Bill would press agencies to reduce improper payments

A bill introduced today in the Senate would more strictly enforce a law to identify and collect overpayments to beneficiaries of federal programs such as Social Security, Medicare and unemployment insurance, and introduce new penalties for agencies that do not comply.

The bill, introduced by Sen. Tom Carper, D-Del., chairman of the Subcommittee on Federal Financial Management, Government Information, Federal Services and International Security, would amend the Improper Payments Information Act of 2002 by levying financial penalties on agencies that do not fully comply with the law.

The act requires agencies to report annually to the Office of Management and Budget the amount of payments issued in error, such as mistakenly or fraudulently paying more than a beneficiary is entitled to or paying individuals who are no longer in a program or are not eligible. The law focuses on at-risk agencies -- those that have issued improper payments totaling 2.5 percent of a program's outlays and $10 million or more in improper payments. OMB audits such agencies.

However, Carper's bill would expand the definition to include an agency that fulfils either of the two conditions. Under the old definition, a $50 billion program with less than $1.25 billion in overpayments would not be considered at risk and therefore not audited, said Sen. Tom Coburn, R-Okla., ranking minority member of the subcommittee.

Carper also would impose penalties for noncompliance. If an inspector general finds that the agency is not reporting its improper payments, the head of the agency has the authority to transfer available funds from any part of the agency to the program to pay for oversight of improper payments. If the IG rules the agency has not complied in a second consecutive year, the head of the agency is required to transfer the funds. If the agency is not in compliance for a third consecutive year, any program not in compliance must transfer 5 percent of its appropriations to the Treasury.

"This legislation is designed to fix the problem," Carper said. "It improves transparency; the reporting threshold is too low as it is." The amount of the federal government's improper payments increased by 34 percent in fiscal year 2007 to $55 billion, up from $41 billion in fiscal 2006, according to an OMB report released Thursday. OMB officials attributed much of the increase to the fact that 14 additional agencies reported on their payments. The fee-for-service component of Medicaid accounted for the largest share of the newly reported improper payments -- $12.9 billion. Overall, nine programs accounted for 90 percent of errors, including unemployment insurance, the food stamp program, the free lunch program and Social Security.

"I'm shocked at the amount of money that agencies waste each year on avoidable errors, and these lost federal dollars grow each year," Carper said.

About 20 percent of all improper payments, or $11 billion, can be attributed to data entry mistakes by federal employees or by systems issuing the wrong amount, said Danny Werfel, acting controller for the Office of Federal Financial Management at OMB. Included in these errors are payments for which the agency does not have documentation to validate the accuracy of the payment, although the payment could be correct.

About 27 percent of the errors occur when checks are sent to individuals no longer eligible, such as a recipient of unemployment insurance who finds a job but continues to receive unemployment benefits. "This category is one where agencies can move forward and verify the information against a third party data source, such as the national register of new hires, and are not doing it enough," Werfel said.

Most of the overpayment errors occur when eligibility cannot be verified by a third party. For example, Werfel said those qualifying for the Earned Income Tax Credit, which requires that a parent live with a child for six months in order to claim the child as a dependent, cannot be verified. "Medical necessity is another area that's hard to validate," he said. "We wanted to distinguish between errors where there is a path forward and a way to verify the information, and cases where we may need to potentially reform the programs themselves."

Werfel said means-tested programs are the most difficult to audit, because eligibility is complex and extremely difficult to verify who is eligible.

Stay up-to-date with federal news alerts and analysis — Sign up for GovExec's email newsletters.
Close [ x ] More from GovExec

Thank you for subscribing to newsletters from
We think these reports might interest you:

  • Sponsored by Brocade

    Best of 2016 Federal Forum eBook

    Earlier this summer, Federal and tech industry leaders convened to talk security, machine learning, network modernization, DevOps, and much more at the 2016 Federal Forum. This eBook includes a useful summary highlighting the best content shared at the 2016 Federal Forum to help agencies modernize their network infrastructure.

  • Sponsored by CDW-G

    GBC Flash Poll Series: Merger & Acquisitions

    Download this GBC Flash Poll to learn more about federal perspectives on the impact of industry consolidation.

  • Sponsored by One Identity

    One Nation Under Guard: Securing User Identities Across State and Local Government

    In 2016, the government can expect even more sophisticated threats on the horizon, making it all the more imperative that agencies enforce proper identity and access management (IAM) practices. In order to better measure the current state of IAM at the state and local level, Government Business Council (GBC) conducted an in-depth research study of state and local employees.

  • Sponsored by Aquilent

    The Next Federal Evolution of Cloud

    This GBC report explains the evolution of cloud computing in federal government, and provides an outlook for the future of the cloud in government IT.

  • Sponsored by Aquilent

    A DevOps Roadmap for the Federal Government

    This GBC Report discusses how DevOps is steadily gaining traction among some of government's leading IT developers and agencies.

  • Sponsored by LTC Partners, administrators of the Federal Long Term Care Insurance Program

    Approaching the Brink of Federal Retirement

    Approximately 10,000 baby boomers are reaching retirement age per day, and a growing number of federal employees are preparing themselves for the next chapter of their lives. Learn how to tackle the challenges that today's workforce faces in laying the groundwork for a smooth and secure retirement.

  • Sponsored by Hewlett Packard Enterprise

    Cyber Defense 101: Arming the Next Generation of Government Employees

    Read this issue brief to learn about the sector's most potent challenges in the new cyber landscape and how government organizations are building a robust, threat-aware infrastructure

  • Sponsored by Aquilent

    GBC Issue Brief: Cultivating Digital Services in the Federal Landscape

    Read this GBC issue brief to learn more about the current state of digital services in the government, and how key players are pushing enhancements towards a user-centric approach.

  • Sponsored by CDW-G

    Joint Enterprise Licensing Agreements

    Read this eBook to learn how defense agencies can achieve savings and efficiencies with an Enterprise Software Agreement.

  • Sponsored by Cloudera

    Government Forum Content Library

    Get all the essential resources needed for effective technology strategies in the federal landscape.


When you download a report, your information may be shared with the underwriters of that document.