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United States Government Accountability Office: 
GAO: 

Testimony: 

Before the Subcommittee on Government Organization, Efficiency, and 
Financial Management, Committee on Oversight and Government Reform, 
House of Representatives: 

For Release on Delivery: 
Expected at 10:00 a.m. EDT:
Friday, April 15, 2011: 

Improper Payments: 

Recent Efforts to Address Improper Payments and Remaining Challenges: 

Statement of Kay L. Daly:
Director:
Financial Management and Assurance: 

GAO-11-575T: 

GAO Highlights: 

Highlights of GAO-11-575T, a testimony before the Subcommittee on 
Government Organization, Efficiency, and Financial Management, 
Committee on Oversight and Government Reform, House of Representatives. 

Why GAO Did This Study: 

GAO’s work over the past several years has highlighted long-standing, 
widespread, and significant problems with improper payments in the 
federal government. Fiscal year 2010 marked the 7th year of 
implementation of the Improper Payments Information Act of 2002 
(IPIA). IPIA requires executive-branch agencies to identify programs 
and activities susceptible to significant improper payments, estimate 
annual amounts improperly paid, and report these estimates and actions 
taken to reduce them. On July 22, 2010, the Improper Payments 
Elimination and Recovery Act of 2010 (IPERA) was enacted. IPERA 
amended IPIA and expanded requirements for recovering overpayments 
across a broad range of federal programs. 

This testimony addresses (1) progress federal agencies have reported 
in estimating and reducing improper payments in fiscal year 2010, (2) 
challenges that continue to hinder full reporting of improper payment 
information, and (3) recent efforts by Congress and the executive 
branch intended to improve transparency and accountability for 
reporting, reducing, and recovering improper payments. This testimony 
is primarily based on prior GAO reports. GAO summarized available 
fiscal year 2010 improper payment information reported by federal 
executive-branch agencies and actions taken by the executive branch 
and Congress intended to improve transparency over, accountability 
for, and reduction of improper payments. 

What GAO Found: 

Federal agencies reported an estimated $125.4 billion in improper 
payments for fiscal year 2010. The $125.4 billion estimate of improper 
payments federal agencies reported in fiscal year 2010 was 
attributable to over 70 programs spread among 20 agencies. Federal 
agencies’ fiscal year 2010 estimated improper payment amount is an 
increase of $16.2 billion from federal agencies’ prior year reported 
estimate of $109.2 billion. 

* Progress Reported in Estimating and Reducing Improper Payments. 
Since the initial implementation of IPIA in fiscal year 2004, federal 
agencies have consistently identified new programs or activities as 
risk-susceptible and reported estimated improper payment amounts. In 
addition, federal agencies have reported progress in reducing improper 
payments and payment error rates in some programs and activities. From 
fiscal years 2004 through 2010, 28 programs have consistently reported 
estimated improper payment error rates for each year. Of these 28, 17 
agency programs reported reduced error rates in comparison with their 
initial or baseline error rates reported in fiscal year 2004. 

* Challenges Remain in Meeting Legislative Requirements to Fully 
Report Improper Payments Information. Agency reporting highlighted 
challenges that remain in meeting the requirements of IPIA, including 
determining the full extent of improper payments across the federal 
government and in reasonably assuring that effective actions are taken 
to reduce improper payments. Specifically, two agencies did not report 
on risk assessments of their programs and activities and three 
agencies did not develop and report on improper payments estimates for 
seven risk-susceptible programs with significant amounts of outlays. 

* Recent Efforts to Address Improper Payments. During fiscal year 
2010, a number of changes and initiatives were put in place that are 
intended to strengthen the framework for reducing and reporting 
improper payments. For example, the President issued Executive Order 
13520, Reducing Improper Payments. The President also issued two 
memoranda intended to expand agency efforts to recapture overpayments 
and directed that a Do Not Pay List be established to help prevent 
improper payments. Further, IPERA was enacted. In addition to amending 
the IPIA existing requirements, IPERA establishes additional 
requirements, among others, related to (1) federal agency management 
accountability; and (2) recovery auditing aimed at identifying and 
reclaiming payments made in error. We view these actions as positive 
steps; however, it is too soon to determine whether these activities 
will achieve their goal of reducing improper payments while continuing 
to ensure that federal programs serve and provide access to intended 
beneficiaries. 

View [hyperlink, http://www.gao.gov/products/GAO-11-575T] or key 
components. For more information, contact Kay Daly at (202) 512-9312 
or dalykl@gao.gov. 

[End of section] 

Chairman Platts, Ranking Member Towns, and Members of the Subcommittee: 

Thank you for the opportunity to be here today to discuss the issue of 
improper payments in federal programs and activities, including 
efforts by federal agencies to identify and remediate improper 
payments.[Footnote 1] Since fiscal year 2000, we have issued a number 
of reports and testimonies aimed at raising the level of attention and 
corrective actions surrounding improper payments. Our work over the 
past several years has highlighted long-standing, widespread, and 
significant problems with improper payments across the federal 
government.[Footnote 2] Fiscal year 2010 marked the 7th year of 
implementation of the Improper Payments Information Act of 2002 
(IPIA).[Footnote 3] IPIA requires executive-branch agencies to 
annually review all programs and activities to identify those that are 
susceptible to significant improper payments, estimate the annual 
amount of improper payments for such programs and activities, and 
report these estimates along with actions taken to reduce improper 
payments for programs with estimates that exceed $10 million. The 
Improper Payments Elimination and Recovery Act of 2010 (IPERA), 
[Footnote 4] enacted July 22, 2010, amended IPIA by expanding on the 
previous requirements for identifying, estimating, and reporting on 
programs and activities susceptible to significant improper payments 
and expanding requirements for recovering overpayments across a broad 
range of federal programs.[Footnote 5] IPERA provisions generally 
become effective in fiscal year 2011. As the steward of taxpayer 
dollars, the federal government is accountable for how its agencies 
and grantees spend hundreds of billions of taxpayer dollars annually, 
including safeguarding those expenditures against improper payments, 
as well as for establishing mechanisms to recoup those funds when 
improper payments occur. 

The Office of Management and Budget (OMB) continues to play a key role 
in the oversight of the governmentwide improper payments problem. OMB 
has established guidance for federal agencies on reporting, reducing, 
and recovering improper payments[Footnote 6] and has established 
various work groups intended to develop recommendations aimed at 
improving federal financial management activities related to reducing 
improper payments. 

Today, my testimony will focus on three key areas: 

* federal agencies' reported progress in estimating and reducing 
improper payments under IPIA for fiscal year 2010; 

* challenges hindering full reporting of improper payment information; 
and: 

* recent efforts by Congress and the executive branch intended to 
improve transparency and accountability for reporting, reducing, and 
recovering improper payments. 

In preparing this statement, we drew upon our previously issued work 
related to fiscal year 2010 improper payments.[Footnote 7] Our 
previous reports are listed at the end of this statement. That work 
was conducted in accordance with generally accepted government 
auditing standards. For fiscal year 2010 data in those reports, we 
summarized information reported by federal executive-branch agencies 
and the actions they reported taking to help reduce improper payments. 
In those reports, we also summarized actions taken by the executive 
branch and Congress during fiscal year 2010 intended to improve 
transparency over, accountability for, and reduction of improper 
payments. Our scope included the 24 Chief Financial Officer Act 
[Footnote 8] agencies and 11 other entities that are significant to 
the 2010 Financial Report of the United States Government. In 
conducting that work, we obtained 31[Footnote 9] federal entities' 
fiscal year 2010 performance and accountability reports (PAR), agency 
financial reports (AFR), or annual reports to identify and aggregate 
the reported improper payment information. We did not independently 
validate the improper payment data reported in these PARs, AFRs, and 
annual reports. 

Progress Reported in Estimating and Reducing Improper Payments: 

Federal agencies reported improper payments of an estimated $125.4 
billion in fiscal year 2010. This estimate represents about 5.5 
percent of the $2.3 trillion of reported outlays for the related 
programs in fiscal year 2010. The $125.4 billion estimate is an 
increase of $16.2 billion from federal agencies' prior year reported 
estimate of $109.2 billion.[Footnote 10] Estimated improper payment 
amounts for both of these years may include estimates based on prior 
years' data, if current reporting year data were not available, as 
allowed by OMB guidance. The $125.4 billion in estimated federal 
improper payments reported for fiscal year 2010 was attributable to 
over 70 programs spread among 20 agencies. As shown in table 1, the 
highest reported improper payment estimated amounts were associated 
with 10 programs. Specifically, the 10 programs accounted for about 
$118 billion or 94 percent of the total estimated improper payments 
reported for fiscal year 2010. 

Table 1: Ten Programs with the Highest Reported Fiscal Year 2010 
Improper Payment Estimated Amounts: 

Program: Medicare Fee-for-Service; 
Agency: Health and Human Services; 
Estimated amount reported: $34.3 billion; 
Primary cause(s) reported: Medically unnecessary services and 
insufficient documentation. 

Program: Medicaid; 
Agency: Health and Human Services; 
Estimated amount reported: $22.5 billion; 
Primary cause(s) reported: Insufficient or no documentation provided 
for conducting medical reviews and cases that were either ineligible 
or their eligibility status could not be determined. 

Program: Unemployment Insurance; 
Agency: Labor; 
Estimated amount reported: $17.5 billion; 
Primary cause(s) reported: Eligibility errors, errors in handling 
separation issues, and claimants who have returned to work and 
continue to claim benefits. 

Program: Earned Income Tax Credit; 
Agency: Treasury; 
Estimated amount reported: $16.9 billion; 
Primary cause(s) reported: High turnover of eligible claimants, 
confusion among eligible claimants, complexity of the law, structure 
of the program, unscrupulous return preparers, and fraud. 

Program: Medicare Advantage; 
Agency: Health and Human Services; 
Estimated amount reported: $13.6 billion; 
Primary cause(s) reported: Insufficient supporting documentation, and 
errors in the transfer of data and payment calculations. 

Program: Supplemental Security Income; 
Agency: Social Security Administration; 
Estimated amount reported: $4.8 billion; 
Primary cause(s) reported: Incorrect computations, misapplication of 
an income or resource exclusion, and inadequate verification of 
accounts and wages. 

Program: Old Age Survivors' and Disability Insurance; 
Agency: Social Security Administration; 
Estimated amount reported: $3.2 billion; 
Primary cause(s) reported: Computation errors; nonverification of 
earnings, income, or work status; and incorrect processing of 
applications or payments. 

Program: Supplemental Nutrition Assistance; 
Agency: Agriculture; 
Estimated amount reported: $2.2 billion; 
Primary cause(s) reported: Incomplete or inaccurate reporting of 
income by participants and incorrect eligibility determination by 
caseworkers. 

Program: National School Lunch; 
Agency: Agriculture; 
Estimated amount reported: $1.5 billion; 
Primary cause(s) reported: Verification and authentication errors, 
including inadequate documentation and fraud or misrepresentation by 
participants. 

Program: Pell Grants; 
Agency: Education; 
Estimated amount reported: $1.0 billion; 
Primary cause(s) reported: Verification errors[A]. 

Source: GAO summary of agencies' data. 

[A] Primary causes were provided by Department of Education officials 
and were not reported in the AFR. 

[End of table] 

It is important to recognize that the $125.4 billion in improper 
payments federal agencies reported in fiscal year 2010 is not intended 
to be an estimate of fraud in federal agencies' programs and 
activities.[Footnote 11] Rather, reported improper payment estimates 
include many types of overpayments, underpayments, and payments that 
were not adequately documented. Agencies cited a number of causes for 
the estimated $125.4 billion in reported improper payments, including 
insufficient documentation, incorrect computations, changes in program 
requirements, and in some cases fraud. 

Increases in the estimated amounts of improper payments reported for 
fiscal year 2010 were primarily attributable to increases in estimated 
improper payments related to four major programs: (1) Department of 
Labor's Unemployment Insurance program, (2) Department of the 
Treasury's Earned Income Tax Credit program, (3) Department of Health 
and Human Services' (HHS) Medicaid program, and (4) HHS' Medicare 
Advantage program. Agencies reported that the increases in the 
estimates for these programs were primarily attributable to an 
increase in program outlays. That was the case for the Medicaid and 
Medicare Advantage programs even though these two programs reported 
lower error rates.[Footnote 12] Both Unemployment Insurance and Earned 
Income Tax Credit programs reported higher program outlays and higher 
error rates for fiscal year 2010 when compared to fiscal year 2009. 

Since the implementation of IPIA in 2004, federal agencies have 
consistently identified new programs or activities as risk-susceptible 
and reported estimated improper payment amounts. 

* fiscal year 2005--17 new programs or activities, 

* fiscal year 2006--15 new programs or activities, 

* fiscal year 2007--19 new programs or activities, 

* fiscal year 2008--10 new programs or activities, 

* fiscal year 2009--5 new programs or activities, and: 

* fiscal year 2010--2 new programs or activities.[Footnote 13] 

In addition, federal agencies have reported progress since 2004 in 
reducing improper payment amounts and payment error rates in some 
programs and activities. From the initial implementation of IPIA in 
2004 through 2010, 28 programs have consistently reported estimated 
improper payment error rates for each year. Of these 28, 17 agency 
programs reported reduced error rates in comparison with their initial 
or baseline error rates reported in fiscal year 2004. Following are 
examples of agencies reporting reductions in program error rates and 
estimated improper payment amounts (along with corrective actions to 
reduce improper payments) in their fiscal year 2010 PARs, AFRs, or 
annual reports. 

* HHS reported that the fiscal year 2010 Head Start program's 
estimated improper payment amount decreased from the fiscal year 2009 
amount of $213 million to $123 million, which represented a decrease 
in the error rate of 1.3 percentage points to a 1.7 percent error 
rate. HHS reported that it reduced payment errors by issuing 
additional guidance for employees on verifying income eligibility and 
a standard template form to help guide grantees in the enrollment 
process. 

* The U.S. Department of Agriculture (USDA) reported that the fiscal 
year 2010 estimated improper payment amount for the Marketing 
Assistance Loan program decreased from the fiscal year 2009 reported 
amount of $85 million to $35 million, which represented a decrease in 
the error rate of 1.75 percentage points to a 0.81 percent error rate. 
USDA reported that corrective actions taken to reduce improper 
payments included providing additional training and instruction on 
improper payment control procedures, and integrating employees' 
individual performance results related to reducing improper payments 
into annual performance ratings. 

Challenges Remain in Meeting Legislative Requirements to Fully Report 
Improper Payment Information: 

Despite reported progress in reducing estimated improper payment 
amounts and error rates for some programs and activities during fiscal 
year 2010, federal agencies' reporting indicates the federal 
government still faces challenges in this area. Agency reporting 
highlighted challenges that remain in meeting the requirements of 
IPIA, including determining the full extent of improper payments 
across the federal government and in reasonably assuring that 
effective actions are taken to reduce improper payments. Specifically, 
some federal agencies' fiscal year 2010 reporting did not include 
information demonstrating that (1) risk assessments were conducted on 
all of their programs and activities, and (2) improper payment 
estimates were developed and reported for all risk-susceptible 
programs. 

IPIA required agencies to annually review all of their programs and 
activities to identify their risk of susceptibility to significant 
improper payments. However, two agencies--the United States Postal 
Service and the Department of Transportation--did not report on risk 
assessments of their programs and activities. The agencies either did 
not report any information on risk assessments in their PARs, AFRs, or 
annual reports, or included some risk assessment-related information 
(such as listing risk factors), but not on the results of any 
assessments of risk for all of their programs and activities. 

Further, IPIA required agencies to estimate improper payments for each 
program identified as susceptible to significant improper payments 
during the risk assessment process. However, three agencies did not 
report estimated improper payment amounts for fiscal year 2010 for 
seven risk-susceptible programs with significant amounts of outlays. 
Most notably, HHS has yet to report a comprehensive improper payment 
estimate amount for the Medicare Prescription Drug Benefit program, 
which had about $59 billion in outlays in fiscal year 2010. However, 
HHS expects to report a comprehensive estimate for this program in 
fiscal year 2011. While none of the seven risk-susceptible programs 
reported an improper payment estimated amount in fiscal year 2010 or 
2009, all but one--Medicare Prescription Drug Benefit program--
reported an improper payment estimated amount for fiscal year 2008. 

Recent Efforts to Address Improper Payments: 

During fiscal year 2010, a number of actions were taken intended to 
strengthen the framework for reducing and reporting improper payments. 
First, in November 2009, the President issued Executive Order 13520, 
Reducing Improper Payments. This order was intended to focus on 
increasing transparency and accountability for reducing improper 
payments and creating incentives for reducing improper payments. Under 
the Executive Order, OMB established a Web site 
(www.PaymentAccuracy.gov) and designated 14 high-error programs to 
focus attention on the programs that significantly contribute to the 
federal government's improper payments.[Footnote 14] The Web site 
provides information on (1) the programs' senior accountable officials 
responsible for efforts to reduce improper payments; (2) current, 
targeted, and historical estimated rates of improper payments; (3) why 
improper payments occur in the programs; and (4) what federal agencies 
are doing to reduce improper payments and recover overpayments. The 
President also issued two memoranda in March and June 2010, intended 
to expand agency efforts to recapture improper overpayments using 
recapture audits,[Footnote 15] and directing the establishment of a Do 
Not Pay List to help prevent improper payments to ineligible 
recipients, respectively. In addition, in 2010, the President set 
goals, as part of the Accountable Government Initiative, for federal 
agencies to reduce overall improper payments by $50 billion, and 
recapture at least $2 billion in improper contract payments and 
overpayments to health providers, by the end of fiscal year 2012. 

In July 2010, Congress passed and the President signed IPERA. This 
legislation was intended to enhance reporting and the reduction of 
improper payments. In addition to amending the IPIA improper payment 
estimation requirements, IPERA established additional requirements 
related to (1) federal agency management accountability; (2) recovery 
auditing aimed at identifying and reclaiming payments made in error; 
(3) compliance and noncompliance determinations based on an inspector 
general's assessment of an agency's adherence to IPERA requirements 
and reporting that determination; and (4) an opinion on internal 
controls over improper payments.[Footnote 16] For example, regarding 
management accountability, IPERA requires agency managers, programs, 
and, where appropriate, states and localities, to be held accountable 
for achieving the law's goals. This includes management's use of the 
annual performance appraisal process to assess whether improper 
payment reduction targets were met and whether sufficient internal 
controls were established and maintained. In addition, IPERA included 
a new, broader requirement for agencies to conduct recovery audits, 
where cost-effective, for each program and activity with at least $1 
million in annual program outlays. This IPERA provision significantly 
reduces the threshold requirement for conducting recovery audits from 
$500 million to $1 million and expands the scope for required recovery 
audits to all programs and activities. Previously, recovery audits 
were only required for agencies whose annual contract obligations 
exceeded the threshold. Another new IPERA provision calls for federal 
agencies' inspectors general to annually determine whether their 
respective agencies are in compliance with key IPERA requirements and 
to report on their determinations. 

Concluding Observations: 

In closing, given the pressures resulting from today's fiscal 
environment, the need to ensure that federal dollars are spent as 
intended is critical. While the increase in governmentwide improper 
payment estimates is alarming, federal agencies' efforts to more 
comprehensively report on estimated improper payments represent a 
positive step to improve transparency over the full magnitude of 
federal improper payments for which corrective actions are necessary. 
With more federal dollars flowing into risk-susceptible programs, 
establishing effective accountability measures to prevent and reduce 
improper payments, and to recover overpayments, becomes an even higher 
priority. However, measuring improper payments and designing and 
implementing actions to reduce and prevent them are not simple tasks. 
Nonetheless, the ultimate success of the governmentwide effort to 
prevent and reduce improper payments hinges on the level of sustained 
commitment the agencies and the administration places on implementing 
the requirements established by IPERA, the Executive Order, and other 
guidance. We view the recent actions taken by Congress and the 
administration as positive steps toward improving transparency over 
and reducing improper payments. However, it is too soon to determine 
whether the activities called for in the Executive Order, Presidential 
memoranda, and IPERA will achieve their goal of reducing improper 
payments while continuing to ensure that federal programs serve and 
provide access to intended beneficiaries. Moreover, congressional 
efforts to oversee agencies will be essential to ensure that agencies 
are taking the appropriate action to fully implement these 
administrative and legislative requirements to improve accountability, 
achieve targeted goals, and reduce overall improper payments. 

Chairman Platts, Ranking Member Towns, this completes my prepared 
statement. I would be happy to respond to any questions you or other 
members of the subcommittee may have at this time. 

Contact and Acknowledgments: 

For more information regarding this testimony, please contact, Kay L. 
Daly, Director, Financial Management and Assurance, at (202) 512-9312 
or by e-mail at dalykl@gao.gov. Contact points for our Offices of 
Congressional Relations and Public Affairs may be found on the last 
page of this testimony. Individuals making key contributions to this 
testimony included Shirley Abel, Assistant Director; Sabrina 
Springfield, Assistant Director; Liliam Coronado; Nicole Dow; Vanessa 
Estevez; Crystal Lazcano; Chelsea Lounsbury; Kerry Porter; Debra 
Rucker; and Danietta Williams. 

[End of section] 

Related GAO Products: 

Medicare and Medicaid Fraud, Waste, and Abuse: Effective 
Implementation of Recent Laws and Agency Actions Could Help Reduce 
Improper Payments. [hyperlink, 
http://www.gao.gov/products/GAO-11-409T]. Washington, D.C.: March 9, 
2011. 

Opportunities to Reduce Potential Duplication in Government Programs, 
Save Tax Dollars, and Enhance Revenue. [hyperlink, 
http://www.gao.gov/products/GAO-11-318SP]. Washington, D.C.: March 1, 
2011. 

For our report on the U.S. government's consolidated financial 
statements for fiscal year 2010, see U.S. Department of the Treasury. 
2010 Financial Report of the United States Government. Washington, 
D.C.: December 21, 2010, pp. 221-249. 

Improper Payments: Progress Made but Challenges Remain in Estimating 
and Reducing Improper Payments. [hyperlink, 
http://www.gao.gov/products/GAO-09-628T]. Washington, D.C.: April 22, 
2009. 

[End of section] 

Footnotes: 

[1] An improper payment is defined as any payment that should not have 
been made or that was made in an incorrect amount (including 
overpayments and underpayments) under statutory, contractual, 
administrative, or other legally applicable requirements. It includes 
any payment to an ineligible recipient, any payment for an ineligible 
service, any duplicate payment, payment for services not received, and 
any payment that does not account for credit for applicable discounts. 
Office of Management and Budget (OMB) guidance also instructs agencies 
to report payments for which insufficient or no documentation was 
found as improper payments. 

[2] See GAO, Opportunities to Reduce Potential Duplication in 
Government Programs, Save Tax Dollars, and Enhance Revenue, GAO-11-
318SP (Washington, D.C.: Mar. 1, 2011), pp. 209-210. 

[3] Pub. L. No. 107-300, 116 Stat. 2350 (Nov. 26, 2002). 

[4] Pub. L. No. 111-204, 124 Stat. 2224 (July 22, 2010). 

[5] For fiscal year 2010, OMB defined the term significant improper 
payments under IPIA as exceeding both 2.5 percent of program payments 
and $10 million. IPERA sets forth specific criteria to define the term 
significant for future fiscal years. 

[6] OMB, Circular No. A-123, app. C, Requirements for Effective 
Measurement and Remediation of Improper Payments (Aug. 10, 2006); OMB 
Memorandum M-10-13, Issuance of Part III to OMB Circular A-123, app. C 
(Mar. 22, 2010); OMB, Circular No. A-136 Revised, Financial Reporting 
Requirements (Sept. 29, 2010); and OMB Memorandum M-11-04, Increasing 
Efforts to Recapture Improper Payments by Intensifying and Expanding 
Payment Recapture Audits (Nov. 16, 2010). 

[7] [hyperlink, http://www.gao.gov/products/GAO-11-318SP]; and U.S. 
Department of the Treasury, 2010 Financial Report of the United States 
Government (Washington, D.C.: Dec. 21, 2010), pp. 221-249. 

[8] See 31 U.S.C. § 901. 

[9] Of the 35 federal entities that are significant to the 2010 
Financial Report of the United States Government, we did not obtain 
PARs, AFRs, or annual reports for the following 4 entities, because 
these entities had not issued their reports as of February 1, 2011: 
the Farm Credit System Insurance Corporation, Federal Deposit 
Insurance Corporation, National Credit Union Administration, and 
Smithsonian Institution. 

[10] In their fiscal year 2010 performance and accountability reports 
and agency financial reports, select federal entities updated their 
fiscal year 2009 improper payment estimates to reflect changes since 
issuance of their fiscal year 2009 reports. These updates increased 
the governmentwide improper payment estimate for fiscal year 2009 from 
$98.7 billion to $109.2 billion. 

[11] Fraud consists of intentional acts of deception with knowledge 
that the action or representation could result in an inappropriate 
gain. 

[12] Reported error rates reflect the estimated improper payments as a 
percentage of total program outlays. 

[13] In fiscal year 2010, the Department of Homeland Security 
identified the Customs and Border Protection-Border Security Fencing 
and Federal Emergency Management Agency-Grants-Transit Security Grants 
programs as risk-susceptible for the first time and reported on 
estimated improper payment amounts for those programs. 

[14] The 14 high-error programs designated by OMB for fiscal year 2010 
include: Medicare Fee-for-Service; Medicaid; Unemployment Insurance; 
Medicare Advantage; Supplemental Security Income; Retirement, 
Survivors, and Disability Insurance; Supplemental Nutrition Assistance 
Program; National School Lunch Program; Rental Housing Assistance 
Programs; Federal-Aid Highway Program, Highway Planning and 
Construction; Children's Health Insurance Program; Earned Income Tax 
Credit; High Cost Program of the Universal Service Fund; and Medicare 
Prescription Drug Benefit. The Children's Health Insurance Program, 
High Cost Program of the Universal Service Fund, and Medicare 
Prescription Drug Benefit programs did not report improper payment 
error rates and amounts for fiscal year 2010. 

[15] Payment recapture audits, also called recovery audits, are 
conducted to identify and reclaim payments made in error. 

[16] IPERA also modified the definition of the terms payments and 
improper payments, and added an explicit definition of a payment for 
an ineligible good or service. IPERA defined a payment as any 
transfer, or commitment for future transfers, of federal funds such as 
cash, securities, loans, loan guarantees, and insurance subsidies to 
any nonfederal person or entity that is made by federal agencies, 
federal contractors, federal grantees, or governmental or other 
organizations administering federal programs or activities. The new 
definition excludes transfers to other federal entities from the 
definition of "payment." Under IPIA, improper payments included any 
payments to ineligible recipients, payments for ineligible services, 
duplicative payments, payments for services not received, and payments 
that do not account for credit for applicable discounts. IPERA 
expanded on this list by adding payments for ineligible goods and 
payments for goods not received as also constituting improper 
payments. In addition, IPERA defined a payment for an ineligible good 
or service as a payment for any good or service that is rejected under 
any provision of any contract, grant, lease, cooperative agreement, or 
any other funding mechanism. 

[End of section] 

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Public Affairs: 

Chuck Young, Managing Director, youngc1@gao.gov: 
(202) 512-4800: 
U.S. Government Accountability Office: 
441 G Street NW, Room 7149: 
Washington, D.C. 20548: