House Government Operations Subcommittee Chairman Gerry Connolly, D-Va., said today he is preparing legislation that aims to reduce the Federal government’s ballooning improper payments rate – which amounted to at least $281 billion in fiscal year 2021 and was greatly exacerbated by fraud in connection with COVID-19 relief programs including unemployment insurance (UI) administered by states whose IT systems were overwhelmed by demand.
News of the government’s soaring improper payment rate broke in January when the Office of Management and Budget (OMB) reported that improper payments rose on a governmentwide basis to 7.2 percent for FY2021, driven in part by big jumps in (UI) fraud. According to OMB, the FY2021 UI program’s improper payment rate jumped to 18.7 percent – roughly 5-8 percentage points higher than during other non-pandemic years.
By contrast, Federal government improper payments – defined as payments that should not have been made or were made for incorrect amounts – totaled 5.6 percent for FY2020.
Rep. Connolly said at a subcommittee hearing today that the 7.2 percent improper payment rate for FY2021 was derived from data showing that 86 “high-risk” Federal programs had some form of improper payments. “Of their 3.9 trillion dollars in outlays, over 7.2% were paid improperly. That’s $281 billion dollars in improper payments–more than any other fiscal year since fiscal year 2003,” he said.
Legislation Looks to Data, IT for Fixes
The congressman said his planned legislation will aim to put in place better management of the governmentwide problem and will rely on the use of better data and improved IT capabilities to reverse the trend of increasing incorrect payments.
Rep. Connolly said the legislation would establish a Federal office “dedicated to program integrity to implement robust oversight of federal agencies’ program integrity efforts.”
“Importantly, this office will shift from a compliance-based to an action-oriented approach by requiring federal programs with significant risk of improper payments to implement proactive, data-driven, and outcome-oriented antifraud controls,” he said.
“In addition, the bill will ensure that agencies minimize the burden of their anti-fraud controls on the public,” Rep. Connolly said. “By focusing its efforts on data collection, sharing, and analysis, this new office will enhance program integrity in the highest-priority federal programs without putting undue burden on those programs’ customers.”
The congressman emphasized the crucial role of data, data sharing, and capable IT infrastructure in tackling the problem.
“I want to highlight that good, quality data – and the modern IT infrastructure that can support its collection, sharing, and analysis – are foundational to tackling improper payments,” Rep. Connolly said. “Data are key to reducing paperwork errors and fraud without putting burden on the public.”
“Using data as a solution is not controversial: last July, the Office of Management and Budget and the Pandemic Response Accountability Committee issued a payment integrity alert on the use of automation and data analytics to, ‘support agency missions while mitigating payment integrity risks,’” he said. “Using and matching datasets to identify potential improper payments, fraudulent or otherwise, is fundamental and nonpartisan – we just need the will to make it happen.”
The goal of shrinking the government’s improper payments has clear bipartisan support among subcommittee leadership.
Rep. Jody Hice, R-Ga., ranking member of the subcommittee, said that Republicans and Democrats may disagree on the necessity of some government programs, but “we know with certainty that government assistance will be totally ineffective if those funds never even reach the intended recipients.”
“Improper payments have been a thorn in the side of our government probably forever,” he said, adding, “the problem, however, is certainly getting worse and it was getting worse even before COVID. The trillions of dollars that were spent in pandemic assistance ushered in a wave of fraud, quite frankly, the likes of which we’ve never experienced before.”
Rep. Hice acknowledged the government’s focus on the problem but said it was past time to take stronger action. “We don’t need more meetings,” he said, “we need action to stop the fraud and the abuse that’s been taking place.”
The congressman said he also wished that a Biden administration representative was among the witnesses at today’s hearing to explain the current state of play on the issue. “This should be a top priority, this should be considered an emergency for this administration,” Rep. Hice said.