Addressing a record-high number of improper payments in federal spending is a priority for House lawmakers on the House Oversight and Reform Committee’s Subcommittee on Government Operations.
Rep. Gerry Connolly (D-Va.), the subcommittee’s chairman, said he plans to introduce legislation to tackle improper payments, which last year reached their highest rate in nearly two decades.
The prospective bill would create a program integrity office to oversee agencies’ efforts to track fraud, waste and abuse in their program spending. The office would help agencies that are struggling with improper payments to make corrections.
The legislation would also emphasize the use of high-quality data and the modernization of information technology to better scrutinize spending in high-risk federal programs.
The office created under the bill “will enhance program integrity in the highest-priority federal programs without putting undue burden on those programs’ customers,” Connolly said at a recent subcommittee hearing on managing improper payments.
Oversight of improper payments, he added, can also lead to better understanding of the effectiveness of federal programs.
“Improper payments are an imperfect, but valuable measure of program integrity,” Connolly said. “In short, they help us answer the question: Is the federal government distributing money in the way Congress intends?”
For fiscal 2021, 86 high-risk federal programs estimated improper payments. Of their $3.9 trillion in combined spending, more than 7.2% were improper payments.
Connolly said that amounts to $281 billion in improper payments, more than any other fiscal year since 2003. The Office of Management and Budget reported in December 2021 that the increase was in large part a result of growth in the improper payment rate for the unemployment insurance program. That added up to 18.71% between July 2020 and June 2021, which is between roughly 5% and 8% higher than a non-pandemic year.
Improper payments encompass both overpayments and underpayments, as well as payments made to the right recipient in the right amount but not in strict adherence to the relevant statute or regulation.
“There are many causes of improper payments. Some improper payments can be attributed to fraud, but many are simply paperwork errors — for example, when an individual or business accidentally checks a box on a form, perhaps because of confusing instructions, language barriers, or bad internet access,” Connolly said.
Linda Miller, a principal for advisory services at Grant Thornton, also a former assistant director at the Government Accountability Office and former deputy executive director of the Pandemic Response Accountability Committee, said using better data to address improper payments would improve management and oversight of agencies’ spending.
Miller said improper payments have continued to increase in recent years, despite efforts from Congress.
“There have been five iterations of legislation focused on improper payments over the last 20 years, and during that time the improper payment rate has steadily risen,” Miller said.
Connolly said the legislation he plans to introduce would create a more proactive approach to tackle improper payments, centering on action rather than just compliance. The bill will also focus on the collection, sharing and analysis of high-quality data across agencies.
“Data are key to reducing paperwork errors and fraud without putting burden on the public,” Connolly said.
The Biden administration is also focused on addressing improper payments by providing more resources to GAO. The administration’s fiscal 2023 budget request gives GAO $810.3 million, $91.1 million more than enacted levels for 2022.
As part of that funding request, GAO says it’s focused on targeting improper payments in federal spending, as well as overseeing infrastructure spending.
Comptroller General Gene Dodaro, in GAO’s budget request report, pointed to a few programs in particular that account for a notable amount of the total improper payments.
“We will also continue to examine the sustainability and integrity of the Medicare and Medicaid programs, which together accounted for more than $1 trillion in expenditures and an estimated $148 billion in improper payments in FY 2021,” Dodaro said. “In addition to eroding public trust, the scope of improper payments in these programs jeopardize the government’s ability to provide care for those who most need it in the future.”
Dodaro also told the Federal Drive with Tom Temin that when it comes to improper payments, more rigor and oversight is necessary for agencies in the executive branch. That includes a more proactive approach to help prevent improper payments before they occur.
“There should be some prevention of fraud efforts underway, quick risk assessments that are done before payments start flowing freely, so that there are some controls up front, and then there ought to be quick post-payment reviews, so you can get some recoveries underway,” Dodaro said. “Experience will tell you, if you don’t get on top of this stuff, later your ability to recover anything gets severely diminished.”
At GAO’s budget request hearing, Rep. Jaime Herrera Beutler (R-Wash.) added that the pandemic has exacerbated the need for improper payment management and oversight.
“The economic instability and increased flow of federal funds associated with COVID-19 have greatly increased the opportunities for fraud, making that framework for managing improper payments really essential to our nation’s financial management,” Herrera Beutler said.
The Biden administration is also calling on agencies to address improper payments as part of its President’s Management Agenda.
The PMA team focused on improving the “business of government” tells agencies to build on the lessons learned administering trillions of dollars during the COVID-19 pandemic, as well as ongoing infrastructure spending, to improve the way it issues grants and other forms of federal financial assistance.