Congress Presses Forward on Improper Payments

Today, the House passed the Improper Payments Elimination and Recovery Act (IPERA), legislation that will help rein in improper payments and save taxpayer dollars. As I’ve written about before, "improper payment" is an umbrella term that covers a number of financial transactions — overpayments to individuals or firms is one example; benefit payments to ineligible program participants is another. That is to say, an improper payment occurs when the federal government pays the wrong amount, the wrong person, or at the wrong time. In 2009, taxpayers lost $98 billion in wasteful improper payments by the federal government to individuals, organizations, and contractors — with $54 billion of that amount stemming from Medicare and Medicaid.  These errors and mistakes are unacceptable — and the passage of the IPERA bill is an important step forward in curbing these wasteful payments.
This legislation, sponsored by Congressman Patrick Murphy of Pennsylvania, would do the following:    
  • Put into law a monetary and percentage threshold for defining a program as susceptible to significant improper payments and make that threshold more rigorous over time.
  • Reduce the monetary thresholds that define what agencies and programs must conduct payment recapture audits from $500 million to $1 million. Payment recapture audits are investigations in which specialized private sector auditors use cutting-edge technology and tools to scrutinize government payments and then find and reclaim taxpayer funds made in error or gained through fraud. These auditors can be compensated based on the amount of improper payments they identify that are then reclaimed — providing a powerful incentive to find every error;
  • Expand the payment recapture audit requirement beyond contract payments to include benefit, grant, and loan payments;
  • Add sanctions for programs that are deemed non-compliant with the law; and
  • Allow OMB to conduct pilots to test accountability mechanisms with appropriate incentives and consequences tied to success in eliminating and recovering program errors.
Congressman Murphy’s bill (which Senator Tom Carper is pushing in the Senate) builds on the executive order the President issued in November to curb improper payments by boosting transparency, holding agencies accountable, and creating strong incentives for compliance. As we work to implement this executive order, this legislation will help the federal government cut down on waste and make the right payments to the right people at the right time.

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