Estimate of improper payments mounts with more scrutiny

Federal agencies estimated higher improper payments as they placed more programs under scrutiny last year. Agencies reported a total estimate for improper payments of $55 billion in fiscal 2007 compared with $41 billion the year before as more programs considered at risk were included.


Most of the increase, or $13 billion, came from a component of the Medicaid program reporting for the first time, said the Government Accountability Office.

Agencies report estimates of improper payments in their annual performance and accountability reports submitted to OMB at the end of the year. Improper payments are those that are inaccurate, duplicative or fraudulent.

“We view this increased reporting as a positive step to improve transparency over the full magnitude of improper payments across the federal government,” said McCoy Williams, managing director of  financial management and assurance at GAO, in a report released Jan. 23.

The $55 billion represents about 2 percent of agencies' $2.8 trillion total outlay in 2007. This latest estimate of $55 billion in improper payments comes from 78 programs in 21 agencies compared with 60 programs in 20 agencies in 2006. Eight programs, however, account for most improper payments, GAO said.

Some agencies still have not developed improper-payments estimates for programs that could be susceptible to incorrect payments.

“Preventing, identifying and recovering improper payments, in that order, are what is needed across the federal government to manage, and ultimately minimize, such payments,” Williams said.

The Homeland Security Department this year will add several programs for which it will report estimates of improper payments, including the Federal Emergency Management Agency’s public assistance programs, he said.

The Health and Human Services Department estimated $13 billion in improper payments over six months for its Medicaid program’s fee-for-service claims, which are processed by the states. This year, HHS will report a comprehensive national Medicaid error rate that includes both its fee-for-service and managed-care components.

Agencies began to target these faulty payments in earnest following passage of the Improper Payments Information Act of 2002, which requires them to assess programs for risk, figure estimates of improper payments from a statistical sample and prepare corrective action plans.


The adoption of internal controls under OMB Circular A-123, similar to Sarbanes-Oxley in the private sector, has added teeth to accounting for federal benefits and payments by establishing a more formal and rigorous self-assessment process.


About the Author

Mary Mosquera is a reporter for Federal Computer Week.

Featured

  • Cybersecurity

    DHS floats 'collective defense' model for cybersecurity

    Homeland Security Secretary Kirstjen Nielsen wants her department to have a more direct role in defending the private sector and critical infrastructure entities from cyberthreats.

  • Defense
    Defense Secretary James Mattis testifies at an April 12 hearing of the House Armed Services Committee.

    Mattis: Cloud deal not tailored for Amazon

    On Capitol Hill, Defense Secretary Jim Mattis sought to quell "rumors" that the Pentagon's planned single-award cloud acquisition was designed with Amazon Web Services in mind.

  • Census
    shutterstock image

    2020 Census to include citizenship question

    The Department of Commerce is breaking with recent practice and restoring a question about respondent citizenship last used in 1950, despite being urged not to by former Census directors and outside experts.

Stay Connected

FCW Update

Sign up for our newsletter.

I agree to this site's Privacy Policy.