Senators Want to Curb Federal Agencies' Improper Payments

By on July 27, 2011 in Current Events with 7 Comments

On the first anniversary of the landmark Improper Payments Elimination and Recovery Act of 2010 (IPERA), Sen. Tom Carper (D-Del.), Chairman of the Subcommittee on Federal Financial Management, introduced legislation that builds on IPERA’s initiatives and takes additional steps to identify, prevent and recover improper payments by federal agencies. Sens. Joe Lieberman (I-Conn.), Susan Collins (R-Maine), and Scott Brown (R-Mass.) join Sen. Carper as cosponsors.

The Improper Payments Elimination and Recovery Improvement Act of 2011 goes beyond IPERA’s goals for curbing agencies’ improper payments with three main concepts, including provisions that: expand requirements and strengthen estimates for agencies’ improper payments; mandate the establishment of a government-wide “Do Not Pay List”; and require Recovery Audit Contractor (RAC) pilot programs across federal agencies. According to an Office of Management and Budget (OMB) estimate, federal agencies made nearly $125 billion in improper payments in 2010.

“Although we have made great strides in curbing improper payments in the past year, we still have a ways to go to improve transparency and make agencies and agency leadership more accountable – while better protecting our scarce taxpayer dollars,” said Sen. Carper. “This bill brings the Improper Payments Elimination and Recovery Act to the next level and makes it stronger, more robust and more effective at preventing and recovering improper payments. I will continue to work with my Congressional colleagues and the Administration, as I have done for the past seven years, to see that these measures are properly and efficiently implemented.”

Improper payments are payments made in error, such as payments made to the wrong person or in the wrong amount and result in billions of lost taxpayer dollars every year. Specifically, the legislation would:

  • Expand requirements for agencies, especially the Department of Defense (DOD), to strengthen the estimation of improper payments. The DOD inspector general noted that the relative low improper payments number – DOD reported around $1 billion in improper payments in 2010 – was likely due to very poor and superficial estimates. The legislation, for example, would prevent agencies from relying only on voluntary disclosure of improper payments by contractors, as well as require agencies to produce documentation to prove a payment was correct. By contrast, the Medicare improper payments program already adopts these standards, and has a much higher estimate of improper payments.
  • Mandate the establishment of a government wide “Do Not Pay List.” Currently, OMB is moving forward with plans to establish a “Do Not Pay List” based on the White House executive memorandum, Memorandum on Enhancing Payment Accuracy Through a “Do Not Pay List.” However, there is much ambiguity in the OMB plan, and there is no legislative mandate to proceed. The IPERA Improvement Act would change that. The legislation would also address some of the challenges of the “Do Not Pay List,” such as the need for multilateral data sharing agreements, broader access to the New Hire Database, and development of a database of incarcerated persons.
  • Require Recovery Audit Contractor pilot programs at federal agencies. Despite the provisions of IPERA written to encourage RAC programs, there is little or no evidence that agencies outside of the Centers for Medicare and Medicaid Services have embraced this process to identify and recover improper payments. Legislation would require a number of pilot programs as a starting point for agencies to adopt RAC programs.

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