Improper Payments at an All-Time High

As we enter calendar year 2017, the Federal government will be dealing with new and continuing payments which could be considered improper. An improper payment is any payment that should not have been made or was made in an incorrect amount. This include overpayments, underpayments, payments made to ineligible recipients, or payments that were not properly documented. Improper payments are always an area of concern for the federal government. For the fourth straight year, the Federal government increased the amount of money described as “improper payments” in 2016.

In an article from Federal News Radio: 1500 AM by Jason Miller, the Government Accountability Office (GAO) is reporting that agencies exceeded $144B in improper payments in fiscal year 2016, up from $137B in 2015. The improper payments increase translates to a higher improper payment rate of 4.67% from 4.39% in 2015. This increase attributes to percentage and dollar amounts increasing in Medicaid, Medicare, loan programs, and earned income tax credit (EITC) programs. According to GAO, those programs are not the only programs and services that attribute to the increase in improper payments. GAO stated in a report released on January 12, “For fiscal year 2016, federal entities reported improper payment error rates that exceeded 10% for 11 risk-susceptible programs, accounting for more than 70% of the government-wide improper payment estimate.”

GAO could not render an opinion on the federal government’s consolidation of their financial statements for 2016. Gene Dodaro, Comptroller General and head of the GAO said, “Given the federal government’s mounting fiscal challenges, it’s essential that it be able to accurately account for its costs, outlays, and assets.” In 2010, Congress passed the Improper Payments Elimination and Recovery Act in order to gain control and reduce improper payments for the last seven plus years. The Office of Management and Budget (OMB) has been in an enduring challenge to reduce improper payments.

St. Michael’s has assisted several DoD Components with improper payments. Often times, we find that root causes stem from a lack of internal controls both systemically and in business processes. Finding solutions to improper payments is a back office function. As one of the premier back office small businesses in the National Capital Region, St. Michael’s will assist your organization in clearing aged improper payments from entitlement systems and fixing business processes to prevent future failures from occurring.