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Audit (A-17-14-52000)

04-15-2014
U.S. Department of Health and Human Services Met Many Requirements of the Improper Payments Information Act of 2002 but Did Not Fully Comply for Fiscal Year 2013

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Summary

OIG is required to review and report the Department's annual Agency Financial Report (AFR) and accompanying material to determine compliance with the Improper Payments Information Act of 2002 (IPIA) as amended by the Improper Payments Elimination and Recovery Act of 2010 (IPERA) and the Improper Payments Elimination and Recovery Improvement Act of 2012. OIG must review the AFR of the most recent fiscal year (FY) to determine whether the agency conducted a program-specific risk assessment to identify each program or activity that may be susceptible to significant improper payments and reported specific information on those programs in its AFR, including whether the rate of improper payments was less than 10 percent. OIG must also evaluate the accuracy and completeness of agency reporting and evaluate agency performance in reducing and recapturing improper payments.

Eight programs were deemed by the Office of Management and Budget to be susceptible to making significant improper payments. For six programs (Medicare Fee-For-Service (FFS), Medicare Advantage, Medicare Prescription Drug Benefit, Medicaid, Foster Care, and Child Care Development Fund), the Department reported the information required by IPIA as amended by IPERA. For two programs (Temporary Assistance for Needy Families (TANF) and Children's Health Insurance Program (CHIP)), the Department did not meet one or more requirements.

The Department met improper payment reduction targets for four of six programs for which it reported reduction targets in the FY 2012 AFR. Medicare FFS and Medicare Prescription Drug Benefit did not meet their improper payment targets. For CHIP and TANF, a target had not been established for either program in the FY 2012 AFR. The Department cited statutory limitations that prohibit the Department from requiring the States to participate in a TANF improper payment measurement and expects to publish an error rate reduction target for CHIP in its FY 2014 AFR. Also, Medicare FFS reported an improper payment rate that exceeded 10 percent.

Regarding the accuracy and completeness of Department reporting, we did not identify any inaccuracies or gaps in the information reported for six programs, but for CHIP and TANF, we identified incomplete information.

We also evaluated the Department's performance in reducing and recapturing improper payments and identified that the Department has achieved some success in reducing improper payment rates. We noted that the Department reported reductions in rates for five programs for which it reported improper payment rates. However, the Department reported increases in Medicare FFS's and Medicare Prescription Drug Benefit's improper payment rates. In addition, the Department reported increases in the percentage of improper payments identified and recaptured.

The Department made progress on some of our prior recommendations. However, it still has not reported an improper payment estimate for TANF, and we reemphasize our prior recommendation that it do so. Other recommendations are still outstanding, such as reducing error rates below 10 percent and publishing improper payment target rates for CHIP. We will continue to follow up until they are resolved. We did not identify any new issues in this report but continue to recommend that the Department improve its compliance with the IPIA.

In its comments on our draft report, the Department provided information on the status of actions it has taken in response to our previous recommendations. In addition, the Department disagreed with our finding that it did not comply with IPIA with respect to CHIP and requested that we report that it has not established CHIP reductions targets because of a lack of baseline data.

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