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LEGISLATION FAILS TO LOWER IMPROPER PAYMENTS IN GOVERNMENT-FUNDED PROGRAMS

Legislation like the Improper Payments Information Act (IPIA P.L. 107-300) and Executive Order 13520 sought to address improper payments in government-funded programs. IPIA instructed federal agencies to report on the number of improper payments occurring and lay out what actions are being taken to lower them. Order 13520 worked to pinpoint high-priority programs and increase transparency. Agencies were mandated to provide projected reduction estimates and details on how they would work to obtain them. In spite of these pieces of legislation, government-funded programs continue to lose billions of dollars as a result of payments made in error.

According to the GAO, federal entities estimated about $141 billion in improper payments in 2017. The Congressional Research Service (CRS) also reported and determined that the 20 high-priority programs identified due to Order 13520, accounted for 96% of the $141 billion. In the years to come, the CRS predicts that these programs will account for 90% of all improper payments.

STATUTE COMPLIANCE ISSUES

The GAO has regularly touched on the following four compliance issues in their reporting regarding improper payments:

Federal entities struggle to gather accurate eligibility data.

Agencies do not have dependable methods for identifying improper payments. 

Entities fail to perform compliance efforts mandated by law.

Agencies go through the motions and see the compliance measures as a way to keep oversight at bay.

While agencies work to comply with statues to report on improper payments, none of them require that agencies reduce payments made in error. Therefore, improper payment rates continue to rise and agencies engage in costly measures to report

The CRS report stated, "nearly half of the high-priority programs have shown no improvement. Specifically, the error rates for seven programs have increased since they first began reporting data, and the error rate for one program has remained unchanged. Moreover, while the error rates for twelve programs have decreased, the decline has been less than 10% for five programs. In some cases, program error rates have not improved."

IMPROPER PAYMENTS REDUCED WITH QUALITY DATA

In order to reduce improper payments, the federal government needs to target the root causes for these payments within high priority programs while at the same time implementing technology solutions.

CMS is one agency in particular that has implemented innovative processes, such as its Fraud Prevention System, to deal with improper payments among its programs. Following the compliance initiatives established in the Improper Payments Elimination and Recovery Act of 2010 (H.R. 3393), in 2018 CMS reported its lowest improper payment rate in eight years.

The agency's Fraud Prevention System is an IT solution that takes advantage of data analytics to identify when mistakes or intentional behavior may result in improper payments or indicate fraud. CMS believes that the system will yield a 20% savings increase.

According to the agency, "CMS employs multi-faceted efforts to target the root causes of improper payments, with an emphasis on prevention-oriented activities. Actions to prevent and reduce improper payments include: policy clarifications and simplifications; prior authorization initiatives that ensure applicable coverage, payment, and coding rules are met before services are rendered; a targeted probe and educate medical review strategy that focuses on outlier providers, limits the number of medical records requested, and puts emphasis on education and assistance in correcting claims errors; and provider education on Medicare policy."

Legislation has helped to bring the problem of improper payments into focus for agencies and government officials. Having said that, these measures primarily revolve around compliance and reporting as opposed to reducing improper payments. In order to stop improper payment rates from rising further, agencies need to look to innovate data solutions to identify and prevent fraud, waste, and abuse.

Read more here.