OMB targets payments

Federal officials should eliminate all improper payments during the next five to 10 years, said Clay Johnson, the Office of Management and Budget's deputy director for management.

Government officials made $45.1 billion worth of improper payments in fiscal 2004, according to a new OMB report. "That sounds like a huge amount of money, which it is," Johnson said during a Jan. 26 press conference. Overpayments accounted for approximately $41.5 billion of that total, according to the report.

Of the $2.3 trillion the government spent last fiscal year, $1.4 trillion worth of programs were at risk of making improper payments, the report finds, although whether officials managing $200 billion worth of those programs actually made improper payments is unknown, Johnson said.

Progress by 15 cabinet secretaries in ending improper payments will be part of the quarterly President's Management Agenda score card, but will not be one of the five categories used to measure the performance of 26 federal agencies, Johnson said. Rather, eliminating improper payments becomes another program along with faith-based initiatives, real property asset management and others that are measured in the score card's back pages.

Fiscal 2004 was the first year requirements of the Improper Payments Information Act of 2002 kicked into action. The provisions require agencies to perform risk assessments, develop valid estimates and draft correction plans.

Doctors were the main recipients of government overpayments. The Medicare program was the largest offender, accounting for $21.7 billion of all improper payments last fiscal year. Significant causes included incorrect dollar amounts either charged or paid to physicians, diagnostic and procedural errors, and insufficient documentation to support benefit payments.

The next largest offender, the Earned Income Tax Credit program, accounted for about $9.7 billion in improper payments, although officials at the Treasury Department effort misspent up to 27 percent of their funds, the largest percentage.

Johnson said there haven't been discussions in OMB about collecting past overpayments, but a federal official said those amounts are debts owed to the government.

About the Author

David Perera is a special contributor to Defense Systems.

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