SD's Nelson Claims ‘Bait and Switch’ as Lifeline Users Fail Automated Eligibility Checks

Universal Service Administrative Co. hasn't de-enrolled any Lifeline users who failed the national verifier's automatic reverification, and no decision has been made on when that will happen, USAC Vice President-Lifeline Michelle Garber told the Telecom Staff Subcommittee at NARUC Sunday. A state commissioner and subcommittee members grilled Garber on high rates of users failing the automated check due to the NV not accessing all databases relevant to determining eligibility, with USAC not even trying to access them in higher cost states.

NARUC’s Telecom Committee plans to vote Tuesday on a resolution, cleared Sunday by the staff subcommittee, that would urge FCC changes to address database and other concerns with the national verifier. The FCC earlier slammed critics who it says seek to undermine efforts to protect USF integrity (see 1901310003).

Garber didn’t dispute claims that many users fail automated reverification in states where the NV doesn’t ping every database used to determine eligibility. USAC can automatically verify about 2-3 percent of Lifeline users in states where the verifier looks only at Housing and Urban Development data, since far more users are eligible for Lifeline through the Medicaid or the Supplemental Nutrition Assistance Program (SNAP), she said. USAC doesn’t have access to those databases in every state, and in states with relatively few Lifeline users, it won’t seek access because it’s not cost effective, she said.

If a user fails the automated process, USAC manually checks how recently the subscriber enrolled and if the provider has any “on-hand documentation” showing eligibility, Garber said. If not, USAC will seek proof directly from the consumer, she said. For the first group of states that hard launched in November, most deadlines for consumers to manually submit information have passed, but USAC hasn’t completed reverification in any state, and no users have been de-enrolled, Garber said. The goal isn’t to de-enroll the eligible, she said: USAC sees the process as “a major learning experience.” USAC plans to deploy the NV across the country this year.

The first wave of states had about a 30-35 percent fail rate for the automatic process, forcing the manual process that only about 1 percent of users complete, Kelley Drye’s Josh Guyan told the subcommittee Saturday. Failure rates are higher in states where USAC doesn’t access all relevant databases, said Guyan, representing National Lifeline Association providers. Failure is 56 percent in Mississippi, where the verifier can access only SNAP and HUD databases, he said. It’s 98 percent in Wyoming, which has HUD access only, he said. The second wave of states is HUD-only, so rates will be at least 90 percent, he said. USAC won’t seek access to state databases because of cost in several low-volume states, including Nebraska, Oregon and Vermont, he said.

NV's Well Is Dry

The NV is a “wreck” in South Dakota, which hard-launched last month, said former Telecom Committee Chair Chris Nelson. The automatic process has a 98 percent fail rate there, said the commissioner. The NV effectively pings state databases, but USAC doesn’t have the all required state permissions, said Nelson: “They’re drilling a great well, but there’s no water.”

Nelson protested a “bait and switch” after Garber confirmed USAC won’t pay to access SNAP and Medicaid databases in low-volume states like South Dakota. Two years ago here, USAC failed to mention such, he said. “It’s called a national verifier,” but the policy results in disparate treatment between states with large numbers of Lifeline users and those with small numbers, Nelson said.

“It’s an important conversation for the FCC,” replied Garber, explaining USAC doesn’t make such decisions “unilaterally,” but gets FCC guidance. “We run all the states by the FCC, and the FCC directs us to proceed with a particular state in a particular manner, and they also approve the schedule by which that state would be launched.”

FCC Wireline Bureau Telecom Access Policy Division Chief Ryan Palmer had been scheduled to speak Sunday alongside Garber but canceled.

“The FCC has found that nearly 18.5% of payments from the Lifeline program are improperly made, which is entirely unacceptable," emailed a spokesperson. "The National Lifeline Eligibility Verifier is key to reducing improper payments, and will enable us to focus program benefits on those who truly need them. We are working hard to automate the verification process as much as possible, and will continue to work with the states to make the Verifier as efficient and cost-effective as possible.”

State Concerns

Telecom Subcommittee members had many questions about the verification process.

Chair Lynn Notarianni asked why USAC does a state-by-state business case for accessing databases rather than spread the costs across all states. “It seems like the benefit is to all of us,” said the Colorado Public Utilities Commission telecom section chief. Colorado PUC Senior Telecom Analyst Teresa Ferguson asked if USAC plans to work with states where many customers can’t be automatically verified. “Or is that above USAC’s pay grade to try to find a middle ground and not dump these customers?"

Some suggested it’s an impossible dream to expect the NV to ping all state eligibility data. States or the federal government putting up money for an all-encompassing database sounds like a “pie-in-the-sky” wish, said Cary Hinton, District of Columbia Public Service Commission policy adviser. Consultant Joe Gillan, vice chair of USAC’s High Cost and Low Income Committee, said there will never a point "where you go to the national verifier and it’s able to ping every database.” Some databases don’t exist at the state level, others aren’t available electronically, and access may not be worth the cost in low-volume states, he said.

NARUC’s draft resolution also asks the FCC to reconsider USAC’s policy of not accepting cards without dates showing the user’s current participation in the program. Garber confirmed USAC training manuals say not to accept cards without dates, even though she said SNAP cards “rarely if ever” contain those dates but tend “to be what the user has on them.”

It seems appropriate to be concerned about cards not showing dates if the objective is to reduce waste, fraud and abuse, Hinton said. Relying on cards with no expiration date “makes me really nervous,” agreed Nelson. “But something has got to be done in the interim.”

A subcommittee member questioned the pace of the verifier’s rollout when the panel on Sunday took up the resolution for vote. “It’s problematic even beyond what we can cover in this resolution,” said California Public Utilities Commission Communications Division Director Cynthia Walker. “I don’t know what the answer to that is other than to suggest delay.”