Michigan OIG details Bridge Card fraud detection, urges state funding for chip cards

Stacy Sampson, Inspector General for Health and Human Services, told the Michigan House Oversight Committee on State and Local Public Assistance Programs that her office uses data analytics, interagency matches and criminal referrals to detect and deter fraud in Bridge Card (SNAP/Food Assistance Program) benefits.

"More than half of our investigations come from data analytics," Sampson said, summarizing the Office of Inspector General's approach to identifying suspicious applications, cloned terminals and trafficking schemes.

The nut of the presentation: Michigan's public assistance programs are large and thus attractive to organized fraud. Sampson noted Medicaid enrollments of about 4,000,000 beneficiaries and a Medicaid budget near $24,000,000,000; she said the Food Assistance Program (FAP) had about 2,000,000 enrolled recipients and a roughly $3,200,000,000 budget. Last year, the OIG performed nearly 17,000 public assistance application investigations that the office says produced $81,000,000 in cost avoidance.

Sampson described multiple investigative tools and results. She said the office uses the federal Public Assistance Reporting Information System (PARIS) to match recipients across states; PARIS matches drove nearly $20,000,000 in cost avoidance last fiscal year. The OIG also described operations to detect cloned point-of-sale terminals and skimmers, reporting 44 skimmers confiscated in Michigan, safeguarding more than 76,000 Bridge Card accounts and protecting some $16,000,000 in benefits.

"These analytic activities have resulted in the detection and confiscation of 44 skimmers at Michigan retailers, and have safeguarded over 76,000 Bridge Card accounts and more than $16,000,000 in food stamp funds," Sampson said.

Sampson outlined common fraud schemes: identity theft (including use of stolen or deceased persons' information), trafficking (selling benefits for cash, sometimes at about 50 cents on the dollar), and cloned terminals that use stolen Food and Nutrition Service (FNS) terminal IDs to process unauthorized transactions. She cited examples presented to the committee, including a case in which an individual allegedly used stolen identities to submit more than 200 fraudulent applications and another that involved nearly $755,000 in food assistance benefits taken using deceased persons' information.

The OIG also described a welfare pretrial diversion program developed with the attorney general’s office. Sampson said 46 participants have enrolled and that program repayments totaled about $74,000 to the state.

On prevention measures, the office emphasized front-end eligibility reviews that stop payments before they are issued. Sampson said more than 8,000 of last year’s 17,000 investigations were front-end eligibility investigations; about 4,000 suspicious applications were denied, reduced or withdrawn, which the OIG says saved nearly $32,000,000 in benefits.

Committee members pressed the OIG on operational details and potential legislative levers. Representative Mentzer asked about replacing magnetic-stripe Bridge Cards with chip-enabled cards; Sampson said the federal Food and Nutrition Service recently authorized states to move to chip technology but that statewide implementation would require replacing large numbers of cards and terminals. The department provided a bid estimating total program costs at $14–16 million; because the federal government would pay half, Michigan’s share would be about $7–8 million, she said.

"We really could get — we need the money to replace our swipe cards to Bridge Card technology, and that's a — that's a 6 to $8,000,000 Michigan cost," Sampson said. Later she and a committee member described the state's expected share as "between 7 and $8,000,000." Sampson and committee members framed the chip transition as the office's top legislative ask to reduce skimming and cloning at the point of sale.

The OIG also described technical and interagency limits to detection. Sampson said PARIS data vary by state, sometimes arriving late or lacking fields that require "massaging" before useful matches are found. She said the OIG has developed machine-learning and advanced-analytics capability through an FNS fraud framework grant; Casey Barton, manager of the OIG data analytics section, told the committee the office is acquiring advanced analytics and machine learning tools to better prioritize trafficking and identity-theft cases.

Sampson warned that, while chip cards and analytics would reduce certain fraud vectors, scams and identity theft would continue to present challenges for vulnerable Michigan residents. She urged the legislature to consider funding the chip transition and to support staffing for investigations.

Ending: Committee members thanked the OIG team and signaled follow-up requests for data. The only formal action recorded on the committee’s agenda was unanimous approval of minutes from the June 5 meeting; no appropriation or formal legislative vote on chip cards took place during the hearing.