From payment accuracy to program integrity

As the fog of the COVID-19 war continues to dissipate, it has become increasingly clear that hundreds of billions of dollars were needlessly added to the national debt due to the government’s inability to prevent the nefarious actions of fraudsters.

Two federal agencies in particular – the Labor Department and the Small Business Administration – were the primary marks. That staggering level of fraud coupled with mounting concerns about the size and trajectory of the nation’s debt load should elevate program integrity as a top management focus, not only to thwart the fraudsters but to ensure every taxpayer dollar is spent effectively.

To be sure, federal agencies make too many improper payments and have for decades – even in years lacking a pandemic or other mega disaster. The COVID-19 crisis simply highlighted the problem.

The GAO estimates improper payments across the government totaled at least $247 billion in 2022 alone, even when excluding certain risky programs that would undoubtedly push that figure even higher. Not surprisingly, agencies are now directing their energies toward developing more reliable fraud mitigation strategies, preventing and detecting fraud, and reducing payment errors.

The notion of reducing these improper payments – whether arising from fraud or other abuses – is also nothing new. Agencies have kept busy for years responding to a steady stream of statutory mandates, like the Improper Payments Information Act of 2002, designed to strengthen federal financial management and minimize improper payments. In fact, one of those statutes, the Payment Integrity and Information Act was signed into law just 25 days before the CARES Act, the largest COVID-19-assistance funding measure. Clearly, it did not do much to deter the fraudsters in waiting.

In addition to a growing body of law to strengthen program integrity, extensive fraud avoidance and payment integrity guidance has been issued by executive branch oversight organizations. Moreover, the Biden administration published a set of proposals in early 2023 to further enhance fraud and identity theft prevention practices based on lessons learned during the pandemic.

Such advancements, though, are only as good as an agency’s ability to adhere to them amid a crisis. As was the case with much of the $5 trillion provided for COVID-19 assistance, a desire to push money out the door quickly by creating new programs and expanding others often clashes with sound financial management.

In the early, frenzied days of the pandemic, agencies were at times compelled to relax internal controls or hastily craft program regulations contributing to an intolerable level of fraud and abuse in the distribution of aid. The incidence of fraud of this magnitude not only costs taxpayers but it weakens trust in government and calls into question the government’s ability to meet one of its core duties, to promote the general welfare, during times of national emergencies.

While “program integrity” is commonly characterized as getting payments right, it is a necessary (compliance-driven) but not sufficient (mission-driven) condition. A broader consideration of integrity incorporates both structural and organizational features to determine how best to design and deploy public programs – a more complex undertaking, but surely at least as important.

A more holistic approach to program integrity involves many points along the lifecycle of a public program: from gaining a thorough understanding of statutory requirements and objectives to delivering a program in a way that meets the needs of intended beneficiaries while safeguarding taxpayer interests.

There is much to be done between enactment of a program and its delivery to the public. Implementation actions typically include the development of regulations, operating procedures, budgets, systems, and program evaluation plans, along with other administrative tasks. All are important activities best performed in the context of acting as constant stewards of taxpayer dollars in attempting to meet intended outcomes. Moreover, achieving full program integrity is not a perpetual state; even the best designed and delivered program may become obsolete at some point.

Program integrity flows from the use of evidence, research, and advocacy to identify and remedy areas where outcomes are falling short, or incentives are misaligned. At Arnold Ventures, we also consider program integrity in the context of whether the political will exists to advance public policies maximizing opportunity and minimizing injustice.

Already facing a severe structural mismatch between revenues and spending, the last thing the U.S. government should be doing is adding to the debt tab by funding programs that lack integrity and show little promise in that regard. The importance of getting payments right cannot be overstated.

But program integrity needs to be considered in a context well beyond payment fidelity, where structural and operational program features maximize prospects for mission accomplishment. The simple truth is that we cannot afford to do otherwise.

Doug Criscitello, a former official with the Congressional Budget Office and the Office of Management and Budget, is a Program Integrity Fellow at Arnold Ventures and a Fellow of the National Academy of Public Administration.