Agencies’ improper payments increase; Obama to issue executive order

Improper payments by federal agencies increased to $98 billion in fiscal 2009, up from $72 billion in 2008, prompting the White House to issue an executive order to combat such errors.

Office of Management and Budget Director Peter Orszag said Monday the increase reflected two primary factors -- better measurement of erroneous payments, and the fact that federal outlays have increased as a result of the response to the recession.

"A constant error rate applied to an expanded base will cause numbers to go up," he said.

The improper payment rate for the Medicare fee-for-service program jumped significantly, from 3.6 percent to 7.8 percent. Orszag said that increase was primarily a reflection of stricter measurement. For example, he said, an illegible signature from a doctor was now more likely to trigger a classification of improper payment than it has in the past. But Orszag acknowledged that an almost 5 percent jump in improper payments under the Medicare Advantage program, where private insurance companies offer coverage to Medicare beneficiaries, was not a result of methodological changes.

Regardless of the reasons for increases, Orszag said they were unacceptable.

"We can no longer tolerate these errors, mistakes and misdeeds," Orszag said. "Every dollar misspent is a dollar not going to help an unemployed worker, a family in need of help buying groceries, or a senior who relies on Medicare to stay healthy."

Orszag said that within the next week, President Obama will issue an "aggressive" executive order to address improper payments. It will include three components: increased transparency and public participation, accountability at the agency level and incentives for compliance.

The order will require agencies to create improper payments dashboards on their websites, with information on error rates and outstanding payment issues. Agencies will also be required to appoint a Senate-confirmed official to be primarily accountable for erroneous payments.

"As we work with agencies to find the right accountable official, we will not be locked on to the [chief financial officer] necessarily," said Danny Werfel, acting controller of OMB's Office of Federal Financial Management, who is awaiting confirmation by the Senate. "We want the person best positioned, and that might be an assistant secretary over a program [or] the deputy commissioner of a bureau. We'll have a broad view of the agency to make sure we get the right person. In many cases, it will not be the CFO."

Currently, agencies are required to set goals for addressing improper payments, but those targets do not necessarily need to involve reductions. Under the executive order, agencies will be explicitly required to reduce improper payments and have their targets approved by their inspector general.

"If agencies don't succeed in reducing improper payments two years in a row, the agency's Cabinet official and the responsible Senate-confirmed official will come in to speak to the director of OMB -- which is me -- and lay out a plan for how they will succeed," Orszag said.

The executive order will boost the resources available for states to invest in the integrity of federally funded programs administered by states. It will expand nationwide a Medicare pilot program which has recovered more than $90 million in improper payments in three states through the use of audits aimed at recovering funds.

Contractors will be required to "become part of the solution," Orszag said. Currently, if the government discovers an overpayment or other improper payment to a contractor, the vendor must pay back the government without interest or penalty. The executive order will subject contractors to debarment, suspension and financial penalties if they fail to disclose overpayments.

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

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

  • Forecasting Cloud's Future

    Conversations with Federal, State, and Local Technology Leaders on Cloud-Driven Digital Transformation

    Download
  • The Big Data Campaign Trail

    With everyone so focused on security following recent breaches at federal, state and local government and education institutions, there has been little emphasis on the need for better operations. This report breaks down some of the biggest operational challenges in IT management and provides insight into how agencies and leaders can successfully solve some of the biggest lingering government IT issues.

    Download
  • Communicating Innovation in Federal Government

    Federal Government spending on ‘obsolete technology’ continues to increase. Supporting the twin pillars of improved digital service delivery for citizens on the one hand, and the increasingly optimized and flexible working practices for federal employees on the other, are neither easy nor inexpensive tasks. This whitepaper explores how federal agencies can leverage the value of existing agency technology assets while offering IT leaders the ability to implement the kind of employee productivity, citizen service improvements and security demanded by federal oversight.

    Download
  • IT Transformation Trends: Flash Storage as a Strategic IT Asset

    MIT Technology Review: Flash Storage As a Strategic IT Asset For the first time in decades, IT leaders now consider all-flash storage as a strategic IT asset. IT has become a new operating model that enables self-service with high performance, density and resiliency. It also offers the self-service agility of the public cloud combined with the security, performance, and cost-effectiveness of a private cloud. Download this MIT Technology Review paper to learn more about how all-flash storage is transforming the data center.

    Download
  • Ongoing Efforts in Veterans Health Care Modernization

    This report discusses the current state of veterans health care

    Download

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