Improper payments—payments that should not have been made or were made in the incorrect amount—have consistently been a government-wide issue despite efforts to identify their root causes and reduce them. In fact, the government still doesn’t fully understand the size of federal improper payments, partly because it doesn’t have complete, reliable, or accurate estimates.
Federal agencies made an estimated $247 billion in improper payments in FY 2022, and cumulative federal improper payment estimates have totaled about $2.4 trillion since FY 2003. Approximately 78% of the FY 2022 total (about $194 billion) was reported by five program areas.
Programs with the Largest Percentage of Improper Payments for Fiscal Year 2022
However, the $247 billion total does not include estimates for certain risk-susceptible programs, such as the Department of Health and Human Services’ Temporary Assistance for Needy Families program.
There are a number of steps that Congress and federal agencies could take to help reduce federal improper payments and save taxpayer funds.
To better prepare for future emergencies like COVID-19, hurricanes, and wildfires, agencies could do more to manage the risk of payment errors in federal emergency assistance programs. For instance, they could identify and assess risks, design procedures to verify program eligibility, monitor their effectiveness, and get information on payment errors.
Medicaid could improve oversight to ensure that claims aren’t paid to ineligible medical providers, including those who have suspended or revoked medical licenses.
Many agencies were able to distribute funds quickly when the COVID-19 pandemic began, but the tradeoff was that they did not have systems in place to prevent and identify payment errors and fraud. Congress could help improve how federal funds are monitored to ensure that, in future emergencies, agencies can act quickly with proper payment safeguards in place.
Congress could help agencies identify susceptible programs, develop reliable methods for estimating improper payments, and implement effective corrective actions.
Some agencies have made progress reducing the number of such errors in their programs. For instance, some have improved the accountability of senior leaders for their programs. Others have used new technology to automate the payment process. Other agencies could use such techniques to reduce their own payment errors.