Improper Payments
Progress Made but Challenges Remain in Estimating and Reducing Improper Payments Gao ID: GAO-09-628T April 22, 2009GAO's work over the past several years has demonstrated that improper payments are a long-standing, widespread, and significant problem in the federal government. The Improper Payments Information Act of 2002 (IPIA) has increased visibility over improper payments by requiring executive branch agency heads, using guidance from the Office of Management and Budget, to identify programs and activities susceptible to significant improper payments, estimate amounts improperly paid, and report on the amounts of improper payments and their actions to reduce them. This testimony addresses (1) progress made in agencies' implementation of IPIA for fiscal year 2008, and (2) several major challenges that continue to hinder full reporting of IPIA information. GAO was also asked to provide an overview of Medicare and Medicaid programs' implementation of IPIA. This testimony is based primarily on GAO products, Office of Inspector General (OIG) audit reports, and agencies' fiscal year 2008 reported improper payment information, including information reported by the Department of Health and Human Service's (HHS) Centers for Medicare and Medicaid Services (CMS). GAO also analyzed fiscal year 2008 governmentwide improper payment information to identify trends and reviewed Medicare and Medicaid programs' reported actions to identify, estimate, and reduce improper payments.
Agencies reported improper payment estimates of $72 billion for fiscal year 2008, which represented about 4 percent of the $1.8 trillion of reported outlays for the related programs. This represents a significant increase from the fiscal year 2007 estimate attributable to (1) a $12 billion increase in the Medicaid program's estimate and (2) 10 newly reported programs with improper payment estimates totaling about $10 billion. (1) Progress made in estimating and reducing improper payments. The governmentwide improper payment estimates rose about $23 billion from fiscal year 2007 to 2008. This represents a positive step to improve transparency over the full magnitude of the federal government's improper payments. Further, of the 35 agency programs reporting improper payment estimated error rates for each of the 5 fiscal years since implementation of IPIA--2004 through 2008--24 programs (or about 69 percent) reported reduced error rates when comparing fiscal year 2008 error rates to fiscal year 2004 error rates. Also, the number of programs with error rate reductions totaled 35 when comparing fiscal year 2008 error rates to fiscal year 2007 rates. (2) Challenges remain in meeting the goals of IPIA governmentwide. The total improper payment estimate does not yet reflect the full scope of improper payments across executive branch agencies; noncompliance issues with IPIA continue; and agencies continue to face challenges in the design or implementation of internal controls critical to identifying and preventing improper payments. The fiscal year 2008 total improper payment estimate of $72 billion reported for fiscal year 2008 did not include any estimate for ten programs--including the Medicare Prescription Drug Benefit program--with fiscal year 2008 outlays totaling about $61 billion that were identified as susceptible to significant improper payments. Over half of the agencies' OIGs identified management or performance challenges that could increase the risk of improper payments, including challenges related to effective internal controls. (3) Medicare and Medicaid programs' implementation of IPIA and its challenges. Medicare and Medicaid comprise 50 percent of reported governmentwide improper payments in fiscal year 2008. HHS reported improper payment amounts of $10.4 billion in Medicare Fee-for-Service and $6.8 billion in Medicare Advantage. HHS also reported in its agency financial report that it issued its first full-year Medicaid improper payment rate estimate of 10.5 percent, or $18.6 billion for the federal share of expenditures for fiscal year 2008. This Medicaid improper payment estimate represents the largest amount that any federal agency reported for a program in fiscal year 2008. While CMS has taken steps to enhance its program integrity efforts, further work remains to put in place the internal controls necessary to effectively identify and detect improper payments. For example, GAO's work on Medicare's home health care administration and enrollment of durable medical equipment suppliers found weaknesses that exposed the program to significant improper payments. The magnitude of Medicaid improper payments indicates that CMS and the states face significant challenges in addressing the program's vulnerabilities in estimating national improper payment rates for diverse state-administered programs.
GAO-09-628T, Improper Payments: Progress Made but Challenges Remain in Estimating and Reducing Improper Payments
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Testimony before the Subcommittee on Federal Financial Management,
Government Information, Federal Services, and International Security,
Committee on Homeland Security and Governmental Affairs, U.S. Senate:
United States Government Accountability Office:
GAO:
For Release on Delivery:
Expected at 3:00 p.m. EDT:
Wednesday, April 22, 2009:
Improper Payments:
Progress Made but Challenges Remain in Estimating and Reducing Improper
Payments:
Statement of Kay L. Daly, Director:
Financial Management and Assurance:
GAO-09-628T:
GAO Highlights:
Highlights of GAO-09-628T, a testimony before the Subcommittee on
Federal Financial Management, Government Information, Federal Services,
and International Security, Committee on Homeland Security and
Governmental Affairs, U.S. Senate.
Why GAO Did This Study:
GAO‘s work over the past several years has demonstrated that improper
payments are a long-standing, widespread, and significant problem in
the federal government. The Improper Payments Information Act of 2002
(IPIA) has increased visibility over improper payments by requiring
executive branch agency heads, using guidance from the Office of
Management and Budget, to identify programs and activities susceptible
to significant improper payments, estimate amounts improperly paid, and
report on the amounts of improper payments and their actions to reduce
them.
This testimony addresses (1) progress made in agencies‘ implementation
of IPIA for fiscal year 2008, and (2) several major challenges that
continue to hinder full reporting of IPIA information. GAO was also
asked to provide an overview of Medicare and Medicaid programs‘
implementation of IPIA. This testimony is based primarily on GAO
products, Office of Inspector General (OIG) audit reports, and
agencies‘ fiscal year 2008 reported improper payment information,
including information reported by the Department of Health and Human
Service‘s (HHS) Centers for Medicare and Medicaid Services (CMS). GAO
also analyzed fiscal year 2008 governmentwide improper payment
information to identify trends and reviewed Medicare and Medicaid
programs‘ reported actions to identify, estimate, and reduce improper
payments.
What GAO Found:
Agencies reported improper payment estimates of $72 billion for fiscal
year 2008, which represented about 4 percent of the $1.8 trillion of
reported outlays for the related programs. This represents a
significant increase from the fiscal year 2007 estimate attributable to
(1) a $12 billion increase in the Medicaid program‘s estimate and (2)
10 newly reported programs with improper payment estimates totaling
about $10 billion.
* Progress made in estimating and reducing improper payments. The
governmentwide improper payment estimates rose about $23 billion from
fiscal year 2007 to 2008. This represents a positive step to improve
transparency over the full magnitude of the federal government‘s
improper payments. Further, of the 35 agency programs reporting
improper payment estimated error rates for each of the 5 fiscal years
since implementation of IPIA”2004 through 2008”24 programs (or about 69
percent) reported reduced error rates when comparing fiscal year 2008
error rates to fiscal year 2004 error rates. Also, the number of
programs with error rate reductions totaled 35 when comparing fiscal
year 2008 error rates to fiscal year 2007 rates.
* Challenges remain in meeting the goals of IPIA governmentwide. The
total improper payment estimate does not yet reflect the full scope of
improper payments across executive branch agencies; noncompliance
issues with IPIA continue; and agencies continue to face challenges in
the design or implementation of internal controls critical to
identifying and preventing improper payments. The fiscal year 2008
total improper payment estimate of $72 billion reported for fiscal year
2008 did not include any estimate for ten programs”including the
Medicare Prescription Drug Benefit program”with fiscal year 2008
outlays totaling about $61 billion that were identified as susceptible
to significant improper payments. Over half of the agencies‘ OIGs
identified management or performance challenges that could increase the
risk of improper payments, including challenges related to effective
internal controls.
* Medicare and Medicaid programs‘ implementation of IPIA and its
challenges. Medicare and Medicaid comprise 50 percent of reported
governmentwide improper payments in fiscal year 2008. HHS reported
improper payment amounts of $10.4 billion in Medicare Fee-for-Service
and $6.8 billion in Medicare Advantage. HHS also reported in its agency
financial report that it issued its first full-year Medicaid improper
payment rate estimate of 10.5 percent, or $18.6 billion for the federal
share of expenditures for fiscal year 2008. This Medicaid improper
payment estimate represents the largest amount that any federal agency
reported for a program in fiscal year 2008. While CMS has taken steps
to enhance its program integrity efforts, further work remains to put
in place the internal controls necessary to effectively identify and
detect improper payments. For example, GAO‘s work on Medicare's home
health care administration and enrollment of durable medical equipment
suppliers found weaknesses that exposed the program to significant
improper payments. The magnitude of Medicaid improper payments
indicates that CMS and the states face significant challenges in
addressing the program's vulnerabilities in estimating national
improper payment rates for diverse state-administered programs.
To view the full product, including the scope and methodology, click on
[hyperlink, http://www.gao.gov/products/GAO-09-628T]. For more
information, contact Kay L. Daly at (202) 512-9095 or dalykl@gao.gov.
[End of section]
Mr. Chairman and Members of the Subcommittee:
Thank you for the opportunity to be here today to discuss the
governmentwide problem of improper payments in federal programs and
activities and executive branch agencies' efforts to address key
requirements of the Improper Payments Information Act of 2002 (IPIA).
[Footnote 1] Since fiscal year 2000, we have issued a number of reports
and testimonies aimed at raising the level of attention and corrective
actions surrounding improper payments. Our work over the past several
years has demonstrated that improper payments have been a long-
standing, widespread, and significant problem in the federal
government. IPIA has increased visibility over improper payments
[Footnote 2] by requiring executive branch agency heads to identify
programs and activities susceptible to significant improper payments,
[Footnote 3] estimate amounts improperly paid under those programs and
activities, and report on the amounts of improper payments and their
actions to reduce them. As the steward of taxpayer dollars, the federal
government is accountable for how its agencies and grantees spend
hundreds of billions of taxpayer dollars annually and is responsible
for safeguarding those funds against improper payments as well as
having mechanisms in place to recoup those funds when improper payments
occur.
The Office of Management and Budget (OMB) has played a key role in the
oversight of the governmentwide improper payments problem by providing
leadership on financial management improvement initiatives. OMB
continues its commitment to address governmentwide improper payments by
establishing guidance for federal agencies on improper payment
reporting,[Footnote 4] and by working with agencies to establish
corrective action plans and address their root causes. OMB also reports
annually on agencies' efforts to address IPIA requirements.
Today, my testimony will focus on three key areas:
* progress federal agencies have made in estimating and reducing
improper payments under IPIA for fiscal year 2008,
* several major challenges that continue to hinder full reporting of
improper payment information, and:
* an overview of Medicare and Medicaid programs' implementation of
IPIA.
My testimony today draws primarily from prior GAO reports and
testimonies conducted in accordance with generally accepted government
auditing standards. We also reviewed agencies' fiscal year 2008
performance and accountability reports (PAR), agency financial reports
(AFR), annual reports, and Office of Inspector General (OIG) audit
reports. In addition, we reviewed the Department of Health and Human
Service's (HHS) AFR and Centers for Medicare and Medicaid Services'
(CMS) financial report. Further, we analyzed fiscal year 2008
governmentwide improper payment information to identify trends and
reviewed Medicare and Medicaid programs' reported actions to identify,
estimate, and reduce improper payments. Generally accepted government
auditing standards require that we plan and perform the audit to obtain
sufficient, 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.
Progress Made in Estimating and Reducing Improper Payments:
Federal agencies reported improper payment estimates of $72 billion for
fiscal year 2008, which represented about 4 percent of the $1.8
trillion of reported outlays for the related programs and a $23 billion
increase from the fiscal year 2007 estimate of about $49 billion.
[Footnote 5] These efforts represent a positive step to improve
transparency over the full magnitude of federal improper payments so
that appropriate corrective actions can be put in place. This increase
was primarily attributable to (1) a $12 billion increase in the
Medicaid program's estimate for its Fee-for-Service and managed care
payments and payments related to incorrect eligibility determinations;
and (2) 10 newly reported programs with improper payment estimates
totaling about $10 billion. Of these 10 programs, we identified 4 that
had been required by OMB to report selected improper payment
information beginning with fiscal year 2003 budget submissions prior to
the passage of IPIA.[Footnote 6] In total, these 4 programs represented
$3.1 billion, or 31 percent, of the approximately $10 billion in newly
reported programs. Further, we noted that agencies consistently
identified new programs or activities as risk-susceptible after the
first year of IPIA implementation:
* fiscal year 2005--17 new programs or activities,
* fiscal year 2006--15 new programs or activities,
* fiscal year 2007--19 new programs or activities, and:
* fiscal year 2008--10 new programs or activities.
The $72 billion estimate of improper payments federal agencies reported
in fiscal year 2008 encompasses 78 programs spread among 22 agencies
(see appendix I for further details) and represents about 2.4 percent
of total fiscal year 2008 federal executive branch outlays of nearly $3
trillion. In addition, the majority of the $72 billion of reported
improper payments in fiscal year 2008 is accounted for by ten programs,
as shown in figure 1. Specifically, the ten programs account for about
$63 billion or approximately 88 percent of the total estimate.
Figure 1: Fiscal Year 2008 Improper Payment Estimates by Program:
[Refer to PDF for image: vertical bar graph]
Program: Medicaid[A] (M, S);
Improper payment estimate: $18.6 billion.
Program: Earned Income Tax Credit (M);
Improper payment estimate: $12.1 billion.
Program: Medicare-Fee-For-Service;
Improper payment estimate: $10.4 billion.
Program: Medicare Advantage;
Improper payment estimate: $6.8 billion.
Program: Supplemental Security Income Program (M);
Improper payment estimate: $4.6 billion.
Program: Unemployment Insurance (S);
Improper payment estimate: $3.9 billion.
Program: Old-Age, Survivors, and Disability Insurance;
Improper payment estimate: $2.0 billion.
Program: Food Stamp Program[B] (M, S);
Improper payment estimate: $1.7 billion.
Program: Temporary Assistance for Needy Families (M, S);
Improper payment estimate: $1.7 billion.
Program: National School Lunch Program;
Improper payment estimate: $1.4 billion.
Program: Other;
Improper payment estimate: $8.9 billion.
Source: GAO analysis of agencies' fiscal year 2008 PARs, AFRs, or
annual reports.
[A] Medicaid's reported improper payment estimate of $18.6 billion
represents the federal share.
[B] The Food Stamp Program's name was recently changed to the
Supplemental Nutrition Assistance Program.
[End of figure]
Seven of the 10 programs with the largest improper payment estimates
are either means-tested programs,[Footnote 7] state-administered
programs,[Footnote 8] or both. A common control used by these programs
to ensure payment accuracy includes verifying the financial eligibility
of the applicant. However, our previous work has shown that the
financial eligibility of an applicant can be difficult to verify in
means-tested programs, increasing the risk of payment to an ineligible
recipient.[Footnote 9] Specifically, there are differences related to
detailed aspects of the income rules such as whose income in a
household is counted and the types of income included or excluded in
either whole or part. For example, the Supplemental Nutrition
Assistance Program (previously Food Stamp Program) considers the income
of the entire household, including children aged 18 and over who are
not students, in calculating income; whereas several other programs
either do not include children's income or exclude portions of their
income from consideration. Similar differences exist in state-
administered programs as a number of states define additional and
unique eligibility requirements beyond what is required at the federal
level. Collectively, these multiple variations in approaches to
identifying recipients' income for determining program eligibility are
likely contributing factors to the high dollar value of improper
payments that exist within these programs.
Federal agencies continued to report progress in reducing improper
payments in their programs and activities. Of the 35 agency programs
reporting improper payment estimated error rates for each of the 5
fiscal years--2004 through 2008--24 programs, or about 69 percent had
reduced error rates when comparing fiscal year 2008 error rates to the
initial error rates reported for fiscal year 2004. Further, we found
the number of programs with error rate reductions totaled 35 when
comparing fiscal years 2008 and 2007 error rates. For example, the
error rate of the U.S. Department of Labor's (Labor) Unemployment
Insurance (UI) program decreased from 10.3 percent in fiscal year 2007
to 9.96 percent in fiscal year 2008. Labor reported that the leading cause of UI overpayments resulted from claimants who returned to work, yet continued to claim UI benefits. Early detection of these overpayments allows agencies to stop payments sooner and to recover these overpayments more expeditiously. Labor reported that matching Social Security numbers of UI claimants with the Department of Health and Human Services' National Directory of New Hires database is the most effective tool to identify UI program improper payments and had
prevented about $93 million of UI overpayments during fiscal year 2008.
Challenges Remain in Meeting IPIA:
While federal agencies have shown progress, major challenges remain in
meeting the goals of IPIA and ultimately provide reasonable assurance
as to the integrity of payments. Specifically, while improved, the
total improper payment estimate reported in fiscal year 2008 does not
yet reflect the full scope of improper payments across executive branch
agencies; noncompliance issues with IPIA implementation continue to
exist; and agencies continue to face challenges in the design or
implementation of internal controls to identify and prevent improper
payments. Not all agencies have yet developed improper payment
estimates for all of the programs and activities they identified as
susceptible to significant improper payments. As shown in table 1, the
fiscal year 2008 total improper payment estimate of $72 billion did not
include any amounts for 10 risk-susceptible programs--including the
Medicare Prescription Drug Benefit program--with fiscal year 2008
outlays totaling about $61 billion.
Table 1: Risk-Susceptible Programs That Did Not Report Improper Payment
Estimates for Fiscal Year 2008:
Agency--program: Department of Health and Human Services--Medicare
Prescription Drug Benefit;
Fiscal year 2008 outlays (dollars in millions): $46,127.0;
Target date for reporting improper payment estimate: Did not report
target date.
Agency--program: Department of Homeland Security--Customs and Border
Protection--Custodial--Refund & Drawback and Continued Dumping &
Subsidy Offset Act & Payments to Wool Manufacturers;
Fiscal year 2008 outlays (dollars in millions): $7,118.0;
Target date for reporting improper payment estimate: Did not report
target date.
Agency--program: Department of Homeland Security--Federal Emergency
Management Agency--Homeland Security Grant Program;
Fiscal year 2008 outlays (dollars in millions): $2,189.0;
Target date for reporting improper payment estimate: 2009.
Agency--program: Department of Homeland Security--Transportation
Security Administration--Aviation Security--Payroll;
Fiscal year 2008 outlays (dollars in millions): $2,012.0;
Target date for reporting improper payment estimate: Did not report
target date.
Agency--program: Department of Homeland Security--United States Coast
Guard--Contract Payments;
Fiscal year 2008 outlays (dollars in millions): $1,811.0;
Target date for reporting improper payment estimate: Did not report
target date.
Agency--program: Department of Homeland Security--Federal Emergency
Management Agency--Public Assistance Programs;
Fiscal year 2008 outlays (dollars in millions): $1,026.0;
Target date for reporting improper payment estimate: 2009.
Agency--program: Department of Homeland Security--Federal Emergency
Management Agency--Infrastructure Protection Program;
Fiscal year 2008 outlays (dollars in millions): $417.0;
Target date for reporting improper payment estimate: 2009.
Agency--program: Department of Homeland Security--Federal Emergency
Management Agency--Assistance to Firefighters Grants;
Fiscal year 2008 outlays (dollars in millions): $356.0;
Target date for reporting improper payment estimate: 2009.
Agency--program: Department of Homeland Security--Immigration and
Customs Enforcement--Investigations;
Fiscal year 2008 outlays (dollars in millions): $227.0;
Target date for reporting improper payment estimate: Did not report
target date.
Agency--program: Department of Homeland Security--Federal Emergency
Management Agency--National Flood Insurance Program[A];
Fiscal year 2008 outlays (dollars in millions): $53.0;
Target date for reporting improper payment estimate: 2009.
Agency--program: Total;
Fiscal year 2008 outlays (dollars in millions): $61,336.0.
Source: GAO's analysis of agencies' fiscal year 2008 PARs or AFRs.
[A] GAO placed the National Flood Insurance Program (NFIP) on its high-
risk list in March 2006 as the program likely will not generate
sufficient revenues to repay the billions borrowed from the Department
of Treasury to cover flood claims from the 2005 hurricanes. It is also
unlikely that NFIP could cover catastrophic losses in future years
should they occur. The insufficient revenues highlight structural
weaknesses in how the program is funded.
[End of table]
For fiscal year 2008, a limited number of agency auditors reported on
IPIA implementation compliance issues as part of their financial
statement audit, although such reporting is not specifically required
by IPIA. Specifically, auditors for 4 of the 35 agencies included in
our scope reported on agencies' noncompliance with IPIA.[Footnote 10]
Agency auditors reported noncompliance issues related to risk
assessments, testing of payment transactions, development of corrective
action plans to reduce improper payments, recovering improper payments,
and inadequate documentation. Fiscal year 2008 reflected the fifth year
that auditors for the Departments of Health and Human Services (HHS)
and Homeland Security (DHS) reported IPIA noncompliance issues,
including not estimating for all risk-susceptible programs,
deficiencies related to testing of payment transactions, and the lack
of corrective action plans. Agency auditors at the Department of
Transportation (Transportation) and DOD reported noncompliance with
IPIA for a third year. For example, Transportation auditors reported
that they had not received sufficient documentation by the time of PAR
issuance to determine if the department's sampling plan used to
estimate improper payments was statistically valid. The auditors for
DOD reported for fiscal year 2008, that the department was still in the
process of developing procedures to identify improper payments and that
its efforts to manage recovery audit contracts had been largely
unsuccessful.
As we previously testified before this Subcommittee,[Footnote 11]
separate assessments conducted by agency auditors provided a valuable
independent validation of agencies' efforts to implement IPIA.
Independent assessments can also enhance an agency's ability to
identify sound performance measures, monitor progress against those
measures, and help establish performance and results expectations.
Without this type of validation or other types of reviews performed by
GAO and agency OIGs, it is difficult to reliably determine the full
magnitude of deficiencies that may exist in agencies' IPIA
implementation efforts.
Agencies continue to face challenges in the design or implementation of
internal controls to identify and prevent improper payments. Over half
of the OIGs for agencies required to report under IPIA identified
management or performance challenges that could increase the risk of
improper payments, including challenges related to internal controls.
Examples of fiscal year 2008 challenges are highlighted below.
* Department of Transportation--The OIG reported that its audits and
investigations continue to find oversight and control deficiencies
increasing vulnerability to improper payments, including fraud and
abuse, and other ethics issues involving agency officials and
contractors, including schemes related to bribery and kickbacks, bid
rigging, and over-billing of labor and materials.
* Department of Education--The OIG reported that effective oversight of
the agency's student federal assistance programs has been a long-
standing and significant challenge. Specifically, the Education OIG
cited control issues related to insufficient numbers of personnel with
the necessary skills and ineffective oversight and monitoring of its
programs and participants, placing billions of taxpayer dollars at risk
of waste, fraud, abuse, and noncompliance.
* Department of the Treasury--The OIG cited erroneous and improper
payments as the sixth top management challenge facing the Internal
Revenue Service (IRS). According to the OIG, erroneous and improper and
payments generally involve improperly paid refunds, tax return filing
fraud, or overpayments to vendors or contractors. The Treasury OIG also
reported some tax credits, such as the Earned Income Tax Credit (EITC)
and the Education Credit, provide opportunities for abuse in income tax
claims. The IRS receives a substantial number of excessive or incorrect
EITC claims. According to the OIG, the exponential growth in fraud in
processing year 2007 presented a challenge for the IRS, which did not
have the resources to handle the volume. The OIG noted that if this
trend continues over the next few years, the IRS might issue an even
greater number of improper refunds, possibly resulting in a
significantly increasing annual revenue loss to the federal government.
Implementation of IPIA in Medicare and Medicaid Programs:
The Department of Health and Human Services (HHS) annually reports on
improper payments in its Agency Financial Report (AFR). For fiscal year
2008, HHS reported improper payment estimates for several programs,
including Medicare and the Medicaid, which together provide health
insurance for one in four Americans. Collectively, HHS reported
improper payment estimates for Medicare and Medicaid totaling about $36
billion for fiscal year 2008.[Footnote 12] (See figure 1.) This
represents about 50 percent of the total $72 billion in reported
improper payments. The Centers for Medicare and Medicaid Services
(CMS), a component of HHS, administers Medicare and oversees Medicaid
at the federal level. CMS is responsible for IPIA implementation for
these programs. CMS reported it has taken steps to address improper
payment requirements for its Medicare and Medicaid programs, but more
work remains to measure annual improper payments for all its risk-
susceptible programs and to design and implement effective internal
controls to prevent improper payments.
Medicare:
Medicare provides health insurance to roughly 44 million elderly and
disabled beneficiaries. As HHS's largest program, it represented nearly
$400 billion or almost 60 percent of HHS's outlays for fiscal year
2008. The Medicare Program is comprised of Medicare Fee-for-Service
(FFS) which includes Hospital Insurance (Medicare Part A) and
Supplementary Medical Insurance (Medicare Part B), Medicare Advantage
(Medicare Part C), and Medicare Prescription Drug Benefit (Medicare
Part D).
Medicare FFS represents the largest share of Medicare payments and
covers an array of items and services including hospital, skilled
nursing and home health care; physician services; ambulance services;
and medical equipment and supplies. CMS has a long-history of
estimating improper payments for its Medicare FFS program that predate
IPIA. Beginning in 1996, HHS's Office of Inspector General (OIG)
estimated improper payments in the Medicare FFS program as part of its
annual financial statement audit. In fiscal year 2003, CMS assumed
responsibility for estimating Medicare FFS improper payments and
modified the methodology to improve error detection and provide more
detailed information on the errors. This coincided with the
implementation of the IPIA. For fiscal year 2008, Medicare FFS improper
payment estimate totaled $10.4 billion, or 3.6 percent of benefit
payments for the prior year.[Footnote 13] As part of its testing, CMS
reported it determined whether the claim payments complied with
Medicare coverage, coding, and billing rules. In its fiscal year 2008
AFR, HHS reported causes of improper payments included provision of
medically unnecessary services, incorrect coding, and insufficient
documentation.
Medicare Advantage is designed to provide health coverage through
private health plans for Medicare beneficiaries who choose to enroll in
this option. Fiscal year 2008 marks the first year that CMS reported
estimated improper payments for Medicare Advantage, with an error rate
of 10.6 percent or $6.8 billion in estimated improper payments. While
HHS's AFR states that medical record reviews were performed, they did
not specifically identify the types of attributes tested to identify
the improper payments. The causes of improper payments cited were
errors in transferring data, interpretation of data, payment
calculations, and incorrect diagnoses resulting in incorrect
beneficiary risk scores.
Medicare Prescription Drug Benefit is an outpatient prescription drug
benefit for Medicare beneficiaries who opt to enroll. As we highlighted
earlier in this testimony, CMS had not yet estimated an error rate for
its Medicare Prescription Drug Benefit, which had total outlays of
about $46 billion for fiscal year 2008.
Medicaid:
The Medicaid program is a joint federal/state program,[Footnote 14]
administered by the states to provide health insurance to certain low
income individuals. Although it was required by OMB to report improper
payment information beginning with its fiscal year 2003 budget
submission, CMS began reporting estimated improper payments for this
program in fiscal year 2007. For fiscal year 2008, CMS estimated
improper payments for fee-for-service providers, managed care plans,
and for ineligible recipients--and reported an error rate of 10.5
percent or $18.6 billion as the federal share of these improper
payments.[Footnote 15] Among all federal programs reporting in fiscal
year 2008, Medicaid had the highest estimated dollar value of reported
improper payments. (See figure 1.) To estimate improper payments for
the Medicaid program, CMS developed a multi-faceted strategy that
included obtaining claim payment data from the 50 states and the
District of Columbia, utilizing a three-year state rotation cycle.
Using this methodology, CMS selects 17 states each year to generate and
report a national improper payment estimate for Medicaid. CMS reported
that the most common causes of Medicaid improper payments resulting
from its medical and data processing reviews included insufficient or
lack of documentation (which accounted for 90 percent of the errors),
pricing errors, and non-covered services. As reported in the fiscal
year 2008 AFR, HHS expressed the view that the high percentage of
errors related to insufficient documentation follows a trend similar to
the early years of the Medicare FFS error rate measurement program.
From its eligibility reviews, HHS reported that based on an informal
survey of states, caseworker errors and a lack of internal controls
were the causes for the errors in eligibility determinations.
Management Challenges in Meeting IPIA Requirements:
While CMS has made efforts to estimate improper payments, challenges
remain to design and implement internal controls to effectively prevent
improper payments and to address fraud, waste, and abuse. Since 1990
and 2003, respectively, we have designated Medicare and Medicaid as
high risk and included them on our High-Risk list.[Footnote 16] These
programs were designated as high risk in part due to the high level of
estimated improper payments and growing concerns about the quality of
fiscal oversight, which is necessary to prevent inappropriate spending.
Although the Medicare FFS payment error rate has decreased in recent
years, HHS OIG raised concerns that the error rates for certain
provider types may be understated based on its review of additional
medical records and interviews with beneficiaries and providers. CMS
has taken steps to enhance its program integrity efforts, but further
work remains to put in place the controls necessary to effectively
identify and detect improper payments. Our recent work in Medicare
continues to identify fraudulent and abusive practices within the
program.[Footnote 17] For example, our review of Medicare's spending on
home health care found that home health agencies' practice of upcoding
(overstating the severity of a beneficiary's condition), providing
kickbacks, and billing for services not rendered contributed to
Medicare's home health spending and utilization. We reported that
inadequate administration of the Medicare home health benefit left the
program vulnerable to improper payments. Likewise, our review of
enrollment of Medicare's durable medical equipment suppliers found
weaknesses in Medicare's screening process that exposed the program to
potentially paying millions of dollars for medical equipment and
supplies that were not necessary or were not provided to beneficiaries.
Similarly, challenges exist for the Medicaid program. In fiscal year
2008, the HHS OIG reported that the shared oversight and enforcement
activities between multiple federal and state entities create
significant challenges to program oversight and integrity. The HHS OIG
also reported that CMS's efforts to identify payment errors, their
causes, and vulnerabilities in Medicaid is particularly challenging
because of the diversity of state programs and the variation in their
administrative and control systems. These findings are consistent with
our prior work on federal and state coordination to estimate improper
payments for state-administered programs, like Medicaid. Specifically,
in April 2006, we reported that communication, coordination, and
cooperation among federal agencies and the states are critical factors
in estimating national improper payment rates and meeting IPIA
reporting requirements for state-administered programs.[Footnote 18]
Further, putting in place a culture of accountability over improper
payments and transparency of the issue helps to reduce fraud and
address the wasteful spending that results from lapses in controls. As
we previously reported,[Footnote 19] measuring improper payments within
the Medicaid program is critical to recouping and reducing them. The
magnitude of the program's payment errors indicates that CMS and the
states face significant challenges to address the program's
vulnerabilities. Identifying and reducing improper payment in Medicaid
are important first steps toward improving the integrity of the
program.
Concluding Observations:
In closing, in light of the current fiscal stress and looming deficits,
the need to ensure that every federal dollar is spent as intended has
never been more important. With more federal dollars flowing into risk-
susceptible programs, establishing effective accountability measures is
critical. In this regard, implementing strong internal controls can
serve as the front-line of defense against improper payments.
Nonetheless, effectively identifying improper payments and designing
and implementing actions to reduce them are not simple tasks or easily
accomplished. Consequently, agencies' efforts to fulfill the
requirements of IPIA will require sustained top-level attention and
commitment. The ultimate success of the governmentwide effort to reduce
improper payments hinges on each federal agency's diligence and
commitment to identify, estimate, determine the causes of, take
corrective actions, and measure progress in reducing improper payments.
Mr. Chairman, this concludes my statement. I would be pleased to
respond to any questions that you or other members of the Subcommittee
may have.
Contact and Acknowledgments:
For more information regarding this testimony, please contact, Kay L.
Daly, Director, Financial Management and Assurance, at (202) 512-9095
or by e-mail at dalykl@gao.gov. Contact points for our Offices of
Congressional Relations and Public Affairs may be found on the last
page of this testimony. Individuals making key contributions to this
testimony included Carla Lewis, Assistant Director; F. Abe Dymond;
Natasha Guerra; Crystal Lazcano; Christina Quattrociocchi; and Sabrina
Springfield.
[End of section]
Appendix I: Improper Payment Estimates Reported in Agency Fiscal Year
2007 and 2008 Performance and Accountability Reports, Agency Financial
Reports, or Annual Reports:
Department or agency: Agency for International Development;
Program or activity: Cash Transfers;
Fiscal year 2007 total estimate (dollars in millions): $3.0;
Fiscal year 2007 error rate (percent): 0.2;
Fiscal year 2008 total estimate (dollars in millions): $2.0;
Fiscal year 2008 error rate (percent): 0.1.
Department or agency: Agency for International Development;
Program or activity: Contracts;
Fiscal year 2007 total estimate (dollars in millions): $96.0;
Fiscal year 2007 error rate (percent): 1.2;
Fiscal year 2008 total estimate (dollars in millions): $69.0;
Fiscal year 2008 error rate (percent): 1.2.
Department or agency: Agency for International Development;
Program or activity: Grants and Cooperative Agreements;
Fiscal year 2007 total estimate (dollars in millions): 0.0[A];
Fiscal year 2007 error rate (percent): 0.0;
Fiscal year 2008 total estimate (dollars in millions): $36.0;
Fiscal year 2008 error rate (percent): 1.2.
Department or agency: Department of Agriculture;
Program or activity: Child and Adult Care Food Program;
Fiscal year 2007 total estimate (dollars in millions): $12.0;
Fiscal year 2007 error rate (percent): 1.7;
Fiscal year 2008 total estimate (dollars in millions): $11.0;
Fiscal year 2008 error rate (percent): 1.6.
Department or agency: Department of Agriculture;
Program or activity: Conservation Reserve Program;
Fiscal year 2007 total estimate (dollars in millions): $9.0;
Fiscal year 2007 error rate (percent): 0.5;
Fiscal year 2008 total estimate (dollars in millions): $24.0;
Fiscal year 2008 error rate (percent): 1.3.
Department or agency: Department of Agriculture;
Program or activity: Conservation Security Program (previously Farm
Security and Rural Investment);
Fiscal year 2007 total estimate (dollars in millions): $1.0;
Fiscal year 2007 error rate (percent): 0.5;
Fiscal year 2008 total estimate (dollars in millions): 0.0[B];
Fiscal year 2008 error rate (percent): 0.0[B].
Department or agency: Department of Agriculture;
Program or activity: Direct and Counter-Cyclical Payments;
Fiscal year 2007 total estimate (dollars in millions): $37.0;
Fiscal year 2007 error rate (percent): 0.4;
Fiscal year 2008 total estimate (dollars in millions): $47.0;
Fiscal year 2008 error rate (percent): 0.7.
Department or agency: Department of Agriculture;
Program or activity: Federal Crop Insurance Corporation Program Fund;
Fiscal year 2007 total estimate (dollars in millions): $63.0;
Fiscal year 2007 error rate (percent): 2.7;
Fiscal year 2008 total estimate (dollars in millions): $165.0;
Fiscal year 2008 error rate (percent): 4.7.
Department or agency: Department of Agriculture;
Program or activity: Loan Deficiency Payments;
Fiscal year 2007 total estimate (dollars in millions): $18.0;
Fiscal year 2007 error rate (percent): 0.5;
Fiscal year 2008 total estimate (dollars in millions): $0.8;
Fiscal year 2008 error rate (percent): 0.6.
Department or agency: Department of Agriculture;
Program or activity: Marketing Assistance Loan Program;
Fiscal year 2007 total estimate (dollars in millions): $458.0;
Fiscal year 2007 error rate (percent): 7.5;
Fiscal year 2008 total estimate (dollars in millions): $92.0;
Fiscal year 2008 error rate (percent): 1.8.
Department or agency: Department of Agriculture;
Program or activity: Milk Income Loss Contract Program;
Fiscal year 2007 total estimate (dollars in millions): $8.0;
Fiscal year 2007 error rate (percent): 2.2;
Fiscal year 2008 total estimate (dollars in millions): $0.3;
Fiscal year 2008 error rate (percent): 0.2.
Department or agency: Department of Agriculture;
Program or activity: Miscellaneous Disaster Programs;
Fiscal year 2007 total estimate (dollars in millions): $25.0;
Fiscal year 2007 error rate (percent): 6.8;
Fiscal year 2008 total estimate (dollars in millions): $5.0;
Fiscal year 2008 error rate (percent): 3.1.
Department or agency: Department of Agriculture;
Program or activity: National School Lunch Program;
Fiscal year 2007 total estimate (dollars in millions): $1,402.0;
Fiscal year 2007 error rate (percent): 16.3;
Fiscal year 2008 total estimate (dollars in millions): $1,449.0;
Fiscal year 2008 error rate (percent): 16.6.
Department or agency: Department of Agriculture;
Program or activity: Noninsured Assistance Program;
Fiscal year 2007 total estimate (dollars in millions): $8.0;
Fiscal year 2007 error rate (percent): 13.1;
Fiscal year 2008 total estimate (dollars in millions): $18.0;
Fiscal year 2008 error rate (percent): 14.7.
Department or agency: Department of Agriculture;
Program or activity: Rental Assistance Program;
Fiscal year 2007 total estimate (dollars in millions): $26.0;
Fiscal year 2007 error rate (percent): 3.1;
Fiscal year 2008 total estimate (dollars in millions): $35.0;
Fiscal year 2008 error rate (percent): 4.0.
Department or agency: Department of Agriculture;
Program or activity: School Breakfast Program;
Fiscal year 2007 total estimate (dollars in millions): $520.0;
Fiscal year 2007 error rate (percent): 24.9;
Fiscal year 2008 total estimate (dollars in millions): $538.0;
Fiscal year 2008 error rate (percent): 25.0.
Department or agency: Department of Agriculture;
Department or agency: Special Supplemental Nutrition Program for Women,
Infants, and Children;
Fiscal year 2007 total estimate (dollars in millions): $25.0;
Fiscal year 2007 error rate (percent): 0.7;
Fiscal year 2008 total estimate (dollars in millions): $34.0;
Fiscal year 2008 error rate (percent): 0.9.
Department or agency: Department of Agriculture;
Program or activity: Supplemental Nutrition Assistance Program
(previously Food Stamp Program);
Fiscal year 2007 total estimate (dollars in millions): $1,794.0;
Fiscal year 2007 error rate (percent): 6.0;
Fiscal year 2008 total estimate (dollars in millions): $1,713.0;
Fiscal year 2008 error rate (percent): 5.6.
Department or agency: Department of Agriculture;
Program or activity: Wildland Fire Suppression Management;
Fiscal year 2007 total estimate (dollars in millions): $13.0;
Fiscal year 2007 error rate (percent): 1.0;
Fiscal year 2008 total estimate (dollars in millions): $0.2;
Fiscal year 2008 error rate (percent): 0.0[C].
Department or agency: Department of Commerce[D];
Program or activity: All programs and activities;
Fiscal year 2007 total estimate (dollars in millions): 0.0;
Fiscal year 2007 error rate (percent): 0.0;
Fiscal year 2008 total estimate (dollars in millions): 0.0;
Fiscal year 2008 error rate (percent): 0.0.
Department or agency: Department of Defense;
Program or activity: Civilian Pay;
Fiscal year 2007 total estimate (dollars in millions): $74.6;
Fiscal year 2007 error rate (percent): 0.3[E];
Fiscal year 2008 total estimate (dollars in millions): $73.9;
Fiscal year 2008 error rate (percent): 0.3.
Department or agency: Department of Defense;
Program or activity: Military Health Benefits;
Fiscal year 2007 total estimate (dollars in millions): $88.6[E];
Fiscal year 2007 error rate (percent): 0.9[E];
Fiscal year 2008 total estimate (dollars in millions): $178.0;
Fiscal year 2008 error rate (percent): 2.0.
Department or agency: Department of Defense;
Program or activity: Military Pay;
Fiscal year 2007 total estimate (dollars in millions): $416.4[E];
Fiscal year 2007 error rate (percent): 0.6[E];
Fiscal year 2008 total estimate (dollars in millions): $434.6;
Fiscal year 2008 error rate (percent): 0.6.
Department or agency: Department of Defense;
Program or activity: Military Retirement Fund;
Fiscal year 2007 total estimate (dollars in millions): $48.7;
Fiscal year 2007 error rate (percent): 0.1;
Fiscal year 2008 total estimate (dollars in millions): $44.0;
Fiscal year 2008 error rate (percent): 0.1.
Department or agency: Department of Defense;
Department or agency: Program or activity: Travel Pay;
Fiscal year 2007 total estimate (dollars in millions): $43.6;
Fiscal year 2007 error rate (percent): 1.0;
Fiscal year 2008 total estimate (dollars in millions): $103.0;
Fiscal year 2008 error rate (percent): 2.0.
Department or agency: Department of Education;
Program or activity: Federal Student Aid--Federal Family Education
Loan;
Fiscal year 2007 total estimate (dollars in millions): $384.0[E];
Fiscal year 2007 error rate (percent): 1.7[E];
Fiscal year 2008 total estimate (dollars in millions): $404.0;
Fiscal year 2008 error rate (percent): 1.7.
Department or agency: Department of Education;
Program or activity: Federal Student Aid--Pell Grants;
Fiscal year 2007 total estimate (dollars in millions): $613.0[E];
Fiscal year 2007 error rate (percent): 4.1[E];
Fiscal year 2008 total estimate (dollars in millions): $630.0;
630.0; Fiscal year 2008 error rate (percent): 3.7.
Department or agency: Department of Education;
Department or agency: Program or activity: Title I;
Fiscal year 2007 total estimate (dollars in millions): $87.6;
Fiscal year 2007 error rate (percent): 0.7;
Fiscal year 2008 total estimate (dollars in millions): $40.0;
Fiscal year 2008 error rate (percent): 0.3.
Department or agency: Department of Energy;
Program or activity: Payment programs;
Fiscal year 2007 total estimate (dollars in millions): $19.7;
Fiscal year 2007 error rate (percent): 0.1;
Fiscal year 2008 total estimate (dollars in millions): $15.3;
Fiscal year 2008 error rate (percent): 0.1.
Department or agency: Environmental Protection Agency;
Program or activity: Clean Water State Revolving Funds;
Fiscal year 2007 total estimate (dollars in millions): $1.6;
Fiscal year 2007 error rate (percent): 0.1;
Fiscal year 2008 total estimate (dollars in millions): $8.3;
Fiscal year 2008 error rate (percent): 0.4.
Department or agency: Environmental Protection Agency;
Program or activity: Drinking Water State Revolving Funds;
Fiscal year 2007 total estimate (dollars in millions): 0.0[A];
Fiscal year 2007 error rate (percent): 0.0[A];
Fiscal year 2008 total estimate (dollars in millions): 0.0[A];
Fiscal year 2008 error rate (percent): 0.0[A].
Department or agency: Export-Import Bank of the United States[F];
Program or activity: All programs and activities;
Fiscal year 2007 total estimate (dollars in millions): 0.0;
Fiscal year 2007 error rate (percent): 0.0;
Fiscal year 2008 total estimate (dollars in millions): 0.0;
Fiscal year 2008 error rate (percent): 0.0.
Department or agency: Farm Credit System Insurance Corporation[G];
Program or activity: All programs and activities;
Fiscal year 2007 total estimate (dollars in millions): 0.0;
Fiscal year 2007 error rate (percent): 0.0;
Fiscal year 2008 total estimate (dollars in millions): 0.0;
Fiscal year 2008 error rate (percent): 0.0.
Department or agency: Federal Communications Commission;
Program or activity: Universal Service Fund--High Cost Support Program;
Fiscal year 2007 total estimate (dollars in millions): $620.0;
Fiscal year 2007 error rate (percent): 16.5;
Fiscal year 2008 total estimate (dollars in millions): $970.3[H];
Fiscal year 2008 error rate (percent): 23.3[H].
Department or agency: Federal Communications Commission;
Program or activity: Universal Service Fund--Low Income Program;
Fiscal year 2007 total estimate (dollars in millions): $75.5;
Fiscal year 2007 error rate (percent): 9.5;
Fiscal year 2008 total estimate (dollars in millions): $75.5[H];
Fiscal year 2008 error rate (percent): 9.5[H].
Department or agency: Federal Communications Commission;
Program or activity: Universal Service Fund--Schools and Libraries;
Fiscal year 2007 total estimate (dollars in millions): $210.0;
Fiscal year 2007 error rate (percent): 12.9;
Fiscal year 2008 total estimate (dollars in millions): $232.7[H];
Fiscal year 2008 error rate (percent): 13.8[H].
Department or agency: Federal Deposit Insurance Corporation[G];
Program or activity: All programs and activities;
Fiscal year 2007 total estimate (dollars in millions): 0.0;
Fiscal year 2007 error rate (percent): 0.0;
Fiscal year 2008 total estimate (dollars in millions): 0.0;
Fiscal year 2008 error rate (percent): 0.0.
Department or agency: General Services Administration[D];
Program or activity: All programs and activities;
Fiscal year 2007 total estimate (dollars in millions): 0.0;
Fiscal year 2007 error rate (percent): 0.0;
Fiscal year 2008 total estimate (dollars in millions): 0.0;
Fiscal year 2008 error rate (percent): 0.0.
Department or agency: Department of Health and Human Services;
Program or activity: Child Care and Development Fund;
Fiscal year 2007 total estimate (dollars in millions): 0.0[I];
Fiscal year 2007 error rate (percent): 0.0[I];
Fiscal year 2008 total estimate (dollars in millions): $573.0;
Fiscal year 2008 error rate (percent): 11.5.
Department or agency: Department of Health and Human Services;
Program or activity: Foster Care;
Fiscal year 2007 total estimate (dollars in millions): $52.6[E];
Fiscal year 2007 error rate (percent): 3.3;
Fiscal year 2008 total estimate (dollars in millions): $99.6;
Fiscal year 2008 error rate (percent): 6.4.
Department or agency: Department of Health and Human Services;
Program or activity: Head Start;
Fiscal year 2007 total estimate (dollars in millions): $89.5[E];
Fiscal year 2007 error rate (percent): 1.3;
Fiscal year 2008 total estimate (dollars in millions): $206.3;
Fiscal year 2008 error rate (percent): 3.0.
Department or agency: Department of Health and Human Services;
Program or activity: Medicaid;
Fiscal year 2007 total estimate (dollars in millions): $6,575.0[E];
Fiscal year 2007 error rate (percent): 4.7[E];
Fiscal year 2008 total estimate (dollars in millions): $18,642.0;
Fiscal year 2008 error rate (percent): 10.5.
Department or agency: Department of Health and Human Services;
Program or activity: Medicare Advantage;
Fiscal year 2007 total estimate (dollars in millions): 0.0[I];
Fiscal year 2007 error rate (percent): 0.0[I];
Fiscal year 2008 total estimate (dollars in millions): $6,848.0;
Fiscal year 2008 error rate (percent): 10.6.
Department or agency: Department of Health and Human Services;
Program or activity: Medicare Fee-for-Service;
Fiscal year 2007 total estimate (dollars in millions): $10,800.0;
Fiscal year 2007 error rate (percent): 3.9;
Fiscal year 2008 total estimate (dollars in millions): $10,400.0;
Fiscal year 2008 error rate (percent): 3.6.
Department or agency: Department of Health and Human Services;
45; Program or activity: Medicare Prescription Drug Benefit;
Fiscal year 2007 total estimate (dollars in millions): 0.0[I];
Fiscal year 2007 error rate (percent): 0.0[I];
Fiscal year 2008 total estimate (dollars in millions): 0.0[I];
Fiscal year 2008 error rate (percent): 0.0[I].
Department or agency: Department of Health and Human Services;
Program or activity: State Children's Health Insurance Program;
Fiscal year 2007 total estimate (dollars in millions): 0.0[I];
Fiscal year 2007 error rate (percent): 0.0[I];
Fiscal year 2008 total estimate (dollars in millions): $834.4;
Fiscal year 2008 error rate (percent): 14.7.
Department or agency: Department of Health and Human Services;
Program or activity: Temporary Assistance for Needy Families;
Fiscal year 2007 total estimate (dollars in millions): 0.0[I];
Fiscal year 2007 error rate (percent): 0.0[I];
Fiscal year 2008 total estimate (dollars in millions): $1,663.0;
Fiscal year 2008 error rate (percent): 9.3.
Department or agency: Department of Homeland Security;
Program or activity: Customs and Border Protection--Custodial--Refund &
Drawback and Continued Dumping & Subsidy Offset Act & Payments to Wool
Manufacturers;
Fiscal year 2007 total estimate (dollars in millions): $2.0[E];
Fiscal year 2007 error rate (percent): 0.0[C, E];
Fiscal year 2008 total estimate (dollars in millions): 0.0[J];
Fiscal year 2008 error rate (percent): 0.0[J].
Department or agency: Department of Homeland Security;
Program or activity: Federal Emergency Management Agency--Assistance to
Firefighters Grants;
Fiscal year 2007 total estimate (dollars in millions): 0.0[I];
Fiscal year 2007 error rate (percent): 0.0[I];
Fiscal year 2008 total estimate (dollars in millions): 0.0[I];
Fiscal year 2008 error rate (percent): 0.0[I].
Department or agency: Department of Homeland Security;
Program or activity: Federal Emergency Management Agency--Homeland
Security Grant Program;
Fiscal year 2007 total estimate (dollars in millions): 0.0[I];
Fiscal year 2007 error rate (percent): 0.0[I];
Fiscal year 2008 total estimate (dollars in millions): 0.0[I];
Fiscal year 2008 error rate (percent): 0.0[I].
Department or agency: Department of Homeland Security;
Program or activity: Federal Emergency Management Agency--Individuals
and Households Program;
Fiscal year 2007 total estimate (dollars in millions): $46.0[E];
Fiscal year 2007 error rate (percent): 7.2[E];
Fiscal year 2008 total estimate (dollars in millions): $42.0;
Fiscal year 2008 error rate (percent): 7.0.
Department or agency: Department of Homeland Security;
Program or activity: Federal Emergency Management Agency--
Infrastructure Protection Program;
Fiscal year 2007 total estimate (dollars in millions): 0.0[I];
Fiscal year 2007 error rate (percent): 0.0[I];
Fiscal year 2008 total estimate (dollars in millions): 0.0[I];
Fiscal year 2008 error rate (percent): 0.0[I].
Department or agency: Department of Homeland Security;
Program or activity: Federal Emergency Management Agency--National
Flood Insurance Program;
Fiscal year 2007 total estimate (dollars in millions): 0.0[I];
Fiscal year 2007 error rate (percent): 0.0[I];
Fiscal year 2008 total estimate (dollars in millions): 0.0[I];
Fiscal year 2008 error rate (percent): 0.0[I].
Department or agency: Department of Homeland Security;
Program or activity: Federal Emergency Management Agency--Public
Assistance Programs;
Fiscal year 2007 total estimate (dollars in millions): 0.0[I];
Fiscal year 2007 error rate (percent): 0.0[I];
Fiscal year 2008 total estimate (dollars in millions): 0.0[I];
Fiscal year 2008 error rate (percent): 0.0[I].
Department or agency: Department of Homeland Security;
Program or activity: Federal Emergency Management Agency--Vendor
payments;
Fiscal year 2007 total estimate (dollars in millions): $144.0[E];
Fiscal year 2007 error rate (percent): 7.6[E];
Fiscal year 2008 total estimate (dollars in millions): $107.0;
Fiscal year 2008 error rate (percent): 7.0.
Department or agency: Department of Homeland Security;
Program or activity: Immigration and Customs Enforcement--Detention and
Removal Operations;
Fiscal year 2007 total estimate (dollars in millions): $10.0[E];
Fiscal year 2007 error rate (percent): 0.9[E];
Fiscal year 2008 total estimate (dollars in millions): $13.0;
Fiscal year 2008 error rate (percent): 0.8.
Department or agency: Department of Homeland Security;
Program or activity: Immigration and Customs Enforcement--Federal
Protective Service;
Fiscal year 2007 total estimate (dollars in millions): $267.0[E];
Fiscal year 2007 error rate (percent): 36.9[E];
Fiscal year 2008 total estimate (dollars in millions): $194.0;
Fiscal year 2008 error rate (percent): 26.0.
Department or agency: Department of Homeland Security;
Program or activity: Immigration and Customs Enforcement--
Investigations;
Fiscal year 2007 total estimate (dollars in millions): $4.0[E];
Fiscal year 2007 error rate (percent): 1.9[E];
Fiscal year 2008 total estimate (dollars in millions): 0.0[J];
Fiscal year 2008 error rate (percent): 0.0[J].
Department or agency: Department of Homeland Security;
Program or activity: Transportation Security Administration--Aviation
Security--Payroll;
Fiscal year 2007 total estimate (dollars in millions): $2.0[E];
Fiscal year 2007 error rate (percent): 0.1[E];
Fiscal year 2008 total estimate (dollars in millions): 0.0[J];
Fiscal year 2008 error rate (percent): 0.0[J].
Department or agency: Department of Homeland Security;
Department or agency: Program or activity: United States Coast Guard--
Active Duty Military Payroll;
Fiscal year 2007 total estimate (dollars in millions): $21.0[E];
Fiscal year 2007 error rate (percent): 0.8[E];
Fiscal year 2008 total estimate (dollars in millions): $21.0;
Fiscal year 2008 error rate (percent): 0.8.
Department or agency: Department of Homeland Security;
Program or activity: United States Coast Guard--Contract Payments;
Fiscal year 2007 total estimate (dollars in millions): 0.0[C];
Fiscal year 2007 error rate (percent): 0.0[C];
Fiscal year 2008 total estimate (dollars in millions): 0.0[J];
Fiscal year 2008 error rate (percent): 0.0[J].
Department or agency: Department of Housing and Urban Development;
Program or activity: Community Development Block Grant (Entitlement
Grants, States/Small Cities);
Fiscal year 2007 total estimate (dollars in millions): 0.0[K];
Fiscal year 2007 error rate (percent): 0.0[K];
Fiscal year 2008 total estimate (dollars in millions): 0.0[K];
Fiscal year 2008 error rate (percent): 0.0[K].
Department or agency: Department of Housing and Urban Development;
Program or activity: Low Income Public Housing;
Fiscal year 2007 total estimate (dollars in millions): $322.9;
Fiscal year 2007 error rate (percent): 1.2;
Fiscal year 2008 total estimate (dollars in millions): $63.5;
Fiscal year 2008 error rate (percent): 0.2.
Department or agency: Department of Housing and Urban Development;
Program or activity: Section 8--Project Based;
Fiscal year 2007 total estimate (dollars in millions): $410.8;
Fiscal year 2007 error rate (percent): 1.5;
Fiscal year 2008 total estimate (dollars in millions): $396.5;
Fiscal year 2008 error rate (percent): 1.4.
Department or agency: Department of Housing and Urban Development;
Program or activity: Section 8--Tenant Based;
Fiscal year 2007 total estimate (dollars in millions): $785.4;
Fiscal year 2007 error rate (percent): 2.9;
Fiscal year 2008 total estimate (dollars in millions): $532.6;
Fiscal year 2008 error rate (percent): 1.9.
Department or agency: Department of the Interior[D];
Program or activity: All programs and activities;
Fiscal year 2007 total estimate (dollars in millions): 0.0;
Fiscal year 2007 error rate (percent): 0.0;
Fiscal year 2008 total estimate (dollars in millions): 0.0;
Fiscal year 2008 error rate (percent): 0.0.
Department or agency: Department of Justice[D];
Program or activity: All programs and activities;
Fiscal year 2007 total estimate (dollars in millions): 0.0;
Fiscal year 2007 error rate (percent): 0.0;
Fiscal year 2008 total estimate (dollars in millions): 0.0;
Fiscal year 2008 error rate (percent): 0.0.
Department or agency: Department of Labor;
Program or activity: Federal Employees' Compensation Act;
Fiscal year 2007 total estimate (dollars in millions): $2.6;
Fiscal year 2007 error rate (percent): 0.1;
Fiscal year 2008 total estimate (dollars in millions): $0.5;
Fiscal year 2008 error rate (percent): 0.0[C].
Department or agency: Department of Labor;
Program or activity: Unemployment Insurance;
Fiscal year 2007 total estimate (dollars in millions): $3,248.0;
Fiscal year 2007 error rate (percent): 10.3;
Fiscal year 2008 total estimate (dollars in millions): $3,897.0;
Fiscal year 2008 error rate (percent): 10.0.
Department or agency: Department of Labor;
Program or activity: Workforce Investment Act;
Fiscal year 2007 total estimate (dollars in millions): $2.9;
Fiscal year 2007 error rate (percent): 0.1;
Fiscal year 2008 total estimate (dollars in millions): $2.5;
Fiscal year 2008 error rate (percent): 0.1.
Department or agency: National Aeronautics and Space Administration;
Program or activity: Program payments;
Fiscal year 2007 total estimate (dollars in millions): $0.9;
Fiscal year 2007 error rate (percent): 0.0[C];
Fiscal year 2008 total estimate (dollars in millions): $11.6;
Fiscal year 2008 error rate (percent): 0.1.
Department or agency: National Credit Union Administration[G];
Program or activity: All programs and activities;
Fiscal year 2007 total estimate (dollars in millions): 0.0;
Fiscal year 2007 error rate (percent): 0.0;
Fiscal year 2008 total estimate (dollars in millions): 0.0;
Fiscal year 2008 error rate (percent): 0.0.
Department or agency: National Science Foundation;
Program or activity: Research and Education Grants and Cooperative
Agreements;
Fiscal year 2007 total estimate (dollars in millions): 0.0[K];
Fiscal year 2007 error rate (percent): 0.0[K];
Fiscal year 2008 total estimate (dollars in millions): 0.0[K];
Fiscal year 2008 error rate (percent): 0.0[K].
Department or agency: Nuclear Regulatory Commission[D];
Program or activity: All programs and activities;
Fiscal year 2007 total estimate (dollars in millions): 0.0;
Fiscal year 2007 error rate (percent): 0.0;
Fiscal year 2008 total estimate (dollars in millions): 0.0;
Fiscal year 2008 error rate (percent): 0.0.
Department or agency: Office of Personnel Management;
Program or activity: Background Investigations Program;
Fiscal year 2007 total estimate (dollars in millions): 0.0[J];
Fiscal year 2007 error rate (percent): 0.0[J];
Fiscal year 2008 total estimate (dollars in millions): $22.2;
Fiscal year 2008 error rate (percent): 4.3.
Department or agency: Office of Personnel Management;
Program or activity: Federal Employees Group Life Insurance;
Fiscal year 2007 total estimate (dollars in millions): $0.8;
Fiscal year 2007 error rate (percent): 0.1[E];
Fiscal year 2008 total estimate (dollars in millions): $0.6;
Fiscal year 2008 error rate (percent): 0.1.
Department or agency: Office of Personnel Management;
Program or activity: Federal Employees Health Benefits Program;
Fiscal year 2007 total estimate (dollars in millions): $168.7;
Fiscal year 2007 error rate (percent): 0.5;
Fiscal year 2008 total estimate (dollars in millions): $83.7;
Fiscal year 2008 error rate (percent): 0.2.
Department or agency: Office of Personnel Management;
Program or activity: Retirement Program (Civil Service Retirement
System and Federal Employees Retirement System);
Fiscal year 2007 total estimate (dollars in millions): $253.5;
Fiscal year 2007 error rate (percent): 0.4;
Fiscal year 2008 total estimate (dollars in millions): $245.9;
Fiscal year 2008 error rate (percent): 0.4.
Department or agency: Pension Benefit Guaranty Corporation[D];
Program or activity: All programs and activities;
Fiscal year 2007 total estimate (dollars in millions): 0.0;
Fiscal year 2007 error rate (percent): 0.0;
Fiscal year 2008 total estimate (dollars in millions): 0.0;
Fiscal year 2008 error rate (percent): 0.0.
Department or agency: United States Postal Service[F];
Program or activity: All programs and activities;
Fiscal year 2007 total estimate (dollars in millions): 0.0;
Fiscal year 2007 error rate (percent): 0.0;
Fiscal year 2008 total estimate (dollars in millions): 0.0;
Fiscal year 2008 error rate (percent): 0.0.
Department or agency: Railroad Retirement Board;
Program or activity: Railroad Unemployment Insurance Benefits;
Fiscal year 2007 total estimate (dollars in millions): $2.1[E];
Fiscal year 2007 error rate (percent): 2.0[E];
Fiscal year 2008 total estimate (dollars in millions): $2.3;
Fiscal year 2008 error rate (percent): 2.0.
Department or agency: Railroad Retirement Board;
Program or activity: Retirement and Survivors Benefits;
Fiscal year 2007 total estimate (dollars in millions): $92.7[E];
Fiscal year 2007 error rate (percent): 1.0[E];
Fiscal year 2008 total estimate (dollars in millions): $95.5;
Fiscal year 2008 error rate (percent): 1.0.
Department or agency: Securities and Exchange Commission;
Program or activity: Disgorgements and Penalties;
Fiscal year 2007 total estimate (dollars in millions): 0.0[B];
Fiscal year 2007 error rate (percent): 0.0[B];
Fiscal year 2008 total estimate (dollars in millions): 0.0[B];
Fiscal year 2008 error rate (percent): 0.0[B].
Department or agency: Securities and Exchange Commission;
Program or activity: Operational Vendor Payments;
Fiscal year 2007 total estimate (dollars in millions): 0.0[C];
Fiscal year 2007 error rate (percent): 0.0[C];
Fiscal year 2008 total estimate (dollars in millions): 0.0[C];
Fiscal year 2008 error rate (percent): 0.0[C].
Department or agency: Small Business Administration;
Program or activity: 504 Certified Development Companies (Debentures);
Fiscal year 2007 total estimate (dollars in millions): 0.0[B];
Fiscal year 2007 error rate (percent): 0.0[B];
Fiscal year 2008 total estimate (dollars in millions): 0.0[B];
Fiscal year 2008 error rate (percent): 0.0[B].
Department or agency: Small Business Administration;
Program or activity: 504 Certified Development Companies (Guaranties);
Fiscal year 2007 total estimate (dollars in millions): 0.0[B];
Fiscal year 2007 error rate (percent): 0.0[B];
Fiscal year 2008 total estimate (dollars in millions): 0.0[B]; Fiscal
year 2008 error rate (percent): 0.0[B].
Department or agency: Small Business Administration;
Program or activity: 7(a) Business Loan Program (Guaranty Purchases);
Fiscal year 2007 total estimate (dollars in millions): $2.6;
Fiscal year 2007 error rate (percent): 0.4;
Fiscal year 2008 total estimate (dollars in millions): $6.5;
Fiscal year 2008 error rate (percent): 0.5.
Department or agency: Small Business Administration;
Program or activity: 7(a) Business Loan Program (Guaranty Approvals);
Fiscal year 2007 total estimate (dollars in millions): 0.0[B];
Fiscal year 2007 error rate (percent): 0.0[B];
Fiscal year 2008 total estimate (dollars in millions): 0.0[B];
Fiscal year 2008 error rate (percent): 0.0[B].
Department or agency: Small Business Administration;
Program or activity: Disaster Loan Approvals;
Fiscal year 2007 total estimate (dollars in millions): $4.5;
Fiscal year 2007 error rate (percent): 0.6;
Fiscal year 2008 total estimate (dollars in millions): $6.1;
Fiscal year 2008 error rate (percent): 0.7.
Department or agency: Small Business Administration;
Program or activity: Small Business Investment Companies;
Fiscal year 2007 total estimate (dollars in millions): $4.0;
Fiscal year 2007 error rate (percent): 0.2;
Fiscal year 2008 total estimate (dollars in millions): 0.0[B];
Fiscal year 2008 error rate (percent): 0.0[B].
Department or agency: Smithsonian Institution[G];
Program or activity: All programs and activities;
Fiscal year 2007 total estimate (dollars in millions): 0.0;
Fiscal year 2007 error rate (percent): 0.0;
Fiscal year 2008 total estimate (dollars in millions): 0.0;
Fiscal year 2008 error rate (percent): 0.0.
Department or agency: Social Security Administration;
Program or activity: Old Age and Survivors' Insurance;
Fiscal year 2007 total estimate (dollars in millions): $2,504.0;
Fiscal year 2007 error rate (percent): 0.5[E];
Fiscal year 2008 total estimate (dollars in millions): $1,963.0;
Fiscal year 2008 error rate (percent): 0.3.
Department or agency: Social Security Administration;
Program or activity: Disability Insurance;
Fiscal year 2007 total estimate (dollars in millions): 0.0[A];
Fiscal year 2007 error rate (percent): 0.0[A];
Fiscal year 2008 total estimate (dollars in millions): 0.0[A];
Fiscal year 2008 error rate (percent): 0.0[A].
Department or agency: Social Security Administration;
Program or activity: Supplemental Security Income Program;
Fiscal year 2007 total estimate (dollars in millions): $4,089.0;
Fiscal year 2007 error rate (percent): 10.1;
Fiscal year 2008 total estimate (dollars in millions): $4,552.0;
Fiscal year 2008 error rate (percent): 10.6.
Department or agency: Department of State[D];
Program or activity: Business Class Travel and Sensitive Payments;
Fiscal year 2007 total estimate (dollars in millions): 0.0[C, E];
Fiscal year 2007 error rate (percent): 4.0;
Fiscal year 2008 total estimate (dollars in millions): 0.0;
Fiscal year 2008 error rate (percent): 0.0.
Department or agency: Department of State[D];
Program or activity: International Information Program--U.S. Speaker
and Specialist Program;
Fiscal year 2007 total estimate (dollars in millions): $0.9;
Fiscal year 2007 error rate (percent): 4.0;
Fiscal year 2008 total estimate (dollars in millions): 0.0;
Fiscal year 2008 error rate (percent): 0.0.
Department or agency: Tennessee Valley Authority;
Program or activity: Payment programs;
Fiscal year 2007 total estimate (dollars in millions): $6.6;
Fiscal year 2007 error rate (percent): 0.1;
Fiscal year 2008 total estimate (dollars in millions): $6.2;
Fiscal year 2008 error rate (percent): 0.1.
Department or agency: Department of Transportation;
Program or activity: Federal Aviation--Airport Improvement Program;
Fiscal year 2007 total estimate (dollars in millions): 0.0[B];
Fiscal year 2007 error rate (percent): 0.0[B];
Fiscal year 2008 total estimate (dollars in millions): $1.0;
Fiscal year 2008 error rate (percent): 0.0[C].
Department or agency: Department of Transportation;
Program or activity: Federal Highway--Federal Aid Highway Program;
Fiscal year 2007 total estimate (dollars in millions): $55.2;
Fiscal year 2007 error rate (percent): 0.2;
Fiscal year 2008 total estimate (dollars in millions): $55.1;
Fiscal year 2008 error rate (percent): 0.2.
Department or agency: Department of Transportation;
Program or activity: Federal Transit--Capital Investment Grants;
Fiscal year 2007 total estimate (dollars in millions): $0.6;
Fiscal year 2007 error rate (percent): 1.1;
Fiscal year 2008 total estimate (dollars in millions): $87.0;
Fiscal year 2008 error rate (percent): 3.1.
Department or agency: Department of Transportation;
Program or activity: Federal Transit--Formula Grants;
Fiscal year 2007 total estimate (dollars in millions): $4.3;
Fiscal year 2007 error rate (percent): 0.3;
Fiscal year 2008 total estimate (dollars in millions): $47.6;
Fiscal year 2008 error rate (percent): 5.6.
Department or agency: Department of the Treasury;
Program or activity: Earned Income Tax Credit;
Fiscal year 2007 total estimate (dollars in millions): $11,350.0;
Fiscal year 2007 error rate (percent): 25.5;
Fiscal year 2008 total estimate (dollars in millions): $12,100.0;
Fiscal year 2008 error rate (percent): 25.5.
Department or agency: Department of Veterans Affairs;
Program or activity: Compensation;
Fiscal year 2007 total estimate (dollars in millions): $240.8;
Fiscal year 2007 error rate (percent): 0.8;
Fiscal year 2008 total estimate (dollars in millions): $340.2;
Fiscal year 2008 error rate (percent): 1.0.
Department or agency: Department of Veterans Affairs;
Program or activity: Dependency and Indemnity Compensation;
Fiscal year 2007 total estimate (dollars in millions): 0.0[A];
Fiscal year 2007 error rate (percent): 0.0[A];
Fiscal year 2008 total estimate (dollars in millions): 0.0[A];
Fiscal year 2008 error rate (percent): 0.0[A].
Department or agency: Department of Veterans Affairs;
Program or activity: Education programs;
Fiscal year 2007 total estimate (dollars in millions): $101.0;
Fiscal year 2007 error rate (percent): 3.7;
Fiscal year 2008 total estimate (dollars in millions): $63.7;
Fiscal year 2008 error rate (percent): 2.2.
Department or agency: Department of Veterans Affairs;
Program or activity: Insurance programs;
Fiscal year 2007 total estimate (dollars in millions): 0.0[K];
Fiscal year 2007 error rate (percent): 0.0[K];
Fiscal year 2008 total estimate (dollars in millions): 0.0[K];
Fiscal year 2008 error rate (percent): 0.0[K].
Department or agency: Department of Veterans Affairs;
Program or activity: Loan Guaranty;
Fiscal year 2007 total estimate (dollars in millions): $4.7;
Fiscal year 2007 error rate (percent): 0.5;
Fiscal year 2008 total estimate (dollars in millions): $3.9;
Fiscal year 2008 error rate (percent): 0.4.
Department or agency: Department of Veterans Affairs;
Program or activity: Non-VA Care Civilian Health and Medical Program
(CHAMPVA);
Fiscal year 2007 total estimate (dollars in millions): $12.4[E];
Fiscal year 2007 error rate (percent): 3.8[E];
Fiscal year 2008 total estimate (dollars in millions): $17.1;
Fiscal year 2008 error rate (percent): 3.2.
Department or agency: Department of Veterans Affairs;
Program or activity: Non-VA Care Fee;
Fiscal year 2007 total estimate (dollars in millions): $92.6;
Fiscal year 2007 error rate (percent): 5.9;
Fiscal year 2008 total estimate (dollars in millions): $24.8;
Fiscal year 2008 error rate (percent): 1.3.
Department or agency: Department of Veterans Affairs;
Program or activity: Pensions;
Fiscal year 2007 total estimate (dollars in millions): $303.9;
Fiscal year 2007 error rate (percent): 8.6;
Fiscal year 2008 total estimate (dollars in millions): $375.1;
Fiscal year 2008 error rate (percent): 10.2.
Department or agency: Department of Veterans Affairs;
Program or activity: Vocational Rehabilitation and Employment Program;
Fiscal year 2007 total estimate (dollars in millions): $4.0;
Fiscal year 2007 error rate (percent): 0.7;
Fiscal year 2008 total estimate (dollars in millions): 0.0[K];
Fiscal year 2008 error rate (percent): 0.0[K].
Total:
Fiscal year 2007 total estimate (dollars in millions): $49,286.8;
Fiscal year 2008 total estimate (dollars in millions): $72,095.9.
Source: GAO's analysis of agencies' fiscal year 2007 and fiscal year
2008 performance and accountability reports (PAR), agency financial
reports (AFR), or annual reports. Figures were rounded to the nearest
tenth for reporting purposes.
[A] Agency combined with program above.
[B] Agency reported that the annual improper payment amount or error
rate was zero.
[C] Agency program estimate or error rate rounded to zero for purposes
of this testimony.
[D] Agency reported that it had no programs or activities susceptible
to significant improper payments.
[E] Fiscal year 2007 estimate or error rate was updated to the revised
estimate or error rate reported in the fiscal year 2008 PAR, AFR, or
annual report.
[F] Agency did not address improper payments or IPIA in its PAR, AFR,
or annual report for fiscal year 2007, fiscal year 2008, or both.
[G] Agency PAR, AFR, or annual report was not available as of the end
of fieldwork.
[H] We obtained this amount from the Office of Management and Budget
(OMB).
[I] Agency reported that it would estimate improper payments in the
future for this program.
[J] Agency did not report an annual improper payment estimate or error
rate for this program.
[K] Agency reported that it received a waiver from OMB, exempting it
from the requirement to annually report improper payment information,
because the program's estimate was below the reporting threshold
(exceeding $10 million and 2.5 percent of program payments) for 2
consecutive years.
[End of table]
[End of section]
Footnotes:
[1] Pub. L. No. 107-300, 116 Stat. 2350 (Nov. 26, 2002).
[2] IPIA 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. It includes
any payment to an ineligible recipient, any payment for an ineligible
service, any duplicate payment, payments for services not received, and
any payment that does not account for credit for applicable discounts.
[3] OMB's guidance defines significant improper payments as those in
any particular program that exceed both 2.5 percent of program payments
and $10 million annually.
[4] OMB, Circular No. A-123, Appendix C, Requirements for Effective
Measurement and Remediation of Improper Payments (Aug. 10, 2006).
[5] In their fiscal year 2008 PARs, AFRs, or annual reports, certain
federal agencies updated their fiscal year 2007 improper payment
estimates to reflect changes since issuance of their fiscal year 2007
PARs, AFRs, or annual reports. These updates decreased the
governmentwide improper payment estimate for fiscal year 2007 from $55
billion to $49 billion, primarily because HHS updated Medicaid's
improper payment estimate for fiscal 2007 from $12.9 billion (or 18.45
percent error rate) to about $6.6 billion (or 4.7 percent error rate),
a $6.3 billion decrease (or 13.75 percent error rate decrease). HHS
reported in its fiscal year 2008 AFR that the $12.9 billion estimate
for fiscal year 2007 was preliminary based on two quarters (or six
months) of fiscal year 2006 claim payments. In fiscal year 2008, HHS
completed its review of fiscal year 2006 claim payments and derived a
significantly lower error rate of 4.7 percent or $6.6 billion for
fiscal year 2007.
[6] The four programs are: Child Care and Development Fund, State
Children's Health Insurance Program, Temporary Assistance for Needy
Families, and the Airport Improvement Program. Prior to the
governmentwide IPIA reporting requirements beginning with fiscal year
2004, former section 57 of OMB Circular No. A-11 required certain
agencies to submit similar information, including estimated improper
payment target rates, target rates for future reductions in these
payments, the types and causes of these payments, and variances from
the targets and goals established. In addition, these agencies were to
provide a description and assessment of the current methods for
measuring the rate of improper payments and the quality of data
resulting from these methods.
[7] Means-tested programs provide cash and noncash benefits to
individuals and families whose income falls below defined levels and
who meet certain other eligibility criteria established for each
program. Means-tested programs provide assistance in eight areas of
need: (1) cash assistance; (2) medical benefits; (3) food and
nutrition; (4) housing; (5) education; (6) other services, such as
child care; (7) jobs and training; and (8) energy aid.
[8] State-administered programs are federal programs that are managed
on a day-to-day basis at the state level to carry out program
objectives.
[9] GAO, Means-Tested Programs: Information on Program Access Can Be an
Important Management Tool, [hyperlink,
http://www.gao.gov/products/GAO-05-221] (Washington, D.C.: Mar. 11,
2005); Means-Tested Programs: Determining Financial Eligibility Is
Cumbersome and Can Be Simplified, [hyperlink,
http://www.gao.gov/products/GAO-02-58] (Washington, D.C.: Nov. 2,
2001).
[10] The four agencies are the Departments of Defense, Homeland
Security, Health and Human Services, and Transportation.
[11] [hyperlink, http://www.gao.gov/products/GAO-08-438T].
[12] HHS's estimated improper payments for Medicare and Medicaid do not
include an estimate for Medicare Prescription Drug Benefit (Part D).
Further, the improper payment estimate for Medicaid represents only the
federal share and not the portion funded by the state.
[13] The Medicare FFS improper payment estimate is based on a review of
2007 claims.
[14] Medicaid is a federal and state program that is financed by the
federal government and states according to a formula established in
law.
[15] The total Medicaid improper payment estimate for fiscal year 2008
was $32.7 billion of which $14.1 billion was the state's share.
[16] GAO, High-Risk Series: An Update, [hyperlink,
http://www.gao.gov/products/GAO-09-271] (Washington, D.C.: January
2009).
[17] GAO, Medicare: Improvements Needed to Address Improper Payments in
Home Health, [hyperlink, http://www.gao.gov/products/GAO-09-185]
(Washington, D.C.: Feb. 27, 2009); Medicare: Covert Testing Exposes
Weaknesses in the Durable Medical Equipment Supplier Screening Process,
[hyperlink, http://www.gao.gov/products/GAO-08-955] (Washington, D.C.
July 3, 2008).
[18] GAO, Improper Payments: Federal and State Coordination Needed to
Report National Improper Payment Estimates on Federal Programs,
[hyperlink, http://www.gao.gov/products/GAO-06-347] (Washington, D.C.:
Apr. 14, 2006).
[19] [hyperlink, http://www.gao.gov/products/GAO-09-271].
[End of section]
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