NASCIO1 honored Michigan's Department of Human Services Office of Inspector General (DHS) with a recognition award for innovative use of Information and Communication Technology (ICT) for fraud detection.
Michigan’s Department of Human Services (DHS) is one of the State’s largest and most important organizations, managing approximately $5 billion in funds for many of Michigan’s critical programs, including food and cash assistance, and child support services. More than 1.2 million Michigan people depend on DHS programs for life’s necessities.
To deliver these services to the State’s neediest citizens – in a tightly controlled fiscal environment – DHS must get the greatest value possible from each and every dollar spent. Neither the agency or its clients, nor Michigan taxpayers, can afford the misuse of funds through fraud, waste, or abuse.
As part of its efforts to deliver value, DHS’s Office of Inspector General (OIG) has implemented some of the most innovative fraud detection methods in the country. Using a sophisticated data warehouse/decision support system supplied by Bull, as an informational backbone, DHS’s OIG has utilized advanced analytics in an unprecedented way to combat fraud activities in the Child Development and Care program [Day Care], and fraud and trafficking in food and cash assistance areas. In so doing, the OIG links data about providers and recipients with Wages data, Unemployment data, national food assistance data, and other sources, to undertake the comparative analysis necessary to achieve breakthrough results.
In fiscal year 2005, the DHS OIG efforts – unprecedented nationwide – identified more than $9.2 million in documented Day Care fraud to be recovered, up from an impressive $3.3 million in 2004, the first year of the data match, and far more significant savings beyond that. OIG now identifies households who have long left Michigan while failing to report their departure. This query alone impacts DHS programs with savings of $1.6 million each year. Moreover, OIG investigators are now much more targeted in their efforts to fight fraud and abuse, and when they confront alleged abusers, they are most often armed with irrefutable statistics and information – meaning their “hit rates” are substantially higher, and the potential for fraud recoveries much greater.
In addition to the monetary savings the agency has realized, and will realize in the future, other major benefits include:
- Savings of future program dollars when fraud is stopped through the “sentinel” effect that puts both clients and retailers on notice that the State has advanced fraud-fighting capability.
- Saving investigation time since analysts and investigators are pulling data from one central source.
- Saving time and money for partnering agencies (for example, the Michigan State Police) by filtering out “bad” trafficking referrals in the food and cash assistance programs.
The benefits of the DHS OIG fraud-fighting efforts do not stop at the state border. Because OIG activities serve as a national model, other states contact DHS to seek the agency’s advice. Further, federal enforcement authorities – particularly, the United States Department of Agriculture’s OIG – rely on the quality of DHS OIG data and analytics to support their documentation for trafficking search warrants they execute in Michigan, and for evidence in cases that they prosecute.
By utilizing the rapid analytical capabilities of the data warehouse and integrating records from disparate databases, Michigan DHS has established a national model in innovative techniques to battle Child Day Care, Food Assistance, and Cash Assistance fraud. In so doing, the agency has also embodied the principle of “Better Government” as spelled out in the Governor’s Cabinet Action Plan. Governor Jennifer Granholm and the State’s Department of Information Technology (DIT), view the “enterprise approach to data sharing as critical to Michigan’s success. As the Governor stated recently: “Information-sharing is absolutely critical to have units of government deliver the best to assist taxpayers. If you cannot share data, then you are not delivering the biggest bang for your buck.”
1 NASCIO, the National Association of State Chief Information Officers, represents in the USA , 57 state chief information officers and information resource executives and managers from the states, territories, and the District of Columbia .