The report notes that proposals have been offered in Congress to require agencies to deem any program with $100 million in expenditures as risk-susceptible. Image: FOTOGRIN/Shutterstock.com
By: FEDweek StaffA Congressional Research Service report has laid out options for increasing the focus on improper payments, including requiring greater attention to “unknown payments”—where the agency lacks sufficient documentation to determine if the payment was proper or not—and to efforts to recoup known overpayments.
The report comes as OMB recently reported a decline in the improper payments rate to just under 4 percent in 2024, but stresses that “improper payment totals have increased in the past two decades in part because federal expenditures have increased significantly while error rates for many programs have not improved much, if at all.”
Like the OMB report, it notes that five programs–Medicare, Medicaid, Unemployment Insurance, Supplemental Security Income, and the Earned Income Tax Credit—account for about three-fourths of improper payments and that the monetary cost increased due to fraud against pandemic-related programs. While “improper” in the government’s terminology also includes underpayments and improperly documented payments, a similar three-fourths are overpayments.
The report notes that proposals have been offered in Congress to require agencies to deem any program with $100 million in expenditures as risk-susceptible, report on their implementation of fraud risk management best practices, include improper payments information with their budget materials, and identify the individual and office with the primary responsibility for reducing improper payments.
“Congress may also wish to consider requiring agencies to report on the percentage of “unknown payments” that are ultimately determined to be proper, improper, and fraudulent . . . Unknown payments that are eventually determined to be improper would increase the totals for overpayments and monetary loss, whereas those that are eventually found to be proper would reduce a program’s “real” improper payment rate.
“The resolution of unknown payments might also shape policy decisions. Unknown payments that are determined to be fraudulent might lead agency officials and Congress to look at strengthening fraud controls, whereas unknown payments that are determined to be accidental might be addressed by providing additional training for program personnel,” it says.
Regarding collection of known overpayments, it says that “Auditors have found that agencies do not always implement recovery audit programs when they should and sometimes do not provide adequate justification for not pursuing the collection of overpayments. In addition, PaymentAccuracy.gov, the primary source for government-wide improper payments data, has limited information on overpayments,” it says.
“To enhance transparency, Congress may wish to require additional reporting in agencies’ annual financial reports. Information that might be useful includes the percentage and amounts of overpayments waived, charged off, or otherwise not identified for recapture for each program; the amounts of overpayments recovered and outstanding for each program and agency; and an explanation of the difference between the estimate of total overpayments and overpayments that agencies identify for recapture,” it says.
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