Put the brakes on government-wide improper payments
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Members of Congress and the White House, no matter what party, agree that agencies need to reduce their wasteful spending. Yet, the federal government still struggles to commit the resources and leadership needed to curb this hemorrhaging of taxpayer dollars. 

The Trump administration has spoken of the importance of reducing a major portion of this misspending known as “improper payments,” which are payments made in the wrong amount, to the wrong people, or for the wrong reason. Improper payments happen every year, with $144 billion of improper payments estimated to have occurred in 2016 — an all-time high. 

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In 2015, the Government Accountability Office (GAO) found that many agencies made improper payments to people who were ineligible because they had died. And, that same year, GAO determined that as much as $1.3 billion in incorrect Medicare payments were made to ineligible health care providers with bogus addresses, including addresses for empty lots and fast food restaurants. In 2016, the Department of Agriculture noted overpayments of $218 million for federal crop insurance; and the Pentagon admitted that it overpaid by more than $100 million to commercial vendors and more than $400 million for travel pay.

The good news is that there are some straightforward steps agencies and the Trump administration can take to address this waste. In fact, there are laws on the books that give authority to, and even require, agencies to take action.

A key milestone occurred in 2010 when Congress passed a law requiring agencies to provide accurate and complete annual estimates of wasteful spending using statistically valid procedures. The hope was that if the government had more information about its misspending, it would be able to more effectively prevent such losses. Since then, Congress has also enacted additional laws aimed at preventing waste and fraud across all agency programs.   

Will these laws eventually make a difference? Only if the current administration and agencies take the laws seriously and make their implementation a high priority — which has not been the case historically. For example, 15 agencies have yet to fully comply with the requirement of estimating and reducing their levels of improper payments, and very few agencies list adequate plans to eliminate identified risks and vulnerabilities leading to improper payments. 

There are a number of agencies that are making progress, however.

Medicare payments made to dead beneficiaries was a long-standing problem until recently; but that, and the earlier mentioned problem with bogus Medicare billing addresses, have largely been fixed due to some diligent work by the Centers for Medicare and Medicaid Services (but remain a problem for some other agencies).

Likewise, the Office of Personnel Management is working with its inspector general to identify improper payments made to deceased federal retirees; and the improper payment numbers for programs such as the Department of Agriculture’s Natural Resource Conservation Service have also seen substantial improvements.

So, what else can be done?

  1. Complete the EstimatesAll federal agencies should correctly and completely estimate their improper payments. Most importantly, the Department of Defense, whose spending is roughly half the discretionary budget of the federal government and whose estimates the GAO and its own inspector general call “unreliable,” should comply with this basic requirement.
  2. Eliminate Root Causes. Agencies should do a much better job detailing the steps and timelines for not only identifying but also eliminating, the root causes of its improper payments. This is required by current law, but the administration could issue new directives to ensure consistent implementation. 
  3. Share Best PracticesThe administration should quickly establish robust and high-level working groups for sharing proven solutions in order to better detect and prevent improper payments and fraud across all federal agencies. This would include sharing of advanced data analysis techniques.
  4. Stop Fraud. The Fraud Reduction and Data Analytics Act, passed by Congress last year, aims to prevent fraud by requiring agencies to use stronger financial tools and practices. The administration should complete required guidance to federal agencies — which is now overdue. 

Ultimately, improper payments is a complex problem that adversely affects taxpayers every year. Congress and the Trump administration should make curbing improper payments and implementing the required solutions a high priority.

Peter Tyler is an investigator with the nonpartisan Project on Government Oversight. 

Nicholas Pacifico is the associate general counsel of Project on Government Oversight.


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