U.S. DEPARTMENT OF LABOR
Employment and Training Administration
Washington, D. C. 20213

CLASSIFICATION

UI

CORRESPONDENCE SYMBOL

TEUQ

ISSUE DATE

5/17/84

RESCISSIONS

 

EXPIRATION DATE

 

DIRECTIVE

:

UIS INFORMATION BULLETIN (QC-1)

 

TO

:

ALL REGIONAL ADMINISTRATORS

 

FROM

:

CAROLYN M. GOLDING
Director
Unemployment Insurance Service

 

SUBJECT

:

Framework and Scope of UI Quality Control System

 

  1. Purpose. The purpose of this information bulletin is to keep you and. tlirou^gh you. the States apprised of major developments in the design arid implementation of the UI Quality Control System recently announced in UIPL 19-84. This is the first in what will be a series of UI-QC information bulletins issued for this purpose.

  2. Backaround. UIPL 19-84, issued March 21, 1984. outlines the scope of problems,lending urgency to the implementation of a UI quality control system and briefly describes the approach being taken to launch this effort. In response to the request made in this directive, a number of concerned State Administrators, UI Directors, Random Audit supervisors and others have offered thoughtful comments, suggestions and provocative opinions on a wide range of topics directly and indirectly related to the design of UI QC.

    While we will not be able to respond individually to each of the letters we have received we do want to express our thanks to the States for both the substance of their comments and the obvious time and care taken in preparing them. These comments have been and will continue to be carefully considered as work proceeds on the design of QC. We look forward to a continuing dialogue with you and the SESA's on these and other issues in the weeks and months ahead.

  3. OC Framework. 

    During the past several weeks an overall framework has been established to guide the development of UI QC. This framework consists of a series of principles and other criteria designed to reflect QC program objectives as well as the characteristics of the UI workload and realities of the environment in which the UI program operates.

    This framework begins with the premise that the Secretary of Labor has statutory responsibility for the accurate and timely payment of benefits to eligible UI claimants and the accurate and prompt collection of UI taxes. This framework also acknowledges that recent OIG surveys and results of the partially implemented Random Audit (RA) error measurement system indicate that overpayments in benefits and errors in revenue collections are significant. Finally this framework acknowledges that the overall objective of UI quality control is the collection and analysis of necessary data to assess the underlying causes of these errors and to implement solutions to the problems identified.

  4. Characteristics of Other QC Systems. 

    Quality control systems ain other Federal entitlement programs are essentially structured means of accurately identifying and measuring the incidence of errors in these programs. The errors identified by these systems are systematically categorized by type and, if possible, cause; and the errors are analyzed with the objective of providing the basis for developing. implementing and tracking corrective action. Accordingly all QC systems have these characteristics in common:

  5. Characteristics of UI Quality Control 

    Consistent with the above characteristics of other QC programs. UI QC will be a diagnostic tool. one which aims at solving those problems creating errors in the system and which tracks the impact of the solutions implemented. To fit the characteristics of UI workload and its environment as well as accomplish QC objectives. it has been determined that QC will have the following characteristics:

  6. QC Scope 

    In recent weeks decisions have also been made as to which UI programs and which aspects of those programs are to be included in UI Quality Control.

    1. Programs

      The UI program consists of 11 separate programs or aspects of programs. These include: Regular UI. CWC. Interstate, UCFE, UCX, EB, FSC, Trade. Disaster, Redwoods, and AEPP. Each of these programs requires the accomplishment of various administrative functions and determinations of status during which errors can and do occur. However, not all of these programs are likely to be included in QC.

      Some of these programs are federally funded; these programs are the Secretary's special responsibility. Programs differing from Regular UI may have different error rates. These differences may be due to Federal law overriding State law, or funding sources other than the State trust fund. Difficulties in switching eligibility requirements in the middle of a benefit year may also lead to confusion in determining individual claimant eligibility, while substituting Federal funds for State funds may lead to differences in the intensity with which State runes and regulations are applied. While it may well be desirable to study each of these special Federal programs, there may not be sufficient return to justify the expenditure necessary to accomplish the review, at least initially.

      In addition to Regular UI, at present only FSC is a major program in terms of outlays, but it is scheduled to expire in March 1985. EB has the potential to be of major significance but under current law, and the level of unemployment, it is relatively small and not expected to increase in the foreseeable future.

      The Random Audit Program (RA), forerunner of QC, samples only a cluster of programs consisting of regular UI . UCFE. UCX and that portion of regular UI claims in which earnings from an out-of-State employer are combined with those of the last employer in the paying State (CWC). Individual programs are not identified within this cluster. Within these programs, only weeks actually compensated are included in the population from which the sample is drawn.

      Building on this RA experience, UI QC will target its resources on these permanently authorized programs of greatest size and on programs which are the Secretary's special responsibility and/or are funded from Federal or Federally collected funding sources: RUI, UCFE, UCX, and CWC. These programs will be grouped together in the population from which the QC sample is drawn. Because of resource limitations, separate error rates will not be calculated for each component.

      If a State triggers on EB, it too will be evaluated using already developed survey instruments and sample designs. If FSC is extended significantly or some other temporary program is enacted techniques similar to those used for EB will be applied. The Interstate program will also be included as soon as pilot testing of alternative approaches has been completed.

    2. Negative Case Actions

      RA does not review denials of either initial or continued claims. Hence, a negative monetary or negative non-monetary determination which precludes payment of benefits is not available in the RA sample frame and is therefore not measured by the review process. The RA sample is drawn from the population of weeks compensated, primarily because each State has benefit payment information available on its computer.

      In the RUI program about one third of initial claims do not result in first payments, and about one in eight continued claims is not compensated. Eliminating these actions from the sample, may undercount underpayments and overestimate the dollars to be saved from improving the accuracy of UI claims procedures. Because QC is designed to be a diagnostic tool for State and Federal managers. errors in areas other than weeks compensated should be examined. This is consistent with the QC objective of a comprehensive approach to coverage and corrective action.

      However, the RA experience also indicates that there will be significant technical and conceptual difficulties in including all negative case actions in the QC sample. For example, many States do not maintain a computerized list of denials which may be accessed readily for inclusion in the sample frame. Because of these technical and practical difficulties. negative case actions (both denials on initial claims and continued claims) will not be included in UI QC until these difficulties have been overcome.

    3. Appeals

      RA does not develop specific error rates for appeals although should a RA case eventually be appealed, the investigators may attend the hearing or review case materials. Data for the RUI program indicate that about 1 in 25 initial claim denials is appealed (lower authority), as is approximately 1 in 600 denials of continued claims. About 1 in 5 lower authority decisions receives a higher authority hearing. Although the extent of under or overpayments resulting from these cases is probably miniscule, the quality of appeals is an important indicator of the equity with which the typical claimant is treated. If done soon enough, sampled appeals could be reversed. QC examinations would also show how well hearing officers are trained and how carefully they adhere to UI law and policy.

      For these reasons appeals will be included in UI QC by accumulating cases from the regular samples which eventually result in appeals. While this procedure may not produce enough cases for producing separate appeals error rates, some additional information may prove useful in assessing the degree of the problem and developing alternatives for future inclusion in the QC design. Until then, review of the appeals process currently accomplished by the Quality Appraisal project will be continued.

    This bulletin maybe distributed to the SESAs in your region. Inquiries should tie directed to Janet Sten on (202) 376-7972, James Van Erden on (202) 376-6328.