Payment Integrity:

Selected Agencies Should Improve Efforts to Evaluate Effectiveness of Corrective Actions to Reduce Improper Payments

GAO-20-336: Published: Apr 1, 2020. Publicly Released: Apr 1, 2020.

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davisbh@gao.gov

 

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Improper payments—those made by the federal government to the wrong person, in the wrong amount, or for the wrong reason—are a significant problem. In fiscal year 2019, government-wide improper payment estimates totaled about $175 billion.

The law requires certain agencies to develop and monitor ways to reduce improper payments and take corrective actions to target their root causes. However, 2 agencies we reviewed did not develop corrective actions that corresponded to the root causes they identified. Further, most agencies did not measure the effectiveness of their actions.

We made 7 recommendations to address these issues.

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Additional Materials:

Contact:

Beryl H. Davis
(202) 512-2623
davisbh@gao.gov

 

Office of Public Affairs
(202) 512-4800
youngc1@gao.gov

What GAO Found

Five out of six agencies used their improper payment estimation results to identify the root causes for the eight programs GAO reviewed. However, the Department of the Treasury (Treasury) used 2006 through 2008 taxpayer data to identify root causes of fiscal year 2018 Earned Income Tax Credit (EITC) improper payments. Without timely data on the true root causes of EITC improper payments, Treasury will lack quality information needed to develop appropriate corrective actions to reduce them.

In addition, only one agency we reviewed—the Department of Veterans Affairs (VA)—adhered to relevant Improper Payments Information Act of 2002, as amended (IPIA), requirements and Office of Management and Budget (OMB) guidance. The Department of Agriculture (USDA) and Treasury did not develop agency corrective action plans corresponding to the identified root causes of improper payments for the Supplemental Nutrition Assistance Program (SNAP) and EITC, respectively. In addition, the remaining three agencies did not have processes in place to either establish planned completion dates, monitor progress, or measure the effectiveness of their corrective actions in reducing improper payments.

Agency Monitoring and Evaluation of Corrective Action Plans for Selected Programs

Program

Did agency establish planned completion dates?

Did agency annually monitor progress?

Did agency annually measure effectiveness?

Supplemental Nutrition Assistance Program

N/A

N/A

N/A

Direct Loan

Pell Grant

Children's Health Insurance Programa

Earned Income Tax Credit

N/A

N/A

N/A

Prosthetic and Sensory Aids Service

Old Age, Survivors, and Disability Insuranceb

Supplemental Security Incomeb

Legend: ✓= yes; ✗= no; N/A = not applicable as agency did not develop corrective actions corresponding to identified root causes of improper payments for the selected programs.

Source: GAO analysis of agencies' corrective action plans and processes. | GAO-20-366

aThe Department of Health and Human Services (HHS) did not have documented procedures for its corrective action plan process.

bSubsequent to our review, the Social Security Administration (SSA) implemented new procedures, including directives to establish planned completion dates and monitor progress.

Unless agencies develop corrective action plans that correspond to root causes of improper payments and implement processes to monitor progress and measure their effectiveness, their ability to ensure that their efforts will reduce improper payments will be limited

Why GAO Did This Study

Improper payments, estimated at almost $175 billion for fiscal year 2019, are a significant problem in the federal government. IPIA and OMB guidance directs agencies to analyze the root causes of improper payments and develop corrective actions to reduce improper payments. This report examines (1) actions that agencies took to identify root causes of improper payments for selected programs, (2) the extent to which their corrective action plans correspond to identified root causes, and (3) the extent to which they monitored progress and evaluated the effectiveness of corrective actions.

GAO analyzed corrective action plans reported in fiscal year 2018 for the following eight programs: Department of Education's Direct Loan and Pell Grant; HHS's Children's Health Insurance Program; SSA's Old Age, Survivors, and Disability Insurance and Supplemental Security Income; Treasury's EITC; USDA's SNAP; and VA's Prosthetic and Sensory Aids Service. GAO selected these programs based, in part, on those programs with at least $1 billion in fiscal year 2018 improper payment estimates.

What GAO Recommends

GAO is making seven recommendations: one each to Education, HHS, and SSA and two each to USDA and Treasury to improve their processes for addressing root causes of improper payments and measure their effectiveness. In their responses, SSA agreed, USDA generally agreed, Education and Treasury neither agreed nor disagreed, and HHS disagreed with GAO's respective recommendation(s). GAO clarified four recommendations and continues to believe all the recommendations are valid.

For more information, contact Beryl H. Davis at (202) 512-2623 or davisbh@gao.gov.

Recommendations for Executive Action

  1. Status: Open

    Comments: In commenting on our draft report, USDA stated that the Food and Nutrition Service should formalize its existing processes into a standard operating procedure to analyze the Supplemental Nutrition Assistance Programs (SNAP) state-level root causes to identify potential similarities among states, in order to improve development and implementation of SNAP agency-level corrective actions, if appropriate.

    Recommendation: The Administrator of FNS should develop and implement a process, documented in policies and procedures, to analyze SNAP state-level root causes to identify potential similarities among the states and develop and implement SNAP agency-level corrective actions, if appropriate, to help address them. (Recommendation 1)

    Agency Affected: Department of Agriculture: Office of the Secretary: Food, Nutrition and Consumer Services: Food and Nutrition Service

  2. Status: Open

    Comments: In commenting on our draft report, USDA stated that a proposed action plan will be developed to revise USDA's procedures for monitoring the progress and measuring the effectiveness of improper payment corrective actions. Processes will focus on the impact corrective actions have on the root causes of improper payments.

    Recommendation: The Secretary of Agriculture should revise USDA's procedures to include processes for monitoring the progress and measuring the effectiveness of improper payment corrective actions. The process for measuring the effectiveness of corrective actions should clearly demonstrate the effect USDA's corrective actions have on reducing improper payments. (Recommendation 2)

    Agency Affected: Department of Agriculture

  3. Status: Open

    Comments: In commenting on our draft report, Education stated that Federal Student Aid (FSA) will continue to evaluate and refine its processes to measure corrective actions and the effectiveness of these actions. Further, Education stated that FSA's measurement of corrective action effectiveness and root cause identification will gain additional precision as FSA collects annual improper payment data and builds upon the new baseline of statistically valid improper payment estimates. Education stated that FSA annually measures the overall effectiveness of its corrective action plans collectively against the improper payment reduction targets, rather than measuring the effectiveness of each individual corrective action. However, OMB guidance directs agencies to measure the effectiveness of each individual corrective action annually.

    Recommendation: The Secretary of Education should revise and document Education's process for measuring the effectiveness of its corrective actions based on its new statistical estimation methodology for Direct Loan and Pell Grant improper payments. This process should clearly demonstrate the effect Education's corrective actions have on reducing improper payments. (Recommendation 3)

    Agency Affected: Department of Education: Office of the Secretary

  4. Status: Open

    Comments: In commenting on our draft report, HHS elaborated on the improper payment corrective action plan process that is called for in OMB guidance. HHS stated that OMB guidance provides agencies the flexibility to measure the effectiveness of corrective actions and believes that this flexibility is vital to its oversight processes to reduce improper payments.

    Recommendation: The Secretary of Health and Human Services should document in policies and procedures HHS's improper payment corrective action plan process. As part of these procedures, HHS should include processes for (1) establishing planned completion dates, (2) monitoring the progress of implementing corrective actions, and (3) measuring the effectiveness of improper payment corrective actions. The process for measuring the effectiveness of corrective actions should clearly demonstrate the effect HHS's corrective actions have on reducing improper payments. (Recommendation 4)

    Agency Affected: Department of Health and Human Services: Office of the Secretary

  5. Status: Open

    Comments: In commenting on our draft report, Treasury stated that each year it indicates in its corrective action plan that IRS will continue to work with Treasury to develop legislative proposals that will improve refundable credit compliance and reduce erroneous payments.

    Recommendation: The Secretary of the Treasury should determine whether Treasury's current improper payment root cause analysis provides sufficiently relevant information that can be used as a basis for proposed corrective actions in reducing EITC improper payments and, if not, update the analysis using more timely data to ensure their reliability for identifying root causes of EITC improper payments. (Recommendation 5)

    Agency Affected: Department of the Treasury: Office of the Secretary

  6. Status: Open

    Comments: In commenting on our draft report, Treasury stated that each year it indicates in its corrective action plan that IRS will continue to work with Treasury to develop legislative proposals that will improve refundable credit compliance and reduce erroneous payments. Although Treasury has made certain legislative proposals, it has not made proposals to specifically help address EITC eligibility criteria issues. Additionally, Treasury's strategy does not include identifying and proposing additional legislative changes needed to help reduce EITC improper payments.

    Recommendation: The Secretary of the Treasury should update Treasury's strategy for addressing the root causes of EITC improper payments to include (1) coordinating with other agencies to identify potential strategies and data sources that may help in determining EITC eligibility and (2) determining whether legislative changes are needed, and developing proposals as appropriate, to help reduce EITC improper payments, such as those related to the inability to authenticate taxpayer eligibility. (Recommendation 6)

    Agency Affected: Department of the Treasury: Office of the Secretary

  7. Status: Open

    Comments: In commenting on our draft report, SSA stated that it will determine the most cost-effective strategies to remediate the underlying causes of payment errors and monitor, measure, and revise the strategies as needed.

    Recommendation: The Commissioner of SSA should develop and implement a process, documented in policies and procedures, to measure the effectiveness of SSA's corrective actions for OASDI and SSI improper payments. This process should clearly demonstrate the effect SSA's corrective actions have on reducing improper payments. (Recommendation 7)

    Agency Affected: Social Security Administration

 

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