Last week, a bipartisan group introduced legislation aimed at the billions of dollars in improper payments made each year by federal agencies. The “Payment Integrity Information Act of 2018” would update and strengthen the current laws that require federal agencies to estimate, detect, prevent, and recover payments made in error, or in the wrong amount.
A major portion of wasteful government spending is a broad category known as “improper payments,” which are payments made in the wrong amount (including both overpayments and underpayments), to the wrong people, or for the wrong reason. An estimate from fiscal year 2016 showed $144 billion in misspending that year—an all-time high. These improper payments result from insufficient financial accountability, and divert dollars from where they are needed. While significant progress by Congress and some federal agencies has been made in curbing improper payments during the past decade, more needs to be done to stop this wasteful and ineffective practice.
Agencies and programs throughout the federal government are the sources of improper payments. For example, the Department of Agriculture noted $218 million in federal crop insurance overpayments in 2016. Also, the Pentagon admitted that, in fiscal year 2016, it made more than $100 million in overpayments to commercial vendors, and more than $400 million in overpayments when reimbursing individuals for travel costs.
Three leading members of the Senate Homeland Security and Governmental Affairs Committee, Ranking Member Claire McCaskill (D-MO), Chairman Ron Johnson (R-WI), and Permanent Subcommittee on Investigations Ranking Member Tom Carper (D-DE) introduced the legislation. The bill language was well-vetted by many experts in the inspector general community, the Government Accountability Office, and the Office of Management and Budget. Staff from the Project On Government Oversight also reviewed the language. A House companion bill is under consideration.
Among the key provisions of the Act, the legislation would:
- Establish more complete understanding of when and why improper payments are made. Agencies should conduct stronger and more consistent reviews of when a program’s spending is at risk for improper payments. For example, payments to federal contractors are rarely given a thorough examination in this light, despite findings from auditors, inspectors general, and the Government Accountability Office that there are major problems. The Act includes language that requires the federal government to find new methods for estimating and detecting improper payments to contractors.
- Focus more agency action toward preventing improper payments. The legislation requires agencies to devise and implement a plan, following a clear timeline in order to eliminate known vulnerabilities, rather than simply trying to recover improper payments after detection. This would shift agencies away from what is called “pay and chase.”
- Provide new nation-wide tools to curb payment errors and fraud. A current federal-wide mechanism to screen federal payments called the “Do Not Pay” program is showing signs of success. However, the system is still missing many improper payments. The bill would give agencies new abilities to catch additional payment errors. For example, state agencies that managed federal benefits programs, such as Unemployment Insurance and Medicaid, would have improved access to the Do Not Pay program.
- Improve use of data analysis tools to ferret out improper payments. The legislation requires federal agencies to coordinate with each other in developing and using cutting-edge data analysis procedures. Some agencies have seen success with these tools, such as the Center for Medicare and Medicaid Services, which continues to develop and refine a robust software system to fight Medicare waste and fraud. However, most agencies have not made effective use of data analysis systems.
Congress is already looking at other useful legislative ideas. Earlier this year, a bipartisan coalition of Congressional sponsors introduced legislation tackling the odd-sounding but very real problem of improper payments involving dead people. The Government Accountability Office has chronicled this substantial improper payment problem. The “Stopping Improper Payments to Deceased People Act” (S. 2374/H.R. 4929) would provide all relevant agencies with access to the full death list maintained by the Social Security Administration, while still maintaining strong privacy and security protections for the data. The legislation would also require steps to improve accuracy and completeness of the Social Security Administration’s database of deceased individuals, and improve the way it is used.
The Project On Government Oversight is working with Congress on the problem of improper payments, and in finding solutions that would result in real progress. We will also continue to work with the Administration and Congress on other measures to improve the accuracy and accountability of government spending.