $4.5 million per year by paying based on the specific procedure performed, the report said.

Medicaid and food stamps, known as the Supplemental Nutrition Assistance Program, are two of the state's largest and most complicated programs.

Rhode Island had the third highest "payment error rate" for food stamps in the nation for Fiscal Year 2011, according to federal statistics. The payment error rate documents improperly approved eligibility and benefits. Rhode Island's error rate for 2012 was 7.69 percent, more than double the national average.

Total food stamp benefits in Rhode Island were $289 million last fiscal year. More than 175,000 Rhode Islanders receive the benefit.

Some 225,000 Rhode Island residents were enrolled in Medicaid in 2009, the latest year for which numbers were available on the program's website. The federal government spent $1.18 billion on enrollees that year while the state contributed $690 million.