A new report from the U.S. Government Accountability Office (GAO) finds that over $240 billion was improperly distributed by the Federal government during fiscal year 2022.

While the improper payment total stands at $240 billion, that doesn’t mean that amount of money was necessarily lost or stolen. Rather, it represents the tally of payments that either should not have been made, or were made in the incorrect amount.

The report found that that across 18 Federal agencies, about $200 billion of the total $247 billion is comprised of overpayments to vendors and other organizations that agencies conduct business with.

“Reducing improper payments is critical to safeguarding federal funds,” said Hannah Padilla, director of Financial Management and Assurance at GAO.

Other improperly distributed funds noted in the GAO report include underpayments of $5.3 billion, unknown payments of about $32.7 billion, and technically improper payments of $9 billion.

Although many different government agencies and programs have cited for improper payments, over 50 percent of the FY2022 payments total came from both Medicare and Medicaid.

“For fiscal year 2022, 18 agencies reported an estimated $247 billion in improper payments across 82 programs,” GAO said. “Approximately 78 percent of this total (about $194 billion) was reported by five program areas: (1) Medicaid ($81 billion), (2) Medicare ($47 billion), (3) the Paycheck Protection Program ($29 billion), (4) Unemployment Insurance ($19 billion), and (5) Earned Income Tax Credit ($18 billion).”

“Specifically, we note that the federal government is unable to determine the full extent to which improper payments occur or to reasonably assure that appropriate actions are taken to reduce them,” the agency said.

The report concludes by that agencies need to take action on previous GAO recommendations that aim to cut the improper payment rate.

Some of the recommendations include:

  • The Small Business Administration (SBA) should develop a strategy that outlines specific actions to monitor and manage fraud risks in the Paycheck Protection Program on a continuous basis;
  • The Centers for Medicare and Medicaid Services (CMS) – a component of the Department of Health and Human Services, should institute a process to routinely assess and take steps to ensure that Medicare and Medicaid documentation requirements are effective at demonstrating compliance with coverage policies while appropriately addressing program risks;
  • To better monitor agency use of the Treasury Department’s Do-Not-Pay (DNP) system once a strategy has been developed, the Director of OMB should develop and implement monitoring mechanisms—such as goals, benchmarks, and performance measures—to evaluate agency use of the DNP working system.

“By working collaboratively to address the open priority recommendations and matters for congressional considerations, federal agencies and Congress can make progress toward reducing improper proper payments and improving payment integrity,” said Padilla.

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Jose Rascon
Jose Rascon
Jose Rascon is a MeriTalk Staff Reporter covering the intersection of government and technology.