Reducing Improper Payments

UI Integrity Conference April 20th, 2010

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Agenda• Introduction of the Executive Order

– Components of the Executive Order – Stakeholder roles and responsibilities – Executive Order milestones

• Guidance – Guidance overview – Major questions addressed in guidance – Sections that states may be interested in

• Work Groups – Description of work groups and issue areas – Role of states and state agencies

• Next Steps • Questions and resources

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Collaboration

• Strengthening partnerships between Federal, State, and local governments and agencies.

• Partner4Solutions.gov has been established to gather best practices to improve program integrity.

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Improper Payments Overview

LandscapePayment errors have been steadily increasing since 2004 when Federal agencies first began measuring and reporting payment errors. The increase is the result of: • More programs measuring error • More thorough measurement

methodologies • Increases in total Federal outlays

StatisticsFY 2009 improper payments are approximately ~$100 billion • Represent ~$30 billion increase

versus FY 2008, driven primarily by more stringent measurement and increased expenditures

• Approximately 90% of the errors are in 12 of the 72 programs measured (6 agencies)

• The Medicare, Medicaid, EITC and Unemployment Insurance programs each have over $10 billion in improper payments

The President issued Executive Order #13520, Reducing Improper Payments on November 20, 2009.

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Components of the Executive Order

Transparency

•“High-priority” programs designated (programs with largest amount of error)

•More frequent measurement and reporting

•Improper payment dashboard • High dollar errors/fraud • Assessment of

performance versus planned targets

• Publicly available •Central website for

reporting waste, fraud, and abuse

Agency Accountability

•Accountable Senate-confirmed appointees for high-priority programs • Inspector generals review: • Error payments over certain

thresh-hold amounts • Measurement plans and

reduction targets •Agency forensic auditing

pursued •Required sharing of

eligibility information among programs and agencies

•Quarterly reporting of high-dollar improper payments

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Incentives for Compliance

• Financial incentives for States to build better systems to identify and reduce errors • State audits to focus on

error reduction versus compliance • Contractors charged

damages for improperly invoicing the government •

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Stakeholders

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Executive Order Milestones

• Publish dashboard • Submit recommendations on:

– Improving measurements – Strengthening internal control measures – Improving information sharing – Enhancing contractor accountability – Shifting focus of single audits to improper

payments – Improving incentives and accountability

• Agency submits first quarterly report on high-dollar improper payments • Agency provides IG with report on error

methodology and plans for meeting targets

• Issue government-wide guidance to agencies • Establish annual or semi-annual

reduction targets

• Establish working groups

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Guidance Overview

• OMB issued implementing guidance for Executive Order 13520 - March 22, 2010

• The guidance is: – Drafted in a “Question and Answer” format – Separated into several sections:

• General questions • Improper payments reporting • Reporting deliverables

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Major Questions Addressed in Guidance

Although many questions are addressed in the guidance, the highlights include instructions on:

• Specifying responsibilities for agency accountable officials;

• Determining the programs subject to the EO (i.e., high-priority programs);

• Defining supplemental measures and targets for high-priority programs;

• Establishing reporting requirements under the EO; and • Establishing procedures to identify entities with

outstanding improper payments.

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Guidance Sections of Interest to State UI Officials

• A few sections that may interest State UI community include: – Measures of access requirements; – More frequent “supplemental measures”; and – Posting additional information on the web.

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Work GroupsWork Group (Section of E.O) Deliverables

Issue Guidance --2(a)(iii) IP Guidance in OMB A-123 App. C

Improve Measures of Access - 2(a)(iv) Dashboard for program access and measurement

Publish Dashboard on Website - 2(b) & 2(c) IP Website

Refine Measurements to Focus on High-Dollar or High-Risk Errors - 3(d)

Forensic tools to measure & detect IP

Improve Information Sharing - 3(e) Sources and ways to share payments info

Enhance Contractor Accountability - 4(a) Contractors –causes & remedies for IP

Shift Focus of Single Audits to Improper Payments - 4(b)

Modifications to SA process for effectiveness

Explore Incentives for State and Local Governments - 4(c)

Administrative actions through OMB Circulars and program guidance

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Work Group Collaboration

• Interagency work groups: – Being lead by agency representatives; – Sharing best practices from different agencies and programs; and – Bridging “silos”

• State involvement in several work groups, including: – Measuring program access; – Improving data sharing; – Single audit requirements; and – Incentives for state and local governments

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Next Steps

• 5/19 Work groups to issue recommendations • 5/19 Website launch • Which recommendations will be pursued? • Payment Recapture Audits

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Questions and Resources

• Joe Pika: jpika@omb.eop.gov or 202-395-1040 • OMB’s improper payments website with EO, guidance, and

other materials: http://www.whitehouse.gov/omb/financial_fia_improper/

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