Government curbs improper payments -- but not enough

The government is sending out fewer checks to undeserving recipients but better management -- possibly aided by new legislation -- still is necessary to truly tackle the problem of improper payments, a Senate panel was told.

Improper government payments to shady contractors, deceased Medicaid clients, ineligible grantees and others had dropped from a record high of $121 billion in fiscal 2010 to an estimated $115 billion in 2011, according to the Government Accountability Office, which looked at 70 programs across 20 agencies.

“But all too often, agencies simply don't do a very good job of coordinating their efforts to prevent improper payments or communicating about best practices,” said Sen. Tom Carper, D-Del., as he convened a hearing Wednesday of the Senate Homeland Security and Governmental Affairs Subcommittee on Federal Financial Management, Government Information, Federal Services and International Security.

“Many also have antiquated databases and computer systems for tracking basic payment information,” he said. “And all too often, we simply don't allow agencies to access the information they need to avoid giving scarce taxpayer dollars to the wrong people.”

Carper is a sponsor, with a bipartisan group of senators and House members, of the 2011 Improper Payments Elimination and Recovery Improvement Act (S. 1409), now headed to the Senate floor.

The legislation would build on a law that President Obama signed in 2010 by codifying the current effort to set up a governmentwide Do Not Pay list (incorporating data from the Social Security Administration’s Death Master File and the General Services Administration’s Excluded Parties Lists Systems), which agencies would check before awarding contracts or payments. The bill also would press agencies to confirm their efforts to collect misspent funds and require more reporting on implementation by the Office of Management and Budget.

U.S. Controller Danny Werfel told the hearing that reducing improper payments was a “highly important priority” for the Obama administration, as evidenced by three presidential directives, the creation of Vice President Joe Biden’s Campaign to Cut Waste and serious attention from Cabinet members.

“We are on track to meet or exceed the bold goals set by the president, having decreased the governmentwide error rate sharply to 4.7 percent, and having avoided making more than $20 billion in improper payments over the last two years,” Werfel said, adding the administration had “a year ahead of schedule nearly met the president’s goal to recapture $2 billion in overpayments to contractors.”

He said the president’s fiscal 2013 budget has a “suite of proposals to increase program integrity that could save $102 billion from 2012 to 2022.” Working with both parties in Congress, Werfel added, “we have significantly reversed the trend” of what had been rising improper payments in Medicaid, food stamps, rental housing, Pell Grants, Supplemental Security Income and the earned income tax credit.

Sen. Tom Coburn, R-Okla., complained that the actual incidence of improper payments could be double the current estimate. “It’s not enough of a priority for the leadership,” he said. It is inexcusable, he added, that agencies such as the Centers for Medicare and Medicaid Services were sending payments without consulting SSA’s Master Death File, or awarding contracts without first asking the Internal Revenue Service whether a contractor is in arrears on taxes.

“No one in America can figure out why we continue to pay dead people,” Coburn said.

Sen. Scott Brown, R-Mass., was equally frustrated, warning that the 2010 health care law, “if it stays, will exacerbate the problem.”

Werfel agreed the problem remained staggering, but he said the accuracy of the Master Death File is limited by the fact that only 30 states participate in the program to update it electronically. And he warned of risks of violating privacy rights and possibly the Internal Revenue Code if agencies consult the IRS on contractors with tax delinquencies.

Shelia Conley, deputy assistant secretary for finance and deputy chief financial officer at the Health and Human Services Department, said as one of the government’s largest agencies, HHS is tracking its improper payments continuously, classifying and correcting errors.

But HHS came in for some criticism from Beryl Davis, GAO’s director of financial management and assurance, who testified that some agencies had not reported estimates for all their susceptible programs. Of 79 programs with improper payment estimates in 2011, she said, “only 42 programs reported the root cause information using the required categories.”

Carper said his new improper payments bill could be packaged with several Republican anti-fraud bills to accelerate the selling of federal properties.