By Kellie Lunney
March 23, 2011The government faces a challenging task in preventing and recovering improper payments while simultaneously ensuring that money is disbursed in a timely manner to those entitled to it, a panel of federal officials said on Wednesday.
The Housing and Urban Development Department, for example, reduced its improper payments from 17 percent to 3 percent during the past decade, said David Sidari, HUD's deputy chief financial officer, but efforts to improve internal controls and institute reform slowed the rate of payments to people who were eligible for assistance, he added. Sidari noted agencies must individually measure their own risk as it relates to preventing and recovering improper payments while ensuring that proper payments are processed expeditiously. "Do you let the money flow to achieve your mission, or slow it down while you retool?" he asked.
Other panelists agreed that the pressure to improve financial management while efficiently serving customers can be a fine line to walk. George Mills, director of the provider compliance group in the office of financial management at the Centers for Medicare and Medicaid Services, described a typical day in his job. "You've got [the Office of Management and Budget] and Capitol Hill saying, 'Stop these improper payments,' " he said. But rooting out improper payments takes time, and agencies can be accused of hassling folks in an effort to recover money, he added.
"Agencies really are under constant pressure to do more with less," said Kay Daly, director of financial management and assurance at the Government Accountability Office.
The officials spoke at a conference sponsored by Federal Computer Week and LexisNexis on using technology and collaborating with federal and state agencies to prevent and recover improper payments. The government reported $125 billion in improper payments in fiscal 2010. Improper payments are mostly the result of human error and less often of fraud, the panelists stressed.
President Obama in July 2010 signed the Improper Payments Elimination and Recovery Act aimed at cracking down on such waste in government and helping the administration reach its goals of reducing improper payments by $50 billion by 2012. The law is the latest in a series of initiatives by the administration to put the government's fiscal house in order. In June 2010, Obama announced the creation of a Do Not Pay List, a network of databases through which agencies can check the status of a potential contractor or individual in an effort to prevent improper payments. That memo followed a March 2010 memorandum directing agencies to expand their use of payment recapture audits, which leverage technology and skilled accountants and fraud examiners to ferret out over- and underpayments to contractors, individuals and other recipients of federal funds. A November 2009 executive order instructed OMB to provide guidance to agencies to help them crack down on waste, fraud and abuse in financial management.
Strengthening internal controls and sharing data when possible with other agencies at the federal and state levels are crucial to preventing and recapturing improper payments, the panelists said. Sidari said consolidating, streamlining and automating financial processes, as well as involving the department's program offices in the effort helped HUD reduce its improper payments.
Also important is using external and internal data to track discrepancies and establish patterns, said Judith Oliveira, division director of the Social Security Administration's Boston audit division. Oliveira said her office used marriage data to figure out improper payments disbursed through the Supplemental Security Income program. It was a challenge, however, because many states did not have the data SSA sought electronically, she said. "If you can't get data from outside data, look at what you've got and try to use it in a new way," Oliveira advised.
By Kellie Lunney
March 23, 2011