Statements and Speeches

WASHINGTON - Today, Sen. Tom Carper (D-Del.), Chairman of the Subcommittee on Federal Financial Management, Government Information, Federal Services, and International Security, testified before the U.S. House of Representatives Subcommittee on Government Organization, Efficiency and Financial Management hearing, "Solutions Needed: Improper Payments Total $115 Billion in Federal Misspending."

For more information on the hearing or to watch a webcast of the hearing, please click here.

A copy of his testimony, as prepared for delivery, follows:

Let me begin by thanking Chairman Todd Platts, Ranking Member Ed Towns and all of the panel members for the opportunity to testify this morning on the important topic of improper payments.

As everyone in this room knows, we've faced record budget deficits in recent years. Our national debt stands at about $15.4 trillion, well over double what it was just ten years ago. The last time the debt was this high was at the end of World War II. That level of debt was not sustainable then, and it is not sustainable today.

We need to establish a different kind of culture in Washington when it comes to spending. We need to establish a culture of thrift to replace what some would call a culture of spendthrift.

We need to look in every nook and cranny of federal spending – domestic, defense and entitlements, along with tax expenditures – and ask the question "Is it possible to get better results for less money?" If not, is it possible to get better results for the same amount of money we're spending today?

But in order to be effective in that important work of identifying areas where we can spend taxpayers' money more efficiently, we need to sharpen our pencils and stop making the kind of expensive, avoidable mistakes that lead to improper payments.

Before going any further, I think it is important first to explain what it means for a federal agency to make improper payments. An improper payment occurs when an agency pays a vendor for something it didn't receive or, maybe, even pays them twice. It can occur when a recipient has died and is no longer eligible for payment, or when a vendor owes the government money and legally should not be getting a payment until this debt is repaid.

And, of course, sometimes people or companies receive payments that are actually fraudulent.

Federal agencies have estimated improper payments at levels of more than $100 billion annually during the past few years. These payments come from over 70 programs at more than 20 agencies and include programs like Medicare and Medicaid, civilian and military pay at the Department of Defense, and the Federal Emergency Management Agency, to name just a few.

Clearly this level of payment inaccuracy, particularly as the federal government struggles with our massive debt and deficit, is unacceptable.

Fortunately, we can do something about this problem, and if truth be known, we are beginning to make progress. But much more is needed. There are several very real and effective tools available to curb wasteful and fraudulent payments.

Today, I would like to outline some steps that Congress can take now that will make an ever bigger dent in improper payments and help get federal spending back on track.

According to the Government Accountability Office, the federal government made an estimated $121 billion in improper payments in fiscal year 2010. I was encouraged to learn that the early data for fiscal year 2011 shows a slight drop in the level of improper payments to approximately $115 billion, even though more agencies have begun reporting their improper payments. For example, the 2011 estimate includes improper payments for the Medicare prescription drug program for the first time.

Having said that, error rates – and the amount of money lost to avoidable errors – still remain at unacceptably high levels. While agencies are beginning to make progress in implementing new anti-waste and fraud controls and procedures, I believe that a lot more work needs to be done to identify, recover, and prevent improper payments.

But what disturbs me about the problem here in the federal government is that we seem to make these kinds of mistakes at a rate much higher than a business or the average family would tolerate or could afford. And we keep making them over and over again.

But, in 2010, Congress passed and President Obama signed into law the Improper Payments Elimination and Recovery Act. This new law is aimed at making agencies and agency leadership far more accountable for the expensive mistakes they make. It represents a bipartisan and bicameral success in preventing waste and fraud. The 2010 law basically does four things. It stipulates that federal agencies have to identify improper payments. It says that they've got to stop making them and that agencies should seek to recover improper payments where possible. Finally, it directs that agency managers be evaluated in part by how well their agency complies with the new law.

A wide variety of ideas have been put forward on how to further curb improper payments, and in the process reduce our budget deficit and begin whittling down our debt as well. For example, recognizing that more than half of all federal improper payment estimates are from the Medicare and Medicaid program, last year Sen. Tom Coburn and I teamed up to introduce legislation to curb waste and fraud in both programs. The bipartisan legislation – S. 1251, the Medicare and Medicaid Fighting Fraud and Abuse to Save Taxpayer Dollars Act – would take a series of common sense steps to identify and prevent waste and fraud.

It drills down into specific waste and fraud challenges within health care, such as physician identity theft, the need for improved fraud data sharing between the federal government and state agencies, and quicker identification of improper payments to medical providers.

Our bipartisan legislation has attracted 33 cosponsors in the Senate. There is now a companion bill in the House led by Congressmen John Carney and Peter Roskam. Our legislation has garnered the support of a wide range of organizations, including the National Taxpayer's Union, Citizens Against Government Waste, and AARP. Most of the provisions of these bills are based on Government Accountability Office and inspector general recommendations.

Today, I would like to focus on an important new measure that would help all federal agencies prevent, detect and recover improper payments. Bipartisan legislation that I co-authored with Sen. Susan Collins, S. 1409, the Improper Payments Elimination and Recovery Improvement Act, is now making its way through the Senate.

This measure builds upon the 2010 improper payments law. Our new bill recently passed by Unanimous Consent in the Homeland Security and Government Affairs Committee. I am hopeful that it will soon see floor action in the Senate.

Let me now talk about just a few of the provisions in the bill.

Too often, federal agencies make improper payments to individuals who could easily be identified as ineligible. Some of these individuals are applying for benefits using a false address. Others may not meet the criteria for eligibility.

Let's take, for example, a person with a job applying for unemployment benefits using the name of someone who may actually be deceased. Of course, those watching this hearing may ask the obvious question of why a federal agency would ever pay unemployment benefits to an individual who has died or to someone who is trying to commit fraud?

Unfortunately, the answer is that, all too often, agencies simply don't do a very good job of coordinating their efforts to prevent improper payments or communicating about best practices. Many also have antiquated databases and computer systems for tracking basic payment information. And all too often, we simply don't allow agencies to access the information they need to avoid giving scarce taxpayer dollars to the wrong people.

To their credit, the Obama Administration, through executive action, is establishing a "Do Not Pay Initiative." This effort involves screening recipients of federal funds against a list of those ineligible to receive those funds before we cut a check. For example, before an agency could award a contract to a company, the agency would have to cross check against the "Do Not Pay" database, which will include a central, comprehensive database of companies and entities that are no longer allowed to do work with the Federal government because of a fraud conviction or some other reason. Our improper payments legislation establishes the Do Not Pay Initiative in law throughout the federal government, makes several important improvements to the initiative, and adds some tools and procedures to help agencies access data.

The legislation also addresses what is called "death fraud" and other improper payments to deceased individuals. In too many instances, agencies pay benefits to individuals who are deceased and are therefore no longer eligible for payments under program rules. For example, the Office of Personnel Management Inspector General reported that $601 million in improper payments were made to federal retirees found to have died during the past five years. However, such payments to dead people were not unique to this one program. Last year, one of my home state newspapers reported that, 28 years after a Delaware woman had died, one of her relatives was still fraudulently collecting and cashing her Social Security checks. Improving the collection, verification, and use by federal agencies of data on individuals who have died will help curb hundreds of millions if not billions of dollars in improper payments.

Our legislation requires that the Office of Management and Budget, in consultation with other agencies and stakeholders, identify specific solutions and report back to Congress 180 days after passage.

The legislation also includes provisions that strengthen and make more consistent the methods used by agencies to estimate improper payments. This has been an issue identified by both the Government Accountability Office and the inspector general community.

Finally, the bill establishes a series of recovery audit contracts to ensure that agencies actually recover overpayments. Recovery Audit Contracting has proven very successful in the private sector as well as in several federal agencies, including within the Medicare program. There, we have witnessed recoveries of improperly spent taxpayer dollars approaching $2 billion in recent years, and we expect those recoveries to continue to grow.

I anticipate that the Senate will look as favorably on S. 1409 as it did on the Improper Payments Elimination and Recovery Act. I want to invite the Members of this panel and the House of Representatives to join us in this new effort by introducing a companion bill to S. 1409, improving it where possible and passing it.

Let me conclude by noting that we are here today in large part because we believe that we have a moral imperative to ensure that the scarce resources we put into federal programs are well spent. We must use every tool available to put our fiscal house back in order and give the American people the government they expect and deserve. It is the right thing to do on behalf of the taxpayers of this country who entrust us with their hard-earned money. By working together on this latest in a series of common sense initiatives, we can take another important step forward in earning their trust once again.

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