OMB launches pilot projects to crack down on improper payments

The Office of Management and Budget has launched four pilot projects to help states and local communities tackle improper payments.

The test programs, announced Monday on OMB's blog by Director Jack Lew, involve the Agriculture, Health and Human Services, Labor and Treasury departments. The projects, which are a result of collaboration among more than 200 state and local officials and other stakeholders on ways to reduce waste, fraud and abuse, include:

• Centers for Medicare and Medicaid Services: States will share a Medicaid provider enrollment system to see if it helps them detect and prevent provider fraud.
• Food and Nutrition Service: States will share benefits information to help reduce duplicate payments, make it easier for participants to determine eligibility, and ensure people receive their benefits in a timely manner during a disaster.
• Labor: The department will lead a project testing new methods for reducing overpayments in the unemployment insurance program. The pilot will involve helping states access greater sources of data to more quickly identify those recipients most likely to be newly hired and therefore no longer eligible for the benefits.
• Treasury: The department plans to test how it can use its existing debt collection systems to help states collect outstanding federal debt.

The government estimates it made $125 billion in improper payments in fiscal 2010, an increase of $16 billion from fiscal 2009. OMB claims the pilot projects, if successful, could result in at least $100 million in annual savings.

The Obama administration has said preventing and recovering improper payments is a priority. OMB issued specific guidance in April for agencies on complying with the 2010 Improper Payments Elimination and Recovery Act, which 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 that agencies can check for 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.