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Lifeline Law Advisor Insight & Commentary on Lifeline Program Compliance & Regulatory Issues

GAO Report on Lifeline Released

Danielle Frappier Posted in FCC

Flag_of_the_United_States_General_Accounting_Office_svgYesterday, the GAO released its long-awaited report on the Lifeline program. The report has already generated multiple statements that waste, fraud and abuse are “prevalent,” and that “everything” is wrong with the program.

No one asserts that the program is perfectly structured or administered. And, where corrections and improvements in the program can be made, they should be made. But there are some significant limitations on the data and analysis in the report of which readers should be aware. Probably most importantly, the report is based on data from 2014, and therefore necessarily takes virtually no account of the many additional safeguards and improvements that have been made. For example, the FCC adopted a new rule in June 2015 (which became effective in February 2016) that permitted ETCs to retain copies of applicants’ eligibility documentation (e.g., copies of SNAP cards). (Retention used to be prohibited under the FCC’s rules.) Another change was that the FCC adopted a uniform date on which ETCs now take a “snapshot” of their customer bases for purposes of submitting claim forms, which reduced possible duplicate claims.  The positive impact of these types of safeguards and improvements inherently will not be reflected in program information that dates from before they took effect.

There are also some real difficulties in doing large scale comparisons of data across multiple databases, which the report tried to do. For example, it states that it compared Lifeline rolls to Medicaid databases in selected states, noting that “States can take up to 3 years to adjust their Medicaid data, and as a result beneficiaries can be included or excluded retroactively.” GAO report at p. 71. Looking three years after the fact is sure to produce at least some problems.

The undercover testing has issues of its own. Notably, as far as we can tell, the report does not specify whether the fictitious applications submitted by the undercover testers were actually claimed by the Lifeline providers. This matters because many, if not all, major providers use a “defense in depth” strategy to block ineligible applicants from getting subsidized service. Many are weeded out before being allowed to fill out and submit an application, but many applications are rejected at a subsequent stage (before subsidies are claimed) as a result of back-end quality assurance procedures. And if providers later realize that ineligible subscribers were erroneously claimed, there are established  procedures to return funding if reimbursement for an ineligible customer’s service was claimed in error.

Finally, the report notes that the Improper Payments Information Act rate for the Lifeline program was 0.45 percent in 2015. That is quite a low number – lower than for the E-rate program, which in that same year was 6.33 percent (see the FCC Fiscal Year 2015 Agency Financial Report at p. 88) and much lower than the typical improper payment rates for programs such as Medicare, Medicaid, veterans’ benefits, etc. As a result, the appropriate reaction to an improper payment rate of less than one-half of one percent is to use this data to continue to make improvements to the program, not to treat the program as in any sort of crisis calling for an urgent or hysterical response.