Narrative: a. 5.

ADWS’ operational overpayment rate for the year ending June 30, 2014, was 8.380%, down from 9.63% for the year ending June 30, 2013, while its UI IPIA Integrity Rate was 9.441%. For CY 2014 the operational overpayment rate was 7.979%, which was a reduction of 1.571% from CY 2013. The following causes have been identified by ADWS’ Benefit Accuracy Measurement (BAM) Unit as the top three root causes of overpayments: (1) Benefit Year Earnings: At 4.427%, Benefit Year Earning issues are the leading cause of overpayments, though this is a decrease from 5.10% the previous year. BAM data for the year ending June 30, 2014 indicate that 49.886% of dollars overpaid is the direct result of claimant error in failing to report earnings or due to claimants incorrectly reporting earnings. (2) Separation Issues: At 3.325%, the second leading cause of overpayments is attributed to claimant error, employer error or a combination of the two regarding separation issues; this is down from 3.59% the previous year ending June 30, 2013. BAM data indicate that 35.219% of dollars overpaid during the period ending June 30, 3014 is the result of incorrect or inadequate separation information provided by one or both of the parties. (3) Other Issues. At .752%, the third leading cause of overpayments is attributed to "Other Issues;" this is up slightly from 0.56% during the period ending June 30, 2013. These issues include: appeal reversals, claimant fraud outside the key week, and claim maintenance issues. BAM data indicate that 7.960% of dollars overpaid is the result of other issues.

ADWS continues to work to improve preventing, detecting and recovering improper unemployment insurance overpayments. The GPRA goal for FY 2016 is that at least 67.9% of the estimated detectable recoverable overpayments will be established. ADWS’ GPRA performance for SY 2015 was 53.49%, an increase of 12.71% over SY 2014. With regard to the Core Measure, ADWS will continue to strive to meet or exceed the Core Measure of 50% to 95% for the Detection of Overpayments, which it did for six consecutive quarters beginning with the 2013-4 quarter. Training will continue to be a major point of emphasis in order to cultivate and maintain a well-trained and experienced staff to better minimize the occurrence of overpayments. Staff turnover in the FIRE Unit and BPC negatively impacts the determination of issues and the establishment of overpayments and is critical to continued success.

Over the past three years the BAM Operational Rate continued to decrease from 11.27% to 10.17% to 9.63% to 8.380%. In order to increase the overpayment detection rate and reduce the operational overpayment rate further, ADWS will pursue the following major strategies: 1. Prevent, detect and reduce future overpayments by increasing employer electronic responses; 2. Prevent and reduce future overpayments through claimant messaging; 3. Prevent, detect, reduce and recover overpayments by interlinking more of the investigative and administrative systems; 4. Prevent, reduce and recover overpayments by prosecuting the most egregious fraudulent offenders.

With regard to Benefit Year Earnings issues, ADWS continues to educate claimants on the importance of reporting earnings timely and accurately. In addition, ADWS’ IVR Cross Match System installs control dates on claims whenever matches are made between claimants and the State New Hire Directory. Local offices then review those claims and, if appropriate, contact claimants regarding reporting earnings. To further enhance the IVR Cross Match System, in May 2012, ADWS began automatically mailing letters to claimants who claim the week in which a match was made from the State New Hire Directory. These letters congratulate claimants for obtaining new employment and serve as another opportunity to issue instructions regarding reporting earnings.

In addition to the enhancements made to ADWS’ IVR Cross Match System, ADWS deployed an employer reporting tool to securely report instances of claimant activity that impact eligibility and an online fraud reporting system for citizens to report suspected claimant and employer unemployment insurance fraud. Referrals made by citizens are simultaneously forwarded to UI Administration and UI Technical and are typically assigned for investigation within 24 hours of receipt. In SY 2015, ADWS received job refusal referrals, 212 drug test failure referrals, 74 claimant fraud referrals and 19 employer fraud referrals through these systems. The quick notification to ADWS of these events, when substantiated, will continue to reduce improper payments.

To emphasize the importance that the highest levels of Arkansas government have placed on preventing inaccurate wage reporting by claimants, beginning in March 2012, ADWS developed and deployed a wage cross match that runs biweekly with state employee payroll. This report contains the weekly pay of any state employee who also claimed benefits within the applicable two week period. ADWS utilizes this tool to identify claimants with earnings issues and immediately initiates a fast track investigation.

The second leading cause of overpayments in Arkansas is separation issues due to inadequate or untimely separation information being provided by the employer. In March 2012, ADWS deployed its electronic response system for employers to the World Wide Web. Through the electronic response system, employers may receive and respond to Notice to Last Employers, Notice to Base Period Employers, and adjudication questionnaires via the Internet. This system enhances ADWS’ adjudication system by enabling it to have the same functionality as SIDES at a lower cost. The implementation of this method of response has improved the quality of nonmonetary determinations and reduced the number of improper payments due to the untimely employer responses to adjudication questionnaires or appeals. Marketing to employers continues to be essential to the effectiveness of this system. In combination with ADWS’ efforts to better educate our employers on the importance of accurately and timely responding to requests from ADWS for separation information, ADWS expects a continued reduction in errors that arise in the adjudication process.

To address nonmonetary adjudication quality, ADWS designated an AAS Training Officer whose primary responsibility is to evaluate and improve the existing procedures for our adjudication staff. The Training Officer also reviews a sampling of all adjudicators’ determinations in order to ensure consistent and accurate interpretation of Arkansas’ unemployment insurance laws. The improvement in the quality of nonmonetary determinations should also help reduce the total amount of improper payments to claimants who are later determined to be ineligible for UI benefits via the appeal process.

The third leading cause of overpayments in Arkansas is the result of "Other Issues." These issues include fraud outside the key week, appeal reversals and claim maintenance issues. Staff training will continue to be a major point of emphasis in order to prevent improper payments resulting from appeal reversals and claim maintenance errors. ADWS recognizes the correlation between the average case age of higher and lower authority appeals and the dollar amount of improper payments categorized as "Other Issues" resulting from appeal reversals. The reduction of the average case age of higher and lower authority appeals has had a significant impact in this area. The Board of Review and the Appeal Tribunal have made considerable efforts to reduce their average case ages and are well within compliance with their performance measures.

ADWS will continue to take steps necessary to improve the recovery of overpayments. Future efforts will seek to finalize the electronic link with AAS to allow for immediate electronic entry of overpayments and to link with the appeal system to automate appeal decisions. ADWS will also seek to deploy an automated cross match to better coordinate its TOP and state tax refund intercept process in order to minimize refunds to claimants from overlapping intercepts. These projects will ultimately free BPC resources to further increase the recovery of overpayments.

Instructions for the following section: In each individual section below, enter a Root Cause, from above, and the top three focused Strategies that will be employed to correct or reduce this cause of overpayments. An additional line is available in each section to include other significant strategies that target the root cause.

Root Cause 1: Benefit Year Earnings

Root Cause 2: Separation Issues

Root Cause 3: Other Issues