Making Further Progress on Improper Payments

Over the last four years, this Administration has made reducing the government-wide improper payment rate a priority.  Improper payments – those Federal payments made to the wrong entity, in the wrong amount, or for the wrong reason – represent a waste of taxpayer resources and undermine the integrity of critical government programs. 

When the President took office in 2009, payment error rates were on the rise.  In fiscal year (FY) 2009, the improper payment rate was 5.42 percent.  Since then, the Administration, working together with Congress, has significantly reduced improper payments by strengthening accountability and transparency through yearly reviews by agency inspectors general, and expanded audits for high priority programs.

As a result of this concerted effort, the improper payment rate declined to 3.53 percent in FY 2013 when factoring in Department of Defense commercial payments, compared to 3.74 percent in FY 2012 under the same accounting. Over the past year, we reduced improper payment rates in major programs across the government, including Medicaid, Medicare Advantage (Part C), Unemployment Insurance, the Supplemental Nutrition Assistance Program (SNAP - Food Stamps), Pell Grants, and two Social Security programs – Supplemental Security Income (SSI) and Retirement, Survivors, and Disability Insurance.  Furthermore, agencies recovered more than $22 billion in overpayments through payment recapture audits and other methods in FY 2013. 

In programs administered at the local level, the Federal government has been working directly with States to ensure that appropriate corrective actions are put in place to reduce improper payments.  For example, through the Medicaid Integrity Program, Federal staff specializing in program integrity provide support to States in their efforts to combat Medicaid provider waste, fraud, and abuse.  In other instances, Federal agencies have implemented innovative techniques to ensure that benefit payments are accurate.  For example, the SSI program is using new methods to verify bank account balances and ensure beneficiaries meet program asset thresholds.

The Administration is also advancing data analytics and improved technology to prevent improper payments before they happen.  For example, in January 2013, the President signed into law the Improper Payments Elimination and Recovery Improvement Act which reinforces and accelerates the Administration’s “Do Not Pay” efforts, requiring all Federal agencies to check the “Do Not Pay” list before issuing payments and awards.

OMB has also begun conducting a comprehensive analysis of agency-specific corrective actions to identify programs with the highest return-on-investment or potential for substantially reducing improper payments.  This analysis will help shape guidance on improper payments to be released in the months ahead.

Improper payments represent an unacceptable waste of taxpayer resources. Moving forward, this Administration will continue its efforts to be effective stewards of taxpayer dollars by reducing improper payments and other instances of waste, fraud, and abuse.

Beth Cobert is the Deputy Director for Management of the Office of Management and Budget

Your Federal Tax Receipt