OMB: Agencies cut payment errors
By Mary Mosquera
Published on February 1, 2008
Agencies reported an error rate of 3.5 percent, or $55 billion, in 2007 for improper payments for benefits, health care claims and other transactions. But error rates from the original baseline programs reporting in 2004 have steadily fallen from 4.4 percent to 3.1 percent last year.
Agencies have expanded each year since 2004 the number of programs reporting error measurements and also reduced a significant amount of improper payments each year in the past four years since agencies have had to report them, the Office of Management and Budget said.
In 2007, agencies added to the estimate 14 programs that were susceptible to risk of incorrect payments, but Medicaid’s fee-for-service component accounted for the overwhelming majority. Agencies identified $1.9 trillion in program outlays last year to be measured for improper payments and submitted an additional $330 billion in contract payments to recovery audits. As a result, 80 percent of all federal outlays are measured or reviewed for improper payments, OMB said in a memo released Jan. 31. By the end of this fiscal year, agencies will report on 90 percent of high-risk federal outlays.
“Reporting improper payment rates to the public has enabled federal agencies to quickly take effective action to eliminate them,” said Clay Johnson, OMB deputy director for management, at a briefing Jan. 31. “Transparency in goals and performance measures has driven real, significant accountability throughout most of the federal government.”
Most errors result from inaccurate documentation or a lack of supporting information. The results from the past three years of reporting have shown that once agencies have measured and reported program errors, they are able to implement corrective actions to reduce those errors in subsequent years. Many of the improper payments involve decisions made by states for federal payments, said Danny Werfel, OMB acting controller. For example, the Veterans Affairs Department and Army Corps of Engineers have employees to conduct transactions and as agencies implements new technologies, policies and procedures, corrections need to take place around that, but it will take time, he said.
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