Collaboration in Civic Spheres

CRS: U.S. Improper Payments At Least $688B Since ‘04

by Matt Rosenberg November 1st, 2013

Improper payments by U.S. government agencies were at least $115 billion in fiscal 2011 and $108 billion in 2012 but billions more may be misspent each year – under the radar of government watchdogs – according to a recent report from the non-partisan research arm of the U.S. Congress called the Congressional Research Service. The partial total has grown in dollar terms from $45 billion in 2004 to a cumulative $688 billion through last year. In percentage terms improper payments are now are at least 4.35 percent of U.S, government annual spending, equal to 2004 but down from a spike to 5.42 percent in 2009 and 5.29 percent in 2010.

From Improper Payments and Recovery Audits: Legislation, Implementation, and Analysis, Congressional Research Service, October, 2013

Definitions, Please
Improper payments are classified as those that shouldn’t have occurred or were for an inaccurate sum, including both over- and under-payments. They may have been made to recipients not eligible based on qualifications or lack of documentation; or for goods or services that were’t actually transmitted. They also include duplicate payments or ones that failed to factor in valid discounts.

Cashing Social Security Checks of Dead Relatives
One example of how improper payments occur is when the Social Security Administration is slow to verify the reported death of a beneficiary because the death notice comes from a “less accurate” source such as a post office, bank, the U.S. Department of Veterans Affairs, or Medicare/Medicaid. As it takes time – often years and years – to verify the reported death, SSA may continue to send checks to the decedent’s address. These may then be cashed by other individuals such as family members or caregivers. Public records show the problem is fairly endemic.

A Nationwide Problem
Four different Western Washington defendants pled guilty to Social Security fraud in the first half of this year stemming from payments they received on behalf of dead people.

A host of other such cases, specifically involving alleged or admitted theft of social security benefits intended for the deceased are also archived at the investigations section of the Web site of the U.S. Health and Human Services Department’s Office of the Inspector General. Going back only to May 1 of this year are cases involving charges, guilty pleas or convictions in Ohio (sentenced); Mississippi (guilty plea); New Mexico (charged); Washington, D.C. (sentenced); California (sentenced); Oregon (sentenced); (charged); Illinois (sentenced); Illinois (guilty plea); New York (guilty plea); New York (sentencing); Oregon (guilty plea); New Hampshire (guilty plea); and California – Deputy Riverside County Prosecutor (charged).

HHS Central to the Improper Payments Problem
Improper payments tied to federal health care benefits figured in prominently to a detailed year-end 2012 report from the HHS Inspector General that the agency could save $23 billion per year if previously recommended reforms were implemented. And just today the HHS OIG reported on $29 million in improper Medicare Part D prescription drug benefit paid from 2009 through 201 to illegal residents, in violation of federal law.

So Too, Treasury’s Earned Income Tax Credit
Another prominent example: The Treasury Department’s Earned Income Tax Credit program has seen at least $100 billion in improper payments from federal fiscal years 2003-2011.

From paymentaccuracy.gov

The new CRS reports explains improper payments have mounted due partly to “…agencies’ failure to reduce substantially the error rates for risk-susceptible federal programs with multi-billion annual outlays. In some cases, error rates for these programs have actually increased over time. Moreover, the full extent of the improper payment problem is not known because agencies have yet to develop improper payment rates for some programs, including programs which (the U.S. Office of Management and Budget) estimates may have annual improper payments of $750 million annually.”

According to the Programs Not Reported section of the paymentaccuracy.gov transparency and reporting site now mandated by federal legislation, examples of non-reporting programs include HHS’s Children’s Health Insurance Program, the High Cost Program of the Universal Service Fund of the Federal Communications Commission, and Treasury’s Earned Income Tax Credit Program, which actually does report some improper payments but not nearly all that are thought to be likely. These three are developing plans to more accurately report their improper payments.

Public Data Ferret’s U.S. Government+Management archive

Other Culprits – Unemployment, Social Security, School Lunch Program
An interactive ascending/descending-rank table from paymentaccuracy.gov shows which agencies have the highest amounts of improper payments by dollar and as a percent of spending. On a percentage basis, the Earned Income Tax Credit had the highest rate of improper payments in 2012 at 22.7 percent, followed by the National School Lunch Program, Medicare Advantage Part C, Unemployment Insurance, and Social Security.

Key Fixes Seen
Recommended remedies include removing “statutory or regulatory barriers…to perform recovery audits,” and correcting poor information sharing between agencies on matters such as benefits eligibility, says the CRS report.


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