Today, the Office of Management and Budget (OMB) is releasing its annual data on improper payments, which shows a reduction Government-wide. This critical milestone demonstrates the integrity of Government programs while ensuring that Government continues to work better for the American people.
The improper and insufficient documentation payment rate in Fiscal Year (FY) 2023 was 5.43%. Consistent with the reduction in FY 2022, this year’s rate again shows a significant decrease compared to the FY 2021 rate of 7.16%. This FY 2023 combined figure represents a slight increase from FY 2022’s rate of 5.12% however, due exclusively to an increase in payments with insufficient documentation. Excluding three time-bounded pandemic relief programs that were designed, implemented, and overwhelmingly administered at the onset of the pandemic in 2020 (Pandemic Unemployment Assistance program, Paycheck Protection Program, and COVID-19 Economic Injury Disaster Loan program), the FY 2023 rate was 4.03%—the lowest level since 2014.
There are many scenarios that can lead to an improper payment, including overpayments, underpayments, or even payments made to the right recipient in the right amount but not in strict adherence to agency policies and procedures. Improper payments are not a measure of fraudulent payments, nor are they a measure of monetary losses to taxpayers. If an agency has insufficient documentation when performing its improper payment review to determine whether a particular payment was made properly, the entire payment is counted toward the improper payment rate despite there being no evidence to support the payment was made improperly. Even in cases where improper payments are subsequently recovered, they are still counted as improper.
Particularly notable gains were made this year by the Centers for Medicare & Medicaid Services (CMS), with Medicaid and Children’s Health Insurance Program (CHIP) continuing to report significant reductions in improper and insufficient documentation payment rates. In FY 2023, these programs saw a reduction of their improper and insufficient documentation payment rates by 7.04% and 13.94% respectively. This builds on top of the significant reduction already seen in FY 2022, with the continued decrease in improper and insufficient documentation payments resulting from CMS’ ongoing work with states to improve states’ compliance, processes, and systems.
Earlier this year, the Department of Labor released the one-time improper and insufficient documentation payment rate for Pandemic Unemployment Assistance (PUA), which covered the entire program period beginning in 2020. Despite more than 60% of PUA payments being made in 2020, this rate was reported for the first time in August 2023 and the entirety of the program was included in the FY 2023 Government-wide improper and insufficient documentation payment rate.
While the PUA methodology of including all payments in a single rate reduces the accuracy of the Government-wide improper and insufficient documentation payment rate by attributing the entire program to FY 2023, development of this full-program improper and insufficient documentation payment rate will help guide future program design decisions. The Administration and Department of Labor have, using funding from the American Rescue Plan Act, already made significant investments in improving the reliability, timeliness, and accuracy of state unemployment insurance systems. Earlier this year, the Department of Labor announced more than $374 million in grants to 49 states and the U.S. Virgin Islands to modernize and strengthen their unemployment systems.
OMB continues to see progress in addressing improper payments, especially when reviewing ongoing and recurring programs, but more work remains. As the President has said, “We have to prove democracy still works, that our Government works and can deliver for our people”—and that means continuing to make sure that we safeguard taxpayer dollars in a manner deserving of public trust.