By Jason Miller
Executive Editor
Federal News Radio

Congressman Todd Platts (R-Pa.) sees significant progress in how agencies are reducing the amount of money improperly paid out.

The chairman of the Oversight and Government Reform Subcommittee on Government Organization, Efficiency, and Financial Management said despite the fact the amount went up over the last seven years from about $30 billion to more than $125 billion in 2010, the error rate-which is the real determining factor of progress-has gone down.

But Platts said there is one area in the government’s battle against the waste, fraud and abuse that falls short in many spending programs.

“When a department is audited, and it’s part of the consolidated financial statement, they can get clean opinion, but still have tens of billions in improper payments,” said Platts in an interview with Federal News Radio. “The audit that is done today is not focused on that aspect.”

Platts said the Homeland Security Department is one agency that actually does focus on improving their internal controls specifically around improper payments and it’s made a significant difference.

“What we may need to do legislatively is look at the audit requirements we have and either revise or compliment what already is being done with auditing requirements that are focused more on internal controls and really how we guard against improper payments being made,” he said. “We will work closely with OMB and my colleagues on both sides of the aisle who are very interested in this issue on what legislation may be needed.

Platts held a second hearing of the session last Friday on improper payments. Office of Management and Budget controller Danny Werfel testified about the administration’s progress on reducing improper payments.

Werfel highlighted several initiatives his office is leading, including expanding the use of recovery audits, the (www.paymentaccuracy.gov) improper payment dashboard to increase transparency and the continued piloting of the “Do Not Pay List.”

Werfel said the administration asked for $10 million in its 2012 budget request to expand the list, which “will serve as a single source through which all agencies can check the status of a potential contractor, grantee, or individual beneficiary by linking the agency to relevant eligibility databases, such as the Social Security Administration’s Death Master File or the General Services Administration’s Excluded Parties List System.”

“While the initial portal has been built, the implementation of this initiative will have several components to be executed in phases such as conducting pilot tests of the portal by federal agencies, addressing implementation issues, linking additional databases, and developing capabilities for automating checks by agency systems,” he said. “The automation phase would incorporate cutting-edge fraud detection technology to further reduce the number of improper payments.”

Werfel added the Treasury Department’s Bureau of the Public Debt will use the 2012 funding to create an operations center focused on using new technology to fight waste, fraud and abuse, and to expand the portal.

“The new operations center and the DNP portal expansion will leverage the type of forensic technology successfully deployed by the Recovery Accountability and Transparency Board to monitor and root out fraud in Recovery Act funding,” he said. “The operations center will be available to agency management and the Inspector’s General community to fight waste, fraud, and abuse.”

Platts said the Do Not Pay List is another good tool for agencies to prevent improper payments instead of always trying to collect them after the fact.

“I’m very encouraged by what we heard at the hearing,” Platts said. “Danny Werfel and his staff at OMB are taking very seriously the responsibility of what they are doing.”

Platts said there are several success stories across government, including the Centers for Medicare and Medicaid Services (CMS). He said CMS dropped its error rate on its Medicare fee-for-service program from about 12 percent to 10 percent, which means a savings of billions of dollars. OMB reported that the CMS program made more than $34 billion in improper payments out of a total of more than $326 billion in spending in 2010.

Platts also said agencies should continue to bring private sector best practices into the government. He said credit card companies have had success in using advanced technology to look abnormal spending patterns.

Werfel said OMB has started to do that through the Do Not Pay portal as well as through better information sharing between CMS, the Social Security Administrations, and the departments of Defense and Veterans Affairs. The administration also is enhancing civil and criminal penalties for federal health care fraud and false claims.

“[T] he Recovery Board has deployed a cutting-edge fraud mapping tool that leverages the latest technologies in data capture and analytics to identify potential fraud and error,” Werfel said. “The Recovery Board has pioneered and refined the tool, which has been cited as one of the reasons why fraud and abuse in Recovery Act funds has been much lower than most people expected.”

Platts said he expects to hold further hearings on improper payments in the coming months, including one with DHS to find out more about how their internal controls is helping them prevent improper payments.

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