[Senate Hearing 113-114]
[From the U.S. Government Publishing Office]



                                                        S. Hrg. 113-114

 
                    CURBING FEDERAL AGENCY WASTE AND
    FRAUD: NEW STEPS TO STRENGTHEN THE INTEGRITY OF FEDERAL PAYMENTS

=======================================================================

                                HEARING

                               before the

                              COMMITTEE ON
               HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS
                          UNITED STATES SENATE

                    ONE HUNDRED THIRTEENTH CONGRESS


                             FIRST SESSION

                               __________

                              MAY 8, 2013

                               __________

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        COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS

                  THOMAS R. CARPER, Delaware Chairman
CARL LEVIN, Michigan                 TOM COBURN, Oklahoma
MARK L. PRYOR, Arkansas              JOHN McCAIN, Arizona
MARY L. LANDRIEU, Louisiana          RON JOHNSON, Wisconsin
CLAIRE McCASKILL, Missouri           ROB PORTMAN, Ohio
JON TESTER, Montana                  RAND PAUL, Kentucky
MARK BEGICH, Alaska                  MICHAEL B. ENZI, Wyoming
TAMMY BALDWIN, Wisconsin             KELLY AYOTTE, New Hampshire
HEIDI HEITKAMP, North Dakota

                   Richard J. Kessler, Staff Director
               John P. Kilvington, Deputy Staff Director
             Peter P. Tyler, Sr., Professional Staff Member
                    Walter S. Ochinko, GAO Detailee
               Keith B. Ashdown, Minority Staff Director
         Christopher J. Barkley, Minority Deputy Staff Director
     Catharine A. Bailey, Minority Director of Governmental Affairs
             Patrick J. Bailey, Minority Associate Counsel
                     Trina D. Shiffman, Chief Clerk
                    Laura W. Kilbride, Hearing Clerk


                            C O N T E N T S

                                 ------                                
Opening statements:
                                                                   Page
    Senator Carper...............................................     1
    Senator Coburn...............................................     4
    Senator Enzi.................................................    21
    Senator Tester...............................................    23
    Senator McCaskill............................................    28
Prepared statements:
    Senator Carper...............................................    45
    Senator Coburn...............................................    52

                               WITNESSES
                         Wednesday, May 8, 2013

Hon. Daniel I. Werfel, Controller, Office of Federal Financial 
  Management, Office of Management and Budget....................     7
Hon. Patrick P. O'Carroll, Jr., Inspector General, U.S. Social 
  Security Administration........................................     9
Richard L. Gregg, Fiscal Assistant Secretary, U.S. Department of 
  the Treasury...................................................    10
Daniel Bertoni, Director of Education, Workforce, and Income 
  Security Issues, U.S. Government Accountability Office.........    12
Marianna LaCanfora, Acting Deputy Commissioner for Retirement and 
  Disability Policy, U.S. Social Security Administration.........    14

                     Alphabetical List of Witnesses

Bertoni, Daniel:
    Testimony....................................................    12
    Prepared statement...........................................    69
Gregg, Richard L.:
    Testimony....................................................    10
    Prepared statement...........................................    66
LaCanfora, Marianna:
    Testimony....................................................    14
    Prepared statement...........................................    80
O'Carroll, Hon. Patrick P. Jr.:
    Testimony....................................................     9
    Prepared statement...........................................    60
Werfel, Hon. Daniel I.:
    Testimony....................................................     7
    Prepared statement...........................................    54

                                APPENDIX

Charts submitted by Senator Carper...............................    48
Responses to post-hearing questions for the Record:
    Mr. Werfel...................................................    85
    Mr. O'Carroll................................................    94
    Mr. Gregg....................................................   101
    Mr. Bertoni..................................................   113
    Ms. LaCanfora................................................   117


                    CURBING FEDERAL AGENCY WASTE AND
    FRAUD: NEW STEPS TO STRENGTHEN THE INTEGRITY OF FEDERAL PAYMENTS

                              ----------                              


                         WEDNESDAY, MAY 8, 2013

                                     U.S. Senate,  
                           Committee on Homeland Security  
                                  and Governmental Affairs,
                                                    Washington, DC.
    The Committee met, pursuant to notice, at 10:01 a.m., in 
room SD-342, Dirksen Senate Office Building, Hon. Thomas R. 
Carper, Chairman of the Committee, presiding.
    Present: Senators Carper, McCaskill, Tester, Coburn, Enzi, 
and Ayotte.

              OPENING STATEMENT OF CHAIRMAN CARPER

    Chairman Carper. This hearing will come to order. Welcome. 
We are happy to welcome all of you here today.
    This hearing will focus on the very high levels of improper 
payments made by Federal agencies as well as our efforts to 
curb those wasteful and sometimes fraudulent payments.
    As everyone or almost everyone in the room knows, we have 
faced record budget deficits in recent years. Our national debt 
stands at about $16.8 trillion, well over double what it was 
just 10 years ago. The last time the debt was this high was at 
the end of World War II. That level of debt was not sustainable 
then. It is not sustainable today. While we are beginning to 
see reports showing an improving financial situation, our 
country clearly has plenty of work to do on this front.
    These budgeting challenges require a comprehensive, 
bipartisan approach. They require us to make tough decisions 
with respect to both spending and revenues and also with 
respect to entitlements. They should also force us to take a 
tough and honest look at how we can better manage the resources 
taxpayers entrust to the Federal Government and demand that we 
find ways to get better results for less money or better 
results for the same amount of money.
    One of this Committee's main responsibilities and one of my 
top goals as Committee Chair is to demand, through better 
management of government programs, that agencies deliver better 
services to the American people, that we do so more 
efficiently, and we do so wherever possible at a lower cost.
    I will continue to work with Dr. Coburn and our colleagues 
and the Administration to ensure that Federal programs across 
government are improving key management functions, monitoring 
results, and finding ways to do more with less in almost 
everything we do. A key part of these efforts will involve 
program managers sharpening their pencils and stopping the kind 
of expensive, avoidable mistakes that lead to improper 
payments.
    Before going any further, let me just take a minute and say 
I think it is important first to explain what it means for a 
Federal agency to make improper payments. As you will recall, 
an improper payment occurs when an agency pays a vendor for 
something--it could be a medical procedure or a piece of 
equipment, for example--that it did not receive, or maybe even 
pays them twice. It can occur when a recipient has died or is 
for some other reason no longer eligible for a Federal program. 
Improper payments also occur when a vendor is no longer 
permitted for some reason to do business with the Federal 
Government.
    And, of course, sometimes people or companies receive 
payments that are actually fraudulent.
    According to the Government Accountability Office (GAO), 
the Federal Government made an estimated $108 billion in 
improper payments in fiscal year 2012. We have a chart\1\ just 
down here, $108 billion in improper payments in 2012. That is a 
lot of money. But the good news is it was down. It was down 
from $116 billion the year before and from a record high of 
$123 billion in fiscal year 2010.
---------------------------------------------------------------------------
    \1\ The chart referenced by Senator Carper appears in the Appendix 
on page 48.
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    I am encouraged that we are seeing these--I am tempted to 
call them ``small,'' but when you knock, what is it, $5 billion 
1 year, $8 billion another, that is not small. That is real 
money. So I am encouraged that we are seeing these significant 
drops in the level of improper payments. Obviously, we still 
have more to do.
    Despite some progress that has been made, error rates in 
the amount of money lost to avoidable errors still remains at 
unacceptably high levels, and what disturbs me most about this 
problem is that we seem to make these kinds of mistakes at a 
rate much higher than a business or the average family would 
tolerate or could afford. And we keep making some of them over 
and over again.
    Very often, we know what we need to do to fix the problem. 
The testimony we will hear today shows that we are making 
important progress. But more needs to be done. And, 
fortunately, there are several very real and effective tools 
available to curb wasteful and fraudulent payments that are now 
being put to use.
    In 2010, Congress passed and President Obama signed into 
law the Improper Payments Elimination and Recovery Act, which I 
co-authored with Dr. Coburn and others. The law aims to make 
agencies and agency leadership far more accountable for the 
expensive mistakes they make and represents a bipartisan and 
bicameral success in preventing waste and fraud.
    And then last year, Congress enacted an additional law on 
how to further curb improper payments called the Improper 
Payments Elimination and Recovery Improvement Act. Among other 
steps, it established in the law the Do Not Pay (DNP) program, 
and this effort, which was initiated by President Obama through 
Executive action, involved screening Federal fund recipients 
against a list of those ineligible to receive those funds, 
before we cut a check. For example, before an agency could 
award a contract to a company, the agency would have to cross-
check against the Do Not Pay database, which will include a 
central, comprehensive database of companies and entities that 
are no longer allowed to do work for the Federal Government 
because of a fraud conviction or for some other reason. Our 
witness from the Department of Treasury will describe how the 
Do Not Pay program has or has not been successful in preventing 
improper payments before they happen.
    The same Do Not Pay program will also stop payments to 
ineligible beneficiaries. Of course, those watching this 
hearing may ask the obvious question of why an agency would 
ever pay, say, an unemployment benefit to an individual who has 
died or someone who is trying to commit fraud.
    Unfortunately, the answer is that all too often agencies 
simply do not do a very good job of coordinating their efforts 
to prevent improper payments or communicating about best 
practices. Many also have antiquated databases and computer 
systems for tracking basic payment information, and all too 
often, we simply do not allow agencies to access the 
information they need to avoid cutting checks to the wrong 
people.
    There is a specific type of improper payment made by 
Federal agencies that we will highlight today during our 
hearing. In press stories, we hear about agencies making 
payments to people who are actually deceased. For example, the 
Office of Personnel Management (OPM) Inspector General (IG) 
reported just 2 years ago that some $601 million in improper 
payments were made to Federal retirees found to have died over 
the previous 5 years.
    However, such payments to dead people were not unique to 
this one program. A couple of years ago, in my own home State 
of Delaware, newspapers reported that 28 years after a Delaware 
woman had died, one of her relatives was still fraudulently 
collecting and cashing her Social Security check. Twenty-eight 
years. Improving the collection, the verification, and the use 
by Federal agencies of data on individuals who have died will 
help curb hundreds of millions, if not billions of dollars, in 
improper payments.
    It is time that the Congress and the Administration finally 
end this frustrating but also solvable problem of improper 
payments to dead people. The Federal Government simply has not 
made it a high enough priority to keep track of the people who 
have died and to share that information with key agencies to 
prevent payments to deceased individuals.
    This year, some work by the Government Accountability 
Office highlights why we need to give more attention to the 
Death Master File (DMF), the database maintained by the Social 
Security Administration (SSA). Our GAO witness today will 
testify that they found some surprising errors in this 
database.
    These include--I think they are listed right here on this 
chart.\1\ These include 130 records where the date of birth was 
after the date of death. Think about that. The date of birth 
was after the data of death. Also, there were some almost 1,300 
records where the age of death was between 111 and 129. That is 
pretty amazing, but certainly an overstatement of the number of 
Americans who live that long. And these are just among the most 
glaring errors.
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    \1\ The chart referenced by Senator Carper appears in the Appendix 
on page 49.
---------------------------------------------------------------------------
    Our witnesses today include Danny Werfel, the Controller at 
the Office of Management and Budget (OMB), who will discuss 
some simple, straightforward, and effective steps we can take 
to dramatically improve the way the Federal Government 
maintains its database of people who have died and are no 
longer eligible for Social Security or other Federal payments. 
Equally important, we will talk about how to ensure that 
agencies have a secure and effective way to share information 
about who in the United States has died so that all agencies 
that make payments have access to the best and most accurate 
information. It is my hope we will have a good dialogue among 
the witnesses and the Members of our panel leading to some 
clear consensus on solutions. We are not interested so much in 
process--we want product. We are interested in outcome. And I 
hope that we can use this hearing today as a way to develop the 
consensus that will lead to that outcome.
    Let me conclude by noting that we are here today in large 
part because we believe that we have a fiscal imperative to 
ensure that the scarce resources we put into Federal programs 
are well spent. We also have a moral imperative, given the size 
of the deficit. We must use every tool available to put our 
fiscal house in order and to give the American people the 
government they expect and deserve. It is the right thing to do 
on behalf of taxpayers in this country who entrust us with 
their hard-earned money. And by working together on this latest 
in a series of common-sense initiatives, we can take another 
important step in earning their trust once again.
    And now I want to turn it over to Senator Coburn, who has 
been a champion in this arena for a number of years, and it has 
been my privilege to work with him on these and other issues.

              OPENING STATEMENT OF SENATOR COBURN

    Senator Coburn. Thank you, Senator Carper, and welcome to 
all on our panel.
    In October 2010, I put out this study, and I am woe to say 
we have done nothing about paying dead people. We documented $1 
billion that was spent over the previous 10 years that we could 
actually document paid to dead people. And we have made very 
little progress.
    I am appreciative--by the way, Mr. Chairman, I would like 
my written statement to be part of the record.
    Chairman Carper. Without objection.
    Senator Coburn. I will not just read it.
    I am worried about five things. One is--if you will put 
that chart back up that shows the improper payments--everybody 
should understand that this is not all the improper payments. 
This is the improper payments for people who have more than 
$100 million outlay or have 2.5 percent of their program 
outlays and at least $10 million a year. And nobody has 
quantified what that is, so, the comparison is good, we are 
getting better, but it is not all the improper payments, and we 
ought to know that.
    The Do Not Pay Initiative at the Department of Treasury 
which is designed--and I have full faith that we are going to 
eventually get there--to stop improper payments before they 
happen is not getting access to the data that it needs. So it 
cannot accomplish what it wants, and not enough agencies are 
utilizing that program, which has been up and running for about 
a year.
    My third or fourth concern is that there is no way to 
determine whether Do Not Pay is working because there is no 
feedback from the agencies. When Do Not Pay flags a payment for 
the agency making the payment, the Treasury Department has no 
way of knowing if that payment was actually stopped or reduced.
    And then, finally, the Do Not Pay Initiative in many 
government agencies do not have access to the Social Security 
Administration's full Death Master File, as incomplete as it 
is. These agencies instead purchase a public version of the 
list from the Department of Commerce that purchased the list 
from the Social Security department that only has two-thirds of 
the records and is less accurate, which raises the question, 
Mr. Chairman: Why are we purchasing something from an agency 
for another agency to get information we need to do the right 
thing? And all of that goes through the National Technical 
Information Service (NTIS), which 75 percent of everything that 
NTIS has is available on the Internet except the Death Master 
File. So everything that NTIS gives to everybody else you can 
get without ever going to NTIS and not pay a penny. So that is 
one of the areas that we ought to look at in terms of the NTIS 
project.
    So I look forward to the hearing. I use the comparison, 
especially in Medicare, that the average health insurance 
company has less than a 2.5 percent improper payment rate. I 
think we are close to 7, 8, 9 percent--nobody really knows--in 
Medicare through the Center for Medicare and Medicaid Services 
(CMS). And Medicare is one of our greatest unfunded liabilities 
in terms of what is going to happen in the future. So my hope 
is that we learn some concrete things today, actions that we 
can take to, No. 1, improve the Death Master File; No. 2, make 
it accessible to those agencies that actually need it that is 
going to make a difference in terms of the improper payments 
for our country.
    I thank you for holding this hearing.
    Chairman Carper. Happy to do it with you.
    I am going to go ahead and introduce our witnesses and then 
invite them to proceed. We welcome all of our colleagues from 
Wyoming and Montana and other places around the country.
    Our first witness today is Dan Werfel, who serves as 
Controller at the Office of Management and Budget.
    Senator Coburn. He also was a great football player at one 
time.
    Chairman Carper. Yes, he was a great football player.
    Mr. Werfel is responsible for coordinating the Office of 
Management and Budget's efforts to initiate governmentwide 
improvement in all areas of financial management, including 
financial reporting, improper payments, and real property 
management--all important issues to this Committee. Mr. Werfel 
is a frequent Committee witness, and we thank him very much for 
being with us today and for his service.
    Patrick P. O'Carroll, Jr., is Inspector General for the 
Social Security Administration. Mr. O'Carroll directs a staff, 
I am told, of about 600 auditors, investigators, attorneys who 
work to identify and prevent fraud, waste, and abuse in the 
Social Security Administration. He is also a leader within the 
community of Inspector Generals on issues pertaining to 
improper payments. It is called the Council of Inspector 
Generals on Integrity and Efficiency (CIGIE). I am sure there 
is an acronym there somewhere, too, but we are not going to go 
there. Mr. O'Carroll was appointed Inspector General in 2004. 
We thank him for agreeing to testify before us today.
    Mr. Richard L. Gregg is Fiscal Assistant Secretary of the 
Treasury. Mr. Gregg is responsible for developing policy on 
payments, on collections, on debt financing operations, on 
electronic commerce, governmentwide accounting, and the 
Government Investment Fund at Treasury. A busy man these days, 
we appreciate your taking time to be with us today.
    Next, Daniel Bertoni is the Director of the Workforce and 
Income Security Issues at the U.S. Government Accountability 
Office. And I would just say that over the course of his 
career, I am told that Mr. Bertoni has focused on identifying 
and preventing fraud, waste, and abuse in Federal programs. 
That is great. And with that background, we think you are one 
of the right people to have here today. Thank you for joining 
us.
    And, finally, Marianna LaCanfora, our last witness, is 
Acting Deputy Commissioner for Retirement and Disability Policy 
at the U.S. Social Security Administration. During her career 
at Social Security, Ms. LaCanfora has had both field and 
managerial experience, including responsibility for overseeing 
the national budget for its Office of Operations. Before 
serving as Acting Deputy Commissioner for the Office of 
Retirement and Disability Policy, Ms. LaCanfora was the 
office's Assistant Deputy Commissioner. So we are delighted 
that you could join us today. We look forward to your 
testimony.
    Before Mr. Werfel leads us off, let me just say again that 
Dr. Coburn and I have been working on this issue of improper 
payments for a long time. We have collaborated on legislation 
and worked with the Administration on things that the 
Administration can do through Executive action. I think we are 
making progress. We appreciate the support of this President, 
and we appreciate the support of his predecessor, and for 
people who worked in both Administrations. And while I am 
encouraged to see the numbers are going down, at least headed 
in the right direction, we know there is a lot more work still 
to do.
    As Dr. Coburn said, this does not really take in the full 
picture. It does not. The Department of Defense (DOD) does not 
fully disclose their improper payments, and there are a couple 
of agencies that do not do the kind of job that they should.
    The reason why we asked you to come, this panel of 
witnesses today, is not just to give your testimony, take 
questions, and go back to work. We are looking for the 
development of a consensus here. We want this to be the further 
development of a strategy, a governmentwide strategy, to help 
us take these numbers right here and get rid of a lot of that 
red ink and make our taxpayers happier, make all of us prouder 
of the work that we do.
    So we have plenty of work to do. This is not a time to sit 
back and rest on our laurels. Let us figure out what we need to 
do next and let us get it done.
    Mr. Werfel, please.

 TESTIMONY OF HON. DANIEL I. WERFEL,\1\ CONTROLLER, OFFICE OF 
 FEDERAL FINANCIAL MANAGEMENT, OFFICE OF MANAGEMENT AND BUDGET

    Mr. Werfel. Thank you, Chairman Carper, Ranking Member 
Coburn, Senator Tester, Senator Enzi, distinguished Members of 
the Committee. Thank you for inviting me to discuss the Federal 
Government's efforts to prevent, reduce, and recapture improper 
payments. And I appreciate the opportunity to provide an 
important update on this topic.
---------------------------------------------------------------------------
    \1\ The prepared statement of Mr. Werfel appears in the Appendix on 
page 54.
---------------------------------------------------------------------------
    As you know, the Administration has taken an aggressive 
approach to attacking waste, fraud, and abuse in particular, to 
addressing improper payments. In fiscal year 2009, the 
governmentwide improper payment rate was at an all-time-high of 
5.42 percent. And since that time, the rate has consistently 
declined, reaching 4.35 percent in fiscal year 2012. In 
addition, agencies recaptured a record $4.4 billion in 
overpayments to contractors over the last 3 years.
    This is important progress, but, clearly, more work needs 
to be done, and with that in mind, I would like to highlight 
some specific examples of what agencies are doing today to 
reduce improper payments and improve program integrity and then 
discuss where OMB thinks we should go from here.
    First, in the area of health care fraud, Health and Human 
Services (HHS) is using new approaches to detect and prevent 
fraud in the Medicare and Medicaid programs. The Center for 
Medicare and Medicaid Services, has launched the Fraud 
Prevention System (FPS) which analyzes all Medicare fee-for-
service claims using risk-based algorithms prior to payment. In 
addition, last year CMS opened a new Command Center that brings 
together program experts, law enforcement, and others to 
identify fraud more quickly and more effectively.
    This approach is paying off. We have seen record-breaking 
amounts of Federal dollars recovered and returned and a higher-
than-average return on investment over the last 3 years through 
these efforts.
    In the area of tax refund fraud, the Internal Revenue 
Service (IRS) has taken numerous steps to combat identity theft 
and protect taxpayers. For the 2013 filing season, the IRS has 
intensified its fraud detection capabilities by expanding the 
number and quality of its identity theft screening filters. 
Further, IRS suspended or rejected more than 2 million 
suspicious returns--including identity theft returns--so far 
just this filing season. These efforts are paying off across 
the board. I think it is worth noting in larger efforts among 
IRS that the Earned Income Tax Credit (EITC) program, which has 
one of the more significant amount of improper payments, we saw 
a decline in the EITC error rate this year.
    Last, the Department of Labor (DOL) is actively working 
with States to reduce improper payments in the Unemployment 
Insurance (UI) program. For example, Labor recently partnered 
with the New York State Department of Labor to establish the UI 
Integrity Center of Excellence. This new center will foster 
collaboration between the Department of Labor and States to 
develop and implement innovative strategies that State UI 
programs can use to combat improper payments and build capacity 
nationally to use data analytics and predictive modeling more 
effectively.
    Here, too, we are seeing results with a reduction in the UI 
improper payment rate this past year. This is important 
progress, as I noted; however, I also noted there is more work 
to be done. That is why the Administration has set a new 
governmentwide goal of achieving a minimum 97 percent 
governmentwide accuracy rate by the end of 2016. I would like 
to highlight two initiatives that will anchor our efforts in 
getting to this goal.
    First, the President's 2014 budget includes a suite of 
program integrity proposals that, if enacted, would result in 
an estimated $98 billion in total savings over 11 years and 
make important progress in combating improper payments. For 
example, the budget proposes to establish a dependable source 
of mandatory funding for Continuing Disability Reviews and 
(CDRs) Supplemental Security Income (SSI) redeterminations. In 
addition, the budget continues to build upon a robust set of 
proposals to strengthen Medicare and Medicaid program integrity 
from last year's budget and prior efforts. I think it is worth 
repeating that these efforts would save $98 billion over 11 
years, if enacted.
    Second, this Committee and the Administration have worked 
together to leverage technology and data sharing to address 
improper payments. In April 2012, the Administration launched 
the governmentwide Do Not Pay effort to help agencies avoid 
making payments to individuals or entities who should not 
receive Federal funds, such as debarred contractors receiving 
Federal awards or deceased Federal employees receiving 
retirement benefits.
    Earlier this year, the President signed into law the 
Improper Payments Elimination and Recovery Improvement Act of 
2012 (IPERIA), which was championed by this Committee and will 
enhance and expand the efforts already underway. Consistent 
with existing protections for individual data privacy, this new 
law will help improve the identification and recovery of 
improper payments and reinforce and accelerate our Do Not Pay 
effort.
    To help bolster Do Not Pay's impact and address other key 
Administration goals, the President's budget also includes two 
proposals related to improving access to and completeness of 
death-related data.
    I would like to close by emphasizing that this 
Administration will continue to treat improper payments as a 
key priority. I am proud of the progress we have made so far, 
but there is a lot more work to be done, and I look forward to 
working with this Committee as well as GAO, the Inspector 
General community, and the Federal agencies.
    Thank you again for inviting me to testify. I look forward 
to answering your questions.
    Senator Coburn. Mr. Chairman, I just wanted our panelists 
to know that the reason there are not more Members here, we 
have a Joint Session of Congress going on at the same time, and 
I hope that they will be here after that is completed.
    Chairman Carper. OK. Mr. O'Carroll.

   TESTIMONY OF HON. PATRICK P. O'CARROLL, JR.,\1\ INSPECTOR 
          GENERAL, U.S. SOCIAL SECURITY ADMINISTRATION

    Mr. O'Carroll. Good morning, Chairman Carper, Ranking 
Member Coburn, Senator Tester, Senator Enzi, and Members of 
this Committee. Thank you for the invitation to testify today 
as we discuss ways to reduce improper payments.
---------------------------------------------------------------------------
    \1\ The prepared statement of Mr. O'Carroll appears in the Appendix 
on page 60.
---------------------------------------------------------------------------
    Federal agencies reported $108 billion in overpayments and 
underpayments in fiscal year 2012. Identifying, reducing, and 
preventing improper payments are critical efforts for agencies 
and their inspectors general.
    This morning, on behalf of the Council of Inspector 
Generals on Integrity and Efficiency, as the Chairman was 
wondering what the initials were--I would like to review agency 
compliance with existing improper payment laws and share 
recommendations from the IG community that could improve 
payment accuracy.
    Recently enacted laws, including the Improper Payment 
Elimination and Recovery Improvement Act of 2012, requires 
CIGIE oversight of agency actions and reports. With our long 
history of identifying SSA's improper payments, my office was 
asked to take a leadership role in this effort. We recently 
issued a report on Federal agencies' compliance with key 
requirements of the law, such as conducting risk assessments of 
programs, publishing improper payment rates, and issuing 
corrective action plans.
    We reviewed 64 inspectors general, and we found that 27 IGs 
said their agency complied, while 11 concluded that their 
agency did not comply; 21 IGs were not required to issue a 
report because their agencies had minimal improper payments; 
and 5 IGs for intelligence agencies did not make their reports 
public.
    Our review summarizes the reasons given by the 11 IGs that 
concluded that their agency did not comply. Some of the reasons 
for noncompliance were: reporting a program improper payment 
rate greater than 10 percent; failing to publish improper 
payment rates; or providing incomplete information about 
corrective actions or planned progress.
    Of course, we have also specifically reviewed SSA's 
compliance with the laws. SSA has accurately reported its 
improper payment information, including high-dollar 
overpayments. But the agency can make additional efforts, such 
as reviewing current corrective actions, intensifying reduction 
efforts, and analyzing available program data. The IPERIA of 
2012 included a Do Not Pay provision, which requires agencies 
to check lists of ineligible individuals before making 
payments. One of those lists is SSA's Death Master File, so it 
is critical that SSA maintain accurate death records.
    My office has conducted several audits related to accuracy 
of DMF data, which I outline in my written statement. In those 
reports, we have identified many cases in which SSA made 
payments to deceased beneficiaries.
    We also found that some employers and voter registration 
boards made verification requests involving deceased 
individuals. However, because their death information was not 
on the DMF, SSA did not report the individual as deceased to 
the employer or to the voting board.
    We and other IGs have shown the successes that can result 
from collaborative efforts to share data and detect improper 
payments. For example, our auditors recently determined SSA 
could use Medicare claim information to identify overpayments 
to deceased individuals. In that report, we found that 25 
percent of the beneficiaries who had not used Medicare for 3 
years were actually deceased. We estimated SSA paid about $100 
million to those beneficiaries after their deaths.
    As this case shows, IGs should use any and all tools that 
can improve payment accuracy, including analysis of internal 
and external data. To facilitate this high-impact work, CIGIE 
is pursuing an exemption to the Computer Matching and Privacy 
Protection Act, which requires IGs to obtain a formal agreement 
before they match data with other entities. This law impedes 
IGs' efforts to detect fraud and waste.
    For example, we cannot take action against beneficiaries 
who receive disability benefits and Federal workers' 
compensation because we did not have a matching agreement with 
the Department of Labor.
    In 2010, HHS and its Office of Inspector General (OIG) 
obtained an exemption for data matches to identify fraud. We 
believe SSA should have a similar exemption, as should other 
IGs.
    We and other IGs also support a legislative proposal to 
establish a self-supporting fund for integrity activities. We 
have proposed an indefinite appropriation to make available to 
SSA 25 percent, and to our office 5 percent, of actual 
overpayments collected. These funds would be used only for 
integrity activities that provide a continuous return on 
investment.
    In conclusion, as Federal employees, we must ensure that 
taxpayer dollars are spent wisely and efficiently, and that 
government benefits are administered correctly. Federal 
agencies and their OIGs have made a concerted effort to reduce 
improper payments in recent years. This important collaboration 
across government is ongoing. My office will continue its 
liaison role between CIGIE and the Office of Management and 
Budget, and we will provide information to this Committee as 
requested.
    I also want to note that agencies make all of their 
improper 
payment information available to the public online at 
PaymentAccuracy.gov.
    Thank you again for the invitation to testify today, and I 
will be happy to answer any questions.
    Chairman Carper. Thank you, Mr. O'Carroll.
    Mr. Gregg, please.

 TESTIMONY OF RICHARD L. GREGG,\1\ FISCAL ASSISTANT SECRETARY, 
                U.S. DEPARTMENT OF THE TREASURY

    Mr. Gregg. Good morning Chairman Carper, Ranking Member 
Coburn, and Senators Tester and Enzi. Thank you for inviting me 
to testify about improper payments today.
---------------------------------------------------------------------------
    \1\ The prepared statement of Mr. Gregg appears in the Appendix on 
page 66.
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    I would like to provide the Committee with an update on the 
Treasury Department's work to implement the centralized 
business center, named Do Not Pay. I will also describe steps 
Treasury is taking to assist agencies in implementing IPERIA. 
And, finally, I would like to describe Treasury's long-term 
vision on dealing with improper payments.
    Following the President's June 2010 memorandum directing 
agencies to improve payment accuracy by using the Do Not Pay 
list, Treasury, in collaboration with OMB, began developing 
centralized access to a set of databases. Since that time, this 
database has evolved into a database and a business center to 
deal with analytics.
    Agencies can now access the Do Not Pay portal to check 
several key databases to verify eligibility before making a 
payment or award. The portal provides secure access to all data 
sources, including information on deceased individuals, 
debarred contractors, commercially available wage and 
employment information, and information on delinquent debt. It 
is important to note that agencies can only access these data 
sources in accordance with the Privacy Act laws and other 
applicable requirements.
    An agency employee with proper credentials has several 
options to verify eligibility using the Do Not Pay portal. The 
employee may just check an individual record or, more commonly, 
submit a batch to be reviewed. In addition, the employee can 
request that a particular payment file be put under continuous 
monitoring.
    Recognizing that a robust data analytics capability is 
essential in reducing improper payments, Treasury has developed 
a Data Analytics Service. This service provides the ability to 
review large data sets to identify trends, risks, and patterns 
of behavior that may warrant a more thorough analysis. Agencies 
can now use this Data Analytics Service to obtain customized 
matching and analysis of an agency's payment file to identify 
irregularities and potential fraud. Eventually, Do Not Pay will 
be able to build business rules based on data trends and agency 
feedback to improve data quality to agencies.
    Treasury has made significant progress in providing 
agencies access to its Do Not Pay business center. Currently 36 
Federal agencies are using Do Not Pay to reduce improper 
payments. In addition, nine States are currently using Do Not 
Pay in administering federally funded programs.
    Treasury, in partnership with OMB, is helping agencies meet 
the IPERIA requirements. By June 2013, next month, IPERIA 
requires executive agencies to review all payments and awards, 
as appropriate, for their programs through the Do Not Pay 
system. To assist agencies in meeting this deadline, Treasury 
has already begun comparing agency-submitted payment 
information against the public versions of the Death Master 
File and the Excluded Parties List, which includes information 
on suspended or debarred contractors.
    Helping agencies meet the requirements under IPERIA is just 
the beginning. In the coming months, it will be important for 
agencies to establish a robust adjudication process for 
payments that have been identified as potentially improper. To 
provide information that is useful to the agencies, Treasury 
needs to better understand not only the payment data, but also 
each agency's rules and processes for determining eligibility.
    Accordingly, beginning June 2014, Do Not Pay will verify 
prepayment information based on agency-defined rules to either 
identify a payment as potentially improper for the agencies to 
review or, if given the authority, for Treasury to stop that 
payment.
    Treasury's long-term vision is to have our Do Not Pay 
business center and Data Analytics Service become a robust, 
timely, and flexible service for the agencies to use in 
identifying and preventing waste, fraud, and abuse. To fully 
achieve this vision, Treasury will work to both improve the 
quality and the availability of data as well as strengthen our 
analytics capability.
    The key issue for Do Not Pay is access to data. The fiscal 
year 2014 President's budget proposes to expand Treasury's 
authority to access additional databases. These include the 
National Directory of New Hires, the Prisoner Update Processing 
System, and the State-supplied death data in the Death Master 
File.
    While Treasury has made significant progress in providing 
access to agencies to Do Not Pay, much work remains until 
agencies are able to fully utilize the functions and data 
available in the Do Not Pay business center. For example, we 
are working closely with OMB to help address questions related 
to computer matching. IPERIA has made some changes to these 
requirements and I think they will help. Also we are looking to 
work with OMB to implement the requirements under IPERIA and 
streamline the computer matching and other requirements under 
the Privacy Act.
    Treasury is also working to improve its Data Analytics 
Service. Improving data quality will provide agencies with 
highly reliable results and minimize false positives. In the 
long term, Treasury is working to develop a forward-looking, 
continuous monitoring, fraud identification tool. Treasury will 
also enhance Do Not Pay to provide a feedback loop to the 
agencies so they can improve their own data, basically a 
continuous learning process.
    In conclusion, Treasury is committed and I am committed to 
reducing improper payments and assisting agencies with 
implementing IPERIA. I look forward to working with this 
Committee in your very good efforts to improve the work in this 
area.
    I will be happy to answer any questions.
    Chairman Carper. Thanks, Mr. Gregg.
    Mr. Bertoni, please proceed.

    TESTIMONY OF DANIEL BERTONI,\1\ DIRECTOR OF EDUCATION, 
    WORKFORCE, AND INCOME SECURITY ISSUES, U.S. GOVERNMENT 
                     ACCOUNTABILITY OFFICE

    Mr. Bertoni. Mr. Chairman, Ranking Member Coburn, Members 
of the Committee, good morning. I am pleased to discuss the 
Social Security Administration's death information and the role 
such data plays in preventing improper payments, which were 
estimated at more than $100 billion last year.
---------------------------------------------------------------------------
    \1\ The prepared statement of Mr. Bertoni appears in the Appendix 
on page 69.
---------------------------------------------------------------------------
    SSA maintains a death data file for 98 million deceased 
individuals that Federal benefit agencies can electronically 
match against to identify those no longer living and terminate 
benefits. However, SSA's Inspector General and others have 
identified errors in this file. Such errors include deceased 
individuals not being listed and living individuals erroneously 
included.
    My remarks are based on our ongoing work and discuss SSA's 
processes for handling death records and Federal agency access 
to these records.
    In summary, SSA receives about 7 million death reports each 
year from various sources, including family members, funeral 
directors, post offices, and State vital records agencies. 
However, SSA's processes for compiling these reports may impact 
the accuracy of the data because it does not verify certain 
death reports or record others.
    In keeping with its mission, SSA is primarily focused on 
ensuring that it does not make payments to deceased 
beneficiaries. Thus, it only verifies death reports for current 
beneficiaries and only from sources it considers less accurate.
    Verification generally involves field staff reaching out to 
family members, doctors, or other reliable sources to confirm 
the death. Because SSA considers State-verified electronic 
death reports and those from funeral directors and family 
members to be most accurate, no verification is required or 
performed. However, reports from sources deemed less accurate, 
such as post offices, are verified.
    The agency never verifies death reports for non-
beneficiaries, regardless of source. The information, including 
the reported name, date of birth, and social security number 
(SSN), are generally accepted and entered into the file.
    Other agency processes may also contribute to errors. For 
example, if SSA cannot match death report information to data 
in systems, such as a name or SSN, the death generally will not 
be recorded. Thus, short of verifying all reported deaths and 
taking additional labor-intensive steps to resolve non-matches 
and input the corrected information, errors in the data are 
likely.
    In fact, targeted analysis we performed identified 
potential inaccuracies, including nearly 1,300 records where 
the listed age of beneficiaries at death was as high as 129 
years old and 1,800 individuals who had SSNs assigned to them 
but died prior to the year the Social Security system and SSNs 
actually came into existence.
    Regarding access, numerous agencies use SSA's death 
information for the purpose of matching against their program 
data. However, per the Social Security Act, SSA can always 
share the full version of the file, which included State-
reported death information, with Federal benefit-paying 
agencies. All other parties have access to a publicly available 
partial file, which excludes State data.
    Currently, SSA provides the full file, which includes about 
98 million records, to six Federal benefit-paying agencies that 
meet legal access requirements. SSA is reimbursed for the cost 
of sharing this data, and the amounts vary by agency. For 
example, some agencies, such as OPM, pay nothing while DOD pays 
$40,000 annually. SSA officials noted that the cost is 
generally related to the volume of data provided, but that 
other factors may affect what agencies pay. As we proceed with 
our work, we will clarify the key cost drivers and other 
factors leading to variation across agencies.
    As noted previously, several other agencies purchase a 
partial version of the file through the National Technical 
Information Service that includes about 87 million records. 
However, our work shows that some of these agencies do, in 
fact, pay Federal benefits, such as Labor's Occupational 
Illness Compensation Program and the Department of 
Agriculture's (USDA) Farm Service Agency.
    SSA officials told us that decisions are made about an 
agency's statutory access to the full file on a case-by-case 
basis and that several additional agencies recently requested 
such access. However, at this time it is still unclear why some 
benefit-paying agencies still receive only the partial file and 
are relying on less than complete information to ensure the 
integrity of their programs.
    In conclusion, SSA's death information can serve as a 
helpful tool in preventing improper payments, but can only do 
so if it provides accurate information that is reasonably 
accessible to Federal agencies that need it. As we continue our 
work, we will explore these and other issues in more detail and 
look forward to providing a final report later this year.
    Mr. Chairman, this concludes my statement. I am happy to 
answer any questions that you or other members of the Committee 
may have. Thank you.
    Chairman Carper. Thanks, Mr. Bertoni.
    Ms. LaCanfora, please proceed.

TESTIMONY OF MARIANNA LACANFORA,\1\ ACTING DEPUTY COMMISSIONER 
  FOR RETIREMENT AND DISABILITY POLICY, U.S. SOCIAL SECURITY 
                         ADMINISTRATION

    Ms. LaCanfora. Chairman Carper, Ranking Member Coburn, 
Senator Tester, Senator Enzi, and Members of the Committee, 
thank you for inviting me to this important hearing on steps to 
strengthen the integrity of Federal payments. I am Marianna 
LaCanfora, SSA's Acting Deputy Commissioner for Retirement and 
Disability Policy. I will focus my remarks on our collection of 
death information, the accuracy of that information, the 
limitations on our ability to share it, and our legislative 
proposal that would address concerns about disclosure of death 
information.
---------------------------------------------------------------------------
    \1\ The prepared statement of Ms. LaCanfora appears in the Appendix 
on page 80.
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    We designed our systems and processes to timely stop paying 
beneficiaries who have died and to pay benefits to survivors. 
Each year, we post about 2.5 million death reports, primarily 
from family members, funeral homes, financial institutions, and 
States.
    In 1980, following a court order based on the Freedom of 
Information Act (FOIA), we began disclosing this death 
information to the public in a format known as the Death Master 
File. In 1983, Congress added Subsection (r) to Section 205 of 
the Social Security Act, requiring us to collect death 
information from States. The law specifies that the death 
information we receive from States is exempt from disclosure 
under FOIA and the Privacy Act and may be shared only with 
agencies that administer federally funded benefits, or similar 
State programs, to ensure proper payment.
    Consistent with Section 205(r), we share all of our death 
records with eligible Federal agencies, including the Centers 
for Medicare and Medicaid Services, the Department of Defense, 
the Internal Revenue Service, and the Department of Veterans 
Affairs (VA). Under FOIA, we continue to disclose death 
information from non-State sources to the public.
    Over the years, we have made significant improvements to 
our death information collection process. The information we 
now collect is highly accurate, and we strive to further 
improve upon our accuracy.
    Since 2002, we have worked with States to increase the use 
of Electronic Death Registration (EDR), and I cannot stress how 
important this program is going forward. EDR automates the 
death reporting process by enabling States to verify the name 
and Social Security number of deceased individuals against our 
records before they issue a death certificate or transmit a 
report to us. Currently, 35 States and jurisdictions provide 
reliable death reports to us through the EDR process.
    In addition, we have made improvements to our processes 
based on a recent series of OIG audits. For example, in 
December of this past year, we implemented a major systems 
enhancement to ensure consistency between our payment records 
and our Numident file. In addition, we are currently 
redesigning our death information system to make it more 
efficient and reliable.
    There are some limitations on our ability to share our 
death information. For example, the death information we 
collect through EDR is State information, which, under Section 
205(r), we are authorized to disclose only to certain agencies, 
as I mentioned earlier. Because of this restriction we cannot 
provide State death information to the Department of Treasury 
for Do Not Pay purposes.
    To address these limitations, we worked closely with an 
interagency group, led by the Office of Management and Budget, 
to develop our legislative proposal contained in the fiscal 
year 2014 President's budget. The proposal would amend Section 
205(r) of the Social Security Act to allow additional Federal 
agencies to access our death information, including the State 
information, for other purposes including health and safety, 
law enforcement, and the Do Not Pay Initiative.
    This proposal would also restrict access to the publicly 
available Death Master File by delaying the release of the 
decedent's information to the public for 3 years after death. 
This would significantly reduce the ability of criminals to use 
information in these files to commit tax fraud. Only private 
entities that the Commissioner certifies as having a legitimate 
need for the information would be permitted to receive the 
information in the publicly available Death Master File.
    We look forward to working with Congress to refine this 
legislation. I am happy to answer any questions you may have.
    Chairman Carper. OK. Well, thank you all for that 
testimony. I am going to--a little bit of history--Senator 
Ayotte, welcome. Glad you could join us. Thanks for coming.
    Senator Coburn has been working in these venues for quite a 
while. So have some of you. And if you go back, I want to say 
maybe to 2002, President Bush, former President Bush, signed 
into law legislation that said we want Federal agencies above a 
certain size, in terms of their financial activity, we want 
them to start identifying improper payments, and we want them 
to start reporting improper payments. Some did, some did not. 
And we started doing oversight hearings to try to make it real 
clear to agencies we expect them to comply with that new law.
    In 2010, Senator Coburn and I collaborated on legislation 
with input from, frankly, some people at this table to 
basically say not only do we want Federal agencies to identify 
improper payments, we want them to report improper payments, we 
want them to stop making improper payments, we want them to go 
out and recover money that has been improperly paid, and we 
want the agencies to begin to find a way to, if you will, 
identify and reward and say in terms of evaluating supervisors 
of agencies, leaders in agencies, part of your evaluation will 
be your compliance with this law. We increased the number of 
agencies' financial activity that was subject to the law as 
well.
    In 2012, last year in our legislation we focused very much 
on Do Not Pay. We did some other things as well, but we 
appreciate very much the Administration's initiatives here. We 
tried to help in that effort.
    Our focus here today is still improper payments. It is more 
on making payments to people that are dead. It drives me crazy. 
It probably does you as well. And when we walk out of here, I 
do not know if it is possible to actually have an action plan, 
but I want us to be on a road to one.
    The first thing I am going to ask is this: We had a hearing 
yesterday right here on border security with respect to 
immigration reform, and I told the story--some of my colleagues 
who have heard this before, I ask you to forgive me. But it is 
a basketball story. I am talking to one of our head basketball 
coaches back in Delaware, saying, ``Who are the best players on 
your basketball teams? Is it the person who has the best shot, 
the best passer, the best rebounder, the best dribbler? Who is 
the best, most valuable player on your team?'' And he said, 
``The one who makes everybody else better.'' That is what he 
said. ``The best player on the team is the one who makes 
everybody else better.''
    We are trying to make you better. We have worked on this 
legislation for about a decade to try to, frankly, improve our 
ability and the abilities across the Federal Government to do 
our jobs better in reducing improper payments. I think it is 
working. Is there more we can do? There sure as heck is.
    And here is what I am going to ask. I am going to ask you 
to just--taking off on that notion of what we can do further to 
enable not just the agencies here but those that are not here 
that have been making improper payments, particularly to people 
that are dead, what can we do, what do we need to do in 
addition to what we have already done? A lot of times when I 
ask that question, what we hear is more oversight. More 
oversight. And we are good at oversight. We have four 
Subcommittees in this Committee. They are all oversight 
committees. Full Committee, we are an oversight Committee. So 
we are going to continue to do oversight.
    But in terms of legislation that we can push, particular 
oversight that we really need to focus on, let me just ask you 
to give us some guidance, and then we will take it from there. 
Mr. Werfel.
    Mr. Werfel. Senator----
    Chairman Carper. What have we done that is particularly 
helpful on this front? What do we need to do, especially with 
respect to the payment of money, Federal monies, to dead 
people?
    Mr. Werfel. I think I would point to three things on 
improper payments more broadly, but each in some way relates to 
payments to the deceased.
    The first thing that you can do is take a very close look 
at the President's 2014 budget and the various provisions that 
are in play around program integrity. Some relate and are 
critical to improvements to the Death Master File, both the 
accuracy of the information and the ability to share it and the 
completeness of it. There are really game-changing provisions 
in the President's budget around the Death Master File 
specifically.
    But there is a whole broader set of program integrity 
initiatives, and one of the things that is unfortunate is that 
the track record on getting these program integrity initiatives 
enacted is not good.
    Chairman Carper. Why is that?
    Mr. Werfel. I am not sure. I mean, on the one hand, that is 
one of the reasons, for example, let me just point out that in 
the President's budget this year we recommend shifting Social 
Security and HHS program integrity funding to the mandatory 
side, because on the discretionary side we are not getting the 
necessary investment in funding. And we believe and I think we 
have demonstrated that these investments have a positive Return 
on Investment (ROI). It is something like, $10 to $1 on the SSI 
front.
    Chairman Carper. That is pretty good.
    Mr. Werfel. And why can't we get those activities funded to 
the right level is something that we have to look in the mirror 
on and figure out what we can do to get this enacted.
    Chairman Carper. And particularly what can we do on that 
front to help.
    Mr. Werfel. Yes.
    Chairman Carper. Is it work we need to do on the 
appropriations side? What is it?
    Mr. Werfel. I think that is part of it. I mean, I think 
there needs to be more attention from the government oversight 
communities to the appropriators around the importance of these 
efforts, in particular in today's budget climate, with all that 
we have up against us. The fact that we are letting billions of 
dollars in potential savings sit on the table and not executing 
on it is something we have to take very seriously and see if 
there is a way to overcome lack of----
    Chairman Carper. Well, we have several people on this 
Committee that are appropriators. I think Senator Tester is an 
appropriator. We have Senator Landrieu. There are probably 
others that I am not aware of. And that could be something for 
us to work on. That could be good.
    Mr. Werfel. Let me mention one other thing, and it relates 
to your oversight, but maybe there are some additional steps 
that you can take.
    I think one of the themes around improper payments and, in 
particular, payments to dead people is driving agencies to be 
more sophisticated and more attentive to data and analytics and 
how they can close the gap. And you heard some of that in some 
of the opening statements. I think it was Inspector General 
O'Carroll who mentioned that they were able to detect a 
correlation between if you have not gotten Medicare in the last 
3 years, you may be deceased, and that is an important proxy 
for information that can get us----
    Chairman Carper. Or just very healthy.
    Mr. Werfel. Well, that is true, too. [Laughter.]
    There are other examples of that. In the Unemployment 
Insurance program, we are working on a pilot right now with 
financial institutions. The big challenge in unemployment 
insurance is people get back to work. We do not have that real-
time information that they are back at work. We pay them a UI 
benefit. It is improper because they are already back at work 
and they are no longer eligible. That is the major challenge in 
UI.
    What we learn from banks is when banks get direct deposit 
from an employer, they know, they have information, hey, this 
person is working, because there is something about the way the 
deposit comes in that lets them know that it is provided by an 
employer. Access to that information is proving, as we pilot 
this out in the State, extremely helpful to the States to 
trigger, hey, this person is back at work, let us stop this 
payment from going out the door.
    I raise this just to say that there are so many different 
examples like that we have not tapped into yet. I think there 
needs to be more awareness amongst the oversight community that 
there are in the Information Age, data connections that can 
happen that are not happening yet, and we need to take that 
more seriously and get more energy around it.
    Chairman Carper. Good. I would just say to our other four 
witnesses--then I am going to yield to Dr. Coburn--when we come 
back, I am going to pick up--this line of questioning, and the 
kind of information that Mr. Werfel offers is the kind of thing 
that I am looking for. Thanks. Dr. Coburn.
    Senator Coburn. Danny, why do you need bank information? 
You get a Federal Insurance Contributions Act (FICA) payment. 
You get a FICA payment into the government, with the Social 
Security number. Why would you not give that back to the 
States? You do not need the banks.
    Mr. Werfel. I think the issue, Senator Coburn, revolves 
around, again, what information that is Federal that we can 
share. It is ironic, but there are points that we are finding--
we are finding it specifically with UI--that if we can go to 
private sector sources of data, we have a more easier and 
seamless time of getting that information versus some of the--
--
    Senator Coburn. Well, would you mind sending to me the 
reason why you cannot use FICA payments to the Federal 
Government connected with the Social Security to notify a State 
that has somebody on UI, why you cannot give them that 
information?
    Mr. Werfel. Yes, I will. I will get back to you.
    Senator Coburn. Because Tom and I were just talking, we 
want to help get this prohibition on the State-provided 
information for the Death Master File taken care of.
    What was the decline in the EITC payment rate? You said it 
was a significant decline this year, the payment error rate.
    Mr. Werfel. It was not significant, but it is trending 
down. It went from 23.5 percent to 22.7 percent.
    Senator Coburn. I think the number is $13 billion, isn't 
it?
    Mr. Werfel. It is still a very significant----
    Senator Coburn. $13 billion goes fraudulently out of the 
Federal Government every year under EITC. We ought to figure 
that one out.
    Mr. Werfel. Absolutely.
    Senator Coburn. The same thing for the child tax credit, 
another $8, $9 billion that is fraudulently paid. So there is 
$21 billion. That is more than the whole decrease--just those 
two areas more than the whole decrease we have seen in 2 years 
in improper payments.
    We do not have a good handle on the UI improper payment 
rate, right?
    Mr. Werfel. Well, we have a measurement that the Department 
of Labor provides, and it is 11.4 percent this year as an error 
rate.
    Senator Coburn. Yes, OK. Just for my friends from Social 
Security, both Inspector General and Ms. LaCanfora, have you 
all read this report put out by the Permanent Subcommittee on 
Investigations (PSI) on error rates on disability? Have you all 
read this report?
    Mr. O'Carroll. Yes.
    Ms. LaCanfora. Is that a recent one? What is that date?
    Senator Coburn. It was issued last year.
    Ms. LaCanfora. I recall that one.
    Senator Coburn. What the Social Security system says is 22 
percent of the time their Administrative Law Judges (ALJs) are 
making a mistake in terms of what they are granting. That is 
your own internal review. We found 23 to 26 percent. So about 
one-quarter of all the Social Security Disability Income (SSDI) 
determinations do not meet the guidelines within Social 
Security themselves. And so we need to be about fixing not just 
the symptoms of pain for people who are not disabled, but 
fixing the problem, which is putting people on disability who 
are not disabled, who do not meet the requirements under the 
law. And so your own internal documents say that a quarter of 
the time you do not do it.
    We did another study on 300 blindly selected cases from 
three different areas in the country, reviewed every one of 
those cases in detail, and we confirmed what your own report 
says, that your own ALJs are not following the guidelines that 
are given under the law in terms of determining disability. So 
until you fix that problem and continuing disability reviews--
--
    So I want to go back to one other point with you, Dan. 
Rather than make mandatory the monies to do our program 
integrity, why don't we take the money that we are saving, the 
money that we are recapturing, and put that into a fund so that 
fund--that Congress cannot touch, in other words, what is 
recaptured goes into a fund, and then it is used for program 
integrity based on, one, the percentage of success that each 
agency has used in terms of collecting monies; and, No. 2, the 
percentage of the budget that they have in terms of total. Why 
would we not do that?
    Mr. Werfel. I think it is a very reasonable suggestion. 
Anytime your program integrity efforts are creating receipts 
for the Federal Government, whether--for example, in Medicare 
the Recovery Audit Program there has recovered more than $3 
billion over the last 3 years. What happens to that money? I 
would hope that it is invested in further efforts that are 
going to have a positive ROI.
    And so it is good business sense as an investment. It is 
really a question--what happens, unfortunately, is the money 
gets moved into a sphere with the rest of the appropriations 
process and----
    Senator Coburn. Yes, I understand. So I think you will have 
much more success doing what I suggested rather than taking 
money away from the appropriators' capability. We have budget 
guidelines and numbers, and this would not be in part of it. 
And we do have one agency, I think the Treasury--as matter of 
fact, I think the Treasury is the only agency that does not 
have to return its money that either is not spent that was 
unobligated or money that they have collected. They are the 
only agency in the Federal Government that does not have to 
return it to the Treasury.
    One other question for you, Danny, and then we will get to 
the others. I do not know any business or any family that would 
think 3 percent of the time you paid money wrongly was a good 
goal. So my question to you is: How do we come with 97 percent 
rather than 100 percent? I do not know a chief financial 
officer in this country, if their accounts payable department 
was 3 percent of the time paying money out that should not have 
been paid out that would not get fired. So my question is: Why 
is 97 percent an acceptable goal for accuracy in payment for 
the Federal Government?
    Mr. Werfel. That is a very good question. I have two 
responses to it.
    First, it is our next mile marker. It is not the endpoint. 
So we would like to get to--we are at 4.35 percent 
governmentwide error rate right now. We would like to get that 
to 3 percent or a 97 percent accuracy rate as a floor and then 
move on from there.
    But let me react to the notion of a 100 percent goal. I 
would worry about a 100 percent accuracy goal for the following 
reason: If we could achieve it in a cost-effective way, that 
would be great. But there may be--and this is something we need 
to analyze--there may be such inherent complexity in some of 
the Federal programs and operations that you get to a point 
where you start spending $2 to save $1 in order to weed out 
that final bit of error.
    A great example is the EITC. I am reading out these 
percentages to you, and they are north of 20 percent as an 
error rate, and that is very concerning. It is the highest 
error rate of any major program that we have. Why is that? One 
of the main reasons--and it is something I have talked with 
this Committee about before--is because the nature of that 
program is so complex in how you determine eligibility, one of 
the criteria is you have to have lived with your dependent 
child for more than 6 months out of the year in order to be 
eligible. Well, we go in and audit it, and we find that the 
individual--on a case-by-case basis, we can determine and get 
proxies for childhood residency, but there is no broad-based 
childhood residency database that we can tap into.
    So whether the individual has lived with their child for 4 
months or 8 months becomes extremely difficult to ascertain. 
And as we try to ascertain it, we can start auditing more and 
more people, but that has a cost to it.
    Senator Coburn. Yes. All right. Thank you. My time has 
expired.
    Chairman Carper. Senator Enzi.

               OPENING STATEMENT OF SENATOR ENZI

    Senator Enzi. Thank you, Mr. Chairman. I appreciate you 
holding this hearing because I appreciate your chart that shows 
we are now down to $108 billion in incorrect payments and that 
90 percent of those were overpayments. That means that $98 
billion that we sent out in payments should not have even been 
going out the door in the first place. And this 4.35-percent 
rate, if a small business had an improper payment rate of 4.35 
percent, that is $4.35 out of every $100, it would be a real 
problem for their bottom line. Even if it was in a good economy 
and even if that company were in a good financial position, 
they would not be able to afford it. And neither can the 
Federal Government.
    The problem of improper payments comes from dozens of 
different agencies and programs across the Federal and State 
governments--the Social Security Administration, Health and 
Human Services, Department of Labor, Department of Agriculture, 
the Treasury, Department of Education (DOE), Department of 
Housing and Urban Development (HUD). Those are all on Office of 
Management and Budget's list of agencies with high error 
programs. Those are our biggest ones. We are supposed to be 
stewards of taxpayers' dollars, so it is no wonder that the 
taxpayers do not trust the Federal Government to use taxes 
wisely when we have a situation like this.
    I will start with what I hope is a really easy question. 
Mr. Werfel, you mentioned that you could save $98 billion over 
11 years. My question is: Why 11 years? We usually talk about 
10 years.
    Mr. Werfel. I am actually not sure why the estimate came in 
at 11 years. I can find out. We do usually talk about things as 
10 years, but we have a window this year in the budget for 
certain activities of 2013 to 2023, so we include both 
endpoints, and so we are at 11 years. But I can get a better 
answer to you on that.
    Senator Enzi. OK. It suggests to me that maybe most of the 
money comes in that 11th year, which we never, ever get to.
    Mr. Werfel. I do not think that is the case in this 
situation.
    Senator Enzi. OK. Mr. Gregg, as I mentioned, improper 
payments are not just a problem in one agency or one program. 
It is also a problem shared by programs run by the Federal 
Government and programs run by States. And I appreciate that 
you have talked about how to improve interagency cooperation by 
preventing improper payments.
    How do State-administered programs fit into your efforts? 
And are those efforts to improve coordination with the States 
to reduce improper payments? Do States have access to that Do 
Not Pay portal?
    Mr. Gregg. We are working with a number of States that have 
federally funded programs, and we have had some success. I 
think there is a case in Florida where we identified through a 
Death Master File someone that had been deceased for a year or 
more, and a couple hundred thousands dollars had been paid out. 
But I think that we are going to continue to expand our role 
with the States. And, we just started Do Not Pay a couple of 
years ago. I think to me it is kind of at the walking stage. I 
want to get it sprinting as quick as we can, but we are not 
there yet.
    But to the extent that we can assist the States and, of 
course, obviously other Federal agencies, we definitely want to 
do that.
    Senator Enzi. I wonder if we are trying to do that entirely 
in-house. I read about an Israeli program that works on credit 
card fraud that has had significant impact on the particular 
individual that came up with the program. But at any rate----
    Mr. Gregg. Senator, I think to do this right you need a 
couple of things. Or, rather, three things. One is you need 
access to the data, which I think has been talked about. You 
also need the right tools, and in some cases that is software. 
You have some but we want to expand that. And then you need 
some really good people doing the analytics to make sure that 
you do not feed back to agencies a lot of information that are 
false positives. So those are three areas that I think are key 
for us.
    Senator Enzi. Is the software being developed in-house?
    Mr. Gregg. No.
    Senator Enzi. OK. Thank you.
    One of the issues I worked on with Senator Kennedy in the 
Health, Education, Labor, and Pensions (HELP) Committee was the 
health information technology legislation, and our hope was to 
make it easier to share information so that doctors, patients, 
and hospitals could make better medical decisions and work more 
efficiently. It seems to me like there are some parallels here. 
We have a bunch of different organizations trying to use and 
share different information to help make sure that individual 
people get the right service.
    Mr. Werfel, how do you plan to improve or expand the Do Not 
Pay portal to make it a more complete resource for agencies 
that pay out benefits and make it easier to share and check 
information?
    Mr. Werfel. There are a couple of things underway. First, 
one of the major implementation points of Do Not Pay is not to 
wait for the agencies. When we first started down the road of 
Do Not Pay, we said, OK, we will set up this system and then 
agencies will log in, and then they will submit names and we 
will get a sense of whether they are ineligible or not. And 
they still have that option.
    But one of the things that Treasury discovered is we 
already have--and I think Mr. Gregg talked about this. They 
already have these huge payment files of vendors and 
individuals that are already sent to Treasury during the normal 
course of business. So now what we are going to do with Do Not 
Pay is we are going to take all these vendor files that 
agencies have already provided us in the normal course of 
business and start pushing out back to the agencies risk 
reports and saying based on the file of vendors that you paid 
last April that we happen to have information on, these are 
potential risks of the party being suspended or debarred.
    So we are taking kind of a centralized approach to this and 
saying it is not just up to you, agency, to get this process 
started; we are going to give you the information that you 
need, whether you asked for it or not. And that is underway, 
and I think that is one of the ways--it goes back to Senator 
Coburn's question. Why can't we get these government databases 
working with each other? In some cases, there is some agency 
sluggishness. In other cases, it is privacy requirements and 
other rules. And I will get you a comprehensive answer, but we 
are trying to break through that by having a central approach 
where Treasury is owning all of the bureaucracy, streamlining 
it, and pushing the information out.
    Senator Enzi. I will have some additional questions in 
writing that mainly deal with protecting people's privacy 
through this whole thing, too, because that is a major concern.
    Mr. Chairman, I thank you.
    Chairman Carper. Not at all. Thank you so much for being 
here and for those questions. Senator Tester.

              OPENING STATEMENT OF SENATOR TESTER

    Senator Tester. Yes, thank you, Mr. Chairman. I want to 
echo what just about everybody on this panel has said, and that 
is that I think whenever there is an overpayment or an 
underpayment, we hear about it, and it is really tough to 
justify. So if there are things we can do to help you guys do 
your job to help streamline the process, you are on the ground. 
We need to know what those recommendations are so that we can 
move forward accordingly.
    Mr. O'Carroll, in your testimony you highlighted 
significant audit and investigation work that is being done by 
the IGs to identify overpayments and recommend actions to 
eliminate future errors. There are a current number of IG 
positions that are open across the Federal Government. Could 
you give me an idea if these vacancies impact and how 
significantly they impact our ability to identify improper 
payments?
    Mr. O'Carroll. Yes, Senator Tester. I think it was 
interesting, I was just speaking to one of the other panel 
members about this. SSA has an Acting Commissioner right now, 
and whenever you have a person leading an organization in an 
acting capacity, it is very difficult to make a lot of tough 
decisions. You are trying to keep in the middle of the road, 
and that is also what is happening with a lot of the IGs. Six 
or seven of the really large OIGs are either waiting for a 
nominee or waiting for confirmation of a nominee, and they have 
had acting IGs for a number of years.
    In each case there, because of that, I think at least in my 
own case, when you are confirmed, you have that status, and you 
can make decisions, but you are going to find that a lot of 
times with an Acting that is difficult to do. They are not 
getting deference from the agency as a permanent appointee 
would. So, yes, it is a problem, and I would hope that maybe 
some of the nominees can be confirmed more quickly.
    Senator Tester. That is good. So you see it as a problem 
not only with the IG but also with administrators that are in 
an acting position, too, as far as dropping the hammer to find 
out what is going on.
    Mr. O'Carroll. Yes, because it seems like, at least--and 
this is just an informal opinion--that when you are in an 
acting capacity, you do not get very much credit for anything 
going right, and when anything goes wrong, that is the thing 
that is noticed.
    Senator Tester. Right. I get it. I think that pressure 
needs to be put on, from what you said, the Administration to 
put members forward for these positions and for Congress to get 
off their duff and get some of these folks confirmed. Correct?
    Mr. O'Carroll. That is a good summary, Senator.
    Senator Tester. Thank you.
    I guess this would be for you, Danny. Looking at the 
numbers over the years, the amount of overpayments, 
underpayments, it has ebbed and flowed. I think the metrics 
have changed, the reporting requirements have changed over the 
last 10 years several times. So how do you measure progress?
    Mr. Werfel. Well, it is a good question. First of all, as 
much as I have mixed feelings about this chart, I like it and I 
dislike it because there is too much red, but I like the 
numbers coming down.
    One of the challenges with improper payments as a 
mathematical measure is that outlays continue to go up, 
especially in health care and Social Security programs just 
because of the aging of the population. So you could go from an 
8-percent error rate down to a 7-percent error rate, but have 
more improper payments at the end of the year just because of 
the math of the outlays going up so significantly.
    So just looking at our improper payment amounts, I have 
been a big proponent of let us stick to the error measurement 
itself, the rate, rather than the dollar amount. But even the 
rate has its own challenges. How good are we at making sure 
that we are comprehensively measuring error, how valid and 
reliable is that error rate. The auditors, GAO and others, have 
raised questions, so we continue to try to perfect that rate. 
So I cannot sit here and say that the rate is a perfect 
measure.
    I think it is a combination of a variety of different 
symbols. This is important because I think it is going to 
resonate most with the taxpayer, and it is going to call 
attention to the issue, the raw dollar amount. So even if our 
error rate is coming down but this raw dollar amount is going 
up, it matters. And taxpayers should be concerned about it.
    I think the error rate is important because if the error 
rate is coming down, it is a signal that something is going 
right in a program if that error rate is trending down. And it 
is the trend that is important. It signals to the agency that 
they need to continue to reinvest and perfect their work. They 
should not course correct completely.
    And the other is innovations. To the extent we see more 
innovations blooming throughout the agencies, whether it is the 
Command Center that I referenced in my opening remarks at CMS, 
which is really impressive--some of the data analytics that are 
going on at that Command Center did not exist 3 years ago, and 
now they have experts poring over data, looking at things. Let 
me just give you one quick example. I was at a demo there. And 
this goes back to just data analytics. They started to discover 
that they were reimbursing for ambulatory services, but they 
could not connect a procedure at the end of that they were 
reimbursing for. So they started to realize, where is this 
patient going if there is no procedure at the end of the 
ambulatory service? And they realized that they had some fraud 
and some error in terms of overbilling on ambulatory services.
    These are the types of things that are going on at the 
Command Center. More of that--because even if the error rate is 
not coming down as much as we would want, that gives me promise 
that there are good things happening.
    Senator Tester. Well, I would go back to what Mr. O'Carroll 
said, and I am going to ask this question to you, Marianna, and 
that is, you are Acting, right?
    Ms. LaCanfora. Correct.
    Senator Tester. Look, a lot of administrative duties, if 
you do not ruffle anybody's feathers, you will stick around for 
a long time. And you are going to be ruffling some feathers if 
we go after payments, and you are going to be requiring people 
to do some work that needs to be done. I think we all agree. 
Does that impact your ability, the fact that you are still 
acting?
    Ms. LaCanfora. Not in any way. I am a career civil servant, 
so no matter where I am in the agency, I will continue to be 
gainfully employed. But I will say----
    Senator Tester. You can beat people up and not worry about 
losing your job. Is that what you are saying?
    Ms. LaCanfora. Absolutely. [Laughter.]
    Senator Tester. OK.
    Ms. LaCanfora. I was going to say with respect to our 
Acting Commissioner, while she is Acting, as was mentioned 
earlier, she has made the prevention of improper payments her 
top priority, and that has resonated throughout the 
organization. There are many activities underway that we have 
been working on toward this end.
    Senator Tester. OK. One last question. We could pick any of 
them, but we will deal with unemployment insurance. Is there 
any encouragement by the people who are finding a job to report 
that they are finding a job? Are there notes sent out with the 
checks saying, ``When you get a job, would you please notify 
us?'' Or is there a note sent out with the check that is 
saying--I mean, we could make it so--I am not even going to go 
down that line. But you can make penalties on this if they do 
not--this is to help them. Once the help is over with, they 
should notify us. Is there any impetus put on the folks who are 
receiving the payments in unemployment insurance's case?
    Mr. Werfel. It is my understanding that as part of the 
intake process when you are hired into a job, both the employer 
and the employee have certain reporting responsibilities that 
are intended to help, like, for example, the National Directory 
of New Hires----
    Senator Tester. So why are there any overpayments at all if 
there are requirements that they get a hold of----
    Mr. Werfel. It is a couple different reasons, but I will 
name the top two. One, it is the timeliness of the information. 
That is why I go back to the banks seem to know the information 
before the government. And so that is proving useful to get at 
that information. We are not getting the information quick 
enough. And, second, it is imperfections in the reporting. The 
reporting does not always--even though it is required, even 
though it is on the form, and even though it is expected to 
happen, there are employers and employees across the country 
that are not meeting their obligations to do reporting, so we 
have incomplete information.
    So those are the two things that we are trying to get at: 
More real-time information and more enforcement of making sure 
that employers and employees are meeting their obligations to 
do that report.
    Senator Tester. Thank you, Mr. Chairman. I thank the 
panelists. I apologize for going over.
    Chairman Carper. You bet. Thank you, Senator.
    Senator McCaskill, good to see you. Welcome.
    Senator McCaskill. Thank you very much.
    Chairman Carper. Hold on for just a second. Senator Coburn 
needs to, I think----
    Senator Coburn. I have to be on the floor.
    Senator McCaskill. Not a problem.
    Chairman Carper. Could he go first? And then we will 
recognize you.
    Senator McCaskill. Not a problem.
    Senator Coburn. I appreciate that consideration. One point, 
Mr. Werfel. Does the Administration have a position on the 
policy that we recommended that the professionals at Social 
Security Administration be in attendance at ALJ hearings?
    Mr. Werfel. I am not aware of that particular proposal, and 
so I do not know the OMB position. But I can get back to you on 
that.
    Senator Coburn. I would love to have it, because what we 
discovered is--we have great professionals at Social Security. 
They actually know disability law. And when somebody gets to an 
ALJ hearing, they have already been denied twice. And not 
having a member of the professional staff of the Social 
Security Administration there to actually answer the questions 
about the case that made the determination about the case and 
having everybody else on the other side pro-granting of 
benefits is totally unbalanced. And that is one of the reasons 
that we have seen this tremendous growth in what we think is at 
least 25 percent improper SSDI.
    I am going to ask a lot of questions of you in written form 
as well as the rest of them.
    Mr. Bertoni, you said in your statement that some benefit-
paying agencies of the Federal Government are not using the 
Death Master File.
    Mr. Bertoni. Correct.
    Senator Coburn. Which ones are they?
    Mr. Bertoni. We are aware of the Energy Employees 
Occupational Illness System, their program, as well as the 
program at USDA's Farm Service Agency for sure. We are still 
digging into the list right now to identify some that appear to 
be benefit-paying agencies, at least on the surface, and that 
could be larger.
    Senator Coburn. And how much trouble did you--as you looked 
at the Death Master File and all these things you found, how 
difficult was it?
    Mr. Bertoni. It was not difficult at all. We did this 
probably in a couple hours. It was a limited review, but it was 
based on the full 98 million records. In the course of 
validating the data reliability of the file, we ran into some 
of these anomalies, like the date of death before birth, and so 
to pursue that, match that against the full record, we were 
able to come up with those larger numbers, as well as the very 
old folks in the file, and those who received SSNs before there 
even was a system. Those numbers piqued our interest. We ran 
those fairly quickly, did the edits, and were able to have that 
information within hours.
    Senator Coburn. So in terms of what you saw and what you 
found, in terms of recommendations to fix that, what has the 
response been at SSA?
    Mr. Bertoni. We have not made recommendations yet. Our work 
is ongoing. We are still in the early phases of digging through 
this file and trying to understand who the users are. But 
generally I think these are errors related to edit checks, 
keying, things that you could pretty easily fix through some of 
the technology we have today--TurboTax, that type of model, 
where the edit checks could get at some of these keying errors 
that would prevent some of this from happening.
    Senator Coburn. And I would like to say for Social 
Security's defense, none of this is intentional. With the 
amount of data they handle, you are going to have some input 
errors.
    Mr. Bertoni. Absolutely.
    Senator Coburn. There is no question. But there are 
automated ways to correct that.
    Mr. Bertoni. You want to take that out of the person's 
hands and have some assistance so those things can be caught if 
the button is pushed.
    Senator Coburn. Right. Ms. LaCanfora, I have directed my 
staff to take the recommendations from the budget and, as fast 
as possible, get that into legislative language. So they are 
going to be contacting you, and we are going to find a broad 
range of bipartisan support for actually making these changes 
so that this State data can be utilized. And also probably I 
would love your recommendations. This should not have to go 
from you to Commerce, Commerce to NTIS, NTIS to everybody else. 
It ought to be able to--you know, where is what it costs. If 
there is a charge for this, it ought to go straight to Social 
Security, go to all the rest of them, so that we cleanup the 
steps in terms of getting this information available. It ought 
to be able to go from you, and they ought to be able to come to 
you and say, OK, now the 2003 law has been changed and here it 
is.
    Any comment on that?
    Ms. LaCanfora. Yes, if I could just clarify, we directly 
provide all of our death data to Federal benefit-paying 
agencies. Now, we have not hit all of them, but a couple years 
ago we reached out to the Federal benefit-paying agencies that 
purchased the public file. Through that notification several of 
them came to us and got access to all of our death data. We 
have the authority and the ability to send our death data 
directly to Federal benefit-paying agencies. We do not have to 
go through NTIS.
    NTIS is simply the go-between between us and the public for 
those who want to get public records, let us say people doing 
genealogy and things like that. But if you are a Federal 
benefit-paying agency, you can get that data directly from us.
    Senator Coburn. So do you recall how many agencies have 
taken advantage of that?
    Ms. LaCanfora. Right now we have six Federal benefit-paying 
agencies that we give the data to directly. We have two others 
that we are working with. And any agency that believes that 
they are a Federal benefit-paying agency is welcome to contact 
us directly, and we can engage in an exchange with them to 
determine whether they can have all of the death data, 
including State data.
    Senator Coburn. So it comes back to Danny Werfel. Why would 
there not be an OMB mandate that if you are a benefit-paying 
agency that you go get that data?
    Mr. Werfel. I think it is a good suggestion. The Do Not Pay 
Initiative was a global response to what we were detecting in 
2010 based on a series of IG and GAO reports.
    Senator Coburn. I understand that. I am not critical. I 
love your Do Not Pay. But in the meantime, why isn't there a 
mandate coming out from OMB saying if you are benefit-paying 
agency, you will double-check against this Death Master File? 
What is wrong with that?
    Mr. Werfel. And I think--let me answer that in two ways. 
One, in our Do Not Pay guidance, we required every agency to 
review their pre-award, pre-payment processes around data and 
making sure they were accessing it. But what we did not do is 
go that extra dimension of if you are an agency that has not 
reviewed, you must do it now. We just said review your pre-
award, pre-payment processes, make sure that you are accessing 
the appropriate information.
    We can certainly go back to those agencies and understand 
how they are implementing that general directive and see if we 
can get at the point.
    Senator Coburn. Well, but the difference, quite frankly, is 
one is a partial Death Master File and the other is a complete 
one. Why would you not say, until you get all this up and 
running, here is one thing that you will do, here is the list 
of all of the Federal agencies that are using the incomplete 
death--the Department of Homeland Security, the Department of 
Agriculture, the Department of Justice, the Department of 
Labor, the Department of State, the Drug Enforcement 
Administration (DEA)--all the rest of those, they are not using 
the complete Death Master File. So I just do not understand why 
you would not do both. You are going to be checking against a 
better file as you roll out the Do Not Pay, they are checking 
against a substandard file now.
    I would love an answer from you on that----
    Mr. Werfel. It was our intention to do what you are saying. 
We just did not execute it exactly as you are suggesting. But 
what I will do is go back, and we can talk to the agencies who 
are supposed to be executing against a more general requirement 
to be accessing death data based on their review of their pre-
award, pre-payment processes.
    Senator Coburn. All right. Thank you.
    Thank you very much, Senator.
    Senator McCaskill. Sure.
    Chairman Carper. Senator McCaskill.

             OPENING STATEMENT OF SENATOR MCCASKILL

    Senator McCaskill. Frankly, Senator Coburn covered a lot of 
what I wanted to talk about in terms of the Death Master File. 
I do want to find out about the costs for this. Why are we 
charging for this? I mean, this is going to save us money that 
should not be paid out. Why are we charging between government 
agencies for this list?
    Ms. LaCanfora. Under the law we are required to be 
reimbursed for this activity unless there is a quid pro quo 
activity where we are also benefiting from data from another 
agency with which we do an exchange. But, generally speaking, 
we are required to be reimbursed.
    Senator McCaskill. Well, we need to look at that, Mr. 
Chairman. And is the complete list more expensive than the not-
complete list?
    Ms. LaCanfora. Yes. The cost is based on the quantity of 
data and the frequency with which we are supplying it. If we 
are including State data, then it is more records and it would 
cost more.
    Senator McCaskill. And why are some agencies being charged 
more than others? Like why is the Department of Defense, the 
Defense Manpower Data Center, paying $40,000 annually and you 
only pay $10,000--CMS only pays $10,000?
    Ms. LaCanfora. That would depend on what we are getting 
back from CMS. If we are getting data from CMS to use in the 
Administration of our benefit programs that we would otherwise 
be paying for, there would be a quid pro quo arrangement, so we 
would charge them less money.
    Senator McCaskill. Does anybody see that this is a problem? 
Let me go down. Do any of you here think that should be fixed? 
OMB?
    Mr. Werfel. Well, I certainly want us to have an effective 
and coherent process for the way in which agencies are 
reimbursing one another for services provided. I just do not 
know the details enough in this particular situation to 
understand why those differences are occurring. So I would not 
want to comment on it. But I agree with the general principle. 
We should have a logical approach for the manner in which we 
are reimbursing one another.
    Senator McCaskill. And I could see it if this was a list 
that was going to somehow enhance the ability of someone else 
to provide a service. But what this list is for is to keep 
money from going out the door that should not be going out the 
door. I mean, it seems like to me we should be falling all over 
ourselves, no matter what part of government we are, to make 
sure this list is everywhere, complete, and no one is having to 
figure out whether or not it is really worth it for them to 
budget for it. Because, frankly, if this was their money, if 
these were private businesses, if you all were under one big 
private business and you were different divisions of a big 
business, do you really think these kind of artificial barriers 
would be put up if it all came down to the bottom line? Well, 
this is the bottom line for taxpayers.
    So I would really like all of you to formally respond to 
whether or not you think it is a great idea that this should be 
a matter of if you want the good list,\1\ it is going to cost 
you more money in order to prevent paying out money that the 
government should not be paying. I would like that from you.
---------------------------------------------------------------------------
    \1\ Information from Ms. LaCanfora appears in the Appendix on page 
117.
---------------------------------------------------------------------------
    Let me also ask you, Mr. Werfel, about the Department of 
Defense. According to their own statistical sampling, they 
acknowledge they are underestimating their improper payments. 
They say, ``Yes, we are underestimating them.'' But every year, 
you sign off on those estimates. Aren't you sending the wrong 
signal when you are signing off on estimates that are being 
acknowledged by the agency are incorrect and underestimating 
the amount that is really going out the door in improper 
payments?
    Mr. Werfel. I am glad you raise the question, Senator. I 
have two or three reactions on DOD.
    First, they have had challenges with their error 
measurement. Their 2011 error measurement, GAO wrote a report 
with a very long set of recommendations for how to improve it. 
DOD concurred with each and has since updated their error 
measurement. Now, GAO has not gone back yet and re-evaluated, 
but their IG did an evaluation, and so far we did not see 
anything coming out of that IG report that seemed to indicate 
that the DOD had repeated some of those problems.
    But to your question, OMB did not sign off on DOD's error 
measurement. In fact, when I cite in my testimony a 4.35-
percent error rate, I do not include the DOD error measurement 
in that number. And the reason is because if I were to do it, 
then the error rate would actually be 3.7 percent 
governmentwide. It would precipitously drop, because DOD is 
reporting such a small amount of error on such a large 
denominator, and we scratched our heads when we saw that, and 
we said we are not yet comfortable impacting our governmentwide 
number in such a significant way until we get more assurance 
from GAO, DOD, DOD IG that the number is robust.
    So I think DOD is doing the right thing by measuring and 
trying to perfect that measurement and respond to GAO 
recommendations. But I agree, until we have a greater degree of 
confidence, we are not going to be placing that number in our 
governmentwide numbers.
    Senator McCaskill. Well, you may not be placing the number 
in your governmentwide numbers, but DOD is claiming that they 
are compliant with the improper payment law because you sign 
off on their estimate every year. And that is my question. If 
they are pegging their compliance with the fact that you are 
signing off and you are signing off on estimates that everyone 
acknowledges are too low, does that not send the wrong message 
governmentwide?
    Mr. Werfel. It would. I have to be honest, I do not know or 
understand the concept of OMB signing off on an error rate in 
order to generate compliance. They put the error rate as 
required in their annual financial statement report. The 
Inspector General will look at that report. The Inspector 
General under the law is required to do the compliance review.
    From OMB's position, we want agencies to continually 
generate better error measurements, but there is no point in 
time that I am aware of where anyone in my office is saying, 
``Stamp of approval, this is good.'' We really on the Inspector 
General to do that for us.
    Senator McCaskill. Mr. O'Carroll, did you want to 
contribute?
    Mr. O'Carroll. Senator, I think you had mentioned before 
that the Inspector General had reported them as compliant. In 
our IPERA wrap-up report, they are one that is listed as 
compliant. So the Inspector General has reviewed the statement 
by the agency, and said they are within compliance.
    But I will go back, check with the Department of Defense 
and the IG, and find out why they are saying it is compliant 
and why they are using that percentage from DOD.
    Senator McCaskill. It kind of sullies the exercise----
    Mr. O'Carroll. It does.
    Senator McCaskill [continuing]. When an agency is saying, 
``We know we are not doing it right, but, by the way, we are 
compliant.'' So that kind of common sense-wise defeats the 
purpose.
    Let me finally get back to the Death Master File. I know 
that the bar at this point--you said in terms of sharing it--is 
for agencies that are paying benefits. But Treasury is really 
working at a Do Not Pay effort. Are you saying that the law 
currently does not allow you to share with Treasury even though 
they are working on a comprehensive Do Not Pay Initiative that 
is going to save taxpayers a lot of money, that you are 
prohibited in the law from sharing this list with them?
    Ms. LaCanfora. Yes, we are. Section 205(r) of the Social 
Security Act strictly prohibits disclosure for that purpose. 
Now, we support that purpose, do not get me wrong, and that is 
why we have a proposal in the President's Fiscal Year 2014 
budget to expand our authority to be able to disclose 
information more broadly to Federal agencies, not only for 
purposes of Do Not Pay but also for law enforcement, health and 
safety, and other related issues that we cannot currently 
disclose.
    Senator McCaskill. OK. Well, I know that Senator Coburn is 
on this and I know the Chairman is on this in terms of giving 
you the language you need. I will continue to follow-up to see 
if we cannot make this important vital information available 
without people worrying about whether they have to choose 
between furloughing an employee or buying the Death Master 
List. I do not think that is a good choice in today's Federal 
Government, and to me--I am pretty sure I know which one they 
would choose, and I am not sure that is the one that is in the 
best interest of the taxpayer, although I certainly feel for 
the Federal employees.
    Ms. LaCanfora. Might I just offer one thought on this, just 
to provide a little bit of context about the basis for the 
requirement that we get reimbursed. It is not unique to this 
issue. Any time Social Security does work for another agency 
that is not very specific to the administration of our 
programs, we are prohibited from using trust fund money to do 
that. So that is the basis in law--not that this could not be 
modified, but, again, if we did not charge, we would be using 
Social Security trust fund money to do work for other agencies.
    Senator McCaskill. Well, I understand where the law comes 
from, but sometimes the application of the law does not make 
sense if you put on your big common-sense hat. And I think this 
is one place that it does not make sense. I think most people 
that are receiving Social Security would like the idea that we 
would bring down the improper payments money so that they are 
sure Social Security is going to be stable into the future. I 
do not think most of the people that are benefiting from this 
program would have a problem with us making death information 
universally available across government in order to avoid 
paying out benefits to people who have passed on.
    Thank you, Mr. Chairman, for this hearing. As usual, you 
are a dog with a bone when it comes to improper payments, and I 
am glad that you are the Chairman because this bone is getting 
its proper day in front of this Committee.
    Chairman Carper. For days and weeks and months and years, 
and we are delighted----
    Senator McCaskill. And years.
    Chairman Carper [continuing]. You are here to help us 
nibble at this bone, continue to nibble it away.
    I hope you are right, what you just said there at the end 
about the willingness of Social Security beneficiaries being 
willing to forgo a small amount of the trust fund. I would like 
to think that would be true. I appreciate you putting it in 
context, though. That was helpful.
    Go back and just refresh me on the kind of charges, the 
magnitude of the charges to different agencies. There is 
apparently a range, but just share that with us again please.
    Ms. LaCanfora. By all accounts, it is pretty cheap. We are 
essentially giving agencies customized data. In other words, it 
might be weekly, it might be monthly, depending on the needs of 
that particular agency and the nature of the benefits that they 
pay. As Senator McCaskill stated we charge the Department of 
Defense about $45,000, that is estimated. And then, I think 
Senator McCaskill mentioned $9,000 to CMS, which is cheaper, 
because we actually get some data from CMS that we need, so 
there is a quid pro quo there.
    Chairman Carper. Would those charges be made on any kind of 
schedule, or is it as the data was requested? How would the 
charges----
    Ms. LaCanfora. Yes, we generally have an agreement with 
each agency that gets data from us, a reimbursable agreement, 
so there is a payment schedule.
    Chairman Carper. Let us say an agency, if their payment was 
$40,000, it would be a one-time payment annually? Would it be a 
recurring $40,000 payment throughout the year?
    Ms. LaCanfora. Yes, if we know the frequency with which 
they are going to get data for the duration of a year, then 
generally we will charge them once per year.
    Chairman Carper. OK. Thank you.
    I want to go back to my original line of questioning. 
Remember the story I told about the basketball coach? I asked 
him, ``Who are the best players?'' And he said, ``The best 
player on the team is the one who makes everybody else 
better.'' So my question--and Mr. Werfel had a chance to take a 
shot at it, but I want the others to as well. This is a 
question actually I ask a lot in hearings, particularly on 
oversight hearings, what we can do on the legislative side to 
better bring down these numbers on improper payments. We have 
tried to do a lot. Obviously, we are learning some things here 
today that will enable us to do even more and fulfill our 
responsibilities.
    But, Mr. O'Carroll, why don't you take a shot at that 
question?
    Mr. O'Carroll. Thanks for the opportunity, Mr. Chairman. 
One of the----
    Chairman Carper. Before you do, one of the last things I am 
going to do--so you can just be thinking about this while 
somebody else is answering a question. But one of the things I 
like to do at the end of a hearing, especially one like this 
where we are trying to build consensus on a path forward, is to 
ask you--we always ask you to give an opening statement, and I 
am going to ask you to each give a closing statement. It will 
not be 5 minutes but maybe a minute or two, just the things 
that you have learned, that you have heard, that you think 
would be helpful for us as we try to build this consensus, so 
just be thinking about that.
    Go ahead, Mr. O'Carroll.
    Mr. O'Carroll. I wonder if I should hold until the end what 
I want to say now.
    Chairman Carper. No. Do not hold back.
    Mr. O'Carroll. One of the things that I had mentioned in my 
testimony that all the other IGs and ourselves especially are 
interested in is having Congress take a look at the Computer 
Matching and Privacy Protection Act (CMPPA), which is what 
keeps us from sharing our data among all government agencies. 
And a couple quick examples of that would be with HHS, as I 
talked about doing the Medicare match to see whether or not 
people who are not using Medicare are alive or dead. And the 
reason we can do it is that HHS has an exemption to the 
Computer Matching Act so that they can do that. They were able 
to do it with us.
    On a similar one, Federal employees' workers compensation 
with the Department of Labor cannot match with other agencies 
to see what their wages are, to see if they are working when 
they are getting benefits. By the same token, too, SSA wants to 
know when other government agencies are paying benefits, 
whether they are going to be on SSA's disability rolls as an 
example.
    So the Matching Act exemption is very important. We have 
found that for the IGs, it takes so long to apply for and get a 
matching agreement, oftentimes the impetus behind it is gone by 
the time you get the agreement. It takes years to do.
    So if you could take another look at the Computer Matching 
Act, making it easier for agencies to compare data that would 
help on identifying improper payments, that would probably be 
to me one of the best takeaways from this hearing.
    Chairman Carper. That is great. OK. Thank you.
    Mr. Gregg, same question.
    Mr. Gregg. First of all, I would agree that steps were 
taken in IPERIA to help in the computer matching. If further 
refinement could make that even easier, that would streamline 
the process because, having gone through that numerous times, 
it is onerous to get the agreements. And even though there are 
some deadlines set on that, further improvements would help.
    Chairman Carper. OK. Thanks.
    Mr. Gregg. One final point. If I was to ask: Can they do 
something? I think access to the complete Death Master File is 
essential for us to move forward. We are doing what we can with 
the public one, but having the full one would greatly benefit--
--
    Chairman Carper. I am sorry. I am not sure I understand 
what you just said. Just say it again and maybe a little 
differently.
    Mr. Gregg. We need access, Treasury needs access in the Do 
Not Pay program to the complete Death Master File, and that is 
one of the proposals in the President's budget. There are 
several other databases in there that would help us a lot, such 
as the prisoner database and what is referred to as credit 
alert verification reporting system (CAIVRS) and the National 
Directory of New Hires. All four of those are essential for us 
to really do our job.
    Chairman Carper. OK. I am looking down this list of Federal 
agencies that are using incomplete death data, and down there 
near the end is the Department of Treasury. So you are right. 
OK. Good.
    Mr. Bertoni.
    Mr. Bertoni. I would piggyback off that. I think fully 
populating the Do Not Pay portal would go a long way toward 
strengthening program integrity. It is a one-stop shop for 
checking across various data points. But certainly, to address 
the issue of the Death Master File, if you were to expand it to 
include State information, you have to build in the proper 
controls to ensure that, No. 1, only benefit-paying agencies 
were receiving it and that they were using it to ensure the 
integrity of their program. There is a fine line between sort 
of expanding access and controlling who is actually getting it. 
So I think there are some issues there.
    Beyond that, I think promoting data sharing, data cross-
matching at the pre-entitlement level when people come in to 
apply for benefits to make sure that they truly are eligible 
for the program, and then not to forget about them once they 
enter, to do post-entitlement data mining, data matching, to 
ensure that they remain eligible.
    I will give you an example. For many years, we have been 
asking the Social Security Administration to use its National 
Directory of New Hires across its entire Disability Insurance 
(DI) roll.
    Chairman Carper. To use what, the National?
    Mr. Bertoni. The National Directory of New Hires, which has 
some real-time data that they could use to prevent 
overpayments, and match that----
    Chairman Carper. Who keeps that? Is that the Department of 
Labor?
    Mr. Bertoni. That is an HHS file. And we have complete 
resistance. I think one of the reasons is they are probably 
afraid of the number of hits they will get and the work that 
this will generate. But data cross-matching, data mining, pre-
and post-entitlement are certainly key.
    Also, for OMB to work as a vehicle for coordination. Mr. 
Werfel talked about the access to financial institutions. We 
know that SSA is striking out on exactly that initiative to 
monitor their SSI rolls. There might be lessons to learn there 
or opportunities to piggyback on what has already been done.
    Chairman Carper. Good. Thanks. Ms. LaCanfora.
    Ms. LaCanfora. Thank you. There are three things that I 
would like to mention that I think would be helpful in terms of 
supporting SSA's improper payment reduction plans.
    No. 1, we need from the Congress adequate and sustained 
funding. We talked a little bit about the two key items that we 
do in order to ensure the integrity of our programs: The first 
is, medical continuing disability reviews (CDRs), making sure 
that people are, in fact, still medically disabled. We need to 
do these reviews, and the return on investment is significant. 
For one dollar spent, we return $9. So it is a good investment, 
and we need adequate and sustained funding to carry out these 
reviews.
    The second thing is SSI----
    Chairman Carper. Would that be through an appropriation? Is 
that what you are seeking?
    Ms. LaCanfora. Yes. We have a proposal in the President's 
budget--I think Mr. Werfel mentioned it--wherein we would get 
separate funding, mandatory funding, to do our program 
integrity work, including these medical CDRs.
    And the second program integrity----
    Chairman Carper. How much money are we talking about?
    Ms. LaCanfora. Oh.
    Chairman Carper. Just roughly.
    Ms. LaCanfora. I will have to get you that. I do not know 
that off the top of my head.
    Chairman Carper. Does anybody behind you know?
    Ms. LaCanfora. Sorry.
    Chairman Carper. All right. Thank you.
    Ms. LaCanfora. The second activity is SSI redeterminations, 
which are similar reviews done on SSI recipients, looking at 
the non-medical factors of entitlement, making sure that, in 
fact, these individuals are still eligible for SSI benefits. 
Those reviews yield a similarly significant return on 
investment of $1 invested, $6 recouped. So both of those 
activities need to be funded adequately in order for us to 
tackle and to further reduce our improper payments.
    No. 2, I mentioned Electronic Death Registration. As it 
relates to our death records, the Electronic Death Registration 
Program significantly improves the accuracy of our records. 
There is also a proposal related to EDR in the President's 2014 
budget. It is actually an HHS proposal because they are the 
agency that provides funding to States in order for those 
States to participate in Electronic Death Registration. If we 
could get more States and jurisdictions to participate in EDR, 
we would go a tremendously long way in improving the accuracy 
of our death records.
    Chairman Carper. Stay with that one for just a moment. So 
right now there is a disincentive for States to do this. Is 
that correct? And what we are trying to do here with the money 
is to take away the disincentive?
    Ms. LaCanfora. I do not know if there is a disincentive, 
but I do not think there is a particularly strong incentive.
    Chairman Carper. OK. Would what you are suggesting 
incentivize the States?
    Ms. LaCanfora. Well, right, so HHS has the statutory 
authority to issue grant money to States for the express 
purpose of getting them to make their records, their vital 
records, including death records, electronic. And when they can 
get their records in an electronic format, it makes it much 
easier for them to transmit them to us in a simple, efficient 
way. So it is really in the best interests of the States, but 
it is a funding issue for them.
    Chairman Carper. I was going to ask, is there any other 
reason why the State might want to do this? Is there a value 
presumably to the States? I think that is what you are saying?
    Ms. LaCanfora. I think there is value to the States. I do 
not want to speak on their behalf, but I believe that the only 
disincentive is the fact that it costs money, and States do not 
have a lot of that right now, so they are looking for some 
funding from the Federal Government to help them get their 
records in order. One of the positive byproducts is that they 
can give us accurate records.
    Chairman Carper. All right. Thank you.
    Mr. Bertoni. Senator Carper, I have one thing to add to 
that.
    Chairman Carper. Please.
    Mr. Bertoni. States are reimbursed for timely submission of 
those verified reports. Every time they verify, send forward a 
verified good report, they are reimbursed. More timely, more 
money, from 80 cents to $3. So if you----
    Chairman Carper. Is that 80 cents to $3 per State or----
    Mr. Bertoni. Per submission.
    Chairman Carper. Thank you.
    Mr. Bertoni. So if you are submitting timely, you are 
getting more money. So I think there is an incentive for them 
to move into that----
    Chairman Carper. OK. Thanks.
    Ms. LaCanfora. Yes, that is a good point. Thank you for 
raising that. It is true.
    And last but not least, just to reinforce, there is a 
proposal in the President's budget to modify our authority to 
give us the ability to disclose the State records to the Do Not 
Pay Initiative and for other purposes, and we would appreciate 
the Congress' support and look forward to working with you on 
that.
    Chairman Carper. All right. Good. Well, thank you.
    I have a couple more questions. I think one would be for 
Mr. O'Carroll, and I might work you into that one, Ms. 
LaCanfora, and then one for Mr. Werfel, and then I will ask you 
to give your closing statements.
    For Mr. O'Carroll, over the past years, the Social Security 
Office of Inspector General has reported significant 
shortcomings that resulted in as many as, I think, about 1.4 
million deceased beneficiaries not listed in the Death Master 
File used to help prevent improper payments to dead 
individuals. I understand that your office has done some 
important work to try to identify and describe this 
shortcoming, including identifying more than a million records 
missing from the Death Master File and potential solutions. Do 
you want to talk a little bit about those problems and maybe 
some solutions, please?
    Mr. O'Carroll. Yes, Chairman. We have done a number of 
different audits on the Death Master File. The Death Master 
File is fed by SSA's Numident, and then also there are the two 
payment systems: The Master Beneficiary Record, which includes 
Title 2 beneficiaries, and then there is the Supplemental 
Security Record (SSR), which includes SSI recipients. And what 
we are finding is the data is not always consistent across all 
three systems. A report can come in that a person is deceased, 
and we will stop paying a Title 2 benefit to them, but at the 
same time, because their name might have changed, it could have 
a wrong date of birth on it or whatever, where the two systems 
do not match, it does not go into the Numident, which then 
means it does not go into the Death Master File.
    So we have done three audits on that issue. We have another 
one underway right now where we are taking a look at the 
Numident file to see if that data matches the other two files. 
And so we have continuing work going on. We are keeping 
everybody well informed. We are working closely with SSA. In 
fact, Ms. LaCanfora and I have been talking about even doing a 
new audit to evaluate if any of the fixes that SSA has put into 
this issue, whether they are working or not. So we are working 
collaboratively on the Death Master File with SSA and trying to 
give them information on how to make it better. And we have 
asked in the past for them to correct some of the mistakes that 
we have discovered and they have agreed to our recommendations.
    Chairman Carper. Ms. LaCanfora, just briefly, does the 
Social Security Administration have a timeline for addressing 
these problems and trying to ensure a more complete Death 
Master File?
    Ms. LaCanfora. Yes, if I might just provide a little bit of 
context. I want to thank the Inspector General because I would 
agree that we have a very good working relationship, and their 
audit work has been very helpful for us in identifying some of 
the problems that exist and fixing them. So just for a bit of 
context----
    Chairman Carper. Let me say that is encouraging to hear. It 
really is.
    Ms. LaCanfora. Yes. So just for----
    Chairman Carper. We do not always hear that, so that is 
good.
    Ms. LaCanfora. When we look back and we find problems--and 
you have listed some of them on the other poster there--you 
have to keep in mind that our death records, the 90 million 
death records that we have, we began collecting them in 1940. 
That was before we had computers. So a lot of the records are 
not accurate because they were manually input, and that is just 
the reality.
    The other thing is that a lot of the anomalies that you see 
are a result of the fact that we collect death information for 
the Administration of Social Security programs. If a person is 
not a Social Security beneficiary, we do not spend a lot of 
time trying to make sure that the date of death is exactly 
correct.
    Now, knowing that other agencies and private sector 
entities are using this death data more and more, we are trying 
to make headway in making sure that the data is accurate, and 
we have made significant progress, and I want to mention--to 
address your question about the timeline--in December of this 
past year, we implemented a major systems enhancement that goes 
a long way, I believe, to correcting maybe even the majority of 
the problems identified by both GAO and OIG. We basically put 
an edit in place so that when we are processing a claim or 
taking an action in our records, we cannot have a discrepancy 
between our payment records and our Numident file. The Numident 
file is the file that houses Social Security number and death 
data. So up until December, there were some alerts there, but 
there was no prohibition to creating a discrepancy.
    Effective December, there is now a prohibition to creating 
a discrepancy, so going forward we should have matching records 
between our payment file and our Numident file. I think that is 
a very significant milestone that we have already hit.
    In terms of going forward, we are also redesigning our 
death processing system. As I mentioned earlier, it was 
designed for the Administration of Social Security programs. It 
was not designed with the idea that private sector companies 
and other agencies would also be relying on this data. We are 
going to make it more robust and more reliable so that we can 
help shore up the data and make it more usable to these other 
entities.
    Chairman Carper. Can you give us a timeline on 
accomplishing that goal?
    Ms. LaCanfora. We have already begun that activity. We have 
a laundry list of things we would like to accomplish, and we 
believe that we can implement at least the majority of these 
activities in fiscal year 2014.
    Chairman Carper. That is well before any of us are going to 
end up on that Death Master File, huh? [Laughter.]
    Ms. LaCanfora. I hope so.
    Chairman Carper. Well, good. All right. That is good.
    The last question is for Mr. Werfel. I am going to ask you 
not to give us a long answer, but fairly briefly, if you could, 
so that we will have time for those closing statements.
    I want to ask you really a general question about some of 
the Federal programs that are managed by State governments. 
State agencies run, as you know, a number of large and 
important programs, including Medicaid, unemployment insurance, 
Temporary Assistance for Needy Families. I understand that one 
of the solutions for curbing improper payments in these 
programs is to cross-check the beneficiaries in one State 
against those in the other 49 States. In other words, what we 
are doing is making sure that people enrolled in Medicaid in my 
State of Delaware, for example, are not also enrolled just 
across the line in Pennsylvania or in Maryland. Receiving 
Medicaid benefits through two States is, as we know, against 
the rules, and it would be a strong indicator of possible 
fraud. However, Delaware and the other States do not have 
robust methods for these State-to-State cross-comparisons.
    So could you just describe for us, Mr. Werfel, the 
challenges and the opportunities relating to helping States 
check with one another in order to identify duplicate enrollees 
in Federal programs? And I would specifically like to hear 
about that the Public Assistance Reporting Information System 
(PARIS) program. That is an acronym. I am not sure what it 
stands for, but all caps, PARIS program, which I understand is 
a very good tool designed for this purpose, but not yet fully 
utilized by the States. We have talked about this one before, 
as I recall. Go ahead.
    Mr. Werfel. Yes, it is Public Assistance Reporting 
Information System, and its purpose is to provide States a 
common source of information. So similar to, ``Hey, did this 
person return back to work? We better stop the UI payment,'' it 
is, ``This person already received their Medicaid benefit from 
State X. Let us stop the payment going from State Y.''
    The theme here is very similar, and so in keeping my answer 
brief, there are a lot of solutions that we can tap into at the 
Federal level that involve getting the right data in the right 
hands at the right time, and there needs to be some forethought 
about how we do that and how we prioritize. What are the types 
of problems we want to fix? Where is the data that is able to 
do it? And how do we bring that data together in a sensible 
way?
    That is essentially what we are trying to do with Do Not 
Pay, and there are very similar opportunities through State-
administered programs to share information, both State-driven 
data, Federal data, and, again, private sector data sources as 
well. It is kind of like data, data, data. That is really what 
these answers are going to revolve around, and the question is: 
Do we have a strategy--as you mentioned, an action plan--for 
how to do it?
    So I think one of the things we need to do in working with 
the States is make sure we understand what the action--like you 
are asking for, an action plan on how we are going to get 
better at death data. Working with the States, what is the 
action plan to make sure we are getting better at not having 
multiple State payments go out?
    Chairman Carper. Good. Well, I think helping States to work 
together with one another in order to prevent improper payments 
represents a pretty good opportunity, and there is likely a 
useful Federal role, and I hope we can continue to explore this 
concept.
    Let us go to the wrap, if you will. Ms. LaCanfora, since 
you got to lead off last with your opening statement, we will 
ask you to close first.
    Ms. LaCanfora. OK. Well, I think a lot has already been 
said, but----
    Chairman Carper. No, it is OK, actually, to--if you want to 
reiterate something, I think repetition, particularly on stuff 
that is important for takeaways, would be welcome.
    Ms. LaCanfora. OK. I appreciate that.
    I would like to get back to your question first on the 
amount of money that we are asking for to do our program 
integrity work. The number is $1.2 billion, and that is to do 
our redeterminations for the SSI program, ensuring that 
individuals are still, in fact, entitled to the benefits that 
they are getting, as well as the medical continuing disability 
reviews in our disability program. Both of those activities 
have a very significant return on investment. So while it seems 
like a lot of money, it is a good investment and will return 
more back to you as a result of the expenditure.
    Chairman Carper. Thanks very much. We have noted that.
    Ms. LaCanfora. So just to talk again about Electronic Death 
Registration, I know that it has been said a few times on the 
panel that we do not verify all of the death reports we get, 
and that is true, particularly if someone is not a Social 
Security beneficiary. And there is a question, I think, about 
whether we should be verifying those death reports. Should we 
verify death reports, all of them that we get, to ensure the 
accuracy of the Death Master File, even though we do not really 
need to do that for our own program purposes?
    I would argue--and I am looking forward to more discussion 
on this topic-- but I would argue that this is not the most 
efficient way to go about achieving accuracy in the Death 
Master File, because in essence what it would mean is we would 
be getting a bad report in and then we would be running out and 
chasing down verification as to whether it is right or wrong. 
That would be very labor intensive, and it would require us to 
redirect resources away from mission-critical Social Security 
work.
    There is a better alternative, and that is the Electronic 
Death Registration process, which, if States and jurisdictions 
participate in that activity, ensures an accurate report up 
front, so there is no need to take in a bad report and then 
chase it down for accuracy. Rather, we get it right the first 
time. That also requires some funding, and as I mentioned 
earlier, it is in the President's budget. That would go a long 
way to solving this problem without having to use precious 
Social Security resources to do verifications of non-
beneficiaries. I cannot stress enough the importance of the 
Electronic Death Registration Initiative.
    And, last, I would echo Mr. Werfel's request to look at the 
proposals that are in the President's budget, because we did 
work across agencies in a thoughtful way to come up with the 
proposals that are in there, and in particular the one related 
to the Death Master File. We really worked hard to strike a 
balance here because we want to make sure that Federal agencies 
have access to this data to prevent improper payments via the 
Do Not Pay list, and we also want to make sure law enforcement 
has access to the data. So we are through this proposal 
expanding Federal agency access, but at the same time, we are 
also delaying the release of the public Death Master File to 
the public for 3 years because there are criminals, wrongdoers 
out there, that are using the data to commit tax fraud, and we 
want to prevent that.
    So I think we have struck a good balance with this 
particular proposal and would look forward to working on it 
with the help of the Congress.
    Chairman Carper. Good. That is well said. Thank you. Mr. 
Bertoni.
    Mr. Bertoni. I am going to make a larger policy point, then 
move to an operational point, stick to the area of death 
information. The DMF is a useful tool. It is not perfect. But 
the policy question is: Where do we take this?
    I think there are good arguments on both sides as to 
further restricting or increasing the availability of this 
information to various sources. But depending on where you go, 
that is going to have real implications as to whether we need 
or whether three sources of this information will continue to 
be viable down the road. So it is something to keep in mind.
    From an operational standpoint, I would agree with my 
fellow witness that operationally a lot would need to be done 
to clean this file up. And the question is: How do we do that? 
Do we reach back, do we look back and cleanup old records? Or 
do we focus on the data that we can take care of from this day 
forward? I agree, EDR will go a long way toward, on its own, 
cleaning up the data files, and as a country, the Congress and 
where they direct SSA to go on this, you have to realize that 
if you go back and look at the much older records, it does have 
implications for staff time, staff years, and what it is going 
to take for staff to really verify those numbers.
    Chairman Carper. OK. Thank you. Mr. Gregg.
    Mr. Gregg. Thank you, Mr. Chairman. Treasury is a volunteer 
in this area.
    Chairman Carper. I am sorry. Treasury what?
    Mr. Gregg. Is a volunteer in this area. Two or 2\1/2\ years 
ago, Danny called me and said they really want to push through 
some kind of a central clearinghouse and asked whether Treasury 
would take the lead on Do Not Pay. And I said yes for two 
reasons: first, I thought it was the right thing to do for good 
government; and, two, because we are a central agency, we make 
a billion payments a year, we handle a lot of the debt 
collection work. So it made sense from an overall design. And I 
think we also are very careful, we have been careful for many, 
many years, protecting individuals' privacy. If you handle all 
the Social Security payments and many other payments, you have 
to be able to do that.
    In terms of going forward, I think we have moved very 
quickly and aggressively to stand up Do Not Pay. We have 
absolute management commitment from myself and within Treasury 
and the Commissioner of the Fiscal Service. We also have a good 
team in place--some of them are here today---that have really 
dedicated themselves to moving ahead on this as quickly as 
possible, wisely but quickly. And we have had a great 
partnership with OMB and the agencies.
    There is much more left to be done, and we are very 
committed to doing that. We can help, and we can help a great 
deal. There is also a lot of work that agencies have to do 
because they have more data than we do about their various 
programs.
    Finally, the two things that I had said before that I would 
just reiterate--well, three things. One is data access. We need 
data access to the full Death Master File and the three other 
programs identified in the President's budget. Second, anything 
you can do to help further streamline the computer matching 
would be great. And, finally, just encourage your Committee to 
keep at this because it is very important.
    Chairman Carper. We will. Mr. O'Carroll.
    Mr. O'Carroll. Thanks, Mr. Chairman, for the opportunity to 
testify today. I want to re-emphasize the importance of 
preventing improper payments to the Council of IGs and the IG 
community. This is very important to us. My office works on a 
monthly basis with OMB, Danny's office. We discuss it 
frequently. Every month, at the Council of IGs meeting, there 
is a 5-minute session where I report out what the community is 
doing on preventing improper payments.
    Chairman Carper. Do you really? That is great.
    Mr. O'Carroll. We keep it at the forefront and it is 
reported out each time.
    I guess the biggest thing now is declining resources. We 
need to make sure that there is sufficient funding for 
preventing improper payments. The one thing that we have talked 
about already was having an integrity fund in the budget of 
agencies. I think that is very important. It will force SSA to 
keep up the number of reviews that prevent people from getting 
improper payments.
    Another thing that I did not mention and it is not in my 
testimony is our Cooperative Disability Investigations (CDI) 
progam. We have State investigators and IG investigators who 
look at people, when they are trying to get on the disability 
rolls and they prevent fraud up front. We call it our CDI 
program, and that is a good way to prevent improper payments 
before they go out. That would be assisted by any type of an 
integrity fund.
    And, last, in IPERA is a recovery auditing provision that 
allow agencies, when they recover money through auditing of 
improper payments, they can use that money to prevent improper 
payments in the future. Unfortunately, a lot of agencies like 
SSA, that provision is only for discretionary funding and has 
nothing to do with the trust funds, which is where most of the 
fraud against SSA is happening. So we cannot recover any of 
that 1 percent of SSA's budget or use any of our recoveries on 
Trust Fund audits. So that is something else that if you 
would----
    Chairman Carper. Good. I am glad you mentioned that. Glad 
you mentioned it.
    Mr. Werfel, closing statement? I am going to ask you to 
keep it brief, if you would.
    Mr. Werfel. Two things, and I will do them each in 30 
seconds.
    Chairman Carper. All right. That would be good.
    Mr. Werfel. First, you asked at the start of the hearing, 
Mr. Chairman, that you hoped that we could come out of this 
hearing with an action plan. Let me suggest to you, based on 
everything I have heard today, there are three parts to the 
action plan for the Death Master File, for improving death 
data.
    The first is access. We have to increase access. And the 
President's budget I think scratches that edge and gets the job 
done if it gets enacted.
    The second is to improve the overall accuracy, 
completeness, and reliability of the information in the Death 
Master File. I agree with Ms. LaCanfora and the other witnesses 
that the Electronic Death Registration at the States is our 
best bet to do that. Getting that State information, getting it 
more timely, but through an automated system, it will put in 
internal controls. It will not let them report a death before 
the date of birth. That is the type of automation that we need. 
So the second part of the action plan is to improve accuracy 
and completeness, and EDR is the way to go.
    And the third is to bring it all together and drive the 
match, make sure the match is happening, and that is what the 
Do Not Pay solution is set up to do. And that is what IPERIA, 
the law that you championed, requires. And so I think it is 
just positioning IPERIA--positioning Do Not Pay to be 
successful, making it the best player on the team. We need 
those two pieces beforehand.
    In my final seconds, I just wanted to compliment your 
staff----
    Chairman Carper. Not Peter Tyler. [Laughter.]
    Mr. Werfel. No.
    Chairman Carper. Not Katie, not Patrick, sitting here 
behind----
    Mr. Werfel. OK, if you insist on calling them out by name. 
He brings the type of knowledge and creativity and 
collaboration to this space that the team here at OMB is very 
impressed with, and I thought especially his passion around 
improper payments, it is refreshing to us. And so we just 
wanted to offer a compliment to you and your team.
    Chairman Carper. That is nice to do. We will take those 
shout-outs anytime.
    Senator McCaskill said before she left, she said I was a 
dog with a bone on this issue of improper payments and 
fraudulent payments. Believe me, if I am, then Senator Coburn 
is a very big dog with a bone on this as well. But we are only 
as good as the people who sit behind us and work with us on 
this, and I appreciate that very much, and I know Peter and 
Katie and Patrick do as well.
    I will close with this. As Ms. LaCanfora said several 
times, she said, ``Let me put this in context.'' So I want to 
just put this in context again. The budget deficit topped out a 
couple of years ago at about $1.4 trillion. The budget deficit 
for this year is expected to be somewhere between $825 billion 
and $850 billion. That is an improvement, but that is still, as 
we know, a huge amount of money.
    I am told if we pretty much do nothing and put the 
government budget and everything on autopilot, it drops down to 
about $400 billion several years from now, but then it goes 
back up to about $1 trillion within, say, 10 years from now, 
and that is not good. We have to figure out how to keep the 
deficit on the way back down, at the same time investing in 
things that will strengthen our economy, invest in the 
workforce, invest in research and development (R&D) that can be 
commercialized, invest in infrastructure that makes us more 
efficient as a country.
    But I like to say that there are three things that we need 
to do in order to continue to rein in the deficit. No. 1, 
reform our entitlement programs, and to do so in a way that 
saves money and in a way that does not savage old people or 
poor people and in a way that saves and preserves these 
programs for the long haul.
    The second thing, we need some additional revenues, and if 
you look back at the 4 years where we had balanced budgets, 
those 4 Clinton years, revenues as a percent of the gross 
domestic product (GDP) ranged between 19.5 and 20.5 percent. 
For those 4 years, really about 20 percent. Spending as a 
percent of GDP was also around 20 percent, maybe just a tad 
under that. And last year, I think revenues as a percentage of 
GDP were about 16 percent; spending as a percentage of GDP was 
over 20 percent, maybe about 22, 23 percent. That is why we had 
a big budget deficit. The revenues need to come up and the 
spending needs to come down.
    The last thing I will say, I am struck by how many times I 
talk to people who say, ``I do not mind paying more taxes or 
creating more revenues for the Federal Government. I just do 
not want you to waste my money.'' I hear that a lot. ``I do not 
mind paying more taxes. I just do not want you to waste my 
money.'' Well, I do not want to waste their money, or mine, or 
yours. And the reason why we continue to focus on this 
particular issue, this is a lot of money. This is a whole lot 
of money. And while we are delighted to see the focus that a 
lot of people are making, including the people in this room are 
making, on improper payments, it is actually having an effect. 
It is a little bit like turning an aircraft carrier in the 
Navy. If you keep at it, you can turn the carrier. We are 
turning the carrier here. I think we have a number of good 
ideas here how we can continue to do that, maybe turn that 
carrier a little faster, and we need to do that.
    There is a sense of collaboration and a sense of team here 
at the table that actually exceeds my expectations, and I am 
pleased to hear it and to see it and to feel it. We have on 
this Committee the same kind of collaboration. These are not 
partisan issues. These are just smart issues. And we look 
forward to continuing our focus and finding ways that we can 
help make this team better and that you in turn can make our 
American fiscal health even better, too.
    So, with that in mind, we are going to have--I think I am 
told the hearing record stays open for maybe another 15 days--
that is until May 23 at 5 p.m. sharp--for the submission of 
statements and questions for the record.
    With that, this hearing is adjourned, but our work 
continues. Thank so much.
    [Whereupon, at 12:11 p.m., the Committee was adjourned.]


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