LEGISLATION FAILS TO LOWER IMPROPER PAYMENTS IN GOVERNMENT-FUNDED PROGRAMS

Legislation like the Improper Payments Information Act (IPIA P.L. 107-300) and Executive Order 13520 looked to address improper payments in government-funded programs. IPIA ordered federal agencies to report on the number of improper payments occurring and lay out what measures are being taken to lower them. Order 13520 worked to pinpoint high-priority programs and increase transparency. Agencies were required to submit projected reduction estimates and specifics on how they would work to obtain them. Despite these pieces of legislation, government-funded programs continue to lose billions of dollars due to payments made in error.

According to the GAO, federal entities estimated about $141 billion in improper payments in 2017. The Congressional Research Service (CRS) also reported and discovered that the 20 high-priority programs identified as a result of Order 13520, accounted for 96% of the $141 billion. In the years ahead, the CRS anticipates that these programs will account for 90% of all improper payments.

STATUTE COMPLIANCE ISSUES

In their improper payment reporting, the GAO has regularly brought up the following four compliance issues:

• Federal entities struggle to collect accurate eligibility data.

• Agencies do not have reliable methods for identifying improper payments.

• Entities fail to steer resources towards compliance efforts mandated by law.

• Agencies go through the motions and see the compliance measures as a way to keep oversight at bay.

Surprisingly, while agencies struggle to comply with statues to report on improper payments, none of them require that agencies decrease payments made in error. Consequently, improper payment rates continue to rise and agencies engage in costly measures to report.

The CRS report specified, "nearly half of the high-priority programs have shown no improvement. Specifically, the error rates for seven programs have increased since they first began reporting data, and the error rate for one program has remained unchanged. Moreover, while the error rates for twelve programs have decreased, the decline has been less than 10% for five programs. In some cases, program error rates have not improved."

IMPROPER PAYMENTS LOWERED WITH QUALITY DATA

To reduce improper payments, the federal government will need to make a focused effort in targeting the root causes for these payments within high priority programs while at the same time implementing technology solutions.

CMS is one agency in particular that successfully implemented existing initiatives and innovative processes, such as its Fraud Prevention System, to deal with improper payments within its programs. Following the compliance efforts established in the Improper Payments Elimination and Recovery Act of 2010 (H.R. 3393), last year CMS reported its lowest improper payment rate in eight years.

The agency's Fraud Prevention System is an IT solution that takes advantage of data analytics to detect when mistakes or intentional behavior may result in improper payments or indicate fraud. CMS says that the system will yield a 20% savings increase.

According to the agency, "CMS employs multi-faceted efforts to target the root causes of improper payments, with an emphasis on prevention-oriented activities. Actions to prevent and reduce improper payments include: policy clarifications and simplifications; prior authorization initiatives that ensure applicable coverage, payment, and coding rules are met before services are rendered; a targeted probe and educate medical review strategy that focuses on outlier providers, limits the number of medical records requested, and puts emphasis on education and assistance in correcting claims errors; and provider education on Medicare policy."

Legislation has helped to bring the problem of improper payments into focus for agencies and government officials. Having said that, the statues directed by legislation are costly and primarily revolve around compliance and reporting as opposed to reducing improper payments. In order to stop improper payment rates from rising further, agencies need to look to innovate quality data solutions to identify and prevent fraud, waste, and abuse.

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