GAO, Payment Integrity: Significant Improvements Are Needed to Address Improper Payments and Fraud (testimony) (GAO-24-107660, 2024-09-10)
Summary
GAO-24-107660, a September 2024 GAO testimony titled Payment Integrity: Significant Improvements Are Needed to Address Improper Payments and Fraud, before the Subcommittee on Government Operations and the Federal Workforce, Committee on Oversight and Accountability, House of Representatives. The statement of Orice Williams Brown, Chief Operating Officer, is for release September 10, 2024. It states that cumulative improper payment estimates since fiscal year 2003 total about $2.7 trillion, and that agencies estimated $236 billion in improper payments for fiscal year 2023, a decrease of about $11 billion. It states that six program areas, including Medicare, Medicaid and the Paycheck Protection Program, were responsible for approximately $200 billion of that total.
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“GAO, Payment Integrity: Significant Improvements Are Needed to Address Improper Payments and Fraud (testimony) (GAO-24-107660, 2024-09-10).”
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United States Government Accountability Office
Testimony
Before the Subcommittee on Government
Operations and the Federal Workforce,
Committee on Oversight and
Accountability, House of Representatives
PAYMENT INTEGRITY
For Release on Delivery
Expected at 10:00 a.m. ET
Tuesday, September 10, 2024
Significant Improvements
Are Needed to Address
Improper Payments and
Fraud
Statement of Orice Williams Brown,
Chief Operating Officer
GAO-24-107660
September 2024
PAYMENT INTEGRITY
Significant Improvements Are Needed to Address
Improper Payments and Fraud
Highlights of GAO-24-107660, a testimony
before the Subcommittee on Government
Operations and the Federal Workforce,
Committee on Oversight and Accountability,
House of Representatives
Why GAO Did This Study What GAO Found
Reducing improper payments— Improper payments and fraud are long-standing and significant problems in the
payments that should not have been federal government. Since fiscal year 2003, cumulative improper payment
made or that were made in an incorrect estimates by executive branch agencies have totaled about $2.7 trillion. In fiscal
amount—and fraud—obtaining year 2023 alone, federal agencies estimated $236 billion in improper payments,
something of value through willful representing 71 programs, a small subset of all federal programs. While the fiscal
misrepresentation—is critical to year 2023 estimate is a decrease of about $11 billion from the prior year, this
safeguarding federal funds and could was largely due to Medicaid reducing eligibility requirements for beneficiaries and
help achieve cost savings and improve providers during the COVID-19 public health emergency.
the government’s fiscal position. These
payment integrity issues also erode Total Reported Executive Agency Improper Payment Estimates, Fiscal Years 2003–2023
public trust in government and hinder
agencies’ efforts to execute their
missions and program objectives
effectively and efficiently.
This testimony covers (1) estimates of
government-wide improper payments
and fraud; (2) the status of improper
payments in six high-priority programs,
as well as relevant GAO
recommendations that have not been
fully implemented related to improper
payments and fraud within these
programs; and (3) actions Congress
could take to improve oversight of
efforts to reduce improper payments
and fraud.
Six program areas were responsible for approximately $200 billion of the $236
This testimony is primarily based on
billion fiscal year 2023 improper payments estimate:
GAO’s recent work on improper
payments and fraud. GAO reviewed 1. Department of Health and Human Services’ (HHS) Medicare;
additional information to determine the 2. HHS’s Medicaid;
improper payment amounts, rates, and 3. Department of Labor’s Unemployment Insurance;
root causes for six program areas that 4. Small Business Administration’s Paycheck Protection Program;
represent about 85 percent of all 5. Department of the Treasury’s Earned Income Tax Credit; and
reported improper payment estimates 6. Social Security Administration’s Supplemental Security Income.
in fiscal year 2023. In addition, GAO
analyzed agency financial reports and Each of the six selected program areas are currently or have been on GAO’s
reviewed the fiscal year 2023 Payment High Risk List of areas with vulnerabilities to fraud, waste, abuse, and
Integrity Information Act of 2019 mismanagement or in need of transformation. Agencies have made progress in
compliance reports that each agency’s implementing GAO’s recommendations for the six program areas, but the
IG issued. More detailed information agencies can do more to improve payment integrity and address the remaining
on the scope and methodology of 14 unimplemented recommendations.
GAO’s prior work can be found within
each specific report. In addition to GAO’s work, in fiscal year 2022, the inspectors general (IG) from
10 of the 24 Chief Financial Officers Act agencies found that their agencies did
not fully comply with improper payments criteria as established by federal law
View GAO-24-107660. For more information, and related Office of Management and Budget (OMB) guidance. The IGs of the
contact M. Hannah Padilla at (202) 512- 10 agencies that were not in compliance made at least 30 recommendations to
5683 or padillah@gao.gov or Seto
Bagdoyan at (202) 512-6722 or
bagdoyans@gao.gov.
United States Government Accountability Office
their agencies from these compliance reports that remained open as of May
2024.
Improper payments and fraud are distinct concepts that are not interchangeable
but are related. While all fraudulent payments are considered improper, not all
improper payments are due to fraud. Unlike improper payment estimates that are
produced by a subset of agencies at the program level, in April 2024, GAO
estimated total direct annual financial losses across the government from fraud to
be between $233 billion and $521 billion, based on data from fiscal year 2018
through fiscal year 2022.
GAO has also identified actions Congress can take to enhance its oversight and
hold agencies accountable for reducing improper payments and fraud.
Specifically, in March 2022 GAO recommended that Congress consider taking
the following actions to enhance the transparency and accountability of federal
spending.
• New improper payment reporting. (1) Designate all new federal programs
distributing more than $100 million in any one fiscal year as “susceptible to
improper payments” and thus, subject to more timely improper payment
reporting requirements and (2) require agencies to report improper payment
information in their annual financial reports.
• Fraud risk management reporting. Reinstate the requirement that
agencies report on their antifraud controls and fraud risk management efforts
in their annual financial reports. Such reporting will increase congressional
oversight to better ensure fraud prevention during normal operations and
emergencies.
• Fraud analytics. Establish a permanent analytics center of excellence to aid
the oversight community in identifying improper payments and fraud.
• Internal control plans. Require OMB to provide guidance for agencies to
develop internal control plans that can then be put to immediate use for
future emergency funding.
• Data sharing. Amend the Social Security Act to make permanent the
requirement for the Social Security Administration to share its full death data
with Treasury’s Do Not Pay working system.
• Chief Financial Officer (CFO) authorities. Clarify that agency CFOs have
oversight responsibility for internal controls over financial reporting and key
financial information and require agency CFOs to (1) certify the reliability and
validity of the improper payment risk assessments and estimates and monitor
associated corrective action plans and (2) approve improper payment
estimate methodology in certain circumstances.
• USAspending.gov. (1) Clarify the responsibilities and authorities of OMB
and Treasury for ensuring the quality of federal spending data available on
USAspending.gov and (2) extend the previous requirement for agency IGs to
review agency data submissions on a periodic basis.
In addition, Congress can use a variety of tools to provide greater sustained
oversight through hearings and the appropriations, authorizations, and oversight
processes to incentivize executive branch agencies to improve program integrity
and take efforts to prevent fraud. For example, scorecards are one way
Congress can track agency performance in preventing, detecting, and recovering
improper payments and reducing fraud within government programs.
Page ii Highlights
Letter Letter
Chairman Sessions, Ranking Member Mfume, and Members of the
Subcommittee:
Thank you for the opportunity to be here today to discuss actions that
should be taken to help reduce improper payments and fraud in federal
programs and activities. 1 Improper payments and fraud are long-standing,
significant, and pervasive problems. Since fiscal year 2003, federal
executive agencies have reported cumulative improper payment
estimates of about $2.7 trillion. Further, in April 2024, we estimated total
direct annual financial losses to the government from fraud to be between
$233 billion and $521 billion, based on data from fiscal year 2018 through
fiscal year 2022. 2 Beyond these financial impacts, improper payments
and fraud erode public trust in government and hinder agencies’ efforts to
execute their missions and program objectives effectively and efficiently.
My testimony focuses on six high-priority program areas. 3 They make up
about 85 percent (approximately $200 billion) of the total of estimated
improper payments (approximately $236 billion) that agencies reported
for fiscal year 2023. 4 The six are
1. the Department of Health and Human Services’ (HHS) Medicare
comprising Fee-for-Service, Medicare Advantage (Part C), and
Medicare Prescription Drug (Part D) programs ($51 billion);
1The Payment Integrity Information Act of 2019 defines an improper payment as any
payment that should not have been made or that was made in an incorrect amount
(including overpayments and underpayments) under statutory, contractual, administrative,
or other legally applicable requirements. 31 U.S.C. § 3351(4). As such, improper
payments refer to all kinds of erroneous payments, including but not limited to those
resulting from fraud. Fraud involves obtaining something of value through willful
misrepresentation. All payments made because of fraudulent activities are considered
improper payments. Improper payments could suggest that a program may be vulnerable
to fraud. However, improper payments estimates are not a valid indicator of the extent of
fraud in a particular program.
2GAO, Fraud Risk Management: 2018-2022 Data Show Federal Government Loses an
Estimated $233 Billion to $521 Billion Annually to Fraud, Based on Various Risk
Environments, GAO-24-105833 (Washington, D.C.: Apr 16, 2024). The range reflects the
different risk environments during this period.
3The Office of Management and Budget (OMB) considers a program to be high priority if it
reports estimated monetary losses from improper payments exceeding $100 million in a
given fiscal year. For fiscal year 2023, there were 29 high priority programs.
4The dollar amounts represent each program’s fiscal year 2023 estimated improper
payments amount.
Page 1 GAO-24-107660
2. HHS’s Medicaid ($50 billion); 5
3. the Department of Labor’s (DOL) Unemployment Insurance,
including federal Pandemic Unemployment Assistance and Federal
State Unemployment Insurance ($48 billion); 6
4. the Small Business Administration’s (SBA) Paycheck Protection
Program comprising Loan Forgiveness and Loan Guaranty
Purchases ($23 billion);
5. the Department of the Treasury’s Earned Income Tax Credit ($22
billion); and
6. the Social Security Administration’s (SSA) Supplemental Security
Income ($5 billion).
Given the current fiscal environment, addressing improper payments and
fraud in these six program areas is essential. Our most recent report on
the nation’s fiscal health noted that the federal government faces an
unsustainable long-term fiscal path, including growing deficits from the
projected spending increases in Medicare, Medicaid, and other federal
health care programs; net interest on the debt; and Social Security. 7 It
also highlighted the importance of strengthening payment integrity,
including reducing improper payments, as a step to help to reduce the
deficit.
This statement covers (1) estimates of government-wide improper
payments and fraud; (2) the status of improper payments in the six high-
priority programs, as well as GAO recommendations that the agencies
have not fully implemented related to improper payments and fraud within
these programs; and (3) actions Congress can take to improve oversight
5Under Medicaid’s federal-state partnership, HHS’s Centers for Medicare & Medicaid
Services (CMS) provides oversight and technical assistance for the program, and states
are responsible for administering their respective Medicaid programs’ day-to-day
operations.
6Unemployment Insurance is a federal-state partnership. States administer their own
unemployment insurance programs, according to certain federal requirements and under
DOL’s oversight.
7GAO, The Nation’s Fiscal Health: Road Map Needed to Address Projected
Unsustainable Debt Levels, GAO-24-106987 (Washington, D.C.: Feb. 15, 2024).
Additionally, in April 2024, we testified on the growth in spending in Medicare and
Medicaid and provided examples of steps HHS’s CMS has taken to reduce improper
payments in Medicare and Medicaid, as well as actions still needed by CMS and
Congress. GAO, Medicare and Medicaid: Additional Actions Needed to Enhance Program
Integrity and Save Billions, GAO-24-107487 (Washington, D.C.: Apr. 16, 2024).
Page 2 GAO-24-107660
of efforts to reduce improper payments and fraud, including the use of
scorecards.
My remarks are primarily based on our large body of work examining
improper payments and fraud in the federal government. For the six
program areas, we also reviewed the agencies’ financial reports and
PaymentAccuracy.gov information to determine the estimated amounts,
rates, and root causes reported publicly for the improper payments. In
addition, we reviewed the latest audit reports by each inspector general
(IG) on agencies’ compliance with improper payments requirements.
More detailed information on the scope and methodology of our prior
work can be found within each specific report.
We conducted the work on which this statement is based in accordance
with generally accepted government auditing standards. Those standards
require that we plan and perform the audit to obtain sufficient and
appropriate evidence to provide a reasonable basis for our findings and
conclusions based on our audit objectives. We believe that the evidence
obtained provides a reasonable basis for our findings and conclusions
based on our audit objectives.
Improper payments and fraud are distinct concepts that are not
Background interchangeable but are related. 8
An improper payment is any payment that should not have been made or
that was made in an incorrect amount (including overpayments and
underpayments) under statutory, contractual, administrative, or other
legally applicable requirements. Examples of improper payments include
payments to an ineligible recipient, payments for an ineligible good or
service, and duplicate payments. Agencies’ improper payment reporting
also treats any payment that cannot be determined to be proper due to
lacking or insufficient documentation as improper.
Fraud involves obtaining something of value through willful
misrepresentation. Willful misrepresentation can be characterized by
making materially false statements of fact based on actual knowledge,
deliberate ignorance, or reckless disregard of falsity. While all fraudulent
8GAO, Improper Payments and Fraud: How They Are Related but Different,
GAO-24-106608 (Washington, D.C.: Dec. 7, 2023).
Page 3 GAO-24-107660
payments are considered improper, not all improper payments are due to
fraud. Some, for example, are due to errors.
Improper Payments
and Fraud Remain a
Substantial,
Pervasive,
Government-Wide
Issue
Estimated Improper Improper payments remain a substantial and pervasive issue. Since fiscal
Payments year 2003—when certain agencies began reporting improper payment
estimates—cumulative improper payment estimates have totaled about
$2.7 trillion. As shown in figure 1, the estimated improper payment
amounts have generally increased over this period. This is in part
because the number and size of programs reporting improper payment
estimates have increased.
Figure 1: Total Reported Executive Agency Improper Payment Estimates, Fiscal Years 2003–2023
Note: Prior year improper payment estimates have not been adjusted for inflation.
Page 4 GAO-24-107660
For fiscal year 2023, 71 programs and activities across 14 agencies
reported improper payment estimates totaling about $236 billion. This
represents a decrease of about $11 billion from the prior fiscal year. The
decrease was largely due to a reduction in estimated improper payments
for Medicaid in fiscal year 2023. Medicaid reduced eligibility requirements
for beneficiaries and providers during the COVID-19 public health
emergency.
As seen in figure 2, most of the $236 billion in executive agency improper
payment estimates for fiscal year 2023 consisted of overpayments. The
remaining improper payments consisted of underpayments, unknown
payments, and technically improper payments. 9
Figure 2: Agencies’ Fiscal Year 2023 Reported Estimated Improper Payments by
Type
These estimates do not include all programs that agencies have
determined are susceptible to significant improper payments. As a result,
the estimated total does not reflect the full extent of improper payments.
9According to OMB guidance, “overpayments” are payments exceeding the amount due,
and are payments that, in theory, should or could be recovered. “Underpayments” are
those in which recipients received less than what was due. “Unknown payments” are
those that a program cannot determine were either proper or improper. “Technically
improper payments” are those in which recipients received funds they were entitled to, but
the payment failed to follow all applicable statutes or regulations. Office of Management
and Budget, Requirements for Payment Integrity Improvement, Circular No. A-123,
Appendix C, OMB M-21-19 (Washington, D.C.: Mar. 5, 2021).
Page 5 GAO-24-107660
The fiscal year 2023 consolidated financial statement report for the
federal government noted the that the federal government’s inability to
“determine the full extent to which improper payments occur and
reasonably assure that appropriate actions are taken to reduce them” is a
continued material weakness. 10 For example, an improper payment
estimate for HHS’s Temporary Assistance for Needy Families program,
which receives about $17 billion annually, is not included. HHS reported
that it does not have the authority to obtain the information it needs to
estimate or report an improper payment amount for this program. In April
2022, we recommended that Congress consider providing HHS the
authority to require states to report the data the agency needs to estimate
and report on improper payments for this program. 11 As of September 3,
2024, Congress has not acted on this recommendation.
For fiscal year 2022, IGs determined that 14 of the 24 Chief Financial
Officers Act of 1990 (CFO Act) agencies fully complied with Payment
Integrity Information Act of 2019 (PIIA) criteria and related Office of
Management and Budget (OMB) guidance. This includes publishing
improper payment estimates, corrective action plans, and improper
payment reduction targets for all risk-susceptible programs and activities,
among other criteria and requirements. Fourteen agencies in compliance
in fiscal year 2022 was an improvement from the previous fiscal year and
is attributable to four previously noncompliant agencies becoming
compliant. 12 According to the IG reports for the 10 remaining agencies,
the primary drivers behind them not being in compliance in fiscal year
2022 were (1) high improper payment rate estimates (at least 10 percent),
(2) inadequate risk assessments, and (3) unreliable estimates. The IGs of
the 10 agencies that were not in compliance made at least 30
recommendations to their agencies in their compliance reports for fiscal
year 2022 that remained open as of May 2024. 13
10GAO, Financial Audit: FY 2023 and FY 2022 Consolidated Financial Statements of the
U.S. Government, GAO-24-106660 (Washington, D.C.: Feb. 15, 2024).
11GAO, COVID-19: Current and Future Federal Preparedness Requires Fixes to Improve
Health Data and Address Improper Payments, GAO-22-105397 (Washington, D.C.: Apr.
27, 2022).
12The four agencies that became compliant with applicable PIIA criteria in fiscal year 2022
were the Environmental Protection Agency, the National Aeronautics and Space
Administration, the Office of Personnel Management, and SSA.
13For two of the 10 agencies, the IG did not disclose the status of prior IG
recommendations in the latest (fiscal year 2023) compliance report. As such, the status of
those recommendations was not known.
Page 6 GAO-24-107660
Estimated Government- Improper payment estimates represent a small subset of executive
Wide Fraud Losses agencies’ programs, covering 71 programs in fiscal year 2023. In
contrast, our estimate of financial losses due to fraud is based on data
across the federal government. In April 2024, we estimated total direct
annual financial losses across the government from fraud to be between
$233 billion and $521 billion, based on data from fiscal year 2018 through
fiscal year 2022. The range reflects the different risk environments during
this period. 14 For example, the public health crisis, economic instability,
and increased flow of federal funds associated with the COVID-19
pandemic increased pressure on federal agency operations to spend
federal funds quickly and presented opportunities for individuals and
criminal organizations to commit fraud. The amount of estimated fraud
loss underscores the importance of prevention and need for federal
agencies to manage fraud risks strategically.
Fraud estimates can demonstrate the scope of the problem, improve
oversight prioritization, and help determine the return on investment from
fraud risk management activities. IG and agency officials, however, noted
challenges in producing fraud estimates. For example, limited fraud-
related data and use of varying terms and definitions of fraud for
recording data pose challenges. These data gaps and variability result in
information that cannot be readily compared or consolidated to determine
the extent of fraud across the federal government.
As a result, we recommended that OMB, in collaboration with the Council
of the Inspectors General on Integrity and Efficiency, develop guidance
on the collection of IG data to support fraud estimation. We also
recommended that OMB, with input from agencies, develop guidance on
the collection of agency data to support fraud estimation. OMB generally
agreed with the recommendations. We also recommended that Treasury,
in consultation with OMB, establish an effort to evaluate and identify
methods to expand government-wide fraud estimation to support fraud
risk management. Treasury agreed with the recommendation. 15 OMB
14Our estimate for fraud is not comparable to improper payment estimates. Improper
payment estimates are based on a subset of federal programs, using a methodology not
designed to identify fraud. We have also consistently reported that the federal government
does not know the full extent of improper payments and have long recommended that
agencies improve their improper payment reporting. In contrast, our fraud estimate
includes all federal programs and operations and is based on fraud-related data. With
these differences in scope and data, the upper end of our estimated fraud range ($521
billion) exceeded annual improper payment estimates ($236 billion for fiscal year 2023).
15GAO-24-105833.
Page 7 GAO-24-107660
informed us that it has begun coordination to determine appropriate next
steps regarding our recommendations. However, as of September 3,
2024, these recommendations have not yet been implemented.
Fraud is challenging to detect because of its deceptive nature. As a
result, not all fraudulent activity will be detected or discovered. When it is
discovered, the Department of Justice (DOJ) can bring charges of fraud
against the alleged fraudsters. For example, DOJ has prosecuted over
2,000 COVID-19 fraud-related cases, and hundreds of additional cases
are pending. We analyzed the department’s public statements and court
documentation and found that, from March 2020 through March 2024, at
least 1,998 individuals or entities facing fraud-related charges were found
guilty or liable. 16 This includes charges in cases involving SBA’s loan
programs, DOL’s Unemployment Insurance (UI) programs, and
Treasury’s economic impact payments. Of the individuals found guilty, at
least 1,596 had been sentenced as of March 31, 2024, and many have
also been ordered to pay restitution and fines.
There were also federal fraud-related charges pending against at least
632 other individuals or entities involving federal COVID-19 relief
programs, as of March 31, 2024. 17 We expect the number to continue to
increase as investigations take time to develop and given the significant
number of investigative leads. For instance, SBA’s IG office reported that
its actionable leads represent more than 100 years of investigative case
work. 18 The government has 10 years to prosecute individuals who
committed fraud related to the Paycheck Protection Program (PPP) and
16The federal government may enforce laws through civil or criminal action. Such action
may be resolved through a trial, a permanent injunction, a civil settlement, or a guilty plea.
Our analysis is limited to the cases we identified from public sources and may not include
all criminal and civil cases that DOJ charged as of March 31, 2024. Additionally, details of
fraud cases and schemes presented in court documents may not be complete. All fraud
does not result in prosecution. Cases that reach the prosecution stage in the fraud
identification life cycle represent a fraction of the instances of fraud or all possible fraud
cases.
17A charge is merely an allegation, and all defendants are presumed innocent until proven
guilty beyond a reasonable doubt in a court of law.
18Stolen Taxpayer Funds: Reviewing the SBA and OIG Reports of Fraud in Pandemic
Lending Programs Hearing Before the House Committee on Small Business, 118th Cong.
45 (2023) (statement of Hannibal “Mike” Ware, Inspector General of U.S. Small Business
Administration).
Page 8 GAO-24-107660
the COVID-19 Economic Injury Disaster Loan (EIDL) program. 19 DOL’s IG
has requested Congress similarly extend the statute of limitations for the
pandemic relief UI programs as well. 20 Additionally, in a June 2024 press
release, the Internal Revenue Service requested to Congress that the
statute of limitations for fraud be extended for the Employee Retention
Credit. 21 We support their requests.
Government-Wide Various interagency efforts have been established to combat improper
Initiatives to Address payments and fraud. The examples of federal efforts presented below
illustrate the different types of government-wide efforts. This is not a list of
Improper Payments and
all federal efforts to address improper payments and fraud.
Fraud
Pandemic Response Accountability Committee (PRAC). The PRAC is
composed of federal IGs from several agencies with roles in overseeing
COVID-19 relief and recovery funds. The PRAC has several ongoing
reporting efforts and has developed data analytics tools to detect potential
fraud.
The PRAC created the Pandemic Analytics Center of Excellence (PACE),
which helps agencies identify potential fraud for investigation by
combining oversight data in one place with a suite of analytic tools. As of
March 2024, the PRAC reported that PACE has provided investigative
support to federal law enforcement and IG partners in over 783
pandemic-related investigations. These investigations involved nearly
10,000 subjects and had an estimated fraud loss of over $2 billion.
Moreover, the PRAC built an analytic model for the Pension Benefit
Guaranty Corporation IG office that was used to identify overpayments of
19The statute of limitations for mail fraud and wire fraud prosecutions is 5 years (18
U.S.C.§ 3282), except for mail and wire fraud schemes that affect a financial institution, in
which case the statute is 10 years (18 U.S.C. § 3293). Also, the statute of limitations for
fraud related to PPP loans (15 U.S.C. § 636(a)(36)(W)) and PPP second draw loans (15
U.S.C.§ 637(a)(37)(P)) and for certain COVID-19 EIDL loans (15 U.S.C. § 636(b)(16)),
COVID-19 EIDL advances (15 U.S.C. § 9009b(i)), and targeted COVID-19 EIDL advances
(15 U.S.C. § 9009b (i)) has been extended to 10 years.
20The Pandemic Unemployment Fraud Recoupment Act (S. 1018) contains provisions that
would address this request. As of September 3, 2024, Congress has not passed this bill.
21The Tax Relief for American Families and Workers Act of 2024 (H.R. 7024) contains
provisions that would address this request. As of September 3, 2024, Congress has not
passed this bill.
Page 9 GAO-24-107660
Special Financial Assistance funds, which resulted in a $127 million
settlement agreement with a pension fund related to an overpayment. 22
However, PACE is focused on pandemic programs and its funding is
currently set to expire in 2025. Ongoing challenges with fraud and
improper payments highlight the value of these analytical capabilities
across the federal government. In March 2022, we recommended that
Congress consider establishing a permanent analytics center of
excellence to aid the oversight community in identifying improper
payments and fraud. 23 This could be achieved by building upon and
expanding PACE and making it permanent. This and other actions that
Congress could take to strengthen internal controls and financial and
fraud risk management practices across the government are described in
greater detail later in this testimony and in appendix I.
Joint Financial Management Improvement Program (JFMIP). In fiscal
year 2023 JFMIP, a cooperative venture between GAO, OMB, the Office
of Personnel Management, and Treasury, began an initiative to take a
“whole of government” approach to advancing the prevention and
recovery of improper payments and preventing fraud. In February 2024,
JFMIP published a 3-year plan to advance payment integrity by promoting
greater access to and use of data and analytics and promoting best
practices to equip agencies and states with information, tools, and
resources to prevent fraud and improper payments. 24
Medicare, Medicaid, UI, PPP, Earned Income Tax Credit, and
Additional Agency Supplemental Security Income accounted for about 85 percent of the
Efforts Could Reduce fiscal year 2023 improper payment estimate. As shown in table 1, these
program areas have generally reported high amounts of estimated
Improper Payments improper payments, improper payment rates, or both, for fiscal year 2018
for Selected through fiscal year 2023. Consequently, it is critical that actions are taken
to enhance payment integrity and reduce improper payments in these
Programs programs.
22Pandemic Response Accountability Committee, Semiannual Report to Congress,
October 1, 2023 - March 31, 2024 (Washington, D.C.: June 20, 2024).
23GAO, Emergency Relief Funds: Significant Improvements Are Needed to Ensure
Transparency and Accountability for COVID-19 and Beyond, GAO-22-105715
(Washington, D.C.: Mar. 17, 2022).
24JFMIP, Payment Integrity Initiative: A Three-year Plan to Advance Payment Integrity,
JFMIP-24-02 (Feb. 2024).
Page 10 GAO-24-107660
Table 1: Estimated Improper Payment Amounts and Rates by Program Area, Fiscal Years 2018–2023
Program area Fiscal year (FY) estimated improper payment amounts (in billions)
and rates (percent)
FY 2018 FY 2019 FY 2020 FY 2021 FY 2022 FY 2023
Medicarea $48 (7) $46 (7) $43 (6) $50 (7) $47 (6) $51 (6)
Medicaidb $36 (10) $57 (15) $86 (21) $99 (22) $81 (16) $50 (9)
Unemployment Insurancec $4 (13) $3 (11) $8 (9) $78 (19) $19 (22) $48 (32)
Paycheck Protection Programd – – – – $29 (4) $23 (42)
Earned Income Tax Credit $18 (25) $17 (25) $16 (24) $19 (28) $18 (32) $22 (33)
Supplemental Security Income $5 (8) $6 (10) $5 (9) $6 (10) $5 (9) $5 (9)
Legend: – = no reported data.
Source: GAO analysis of Office of Management and Budget, PaymentAccuracy.gov, Department of Health and Human Services (HHS) and Centers for Medicare & Medicaid Services (CMS) data. |
GAO-24-107660
Note: Improper payment estimates and rates displayed in the table include both improper and
unknown payments. Executive agency estimates of improper payments also treat as improper any
payments whose propriety cannot be determined due to lacking or insufficient documentation. The
estimated improper payment rate is the estimated amount in improper payments divided by the
amount in program outlays for a given program in a given fiscal year.
a
The Medicare improper payment rate was calculated using the estimated improper payment
amounts and outlays for Fee-for-Service, Medicare Advantage (Part C), and Medicare Prescription
Drug (Part D) programs.
b
Amounts reflect the federal share of estimated improper payments and do not include the nonfederal
share. HHS attributes the decline in fiscal year 2023, in part, to flexibilities granted to states during
the COVID-19 public health emergency. For example, states were required to keep people
continuously enrolled in Medicaid regardless of whether their eligibility status changed. Thus,
payments that would have previously been determined to be improper would not be improper under
the relaxed requirements.
c
For fiscal year 2023, the Unemployment Insurance improper payment rate was calculated using the
improper payment amounts and outlays for Federal State Unemployment Insurance and federal
Pandemic Unemployment Assistance programs. The federal Pandemic Unemployment Assistance
program began in 2020 and was determined to be susceptible to improper payments based on the
risk assessment Department of Labor (DOL) performed in fiscal year 2021. DOL published the
improper payment estimate for the federal Pandemic Unemployment Assistance program for the
period April 2020 through September 2021, for fiscal year 2023. The federal Pandemic
Unemployment Assistance program expired in 2021. For fiscal year 2023, DOL included two
pandemic programs—Federal Pandemic Unemployment Compensation and Pandemic Emergency
Unemployment Compensation—in its estimated improper payment amount for Federal State
Unemployment Insurance.
d
The Paycheck Protection Program (PPP) did not begin until 2020. In fiscal year 2022, the Small
Business Administration (SBA) reported an improper payment estimate for PPP loan approvals. SBA
did not produce an estimate for approvals in fiscal year 2023 as funding for PPP loans ended in May
2021 and there have been no new loan approvals since that time. For fiscal year 2023, SBA began
reporting improper payments estimates for PPP loan forgiveness and loan guaranty purchases.
Page 11 GAO-24-107660
Each of the six selected program areas are currently or have been on
GAO’s High Risk List. 25 Further, as shown in table 2, the IGs have largely
reported that their agencies’ programs did not comply with improper
payment requirements for the last 6 fiscal years. While we have found
that agencies have made progress in implementing our recommendations
for each of the six program areas, the agencies need to do more to
address our remaining unimplemented recommendations. Appendix III
provides summary information on selected programs compliance with
PIIA criteria for fiscal year 2023. Appendix IV provides information on our
unimplemented recommendations related to payment integrity in the six
program areas.
Table 2: Program Compliance with the Payment Integrity Information Act of 2019 (PIIA) and Improper Payments Elimination
and Recovery Act of 2010 (IPERA) Criteria
Fiscal Fiscal Fiscal Fiscal Fiscal Fiscal
Agency Program Year 2018 Year 2019 Year 2020 Year 2021 Year 2022 Year 2023
Department of Health and Medicare Fee-for- X
Human Services (HHS) Service
HHS Medicare Part C X X X X X
HHS Medicare Part D
HHS Medicaid X X X X X
Department of Labor Unemployment X X X X X
Insurance
Small Business Administration Paycheck Protection N/A N/A N/A X X X
(SBA) Programa
Department of the Treasury Earned Income Tax X X X X X X
Credit
Social Security Administration Supplemental Security X X X X X
Income
Legend: = IG reported compliance; X = inspector general (IG) reported noncompliance; N/A = not applicable.
Source: GAO analysis of IG compliance reports. | GAO-24-107760
Note: This comparison includes IPERA criteria (Pub. L. No. 111-204, 124 Stat. 2224) for fiscal years
prior to 2021 and PIIA criteria for fiscal year 2021 onward. IPERA established a requirement for
agency IGs to report annually on their respective agencies’ compliance. In March 2020, Congress
and the President enacted PIIA, which repealed IPERA and the other improper payments reporting-
related statutes and enacted substantially similar provisions, including those related to IGs’ reporting
on agency compliance with criteria and the compliance criteria themselves. PIIA, Pub. L. No. 116-
117, 134 Stat. 113 (codified at 31 U.S.C. §§ 3351-58).
25GAO maintains its High Risk program to focus attention on government operations that it
identifies as high risk due to their greater vulnerability to fraud, waste, abuse, and
mismanagement or their need for transformation to address economy, efficiency, or
effectiveness challenges. For our most recent High Risk Update, see GAO, High-Risk
Series: Efforts Made to Achieve Progress Need to Be Maintained and Expanded to Fully
Address All Areas, GAO-23-106203 (Washington, D.C.: Apr. 20, 2023).
Page 12 GAO-24-107660
a
The Paycheck Protection Program began in fiscal year 2020. SBA’s IG assessed SBA as
noncompliant for not conducting a program-specific risk assessment for SBA’s pandemic relief
programs that included the Paycheck Protection Program.
Page 13 GAO-24-107660
Medicare Figure 3 provides an overview of the Medicare improper payment trends
and IG and GAO findings.
Figure 3: Overview of Medicare
Page 14 GAO-24-107660
Medicaid Figure 4 provides an overview of the Medicaid improper payment trends
and IG and GAO findings.
Figure 4: Overview of Medicaid
Page 15 GAO-24-107660
Unemployment Insurance Figure 5 provides an overview of the UI program improper payment
trends and IG and GAO findings.
Figure 5: Overview of Unemployment Insurance
Page 16 GAO-24-107660
a
For fiscal year 2023, the Unemployment Insurance improper payment rate was calculated using the
improper payment amounts and outlays for Federal State Unemployment Insurance and federal
Pandemic Unemployment Assistance programs. The federal Pandemic Unemployment Assistance
program began in 2020 and was determined to be susceptible to improper payments based on the
risk assessment DOL performed in fiscal year 2021. The published fiscal year 2023 improper
payment estimate for the federal Pandemic Unemployment Assistance program covers April 2020
through September 2021. The federal Pandemic Unemployment Assistance program expired in 2021.
Paycheck Protection Figure 6 provides an overview of the PPP improper payment trends and
Program IG and GAO findings.
Page 17 GAO-24-107660
Figure 6: Overview of Paycheck Protection Program
Page 18 GAO-24-107660
Earned Income Tax Credit Figure 7 provides an overview of the Earned Income Tax Credit (EITC)
program improper payment trends and IG and GAO findings.
Figure 7: Overview of Earned Income Tax Credit
Page 19 GAO-24-107660
Supplemental Security Figure 8 provides an overview of the Supplemental Security Income (SSI)
Income improper payment trends and IG and GAO findings.
Figure 8: Overview of Supplemental Security Income
Page 20 GAO-24-107660
Congress Can Act to
Increase Agencies’
Accountability over
Improper Payments
and Fraud
Legislation Needed to In our March 2022 testimony before the Senate Committee on Homeland
Enhance Transparency Security and Governmental Affairs, we identified 10 actions that Congress
could take to strengthen internal controls and financial and fraud risk
and Accountability of management practices across the government (see app. I). 26 These
Federal Spending matters for congressional consideration remain open.
We maintain that the actions detailed below will increase accountability
and transparency in federal spending in both emergency and
nonemergency periods.
Make payment integrity enhancements. We made three
recommendations to Congress to consider legislative action to further
enhance payment integrity efforts across the government. 27
• Establish a permanent analytics center of excellence to aid the
oversight community in identifying improper payments and fraud. 28
This could be achieved by building upon and expanding PACE and
making it permanent.
26GAO-22-105715. We reiterated these actions in testimony before the House Committee
on Oversight and Accountability. GAO, Emergency Relief Funds: Significant
Improvements Are Needed to Address Fraud and Improper Payments, GAO-23-106556
(Washington, D.C.: Feb. 1, 2023).
27GAO-22-105715.
28Congress has not acted to authorize a permanent data analytics center. However, the
Government Spending Oversight Act of 2024 (H.R. 8009 and S. 4036) would establish a
Government Spending Oversight Committee whose general functions would include the
sharing of data and services, data analytics, and providing analytical products to agencies,
in coordination with IGs, to promote program integrity and prevent improper payments.
The committee’s authority would be limited to certain programs. As of September 3, 2024,
Congress has not passed the Government Spending Oversight Act of 2024.
Page 21 GAO-24-107660
• Amend PIIA to reinstate the requirement that agencies report on their
antifraud controls and fraud risk management efforts in their annual
financial reports to improve transparency and accountability. 29
• Require OMB to (1) provide guidance for agencies to proactively
develop internal control plans that would be ready for use in, or
adaptation for, future emergencies or crises and (2) require agencies
to report these plans to OMB and Congress. 30
Amend PIIA. Quickly reporting improper payment estimates for
emergency relief programs is critical for agency accountability and
transparency over whether appropriated funds were spent for their
intended purposes. In addition, estimating improper payments and
identifying root causes help ensure that agencies develop and implement
corrective actions to reduce them.
In November 2020, we recommended that Congress consider, in any
future legislation appropriating COVID-19 relief funds, designating all
executive agency programs and activities that made more than $100
million in payments from COVID-19 relief funds as “susceptible to
significant improper payments.” 31 Such a designation would require,
among other things, agencies to report improper payment estimates for
such a program and develop corrective actions to reduce improper
payments. In March 2022, we recommended that Congress amend PIIA
to apply this criterion to all new federal programs for their initial years of
operation. 32 The current approach resulted in 2-to-3 year delays in
reporting improper payment estimates for short-term and emergency
spending COVID relief programs.
29The Preventing Improper Payments Act (H.R.877), Safeguarding the Transparency and
Efficiency of Payments Act (S. 2924), and Enhancing Improper Payment Accountability
Act (H.R.8343) contain provisions that would address this recommendation. As of
September 3, 2024, Congress has not passed these bills.
30As of September 3, 2024, Congress has taken no action on this matter.
31GAO, COVID-19: Urgent Actions Needed to Better Ensure an Effective Federal
Response, GAO-21-191 (Washington, D.C.: Nov. 30, 2020).
32GAO-22-105715. Bills pending in the Congress, such as the Safeguarding the
Transparency and Efficiency of Payments Act (S. 2924) and Enhancing Improper
Payment Accountability Act (H.R.8343) contain provisions that would address this
recommendation. As of September 3,2024, Congress has not passed these bills.
Page 22 GAO-24-107660
Strengthen management of improper payment risks and spending
data. Since enactment of the CFO Act, 33 accounting and financial
reporting standards have continued to evolve to provide greater
transparency and accountability over the federal government’s operations
and financial condition, including long-term fiscal sustainability.
In August 2020, we made eight recommendations to Congress to
consider ways to improve federal financial management through
refinements to the CFO Act and related statutes. Such actions included
that Congress consider legislation to require that
• chief financial officers (CFO) and deputy CFOs at the CFO Act
agencies have the necessary responsibilities to carry out federal
financial management activities effectively;
• agency leadership identify and, if necessary, develop key financial
management information needed for effective financial management
and decision-making;
• agency leadership annually assess and report on the effectiveness of
internal controls over key financial management information; and
• auditors, as part of each annual financial statement audit, test and
report on agency internal control over key financial management
information. 34
In March 2022, based on experiences during the COVID-19 pandemic
and the rapid growth and magnitude of improper payments, we made
three further recommendations to Congress to consider passing
legislation to do the following. 35
• Clarify that (1) CFOs at CFO Act agencies have oversight
responsibility that includes improper payment information and (2)
internal controls for financial management information include controls
over spending data and improper payment information.
33Pub. L. No. 101-576, 104 Stat. 2838.
34GAO, Federal Financial Management: Substantial Progress Made since Enactment of
the 1990 CFO Act; Refinements Would Yield Added Benefits, GAO-20-566 (Washington,
D.C.: Aug. 6, 2020). The Improving Federal Financial Management Act (S. 4700) contains
provisions that would address the recommendations in our 2020 report. As of September
3, 2024, Congress has not passed this bill.
35GAO-22-105715.
Page 23 GAO-24-107660
• Require each agency CFO to (1) certify, in the financial statement
report, the reliability and validity of improper payment risk
assessments and estimates, including describing the CFO’s actions to
monitor the development and implementation of any corrective action
plans, and (2) approve any methodology that is not designed to
produce a statistically valid estimate. 36
• Require improper payment information required to be reported under
PIIA to be included in agency financial reports. 37
Extend requirements for IGs to report on USAspending.gov data. In
March 2022, we testified about the lack of quality federal spending data
for financial management reviews. 38 Quality federal spending data are
key to management assessing whether agencies are meeting program
objectives. In addition, providing clear and transparent information about
limitations and inconsistencies of data can help users understand the
extent to which the data are comparable and reliable.
We recommended that Congress consider amending the DATA Act to (1)
extend the previous requirement for agency IGs to review the
completeness, timeliness, quality, and accuracy of their respective
agency data submissions on a periodic basis; 39 and (2) clarify the
responsibilities and authorities of OMB and Treasury for ensuring the
quality of data available on USAspending.gov. 40
Amend the Social Security Act regarding the sharing of full death
data. Data sharing can allow agencies to enhance their efforts to prevent
improper payments to deceased individuals. To enhance identity
36The Safeguarding the Transparency and Efficiency of Payments Act (S. 2924) contains
provisions that would address this recommendation. As of September 3, 2024, Congress
has not passed this bill.
37The Safeguarding the Transparency and Efficiency of Payments Act (S. 2924) contains
provisions that would address this recommendation. As of September 3, 2024, Congress
has not passed this bill.
38GAO-22-105715.
39The DATA Act required each IG office to issue three annual reports assessing agency
data submission and implementation and use of data standards. The last report was due
November 2021. Pub. L. No. 113-101, § 3, 128 Stat. 1146, 1151 (2014). For more
information, see GAO, DATA ACT: OIGs Reported That Quality of Agency-Submitted
Data Varied, and Most Recommended Improvements, GAO-20-540 (Washington, D.C.:
July 9, 2020).
40The Stop Secret Spending Act of 2024 (S. 3926) contains provisions that would address
these matters. As of September 3, 2024, Congress has not passed this bill.
Page 24 GAO-24-107660
verification through data sharing, we have previously recommended that
Congress consider amending the Social Security Act to explicitly allow
SSA to share its full death data with Treasury’s Do Not Pay system, a
data-matching service for agencies to use in preventing payments to
ineligible individuals. 41 In December 2020, Congress passed, and the
President signed into law, the Consolidated Appropriations Act, 2021,
which requires SSA to share its full death data with Treasury’s Do Not
Pay working system for a 3-year period. 42 In March 2022, we
recommended that Congress consider making permanent the
requirement for SSA to share its full death data with Treasury’s Do Not
Pay working system. 43
Payment Integrity Continued congressional oversight is critical to ensuring that agencies
Scorecards Could Help address improper payments and fraud in their programs. Congress can
use a variety of tools to provide greater sustained oversight through
Congress Hold Agencies
hearings and the appropriations, authorizations, and oversight processes
Accountable to incentivize executive branch agencies to improve program integrity and
take efforts to prevent fraud.
Payment Integrity Scorecard
Such a scorecard has enhanced oversight
and spurred improvement in other areas. Most One way Congress could oversee agencies and track progress in
notably, in November 2015, Congress began preventing, detecting, and recovering improper payments and reducing
issuing biannual scorecards as an oversight
tool for monitoring agencies’ efforts toward fraud is a payment integrity scorecard. A scorecard could inform
implementing the Federal Information lawmakers, increase transparency and accountability, and provide a
Technology Acquisition Reform Act
requirements and addressing other important
mechanism for monitoring agency payment integrity efforts and progress
IT issues. By providing specific grades to over time. It would also provide much-needed attention and focus on
each agency, Congress has successfully preventing and minimizing governmental losses to improper payments
tracked agencies’ performance in the IT area
over time and Congress-assigned grades of and fraud.
agency performance have shown
improvement.
Source: GAO. | GAO-24-107660
I am pleased that the subcommittee has invested energy and attention in
Note: See Carl Levin and Howard P. ‘Buck’
developing a payment integrity scorecard. The scorecard could shed light
McKeon National Defense Authorization Act on what is known about agencies’ payment integrity efforts, including the
for Fiscal Year 2015, Pub. L. No. 113-291, following:
div. A, title VIII, subtitle D, 128 Stat. 3292,
3438-3450 (2014).
41GAO, Improper Payments: Strategy and Additional Actions Needed to Help Ensure
Agencies Use the Do Not Pay Working System as Intended, GAO-17-15 (Washington,
D.C.: Oct. 14, 2016), and COVID-19: Opportunities to Improve Federal Response and
Recovery Efforts, GAO-20-625 (Washington, D.C.: June 25, 2020).
42Pub. L. No. 116-260, div. FF, title VIII, 134 Stat. 1182, 3202 (2020).
43GAO-22-105715. The Ending Improper Payments to Deceased People Act (S. 2492)
contains provisions that would address this recommendation. As of September 3, 2024,
Congress has not passed this bill.
Page 25 GAO-24-107660
• The extent to which an agency and program are complying with legal
requirements, including the criteria in PIIA.
• The extent to which the agency has dedicated sufficient resources to
payment integrity efforts.
• The steps and corrective action plans the agency has taken to
prevent, identify, and respond to improper payments.
• Whether the agency has implemented GAO’s priority
recommendations and its IG’s most critical recommendations related
to improper payments.
• The extent to which the agency designated an antifraud entity with
clear roles and responsibilities.
• The extent to which the agency developed and implemented a
properly resourced antifraud strategy for the program consistent with
GAO’s Fraud Risk Framework, including a plan for preventing and
responding to potential fraud.
• The extent to which the agency implemented GAO’s priority
recommendations and its IG’s most critical recommendations related
to fraud in its programs.
The subcommittee’s initial scorecard could provide an important baseline
for measuring agencies’ progress moving forward. It also may highlight
that additional information is needed from the agencies about their
program integrity efforts. This information could be obtained through
additional reporting requirements and audits by the accountability
community. I would anticipate the scorecard could evolve over time, and
GAO stands ready to assist the subcommittee in its efforts.
Chairman Sessions, Ranking Member Mfume, and Members of the
Subcommittee, this concludes my prepared statement. I would be
pleased to respond to any questions.
If you or your staff members have any questions concerning this
GAO Contact and testimony, please contact M. Hannah Padilla at (202) 512-5683
Staff or padillah@gao.gov or Seto Bagdoyan at (202) 512-6722 or
bagdoyans@gao.gov. Contact points for our Offices of Congressional
Acknowledgments Relations and Public Affairs may be found on the last page of this
statement. GAO staff who made contributions to this testimony include
Jonathon Oldmixon and Matthew Valenta (Assistant Directors), Bryan
Prince (Auditor in Charge), Stephanie Adams, Pat Frey, Syd Goodman,
Nikita Kuna, Sarah Lisk, and Erin Villas.
Page 26 GAO-24-107660
Appendix I: Payment Integrity Related
Appendix I: Payment Integrity Related Matters
for Congressional Consideration
Matters for Congressional Consideration
In a March 2022 testimony before the Senate Committee on Homeland
Security and Governmental Affairs and a February 2023 testimony before
the House Committee on Oversight and Accountability, we recommended
10 matters for congressional consideration to strengthen internal controls
and financial and fraud risk management practices across the
government. 1 As of September 3, 2024, these matters remain open.
1. Congress should consider passing legislation requiring the Office of
Management and Budget (OMB) to provide guidance for agencies to
develop plans for internal control that would then immediately be
ready for use in, or adaptation for, future emergencies or crises and
requiring agencies to report these internal control plans to OMB and
Congress.
2. Congress should consider amending the Payment Integrity
Information Act of 2019 (PIIA) to designate all new federal programs
making more than $100 million in payments in any one fiscal year as
“susceptible to significant improper payments” for their initial years of
operation.
3. Congress should consider amending PIIA to reinstate the requirement
that agencies report on their antifraud controls and fraud risk
management efforts in their annual financial reports.
4. Congress should consider establishing a permanent analytics center
of excellence to aid the oversight community in identifying improper
payments and fraud.
5. Congress should consider clarifying that (1) chief financial officers
(CFO) at Chief Financial Officers Act (CFO Act) agencies have
oversight responsibility for internal controls over financial reporting
and key financial management information that includes spending
data and improper payment information and (2) executive agency
internal control assessment, reporting, and audit requirements for key
financial management information, discussed in an existing matter for
congressional consideration in our August 2020 report, 2 include
1GAO, Emergency Relief Funds: Significant Improvements Are Needed to Ensure
Transparency and Accountability for COVID-19 and Beyond, GAO-22-105715
(Washington, D.C.: Mar. 17, 2022), and Emergency Relief Funds: Significant
Improvements Are Needed to Address Fraud and Improper Payments, GAO-23-106556
(Washington, D.C.: Feb. 1, 2023).
2GAO, Federal Financial Management: Substantial Progress Made since Enactment of
the 1990 CFO Act; Refinements Would Yield Added Benefits, GAO-20-566 (Washington,
D.C.: Aug. 6, 2020).
Page 27 GAO-24-107660
Appendix I: Payment Integrity Related Matters
for Congressional Consideration
internal controls over spending data and improper payment
information.
6. Congress should consider requiring agency CFOs to (1) submit a
statement in agencies’ annual financial reports certifying the reliability
of improper payments risk assessments and the validity of improper
payment estimates and describing the CFO’s actions to monitor the
development and implementation of any corrective action plans, and
(2) approve any methodology that is not designed to produce a
statistically valid estimate of improper payments.
7. Congress should consider legislation to require improper payment
information required to be reported under PIIA to be included in
agencies’ annual financial reports.
8. Congress should consider amending the DATA Act to extend the
previous requirement for agency inspectors general to review the
completeness, timeliness, quality, and accuracy of their respective
agency data submissions on a periodic basis.
9. Congress should consider amending the DATA Act to clarify the
responsibilities and authorities of OMB and Department of the
Treasury for ensuring the quality of data available on
USAspending.gov.
10. Congress should consider amending the Social Security Act to make
permanent the requirement for the Social Security Administration to
share its full death data with the Treasury’s Do Not Pay working
system.
In addition to these government-wide matters for congressional
consideration, we have also made recommendations to Congress that
would enhance the integrity of individual programs. As of September 3,
2024, these matters remain open.
• Congress should consider providing the Department of Health and
Human Services the authority to require states to report the data
necessary for the Secretary to estimate and report on improper
payments for the Temporary Assistance for Needy Families program
in accordance with 31 U.S.C. § 3352. 3
3GAO, COVID-19: Current and Future Federal Preparedness Requires Fixes to Improve
Health Data and Address Improper Payments, GAO-22-105397 (Washington, D.C.: Apr.
27, 2022).
Page 28 GAO-24-107660
Appendix I: Payment Integrity Related Matters
for Congressional Consideration
• Congress should consider granting the Internal Revenue Service the
explicit authority to establish professional requirements for paid tax
preparers. 4
4GAO, Paid Tax Return Preparers: IRS Efforts to Oversee Refundable Credits Help
Protect Taxpayers but Additional Actions and Authority Are Needed, GAO-23-105217
(Washington, D.C.: Nov. 30, 2022)
Page 29 GAO-24-107660
Appendix II: Estimated Improper Payment Appendix II: Estimated Improper Payment
Amounts and Rates by Program Area, Fiscal
Amounts and Rates by Program Area, Fiscal
Years 2018–2023
Years 2018–2023
Table 3 provides detailed information on estimated improper payment
amounts and rates for six program areas for fiscal year 2018 through
fiscal year 2023.
Table 3: Estimated Improper Payment Amounts and Rates by Program Area, Fiscal Years 2018–2023
Fiscal year (FY) estimated improper payment amounts (in billions)
and rates (percent)
Program area FY 2018 FY 2019 FY 2020 FY 2021 FY 2022 FY 2023
Medicarea $48 (7) $46 (7) $43 (6) $50 (7) $47 (6) $51 (6)
Fee-for-Service 32 (8) 29 (7) 26 (6) 25 (6) 31 (7) 31 (7)
Advantage (Part C) 16 (–) 17 (–) 16 (–) 23 (–) 14 (5) 17 (6)
Prescription Drug Benefit (Part D)b 1 (–) 0.6 (–) 0.9 (–) 1 (–) 1 (–) 3 (4)
Medicaidb $36 (10) $57(15) $86 (21) $99 (22) $81 (16) $50 (9)
Fee-for-Service n/a (14) 27 (16) 30 (17) 28 (14) 22 (10) 16 (7)
Eligibility n/a (3) 32 (8) 61 (15) 76 (17) 61 (12) 35 (6)
Managed Care n/a (0.2) 0.3 (0.1) 0.1 (0.1) 0.1 (0) 0.1 (0) 0 (0)
Unemployment Insurancec $4 (13) $3 (11) $8 (9) $78 (19) $19 (22) $48 (32)
Federal State Unemployment Insurance 4 (13) 3 (11) 8 (9) 78 (19) 19 (22) 5 (16)
federal Pandemic Unemployment – – – – – 44 (36)
Assistance
Paycheck Protection Programd – – – – $29 (4) $23 (42)
Loan Approvals – – – – 29 (4) –
Loan Forgiveness – – – – – 19 (40)
Loan Guaranty Purchases – – – – – 4 (49)
Earned Income Tax Credit $18 (25) $17 (25) $16 (24) $19 (28) $18 (32) $22 (33)
Supplemental Security Income $5 (8) $6 (10) $5 (9) $6 (10) $5 (9) $5 (9)
Legend: n/a = not applicable; – = no reported data or data was not comparable due to methodological changes in the estimates.
Source: GAO analysis of Office of Management and Budget, PaymentAccuracy.gov, Department of Health and Human Services (HHS), and Centers for Medicare & Medicaid Services (CMS) data. |
GAO-24-107660
Note: Improper payment estimates and rates displayed in the table include both improper and
unknown payments. Executive agency estimates of improper payments also treat as improper any
payments whose propriety cannot be determined due to lacking or insufficient documentation. The
estimated improper payment rate is the estimated amount in improper payments divided by the
amount in program outlays for a given program in a given fiscal year.
a
The Medicare improper payment rate was calculated using the improper payment amounts and
outlays for Fee-for-Service, Medicare Advantage (Part C), and Medicare Prescription Drug (Part D)
programs According to CMS, the agency refined its Medicare Advantage improper payment rate
methodology for fiscal year 2022, and as a result, those data should not be compared with prior
years. The agency also refined its prescription drug benefit improper payment rate methodology for
fiscal year 2023 and, as a result, those data should not be compared with prior years.
b
According to CMS, the component amounts (Fee-for-Service, eligibility, and managed care) reflect
point-in-time estimates of improper payments as originally reported by HHS and CMS for each fiscal
year. Amounts reflect the federal share of estimated improper payments and do not include the
nonfederal share. Estimates for the eligibility component may not be comparable across years due to
methodological changes. CMS calculates a separate estimate for total amounts. HHS attributes the
Page 30 GAO-24-107660
Appendix II: Estimated Improper Payment
Amounts and Rates by Program Area, Fiscal
Years 2018–2023
decline in fiscal year 2023, in part, to flexibilities granted to states during the COVID-19 public health
emergency. For example, states were required to keep people continuously enrolled in Medicaid
regardless of whether their eligibility status changed. Thus, payments that would have previously
been determined to be improper would not be improper under the relaxed requirements.
c
For fiscal year 2023, the Unemployment Insurance improper payment rate was calculated using the
improper payment amounts and outlays for Federal State Unemployment Insurance and federal
Pandemic Unemployment Assistance programs. The federal Pandemic Unemployment Assistance
program began in 2020 and was determined to be susceptible to improper payments based on the
risk assessment the Department of Labor (DOL) performed in fiscal year 2021. DOL published the
improper payment estimate for the federal Pandemic Unemployment Assistance program for the
period April 2020 through September 2021, for fiscal year 2023. The federal Pandemic
Unemployment Assistance program expired in 2021. In addition, DOL included two pandemic
programs—Federal Pandemic Unemployment Compensation and Pandemic Emergency
Unemployment Compensation—in its estimated improper payment amount for Federal State
Unemployment Insurance.
d
The Paycheck Protection Program (PPP) did not begin until 2020. In fiscal year 2022, the Small
Business Administration (SBA) reported an improper payment estimate for PPP loan approvals. SBA
did not produce an estimate for approvals in fiscal year 2023 as funding for PPP loans ended in May
2021 and there have been no new loan approvals since that time. For fiscal year 2023, SBA began
reporting improper payments estimates for PPP loan forgiveness and loan guaranty purchases.
Page 31 GAO-24-107660
Appendix III: Fiscal Year 2023 Program Appendix III: Fiscal Year 2023 Program
Noncompliance under the Payment Integrity
Noncompliance under the Payment Integrity
Information Act of 2019
Information Act of 2019
The Payment Integrity Information Act of 2019 (PIIA) requires the
inspector general (IG) of each executive branch agency to issue an
annual report on the agency’s compliance with applicable PIIA criteria.
Office of Management and Budget Circular No. A-123, appendix C,
includes guidance for IGs on how to determine agency compliance with
applicable PIIA criteria. Table 4 summarizes the compliance with PIIA
criteria for the programs for fiscal year 2023.
Table 4: Fiscal Year 2023 Program Noncompliance with the Payment Integrity Information Act of 2019 (PIIA) Criteria
Fiscal year 2023
compliance
Agency Program under PIIA Description of noncompliance
Department of Medicare Fee-for- Compliant Not applicable.
Health and Service
Human Services
(HHS)
HHS Medicare Part C Noncompliant HHS’s Inspector General (IG) reported Medicare Part C as noncompliant
with PIIA because the agency did not (1) demonstrate improvements to
payment integrity or reach a tolerable improper payment rate and (2)
develop a plan to meet the improper payment and unknown payment
reduction target.
HHS Medicare Part D Compliant Not applicable.
HHS Medicaid Compliant Not applicable.
Department of Unemployment Noncompliant DOL IG reported the UI program as noncompliant with PIIA because the
Labor (DOL) Insurance (UI) agency did not, among other things, report an improper payment rate of
less than 10 percent.a
Small Business Paycheck Noncompliant SBA IG reported the PPP as noncompliant with PIIA because the agency
Administration Protection Program did not (1) publish improper payment estimates,b (2) publish corrective
(SBA) (PPP) action plans,c or (3) report an estimated improper payment rate of less
than 10 percent.
Department of Earned Income Tax Noncompliant Treasury IG reported the EITC program as noncompliant with PIIA
the Treasury Credit (EITC) because the agency did not report an estimated improper payment rate
of less than 10 percent.
Social Security Supplemental Noncompliant SSA IG reported SSI as noncompliant with PIIA because the agency did
Administration Security Income not demonstrate improvements to payment integrity or reach a tolerable
(SSA) (SSI) improper payment rate.
Source: GAO analysis of Inspector General (IG) compliance reports. | GAO-24-107760
a
The DOL IG also reported that the Pandemic Unemployment Assistance Program was noncompliant
because DOL did not adequately (1) publish payment integrity information with the annual financial
statement and in the accompanying materials and (2) publish an improper payment reduction target
or develop plan to meet that target.
b
SBA IG reported PPP loan forgiveness and loan guaranty purchases as noncompliant with
publishing improper payment estimates. Although SBA produced estimates, the IG determined they
were not accurate. The population of outlays subjected to sampling, testing, and reporting was not
complete for the program. As such, improper payments related to significant amounts of outlays for
the program remain untested and unreported.
Page 32 GAO-24-107660
Appendix III: Fiscal Year 2023 Program
Noncompliance under the Payment Integrity
Information Act of 2019
c
SBA IG reported PPP loan forgiveness and loan guaranty purchases as noncompliant with
publishing corrective action plans. Although SBA published corrective action plans, the IG determined
the corrective action plans were not effective as they did not adequately address the true root causes
of unknown payments.
Page 33 GAO-24-107660
Appendix IV: Key Unimplemented Appendix IV: Key Unimplemented
Recommendations for Agencies to Improve
Recommendations for Agencies to Improve
Payment Integrity
Payment Integrity
GAO has made several recommendations to improve the integrity of the
six program areas that are the focus of this testimony. Table 5 identifies
those key recommendations that have not yet been fully implemented as
of September 3, 2024.
Table 5: Key Unimplemented Improper Payment Recommendations for Medicare, Medicaid, Unemployment Insurance,
Paycheck Protection Program, Earned Income Tax Credit, and Supplemental Security Income
Report number Recommendations to Department of Health and Human Services: Medicare
GAO-19-277 The Administrator of the Centers for Medicare & Medicaid Services (CMS) should institute a process to routinely
assess, and take steps to ensure, as appropriate, that Medicare and Medicaid documentation requirements are
necessary and effective at demonstrating compliance with coverage policies while appropriately addressing
program risks.
GAO-16-394 In order to better ensure proper Medicare payments and protect Medicare funds, CMS should seek legislative
authority to allow the Recovery Auditors (RA) to conduct prepayment claim reviews.
Report number Recommendations to Department of Health and Human Services: Medicaid
GAO-23-105881 The Administrator of CMS should annually examine state auditors’ Medicaid findings to identify trends across
states and use this information to inform oversight activities and audit processes.
GAO-23-106025 The Administrator of CMS should conduct a study to determine whether it is cost effective to require states to
include payments to managed care organizations and their providers as part of the Recovery Audit Contractor
(RAC) program.
GAO-20-8 The Administrator of CMS should expand its review of states’ implementation of the provider screening and
enrollment requirements to include states that have not made use of CMS’s optional consultations. Similar to
CMS’s contractor site visits, such reviews should include any necessary steps to address areas of
noncompliance for all types of enrolled providers, including those under contract with managed care
organizations.
Report number Recommendations to Department of Labor (DOL): Unemployment Insurance
GAO-22-105162 The Secretary of Labor should develop and execute a transformation plan that meets GAO’s high risk criteria for
transformation; the plan should outline coordinated and sustained actions to address issues related to providing
effective service and mitigating financial risk, including ways to demonstrate improvements. Planned actions
may include addressing audit recommendations, and determining whether legislative changes are needed, as
appropriate. Planned actions may also include achieving quantifiable results in reducing improper payment
rates, including those related to fraud; improving efficiency in claims processing and restoring pre-pandemic
payment timeliness levels; better reaching current worker populations; and enhancing equity in benefit
distribution.
GAO-18-486 The Assistant Secretary of DOL’s Employment and Training Administration should clarify information on work
search verification requirements in its revised Benefit Accuracy Measurement procedures. The revised
procedures should include an explanation of what DOL considers to be sufficient verification of claimants’ work
search activities.
Report number Recommendations to Small Business Administration (SBA): Programs, including Paycheck Protection
Program
GAO-23-105331 The Administrator of SBA, in coordination with the Fraud Risk Management Board, should ensure that SBA has
mechanisms in place and utilizes them to facilitate cross-program data analytics.
GAO-23-105331 The Administrator of SBA, in coordination with the Fraud Risk Management Board, should ensure that SBA has
identified external sources of data that can facilitate the verification of applicant information and the detection of
potential fraud across its programs. It should then develop a plan for obtaining access to those sources, which
may involve pursuing statutory authority or entering into data-sharing agreement to obtain such access.
Page 34 GAO-24-107660
Appendix IV: Key Unimplemented
Recommendations for Agencies to Improve
Payment Integrity
Report number Recommendations to Department of the Treasury: Earned Income Tax Credit
GAO-23-105217 The Commissioner of Internal Revenue should finalize the Service-wide Return Preparer Strategy and identify
the resources needed to implement it.
GAO-21-102 The Commissioner of Internal Revenue should develop a plan and schedule to systematically evaluate the suite
of information returns with a goal of improving compliance and reducing fraud and reporting burden. The
evaluation should consider factors such as filing requirement thresholds, deadlines for filing, corrections and
amendment data, and the potential to consolidate similar forms and include recommendations for needed
changes.
GAO-18-544 Based on the [updated and expanded analysis of the cost and benefits of digitizing returns filed on paper], the
Commissioner of Internal Revenue should implement the most cost-effective method to digitize information
provided by taxpayers who file returns on paper.
Report number Recommendations to Social Security Administration: Supplemental Security Income
GAO-22-104031 The Commissioner of Social Security should identify the root causes of overpayments to Ticket to Work
participants specifically then take appropriate actions to address them.
GAO-19-688 The Commissioner of the Social Security Administration should require field offices to contact payees about
missing or problematic annual accounting forms within a specific time frame.
Source: GAO. | GAO-24-107660
Page 35 GAO-24-107660
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