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 2014
The Improper Payments Elimination and Recovery Act of 2010 (IPERA) requires OIGs to review and report on agencies' annual improper payment information included in their Agency Financial Reports (AFRs) to determine compliance with the Improper Payments Information Act of 2002 (IPIA) as amended by the IPERA as well as the Improper Payments Elimination and Recovery Improvement Act of 2012 (IPERIA). 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. In addition, the Disaster Relief Appropriations Act (DRAA) provides that all programs and activities receiving funds under the DRAA are deemed to be "susceptible to significant improper payments" for the purposes of the IPIA. The program or activities that received funding under the DRAA are required to report and calculate an improper payment estimate. OIG may also evaluate the accuracy and completeness of agency reporting and evaluate agency performance in reducing and recapturing improper payments.
As required, the Department:
- published an AFR for FY 2014 and posted that report and accompanying material required by the Office of Management and Budget (OMB) on the Department's Web site,
- conducted a program-specific risk assessment of five programs that were not deemed high risk by OMB to identify those programs or activities that might have been susceptible to significant improper payments,
- published improper payment estimates for seven of the eight programs that OMB deemed to be susceptible to significant improper payments and all seven programs deemed susceptible to significant improper payments under the DRAA,
- published corrective action plans for seven of the eight programs that OMB deemed to be susceptible to significant improper payments and all seven programs deemed susceptible to significant improper payments under the DRAA,
- published and met annual reduction targets for two of the six programs for which it reported reduction targets in the FY 2013 AFR, and
- reported an improper payment rate of less than 10 percent for six of the eight programs that OMB deemed to be susceptible to significant improper payments and five of the seven programs deemed susceptible to significant improper payments under the DRAA.
The Department followed OMB's guidance, which states "programs that have been determined to be susceptible to significant improper payments and that are already reporting an estimate-or in the process of establishing an estimate-do not have to perform additional risk assessments" (OMB Circular A-123, § I.A.10). Accordingly, the Department does not conduct additional risk assessments for these four high-priority programs: Medicare Fee-for-Service (FFS), Medicare Advantage, Medicare Prescription Drug Benefit, and Medicaid.
In general, the methodologies used by the Department to estimate improper payments were reasonable and valid and resulted in reasonable estimates. The Department also reported information on its efforts to recapture improper payments and the results of those actions.
However, the Department did not fully comply with several IPIA requirements in that it:
- did not perform risk assessments of payments to employees and charge card payments;
- did not publish an improper payment estimate for one of eight programs that OMB deemed to be susceptible to significant improper payments (Temporary Assistance for Needy Families (TANF));
- did not publish corrective action plans for one of the eight programs (TANF) that OMB deemed to be susceptible to significant improper payments;
- did not meet improper payment rate reduction targets for four of the six programs for which it reported reduction targets in the FY 2013 AFR (Medicare FFS, Medicaid, Foster Care, and Child Care Development Fund); and
- did not report an improper payment rate of less than 10 percent for one of the eight programs deemed susceptible to improper payments by OMB (Medicare Fee-for-Service) and two of the seven programs deemed susceptible to improper payments under the DRAA (Administration for Children and Families Social Services Block Grant and Substance Abuse and Mental Health Services Administration Grants).
In addition, we found that the Department has not been in compliance with the IPIA for 4 consecutive FYs for TANF and 3 consecutive FYs for Medicare FFS.
The Department has not fully addressed all of our recommendations from prior years, including the need to provide an improper payment estimate for TANF, meet improper payment rate reduction targets, and reduce improper payment error rates to below 10 percent. Addressing these recommendations would improve the Department's compliance with the IPIA, including compliance issues in our current findings. We will continue to follow up until these recommendations are resolved and reiterate the need to take action on these issues. To address a new requirement under OMB's guidance, we recommend that the Department conduct risk assessments of payments to employees and charge card payments as part of its risk assessment process for 2015.