Law championed by Senator Carper will curb wasteful and improper payments by federal agencies
Apr 15 2011
WASHINGTON – Sen. Tom Carper (D-Del.), Chairman of the Senate Subcommittee on Federal Financial Management, welcomed White House action to implement the Improper Payments Elimination and Recovery Act of 2010, a new law authored by Sen. Carper that requires federal agencies to take steps to eliminate the errors that lead to wasteful spending and fraud.
"The rules released yesterday by the White House to enforce the new improper payments law will mean that all federal agencies will have to do a much better job scrutinizing how they pay their bills," said Sen. Carper. "At a time when we're facing a massive federal deficit and contemplating deep cuts to federal spending, last year's $125 billion in improper payments underscores the critical need for every federal agency to get serious about curbing waste and fraud."
Passage of the Improper Payments Elimination and Recovery Act of 2010 (July 22, 2010) included key changes that will help agencies continue to assess and reduce improper payments in their programs. Specifically, the law provides important tools to address government waste, including requiring agencies to produce corrective action plans with targets to reduce overpayment errors, mandating all agencies that spend more than $1 million to perform recovery audits on all of their programs to actually recoup the overpayments they make, and penalizing agencies that fail to comply with current accounting and recovery laws.
In addition to the rules the White House released that agencies must follow to comply with the new improper payments law, the Government Accountability Office (GAO) released a report today showing the agency by agency breakdown of improper payments for Fiscal Year 2010. Overall, the GAO found $125 billion in total overpayments throughout the federal government. The $125 billion for Fiscal Year 2010 represents a $15 billion increase in the dollar value of improper payments made by federal agencies from Fiscal Year 2009, but a reduction in the percentage of improper payments to 5.495 percent. Several agencies decreased their improper payments rates and some agencies are making progress in meeting goals for these rates. Also, the amounts recouped from recovery auditing continue to increase as agencies increase recovery auditing and the use of recovery auditing contractors.
"The good news is that many agencies have taken real steps to prevent improper payments," continued Sen. Carper. "The bad news is that we still have a long way to go in reducing the amount of improper payments made by federal agencies. But as the saying goes, 'the journey of a thousand miles begins with a single step.' Our improper payments law is that all important first step, requiring all federal agencies to take strong actions to curb overpayments and other wasteful practices."
"Several agencies have already made important strides in recouping overpayments and that is encouraging," continued Sen. Carper. "For example, Medicare identified and recovered more than $75 million in overpayments during the past year. All federal agencies should have programs in place to prevent improper payments, but when an overpayment is made, the federal government should find that money, and return it to the treasury. The White House should be applauded for moving quickly to implement the new law requiring all agencies to curb improper payments. I am also pleased that the Administration is taking the initiative on further actions, including enacting the 'Do Not Pay List' and innovative uses of private sector partnerships, such as accessing commercial databases to identify people committing fraud."
The Improper Payments Elimination and Recovery Act of 2010 (July 22, 2010) included key changes that will help agencies continue to assess and reduce improper payments in their programs. Specifically, the law provides important tools to address government waste, including requiring agencies to produce corrective action plans with targets to reduce overpayment errors, mandating all agencies that spend more than $1 million to perform recovery audits on all their programs to actually recoup the overpayments, and penalizing agencies that fail to comply with current accounting and recovery laws
In the past year the Administration has taken the following actions to help reduce and prevent improper payments in the federal government:
- Issuance of Executive Order 13520 "Reducing Improper Payments" on November 20, 2009 and implementing guidance (M-10-13 – Subject: Issuance of Part III to OMB Circular A-123, Appendix C), which boosts transparency in the reporting of improper payments, holds agencies accountable for waste and creates incentives for reporting and reduction of improper payments.
- Issuance of a memorandum "Enhancing Payment Accuracy Through a 'Do Not Pay List'" on June 18, 2010, which requires agencies to consult appropriate data sources prior to making a payment to ensure the recipient is eligible.
- Issuance of a memorandum "Finding and Recapturing Improper Payments" on March 10, 2010, which requires agencies to expand their use of audits to recovery improper payments.
For more information on improper payments in the federal government, please visit www.paymentaccuracy.gov.