New data from the White House’s Office of Management and Budget (OMB) finds that Federal government improper payments increased in 2023, with the Federal improper payment rate for fiscal year (FY) 2023 coming in at 5.43 percent – a slight uptick from the 5.12 percent in FY2022.
In a Nov. 22 blog post, OMB attributed the uptick to an increase in payments with insufficient documentation.
Notably, the agency said that if three pandemic relief programs – the Pandemic Unemployment Assistance program, the Paycheck Protection Program, and the COVID-19 Economic Injury Disaster Loan program – are excluded, the improper payment rate was 4.03 percent for FY2023 – the lowest level since 2014.
OMB made it clear that “improper payments are not a measure of fraudulent payments, nor are they a measure of monetary losses to taxpayers.” For instance, an improper payment can include both overpayments and underpayments.
“If an agency has insufficient documentation when performing its improper payment review to determine whether a particular payment was made properly, the entire payment is counted toward the improper payment rate despite there being no evidence to support the payment was made improperly,” OMB explained. “Even in cases where improper payments are subsequently recovered, they are still counted as improper.”
Nevertheless, OMB said that notable gains were made in the last year, including by the Centers for Medicare & Medicaid Services (CMS).
CMS’s Medicaid and Children’s Health Insurance Program (CHIP) reported significant reductions in improper and insufficient documentation payment rates. In FY2023, OMB said these programs saw a reduction of their improper and insufficient documentation payment rates by 7.04 percent and 13.94 percent respectively.
OMB also pointed out that the Department of Labor’s (DoL) Pandemic Unemployment Assistance (PUA) one-time improper and insufficient documentation payment rate – which covered the entire program period beginning in 2020 – was included in this year’s government-wide improper payment rate.
Although more than 60 percent of PUA payments were made in 2020, OMB said it was included because DoL reported the program’s improper payment rate for the first time in August 2023.
“While the PUA methodology of including all payments in a single rate reduces the accuracy of the government-wide improper and insufficient documentation payment rate by attributing the entire program to FY2023, development of this full-program improper and insufficient documentation payment rate will help guide future program design decisions,” OMB said.
The Biden administration and DoL have already made investments to improve the reliability and accuracy of state unemployment insurance (UI) systems going forward.
For example, DoL announced over $374 million in grants earlier this year to strengthen state UI systems. The agency’s investments look to strengthen the UI program’s IT infrastructure to protect the system from fraud, promote equitable access, and increase timely access to benefits.
“OMB continues to see progress in addressing improper payments, especially when reviewing ongoing and recurring programs, but more work remains,” OMB concluded. “As the president has said, ‘We have to prove democracy still works, that our government works and can deliver for our people’ – and that means continuing to make sure that we safeguard taxpayer dollars in a manner deserving of public trust.”
