USDA shrinks incorrect food stamp payments via e-debit card

The Agriculture Department has managed to cut $1.4 billion in improper payments over five years from its Food Stamp program through a combination of use of an electronic benefits card and aligning state and federal benefit criteria.

The department’s erroneous payments are at a record-low 5.88 percent, said Kate Coler, deputy undersecretary for food, nutrition and consumer services, during a hearing of the Senate Homeland Security and Governmental Affairs Subcommittee on Federal Financial Management. Agriculture is one of the few departments that has dramatically reduced its improper payments.

Seven programs accounted for 95 percent of the $45.1 billion in improper payments that 17 federal agencies reported last year in 41 programs, according to Linda Combs, controller of federal financial management at the Office of Management and Budget.

Total improper payments across government are considerably higher, Combs told lawmakers Tuesday. That’s because not all agencies have accounted for erroneous payments in programs, such as HHS’ Medicaid program, and auditors have targeted only specific programs that are significantly at risk, said McCoy Williams, director of financial management and assurance for the Government Accountability Office.

Agencies are supposed to report improper payments in their annual performance and accountability reports.

To cut its erroneous payments, Agriculture transformed its food stamp benefits to electronic debit transactions for use at grocery retailers. The debit cards enabled the department to track funds and ensure the identity of users, Coler said.

“As states streamlined eligibility and criteria for payments, it helped to bring down erroneous payments,” she said. The 2002 Farm Bill also allowed for simplified reporting requirements and aligning of food stamp criteria with state welfare and federal Medicaid programs.

States administer the federal money for food benefits, but they don’t have oversight over funds. So Agriculture offered a financial incentive to states for accuracy. Agriculture Secretary Mike Johanns last month awarded $30 million to 16 states for their food stamp accuracy. And seven states with the best payment accuracy rates and the three states with the most improved payment accuracy rates will divide $24 million, Coler said.

Agriculture also conducts a quality control process with each state, shares best practices, provides data analysis, technical assistance and development and implementation of corrective actions.

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