[House Hearing, 114 Congress]
[From the U.S. Government Publishing Office]
EXAMINING BILLION DOLLAR WASTE THROUGH IMPROPER PAYMENTS
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HEARING
BEFORE THE
SUBCOMMITTEE ON
GOVERNMENT OPERATIONS
OF THE
COMMITTEE ON OVERSIGHT
AND GOVERNMENT REFORM
HOUSE OF REPRESENTATIVES
ONE HUNDRED FOURTEENTH CONGRESS
SECOND SESSION
__________
SEPTEMBER 22, 2016
__________
Serial No. 114-166
__________
Printed for the use of the Committee on Oversight and Government Reform
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Available via the World Wide Web: http://www.fdsys.gov
http://www.house.gov/reform
______
U.S. GOVERNMENT PUBLISHING OFFICE
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COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM
JASON CHAFFETZ, Utah, Chairman
JOHN L. MICA, Florida ELIJAH E. CUMMINGS, Maryland,
MICHAEL R. TURNER, Ohio Ranking Minority Member
JOHN J. DUNCAN, Jr., Tennessee CAROLYN B. MALONEY, New York
JIM JORDAN, Ohio ELEANOR HOLMES NORTON, District of
TIM WALBERG, Michigan Columbia
JUSTIN AMASH, Michigan WM. LACY CLAY, Missouri
PAUL A. GOSAR, Arizona STEPHEN F. LYNCH, Massachusetts
SCOTT DesJARLAIS, Tennessee JIM COOPER, Tennessee
TREY GOWDY, South Carolina GERALD E. CONNOLLY, Virginia
BLAKE FARENTHOLD, Texas MATT CARTWRIGHT, Pennsylvania
CYNTHIA M. LUMMIS, Wyoming TAMMY DUCKWORTH, Illinois
THOMAS MASSIE, Kentucky ROBIN L. KELLY, Illinois
MARK MEADOWS, North Carolina BRENDA L. LAWRENCE, Michigan
RON DeSANTIS, Florida TED LIEU, California
MICK MULVANEY, South Carolina BONNIE WATSON COLEMAN, New Jersey
KEN BUCK, Colorado STACEY E. PLASKETT, Virgin Islands
MARK WALKER, North Carolina MARK DeSAULNIER, California
ROD BLUM, Iowa BRENDAN F. BOYLE, Pennsylvania
JODY B. HICE, Georgia PETER WELCH, Vermont
STEVE RUSSELL, Oklahoma MICHELLE LUJAN GRISHAM, New Mexico
EARL L. ``BUDDY'' CARTER, Georgia
GLENN GROTHMAN, Wisconsin
WILL HURD, Texas
GARY J. PALMER, Alabama
Jennifer Hemingway, Staff Director
Andrew Dockham, General Counsel
Katy Rother, Senior Counsel
Sharon Casey, Deputy Chief Clerk
David Rapallo, Minority Staff Director
------
Subcommittee on Government Operations
MARK MEADOWS, North Carolina, Chairman
JIM JORDAN, Ohio GERALD E. CONNOLLY, Virginia,
TIM WALBERG, Michigan, Vice Chair Ranking Minority Member
TREY GOWDY, South Carolina CAROLYN B. MALONEY, New York
THOMAS MASSIE, Kentucky ELEANOR HOLMES NORTON, District of
MICK MULVANEY, South Carolina Columbia
KEN BUCK, Colorado WM. LACY CLAY, Missouri
EARL L. ``BUDDY'' CARTER, Georgia STACEY E. PLASKETT, Virgin Islands
GLENN GROTHMAN, Wisconsin STEPHEN F. LYNCH, Massachusetts
C O N T E N T S
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Page
Hearing held on September 22, 2016............................... 1
WITNESSES
Mr. David Mader, Controller, Office of Federal Financial
Management, Office of Management and Budget
Oral Statement............................................... 3
Written Statement............................................ 6
Ms. Sheila Conley, Deputy Chief Financial Officer, U.S.
Department of Health and Human Services
Oral Statement............................................... 17
Written Statement............................................ 19
Ms. Laurie Park, Deputy Assistant Secretary of Finance, U.S.
Department of Veterans Affairs
Oral Statement............................................... 29
Written Statement............................................ 31
Ms. Marianna Lacanfora, Assistant Deputy Commissioner for Policy
and Chair of the Improper Payments Board, U.S. Social Security
Administration
Oral Statement............................................... 35
Written Statement............................................ 37
Mr. Jeff Schramek, Assistant Commissioner, Bureau of Debt
Management Services, U.S. Department of the Treasury
Oral Statement............................................... 49
Written Statement............................................ 51
EXAMINING BILLION DOLLAR WASTE THROUGH IMPROPER PAYMENTS
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Thursday, September 22, 2016
House of Representatives,
Subcommittee on Government Operations,
Committee on Oversight and Government Reform,
Washington, D.C.
The subcommittee met, pursuant to call, at 3:05 p.m., in
Room 2247, Rayburn House Office Building, Hon. Mark Meadows
[chairman of the subcommittee] presiding.
Present: Representatives Meadows, Connolly, Maloney, and
Clay.
Also Present: Representative Palmer.
Mr. Meadows. The chair would ask unanimous consent that we
can suspend the rules, the House rules, and go ahead and start
this subcommittee hearing.
And hearing no objection from my learned colleague and
friend, since there is no objection, the committee is
considered in order and starting. So we'll go ahead.
The subcommittee will come to order. Without objection, the
chair is authorized to declare a recess at any time. And as we
have noted, I want to thank each of you for being here today.
Certainly, as we come to this time of the year where we
look at improper payments and where we are and what has taken
place, what should have taken place, what may have taken place,
I look for each one of you to, hopefully, help us eliminate
what changes that we can make in terms of, not only our
accounting process, but our expenditures. And part of it is
just reporting.
And when we look at that, the American people expect us to
truly be the stewards of their hard-earned taxpayer money. And
the interesting thing that I found is, in light of so many
improper payments and where we are, it is troubling many times
because of the number and how high it is. And eventually, as I
said, it adds up to real money.
And so when we look at the numbers, it can be troubling. I
would also say, however, though, what I have found is going
from agency to agency to agency is a real dedication on behalf
of the Federal worker to be accountable, and that has been one
of the interesting aspects.
So sometimes it is a number of our Federal employees who
have to deal with a bureaucracy that they did not create. And
by saying that, it is imperative that this committee look at
the bureaucracy that has been created and, hopefully, start to
address that and how we can, not only have better reporting,
but also have an issue where we start to really focus in on
making sure that we are accountable to the American taxpayer.
So in that, I just--I've got a longer written opening
statement that we'll submit for the records, but because my
good friend, Mr. Connolly, has now arrived, I will--if he is
ready, I will recognize him for his opening statement.
Mr. Connolly. Thank you, Mr. Chairman.
My opening statement is going to be eerily similar to that
of Mr. Clay. So we'll enter something for the record and forgo
a verbal statement. He and I are like twins. We think alike, we
act alike, we speak alike, and I can't add to the wisdom of my
friend from St. Louis.
Mr. Meadows. Well, I will go ahead and acknowledge the
presence of the twins here to my right and also go ahead and
introduce our witnesses.
I will hold the record open for 5----
Mr. Connolly. I have been informed my friend did not read
our brilliant statement. Lord Almighty here. Here's what he
would have said, Mr. Chairman.
No, I will enter it into the record and not take up the
time of the committee. Thank you.
Mr. Meadows. I'll hold the record open for 5 legislative
days for any members who would like to submit a written
statement.
We will now recognize our panel of witnesses. I'm pleased
to welcome the Honorable David Mader, controller at the Office
of Federal Financial Management and Office of Management and
Budget, OMB. Welcome.
Ms. Sheila Conley--is that correct, Conley?
Ms. Conley. Yes, sir.
Mr. Connolly. Spelled wrong, Mr. Chairman.
Mr. Meadows. I wanted to verify.
-- deputy chief financial officer at the U.S. Department of
Health and Human Services. Welcome.
Ms. Laurie Park, deputy assistant secretary of finance at
the U.S. Department of Veterans Affairs. Welcome.
Ms. Marianna LaCanfora--that's close, right?
Ms. LaCanfora. Right.
Mr. Meadows. All right.
-- assistant deputy commissioner of policy and chair of the
Improper Payments Board at the U.S. Social Security
Administration. Welcome.
And Mr. Jeff Schramek, assistant commissioner of the Bureau
of Debt Management Services at the U.S. Department of Treasury.
Welcome to you as well.
And pursuant to committee rules, all witnesses will be
sworn in before they testify. And so if you would please rise
and raise your right hand.
All right. Do you solemnly swear or affirm that the
testimony you're about to give will be the truth, the whole
truth, and nothing but the truth?
Thank you.
Let the record reflect that the witnesses answered in the
affirmative.
And in order to allow time for discussion, please limit
your oral testimony, if you would, to 5 minutes, but your
entire written statement will be made part of the record.
So I'll go ahead, Mr. Mader, we'll recognize you for 5
minutes.
WITNESS STATEMENTS
TESTIMONY OF DAVID MADER
Mr. Mader. Thank you, Chairman Meadows, Ranking Member
Connolly, and distinguished members of the subcommittee for
inviting me here today to discuss the administration's efforts
to reduce improper payments.
Addressing improper payments has been a central component
of this administration's overall effort to eliminate fraud,
waste, and abuse. When the President took office in 2009, the
improper payment error rate was 5.2 percent, an all-time high.
Since then, the administration, working together with this
Congress and the IGs, has made progress strengthening
accountability and transparency through annual reviews by
agency IGs and has expanded the review requirements for high-
priority programs.
As a result of this concerted effort in fiscal year 2015,
the past year, the rate was 4.39 percent. It's important to
note that agencies recovered almost $20 billion in overpayments
through payment recapture audits and other methods in fiscal
year 2015. However, this recovery amount is not factored into
the calculation of the 2015 improper payment rate or amount.
Two notable success stories of major government programs
that experienced significant decreases in improper payments is
the Unemployment Insurance Program and HHS' Medicare fee-for-
service. Under the improper--under the unemployment program,
decreased improper payment rates amounted to $2 billion, or 1
percent, between fiscal year 2014 and 2015. This program was
able to achieve this reduction by using an enhanced national
directory of new hires crossmatch and providing enhanced
monitoring and assistance to the States.
The HHS Medicare fee-for-service improper payment rate also
decreased by $2 billion between 2014 and 2015 by reducing
improper payments for inpatient hospital, durable medical
equipment, prosthetics, orthotics, supplies and claims through
the use of prior authorizations, new regulations, and changes
in agency's provider education. And I mention these two
programs in particular because, as you know, these are
programs--and there are many programs--that while funded by the
Federal Government, are actually administered by States, and
that adds to complexity in ensuring that proper payments are
made.
Prior to fiscal year 2015, agencies were required to
categorize their improper payment estimates into three
categories. However, several years ago, these categories were
recognized as providing limited value in determining the root
cause of improper payments.
As a result, OMB developed improper payment categories that
expanded the existing categories and created 13 predefined
categories for agencies to use. Page 3 of my written statement
actually has a nice graphic that shows the before and after.
And these allow agencies now to do a better job of analyzing
the root cause in particular programs.
Corrective actions to address root causes are an area we
want agencies to do more of. Beginning in fiscal year 2015,
with the issuance of OMB Circular A-136, OMB began to address a
disconnect between agencies' corrective action plans and the
root cause analysis. OMB has held townhall meetings with both
agency representatives and IGs over the past 2 years.
Also in 2015, MITRE, a federally funded research and
development center, conducted an independent research project
that focused on governmentwide payment integrity and improper
payments. And as a result of that study, my office is looking
at exploring and determining whether there's a viable need to
create another program integrity group at the executive level.
Although, I do note in some of the--my fellow witnesses here,
actually, from the agencies have started their own group over
the last several months, which allows them to share best
practices and other ideas on how to improve improper payments.
In May of 2016, we also facilitated a meeting between
senior officials from GAO, HHS, and CMS to discuss corrective
action plans and specific challenges in their particular high
error programs. GAO--and Gene Dodaro was there for this entire
meeting--was able to offer some insights around additional
areas where HHS may want to explore corrective actions.
The administration appreciates the opportunity to work with
the Congress to achieve the passage and enactment of S.614, the
Federal Improper Payment Coordination Act. And I'm pleased to
report that OMB is working now with agencies to implement those
requirements. And my colleague from Treasury has responsibility
for implementing a lot of that as part of the do-not-pay
initiative, and I'm sure he'll touch on that in his testimony.
We also worked with Congress on S.2133, the Fraud Reduction
and Data Analytics Act of 2015, which was recently signed into
law. And, again, when we reissued our Circular A-123 in the
summer, we actually started including now some of the
requirements for that. So in both of these cases, we've moved
aggressively to implement these new requirements in the
legislation.
In December 4 of 2015, we submitted to Congress the first
report required by OMB for the do-not-pay initiative. The
report outlined the multiple components of our phased strategy
for screening payments. And Mr. Schramek is going to talk
extensively about the successes that they've had since the
initiation of this program.
I think it's important to note that, in addition to
Treasury, there are agency payment integrity centers at CMS, at
DOD, at SSA, and the Department of Labor. So it's not just
unique to the do-not-pay initiative at Treasury. We have
multiple efforts going on across the executive branch.
There's a compelling evidence that investments in
administrative resources can significantly decrease the rate of
improper payments and recoup many times their initial
investment. That's why this administration for multiple years
has proposed making significant investments in program
integrity initiatives, both in the 2016 as well as the 2017
budget. And many of these initiatives do not involve additional
expenditure of funds. They actually require legislative
changes. And I believe that this is an area where this
committee can help with other committees in Congress in
educating them on the wisdom of making some of these
legislative changes.
Combating improper payments continues to be a top priority
for this administration, and we continue to explore new and
innovative ways to address these problems. Although progress
has been made, much more remains to be done, and we need your
help.
We look forward to working with the Congress to pass many
of the provisions contained in the President's 2017 budget.
Thank you for inviting me today, and I look forward to your
questions.
[Prepared statement of Mr. Mader follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Mr. Meadows. Thank you so much.
Ms. Conley, you're recognized for 5 minutes.
TESTIMONY OF SHEILA CONLEY
Ms. Conley. Good afternoon, Chairman Meadows, Ranking
Member Connolly, and distinguished members of the subcommittee.
Thank you for your leadership in improving Federal financial
management, and thank you for inviting me to testify about the
Department of Health and Human Services' efforts to reduce
improper payments.
I appreciate the opportunity to describe HHS' commitment
and progress in addressing improper payments as well as some of
our major initiatives. With outlays of approximately $1
trillion and responsibility for some of the government's
largest programs, strengthening program integrity and reducing
improper payments is a top priority of the Department. This
focus extends to every member of HHS' senior leadership team
and throughout all of our operating divisions and programs.
While we've made significant progress, more work remains.
Improper payments result from many circumstances, including
a lack of or insufficient documentation to support a sampled
claim. Improper payments are not measures of fraud, although
the concepts are often mistakenly used interchangeably.
HHS is focused on improper payments since 1996 when we
worked with the HHS Office of the Inspector General to
establish a Medicare fee-for-service error rate. Since then,
we've established error rate processes for several additional
programs and continue to implement targeted corrective actions.
For fiscal year 2015, HHS reported error rates for seven
programs that are susceptible to significant improper payments.
Two programs, Medicare fee-for-service and foster care,
reported lower rates since last year. However, five programs
reported higher rates compared to the previous year. Through
these seven programs, about 95 percent of the Department's
outlays are subjected to the rigors of an annual error rate
measurement process and the scrutiny of public disclosure.
In fiscal year 2015, we also reported rates for seven
Superstorm Sandy programs as directed by law. We've learned
that our efforts to reduce improper payments must be strategic,
multifaceted, and continuous. To that end, we're pursuing three
approaches that deliver results: Leveraging technology,
strengthening key partnerships, and exploring innovative
solutions.
As for leveraging technology, one of our major initiatives
is the fraud prevention system, which uses predictive analytics
technology to automatically screen Medicare fee-for-service
claims prior to payment. That's an average of 4-1/2 million
claims per day that are screened. It also flags suspicious
patterns and identifies investigative leads. For 2015, we
reported a return on investment of $11.50 for every dollar the
government spends on this system.
As for strengthening key partnerships, it's important to
recognize that many of our programs are State administered,
which make the States critical to our success. We're working
closely with State and Medicaid and CHIP officials to implement
important requirements that will both strengthen program
integrity and directly impact the error rates.
A very promising innovative solution relates to HHS' use of
prior authorization initiatives in Medicare fee-for-service, an
approach used in the private sector and other healthcare
programs. HHS began using prior authorization for power
mobility devices and is expanding this practice to other areas.
While our priority is to make payments properly in the
first place, we also focus on recovering improper payments when
they do occur. For example, the Medicare fee-for-service
recovery audit program has collected over $10 billion since
2009.
While the Department has made progress, more work remains.
We have a proven track record of working hard to address
improper payments, and this area is and will continue to be a
top priority for the Department. We look forward to working
with this subcommittee and our partners and other Federal
agencies as well as the States to reduce improper payments and
strengthen our programs.
Thank you again for this opportunity to testify. I'm happy
to answer any questions that you may have.
[Prepared statement of Ms. Conley follows:]
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Mr. Meadows. Thank you, Ms. Conley.
Ms. Park, you're recognized for 5 minutes.
TESTIMONY OF LAURIE PARK
Ms. Park. Good afternoon, Chairman Meadows, Ranking Member
Connolly, and members of the subcommittee. Thank you for
inviting me here today to discuss VA's accomplishments and
plans for reducing improper payments and achieving sustained
compliance to IPERA.
As the VA deputy assistant secretary for finance, I am
responsible to the interim chief financial officer for the
departmentwide financial management activities. I am keenly
aware that VA's financial management needs to improve, and I
assure you that the Department is taking aggressive action to
address our financial management challenges, including
compliance with IPERA, as part of our stewardship of taxpayers'
dollars.
The Department is currently responsible for ensuring
accurate testing, projections, and annual reporting of improper
payments in 14 programs. These 14 programs provide a wide range
of goods and services, including care in the community for our
Nation's veterans, medical supplies to VAhospital and clinics,
benefits including compensation for disabilities, education,
and vocational rehabilitation for our veterans, rebuilding
after Hurricane Sandy, and payments to Federal employees.
I am responsible for issuing departmentwide guidance for
implementing IPERA and for providing oversight on related
departmental activities. In an effort to ensure commitment and
accountability, a senior accountable official is responsible
for identifying and reducing improper payments in their
programs.
In May 2016, the VA Office of Inspector General reported
that VA did not comply with two of six IPERA requirements
because it did not meet reduction targets and maintain a gross
improper payment rate of less than 10 percent for all programs.
Eight of these programs did not meet reduction targets
established in fiscal year 2014, and two of these programs also
exceeded the 10 percent threshold. OIG also reported that VA's
increase was due primarily to improvements in estimating
improper payments.
In 2015, the Department improved its testing in response to
an OIG finding that acquisition regulation requirements were
not appropriately considered. VA collaborated closely with the
Office of Management and Budget and the IG to ensure the
accurate understanding of the effect of this concern. As a
result, VA classified payments that did not comply with
applicable Federal procurement laws, including the Federal
Acquisition Regulation, as improper.
Prior to 2016, VA's longstanding practice had been to rely
on authorization with individual providers to procure care in
the community when other arrangements were not practical or
would delay care that our veterans urgently need. Some smaller
providers and those who only treat a few veterans a year may
consider following all five requirements a disincentive to
treating veterans.
In an effort to find a way to comply with statute and
regulation, the VA has sought legislative authority to enter
into provider agreements. This legislation would greatly reduce
improper payments that were considered technically improper,
but do not represent any form of fraud, waste, or abuse.
In 2015, the VA increased senior leadership collaboration
and awareness of improper payment challenges. We also
repurposed existing resources to establish a new office focused
on driving identification and reduction of improper payments.
This office's singular focus on achieving IPERA compliance has
elevated the priority and awareness of this important objective
across the Department.
Furthermore, the VA is working with the Department of
Treasury through Do Not Pay and the Social Security
Administration using death-to-match capabilities to identify
improper payments in both the pre- and the postpayment phases.
We still have additional opportunities to leverage these
resources, and VA supports Treasury's legislative proposal to
enhance the effectiveness of Do Not Pay. We are continuing our
collaboration with Treasury on debt collection and utilizing
other Treasury offerings that improve our financial management
performance.
In addition, we have initiated a planning for a new
financial management system, which will strengthen our internal
controls, provide an opportunity to reengineer our financial
business processes, and increase the visibility of our
financial position.
VA acknowledges its current improper payment rate and is
taking actions to increase IPERA compliance, while at the same
time providing veterans the benefits and the services that they
have earned and deserve. Those actions include continuing to
ensure that the improper payment definition is applied
correctly and may result in an increase of reported improper
payments in some programs in 2016 as well. However, most of
these new improper payments are instances where VA paid the
right person the right amount for goods and services received
and do not represent a loss to the government.
Thank you for the opportunity to appear before you today
and for your continued support of veterans. I look forward to
your questions.
[Prepared statement of Ms. Park follows:]
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Mr. Meadows. Thank you, Ms. Park.
Ms. LaCanfora, you're recognized for 5 minutes.
TESTIMONY OF MARIANNA LACANFORA
Ms. LaCanfora. Chairman Meadows, Ranking Member Connolly,
and members of the subcommittee, thank you for inviting me to
discuss our efforts to reduce improper payment. I'm Marianna
LaCanfora, assistant deputy commissioner for Retirement and
Disability Policy and chair of Social Security's Improper
Payments Oversight Board.
Few government agencies touch as many people as we do. This
fiscal year, we expect to pay more than $906 billion in Social
Security benefits to more than 60 million people and about $59
billion in supplemental security income to more than 8 million
people. For fiscal year 2014, we did not meet our accuracy
targets for the SSI program or for the Old-Age, Survivors, and
Disability Insurance Program. Pursuant to IPERA, we sent a
remediation plan for each program to Congress. Although we
didn't meet our targets for the OASDI program, we have
maintained a very high payment accuracy rate in that program.
In fiscal year 2015, for example, 99.6 percent of the benefit
dollars we paid were free of overpayment.
Our greatest challenge is the SSI program. SSI is a means-
tested program for aged, blind, or disabled individuals with
limited income or resources. The SSI program has inherent
complexities. We're required to consider many factors each
month, including income, resources, and living arrangements, in
deciding whether and how much a recipient should receive. Since
these factors can change often, the program's design makes it
vulnerable to payment errors. The SSI overpayment accuracy rate
for 2015 was 93.9 percent, our highest rate since 2003. We've
made progress, but we must continue to target the root causes
of improper payment and further improve accuracy.
Our remediation plan focuses on strategies to address these
root causes. For example, we're combating errors concerning
financial accounts by using an automated process to verify bank
account balances with financial institutions to identify access
resources.
In addition, last year's Bipartisan Budget Act gave us
several important new authorities. Perhaps most critical will
be the ability to obtain timely and accurate earnings
information from third-party payroll providers. We're working
now to implement that and other provisions.
We're also identifying new sources of reliable and timely
data that will allow us to lessen our reliance on beneficiary
reporting. Also worth noting is our creation of a data analytic
center of excellence to inform our efforts and help measure
progress, as well as two Federal communities of practice; one
for data exchange and another for improper payment prevention.
Through these efforts, we bring together more than 30 agencies
to collaborate and share best practices.
Before concluding, I'd like to emphasize our need for
funding. We're among the most efficient and effective agencies
in the Federal Government. Our administrative costs represent
only about 1.3 percent of the benefits we pay. Our medical
continuing disability reviews save $8 on average over 10 years
for every $1 invested, and our SSI nonmedical reviews save $3
for every $1 invested.
While we appreciate the recent increases in program
integrity funding, we also need adequate and sustained funding
to provide basic Social Security services. Since 2010, this
part of our budget has decreased by nearly 10 percent after
adjusting for inflation, while the number of our beneficiaries
has increased by 12 percent. Consequently, we are seeing
service degradation in many areas, including increased wait
times in our field offices and on our telephones. Moreover,
we're dealing with an unprecedented backlog in our program
service centers where we handle much of the work to prevent
improper payment.
The fiscal year 2017 President's budget request would allow
us to increase our program integrity efforts, while providing
quality service to the millions of people who depend on us.
Conversely, under the House Appropriations bill, we would be
forced to furlough all employees and close field offices around
the country for up to 2 weeks next year. It's imperative that
we receive adequate funding in fiscal year 2017.
We appreciate your interest in our efforts to maintain high
payment accuracy and quality service. Thank you for inviting me
to testify, and I'd be happy to answer questions.
[Prepared statement of Ms. LaCanfora follows:]
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Mr. Meadows. Thank you.
Mr. Schramek--I tell you, for a guy from North Carolina,
that's a tough one to be able to pronounce.
You're recognized for 5 minutes.
TESTIMONY OF JEFF SCHRAMEK
Mr. Schramek. Thank you. Good afternoon, Chairman Meadows,
Ranking Member Connolly, and members of the subcommittee. Thank
you for the opportunity to discuss the Department of Treasury's
efforts to help federally funded programs to prevent improper
payments through the Do Not Pay Business Center.
The Improper Payments Elimination and Recovery Improvement
Act of 2012, IPERIA, directed OMB to administer the do-not-pay
initiative. To implement section 5(d) of IPERIA, OMB designated
the Department of Treasury to host the do-not-pay initiative
working system. Treasury's Bureau of the Fiscal Service carries
out this assignment, which is consistent with our mission to
promote financial integrity within the Federal Government.
The Do Not Pay Business Center, which I will refer to
simply as Do Not Pay, is a broader government effort--
governmentwide effort that is designed to prevent improper
payments. Four agencies, represented by some of my colleagues
here, have robust payment integrity programs. This direct
support puts them in the best position to address improper
payments in their own programs. Though we do partner with these
agencies, Do Not Pay can have a bigger impact on agencies that
do not have their own dedicated analytic center. In short, we
fill an important gap.
Do Not Pay's goal is to provide timely, accurate, and
actionable information in a secure environment. Do Not Pay
provides a secure Web-based portal that automatically matches
pay data to sources that can indicate a payment may be
improper. In addition to the portal, Do Not Pay provides
advanced analytic services to detect systemic improper
payments. Fifty-seven agencies currently use the portal, and
since 2015, we completed 21 analytics projects for nine
agencies.
Our work has resulted in a number of successes. For
instance, this year, agencies identified nearly $18.4 million
of improper payments through the use of the Do Not Pay portal.
This is more than doubled the amount reported in fiscal year
2015 and is significantly more than in previous years. This
increase is the result of two factors: More agencies are using
the portal, and through technology we introduced in 2015,
agencies can report the amount of improper payments more
easily. Do Not Pay developed a customized function that helped
one agency this year stop nearly $34 million in improper
payments before the payments were disbursed.
In addition, through its partnership with OMB, Do Not Pay
has helped agencies meet IPERIA's requirements. We did this
providing agencies centralized access to the data sources
identified in the law, including information about deceased
individuals, government vendors, Medicare and Medicaid
providers, and individuals and entities that owe a delinquent
debt to the United States.
Do Not Pay has accomplished much by working closely with
OMB and the agencies, and we are committed to continuous
improvement and innovation. Our partnership with agencies are
critical. Without them, we could not test advances in our
analytics, such as new risk models and better data matching
techniques on real world challenges facing those agencies.
Through our services and existing data sources, Do Not Pay
helps agencies identify improper payments that their internal
processes may have missed.
In addition, the President's fiscal year 2017 budget
contains two proposals that would expand Do Not Pay's data
sources. Specifically, one proposal would amend the Social
Security Act to provide do-not-pay access to the full debt
file. A second proposal would allow programs to access the
national directory of new hires through Do Not Pay, if those
programs are already authorized to use the data.
In sum, Do Not Pay's data matching and advanced analytics
have evolved significantly, and agencies' use of Do Not Pay has
grown substantially. Do Not Pay is viewed more and more as an
important tool for improving payment integrity and ensuring
that the right recipient receives the right payment for the
right reason at the right time.
I welcome any questions you may have.
[Prepared statement of Jeff Schramek follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Mr. Meadows. Thank you so much.
And the chair recognizes himself for a series of questions.
Before I get started on those, however, all of you, thank
you for being here. Thank you for your testimony. You have
staff that is probably behind you that has done much of the
yeoman's work to get that done, and so I want to acknowledge
them, as I'd like to acknowledge both the majority and minority
staff on the work that we get done. It is often really that
hard work that gets overlooked, and so I wanted to make sure
that we did that.
The other part of that that I would say is, is because of
some of the questions on improper payments become
uncomfortable, I want to make sure that no one takes it
personally as an indictment on their work as much as,
hopefully, a benchmark for starting to make progress going
forward.
Does that make sense?
So let me go ahead. Mr. Mader, let me come to you first.
And as we look at OMB and the role that we have, there are some
statutory requirements in terms of reporting improper payments
and the reports that need to come along with that. It appears
that we have a little bit of a difference, our staff talking to
your staff, in terms of what that report may or may not look
like or should look like, because I think you refer more to
paymentaccuracy.gov, which I would suggest is less than robust
and illuminating in terms of its full detail.
And so can you help me understand when we are going to see
a more robust report from OMB as it relates to improper
payments and complying with the statute?
Mr. Mader. So a little history to add to the question. My
predecessor, back in 2010, in implementing the statutory
requirements, I guess, made that decision back at that time to
use the--to create the paymentaccuracy.gov Web site as the way
to satisfy the requirement that's in the legislation. That
required an annual report to Congress, and they implemented
that payment accuracy. And that, you know, started in 2010,
2011. So they were updating it.
I arrived in the summer of--as, you know, the summer of
2014. We updated it in 2015. I assumed that what was being
reported on paymentaccuracy.gov was meeting the letter and the
spirit of the legislation, only to discover this summer when
your staff called us and said, did you know that you weren't
doing this and you weren't doing that, that we realized that
what started in 2010 was not meeting the--both the spirit and
the letter of the law.
To put it in context, what we were displaying was probably
roughly 93 percent of the improper payments, but we were
missing almost 7 percent of that. And there were a couple of
other data elements that the statute required that we were not
displaying. So we had a great conversation with your staff back
the summer that I participated in personally with my staff, all
of who are new and so weren't around in 2010. So that's on me
to make the correction.
And right after the conversation and in our subsequent
analysis, we said, okay, we're going to have to totally revise
this Web site. So we've been, since the course over the last
couple of months, looking at, okay, what are the requirements?
What does it look like now? What do we need to do to meet the
spirit and the letter of the law? We're ready to launch, in the
next couple of weeks, a complete redo of paymentaccuracy.gov in
a way that will capture and display the data so that not only
the annual report to the Congress, but I think--Mr. Chairman,
your earlier point in your opening statement, this is something
that the American public needs to see. So, you know, not only
will it meet the legislative intent of the annual report, but
we believe it will also provide the transparency. We intend to
have that done and updated with the new data in the January
through March timeframe.
Mr. Meadows. Okay. Well, I don't want to prejudge your new
innovation, so I won't. But I'm going to withhold, I guess,
comment until we see what you come up with. Because I think,
clearly, when we look at a report, we're about to put out a
report. That's the kind of report that we should be getting
from you. The data on the payment accuracy Web site, you know,
doesn't really correspond.
And so as we start to integrate that--my good friend, Mr.
Connolly from Virginia, knows more about the IT side of things
than I ever did,--but when we look at the Data Act, when we
look at FITARA, when we look at all of these other issues, we
made a bipartisan commitment to have good quality data that
actually gives us actionable things. And to that extent, I
don't want to create something that's new that doesn't follow
along those two lines and implement that data. But the other is
I don't want to suggest that just having a Web site is a
report.
And so I'm going to be optimistic. You know I'm a trusting
individual, and--but we will verify. So I'll wait to see what
you have coming up.
In January, is that when you said we can expect----
Mr. Mader. Well, so our plan was to actually, starting next
week--and I'm going to get weekly reports from the project
team--to actually start now working on what this new display of
data will look like. Maybe what we ought to be doing is coming
up and meeting with the staff, sort of walking them through
what we're about to do. Because what I don't want to do is
spend a lot of time and money between now and, you know, March
and then go, like, well, that's not meeting your needs.
Mr. Meadows. Yeah. If you can do that, I think that will be
great.
Mr. Mader. So we can do that. I mean, we have--Mr.
Chairman, we also have an executive order that requires, you
know, us to do this as well. So, you know, we're going to have
to do it for ourselves. You know, if the Congress wants, you
know, a different written report, we certainly can do that. But
we have to fix the data.
Mr. Meadows. Yeah. And I'm not looking for redundancy. In
fact, if anything, I'm looking for us to not be redundant. And
I guess what I'm saying is, if that meets our needs, we'll all
be together and be happy about it. The more we can have it
online and the less we have it in terms of a written report,
the better off, I think, we all are. I just want to make sure
that it's in keeping with finishing.
I want to ask one other question, then I'll recognize the
ranking member. And we've got a series of things that I'd like
to go over.
But, Ms. Conley, let me come to you. And you had a great
opening statement, and we look at the numbers that, you know,
your--the 800-pound gorilla in terms of improper payments, in
terms of moneys going out, you and the Social Security
Administration. The problem is, is each time we have this, we
hear that it is a top priority, and each time the number
continues to rise. And we have different hearings where, you
know, we get stakeholders that are blamed or States that are
blamed and, yet there are times when the States want to come in
and help and there seems to be a reluctance from different
agency heads on doing that.
My question is real simple. If it's the top priority, is it
better suited for someone else to look at improper payments
where we start a trend that goes down versus one that continues
to go up? Because we continue to--we're not making progress, I
guess. And I'm saying that in a kind way but in a frustrating
way. This is our third improper payments hearing, and it
continues to go up, and we don't seem to be making much
progress.
What do we need to do?
Ms. Conley. Mr. Chairman, thank you very much for your
question. These are critically important programs, and we take
them very seriously, as well as program integrity, relating to
each of our programs.
These programs are large and they are complex----
Mr. Meadows. Listen, I'm a numbers guy. I get all of that.
Ms. Conley. You understand. Yes, sir.
Mr. Meadows. And I understand that you can talk about
percentages when you have a big budget, because the percentage
is small but the dollar is big. I get that.
I guess what I'm saying is, is there someone else that
needs to look at this to be able to figure it out where we
start to get the trend, we're not making progress? Improper
payments at HHS continue to go up at a disproportionate rate to
the amount of benefits that are being paid out. And that's my
concern, is--it'd be different if it were--we were shrink--you
know, the numbers were going but the percentage--but that's not
happening.
Ms. Conley. So if I may follow up on that. One, I think
it's important to note, as Mr. Mader indicated in his opening
remark, our Medicare fee-for-service program, our rate has come
down from last year----
Mr. Meadows. Right.
Ms. Conley. --to this year, and we were well under our
target. It is still a very large program. So while we're making
progress there in measuring improper payments and complying,
it's--these are still very large numbers.
We've made significant improvements in this program, and
you can--we use the improper payment rates. We're very keen on
the trajectory, whether we measure them uniformly and then we
look to these trends.
And in the case of fee-for-service, we can see that there's
some key actions that we're taking in the fee-for-service
program that are really paying off and driving that rate down.
So as part of our root cause analysis for fee-for-service, we
determine----
Mr. Meadows. So it went down by what, $2 billion is what
we're looking at? So I'm looking at the numbers. But Medicare
part C went up by $2 billion, Medicare part D went up by $1
billion. I mean, so--Medicaid went up by $12 billion. And so
when you look at it, it's easy to highlight the one where we've
made a little--and I guess what I'm saying is, when you look at
the overall number, we're now up at $89 billion. And, again,
that's real money. I mean, it's not my money, it's not your
money, it's the American taxpayer's money.
So here's what I would like, and I'm going to recognize the
ranking member. I need from you, specifically, what we're going
to do different between now and next year this time when we
have this same report that comes out where we start to reverse
the trend. I need a specific--not that it's important, not that
it's this. I need how are we going to address these particular
issues?
And I'll recognize the ranking member, Mr. Connolly.
Mr. Connolly. I thank my friend. And I echo a lot of what
he had to say. I will say, however, Congress can't have it
two--both ways. We can't ding on you for not getting down that
number to the lowest possible number when we're not willing to
invest in the tools and resources necessary to recover those
dollars or prevent them in the first place.
And we know that in certain respects, certain investments
have huge payoff. My friend and I have talked on a bipartisan
basis on our committee about, you know, you invest more money
in GAO, for example, and it has a big payoff. We invest in--
I'll speak only for myself. We invest in IRS. It has a big
payoff. So if you're looking for enhancing revenue and getting
down----
Mr. Meadows. Well, they'll just get your tax return. I
mean, we can almost balance the budget on----
Mr. Connolly. I'll take my chances.
So anyway--so we in Congress also need to take
responsibility for our part in this. But I know that my friend,
Mr. Meadows, and I share a goal, though, that this is something
we could do something about it, it seems to me, on a bipartisan
basis.
And, actually, in an odd way, if I can use this phrase,
it's free money. Every dollar we recover that's not--or we
avoid as an improper payment, however you define it, is a
dollar we don't have to raise in new taxes. It's a dollar we
don't have to cut from a critical investment that we know we
need for the future. It's a dollar we don't have to have from
sequestration. And why we don't pay more attention to this as a
Congress, I don't know, or as a government. And I just thank my
friend for continuing this tradition.
My first improper payment hearing was in this room on
this--the predecessor subcommittee with our friend, Todd
Platts, who was the Congressman from Pennsylvania at the time,
who took this very seriously and set the kind of bipartisan
cooperative tone I think we need on this.
Mr. Mader, what is the universe, total universe, of
improper payments we're talking about right now?
Mr. Mader. So the last----
Mr. Connolly. Dollar figure.
Mr. Mader. So the dollar figure fiscal year 2015 is $136
billion.
Mr. Connolly. Okay. Now, I want to say, when I first went
to my first hearing on this, it was roughly about that. It
might have been about $150 billion then. Sound right, 5 years
ago?
Mr. Mader. So 5 years ago, the percentage was higher, the
dollar amount was lower.
Mr. Connolly. A little lower. Okay. So it made some
progress?
Mr. Mader. We've made progress on the rate, yes.
Mr. Connolly. Okay. Of that $136 billion, how much is
Medicare fraud?
Mr. Mader. I would have to defer to my colleague from HHS
on that. I don't keep that data.
Mr. Connolly. All right. Ms. Conley? And you're talking to
your cousin here, don't fudge.
Ms. Conley. No relation, right?
So you raise a very important question and important topic,
because I think when we're talking about the extent of improper
payments, it's important to go back and understand what
improper payments are and what they are not.
So an improper payment is making sure that--an improper
payment can arise from a payment to the wrong person or on
behalf of the wrong person, in the wrong amount, for the wrong
benefit, or without documentation.
Mr. Connolly. No, we understand. The reason I'm trying to
get at fraud is this: There's different strategies. Right?
Ms. Conley. Right. That's right.
Mr. Connolly. So the nature--what's behind my question
isn't to ding on you for--it's a big program and there's going
to be fraud. Human nature is going to be human nature and
people are going to cheat.
So working with Mr. Mader or with the Treasury Department,
we can come up with systems that start to reduce the number of,
oops, you know, we double billed, we double paid. We thought
you were 65; you weren't. Whatever it is. We thought you were a
veteran, and it was your cousin or your neighbor; a mistake. It
happens. And if we can make systems more and more efficient and
fool proof, we can cut down on that error rate, save taxpayers'
dollars.
Fraud's a different matter. Fraud, I've got to go after it.
I've got to have investigative resources. I've got to have
prosecutorial resources. I've got to persuade U.S. attorneys
that this is really a high priority, and it can become win-win.
You know, I've got to make some serious investments. That's a
very different kind of improper payment, but I've got to do
both.
So I need to know your universe. What is--of the $136
billion, how much of that is Medicare fraud?
Ms. Conley. We do not have a commonly accepted methodology
for measuring the extent of fraud. We do, though, have other
processes whereby we assess the various risks that fraud could
occur.
Mr. Connolly. Ms. Conley.
Ms. Conley. Yes, sir.
Mr. Connolly. I can't believe you're a relative.
Is it not somewhere around $50- or $60 billion, best
estimate, Mr. Mader?
Mr. Mader. Well, I'm not sure of the--the $136 billion, I
don't know, but let me see if I can answer your question maybe
a little bit differently.
So of that $136 billion, $45 billion, 33 percent of that,
is related to documentation errors. And I dare say it's
probably not fraud. Okay?
Mr. Connolly. Right.
Mr. Mader. If they filled out the form or they didn't fill
out the form. And what's also interesting to note is that this
issue--and it's a lot around insufficient documentation, you
know, 33 percent of that total, actually isn't required to be
reported as improper payments under the underlying statute. It
was actually introduced in the previous administration.
And that's not making an excuse, but I think, Congressman
Connolly, makes--the point that you're making is that there's
ways to deal with those kinds of errors and then there's fraud.
And a lot of the things that we're talking about in the way of
program integrity initiatives or some of the examples around Do
Not Pay, merely speak to that, how do I--how do I get to the
documentation errors? How do I do a better job of getting it
right the first time? Because if I picked a sample, and a form
is missing, improper payment.
Mr. Connolly. Right. But we know that fraud occurs. For
example, I know of one U.S. Attorney's Office that recovered--I
think, almost identified and helped recover almost $3 billion
in Medicare fraud. That's one. We have 99 U.S. attorneys. So, I
mean--and I--this is not a new question, because I remember--
unless I'm smoking something, but at this very room, this very
subcommittee, we've looked at a figure of estimates of around
$50- to $60 billion. It could be more. We don't know.
So I'm trying to look at the whole pie. That pie is $136
billion, 43 percent are documentation error. So what percent do
we think are fraud?
Mr. Mader. We're going to have to come back and--I don't
know and I don't--you know, I don't want to guess.
Mr. Connolly. All right.
Treasury Department, do you want to help guess with me? Do
you know? Any idea? Give me the universe of potential fraud. I
mean, out of this pie.
Ms. Schramek. I don't have the universe.
Mr. Connolly. Don't have the universe.
Ms. Schramek. Not for fraud.
Mr. Connolly. All right.
Well, Mr. Chairman, I'm frustrated by this because I don't
know how we devise strategies that try to get at this if we're
not willing to put some percentage or number. And I understand
it's an estimate, a guesstimate, fraud's--how much potential
fraud is going on out there I know is a tough thing, because--
well, to quote Donald Rumsfeld, there are the known knowns and
the no unknowns and the unknown unknowns, and okay.
But it's kind of important we get our arms around this so
we at least, for planning purposes, declare a universe so that
we can devise strategies to reduce it.
Mr. Meadows. And I would agree with the gentleman.
Mr. Connolly. Yeah. But let me just say a final thought
here. Boy, would I love--I mean, the chairman asked that you
come back to us with strategies that we can sort of sink our
teeth into in the new year. I would love to see a--sort of a
spitball strategy that says--okay. In theory, we know we can't
ever get to zero, but what would it take, in theory, to get
that $136 billion to zero? Because every one of those dollars
is a dollar for new investment or a dollar where we avoid
having to put new burdens on taxpayers or a dollar to reduce
the debt if we want to dedicate it to that. I mean, there are
lots of possibilities with this, that's why getting the fraud
piece is important.
And I'd love to, at some point, have somebody do some
spitballing about this. I mean, I don't want to raise false
expectations. It can be zero. But surely, we can do better.
Surely, as the chairman indicated, and I echo his sentiments, I
mean, it's a little bit like Groundhog Day when we have these
hearings, because I thought we might be making not so much
incremental progress as maybe spectacular progress with new
data systems and new technology investments and the like.
So I think we approach this in the spirit of trying to
partner with you, that get our arms around this collectively as
a government, because a lot of good can come out of this. And
bad things happen when this is left unaddressed.
So I wish you'd get back to us with the fraud estimates so
that we have--we can work with you in devising strategies and
try to fight for getting the resources you need for those
strategies.
Thank you, Mr. Chairman.
Mr. Meadows. I thank the gentleman.
So let me--let me see if I can summarize that, because I--
if we're going to address this--and we have it titled improper
payments for a reason, because we don't put it in a bucket. And
that--I mean, we know that it's improper.
Here's what I would like to ask you to do, and it gets, I
think, to the gentleman's question, is if we can look at a
couple of subbuckets. Coding errors is one--so I'm going to
take HHS, because I know that probably better.
So we know that the RAC audit say, okay, you've got coding
errors, you've got issues where you've got the wrong date. And
it shows as an improper payment when, indeed, it is--really,
it's probably a proper payment that's improperly coded, but yet
it shows up and so it drives the numbers up. That's part of it.
The other part of that is, is there are--is the suspected
activity that may not be fraud, but we're not sure. And so
that's got to go in a bucket, because you're going to have your
general counsel who say you can't say it's fraud because we
can't prove it's fraud. And we understand the legal
requirements here. But if you can put it in a bucket.
Then if we can look from a historical standpoint, and
that's what the gentleman is talking about, is a percentage of
those that are collected, how much do we go after for fraud?
And I'm willing to work with the gentleman to look at these
numbers to not say it has to go back to Treasury.
So, you know, if we're looking at SSA, and you're saying,
well, we're having a tough time, and you do a better job on
that, I'm willing to invest the political capital to say, okay,
we have to return it. It's part of what I talked about with Mr.
Mader on real estate. You've got one group that disposes of it,
but they don't get the money back, so there's no incentive to
do it. And so we're willing to work in a bipartisan way. We've
got to get the number down. And I'd rather have accurate
numbers and accurate reporting versus all of that.
Does that make sense? All right.
I'm going to ask for a unanimous consent to have Mr. Palmer
join us, because I've got to run to a WRDA hearing on one
critical area that we're trying to address when he comes in.
And I may--I didn't want to interrupt the gentleman from
Missouri.
Mr. Clay, you're recognized.
Mr. Clay. Thank you.
In 2009, President Obama signed an executive order to
reduce improper payments by, quote, ``intensifying efforts to
eliminate payment error of waste, fraud, and abuse in the major
programs administered by the Federal Government.''
Pursuant to this executive order, in 2011, Department of
the Treasury established a Do Not Pay Center that offers tools
and resources for agencies to use for the reduction of improper
payments.
Mr.--pronounce your name.
Mr. Schramek. Mr. Schramek.
Mr. Clay. --Schramek, what services does the Do Not Pay
Center offer agencies to help curb improper payments?
Mr. Schramek. Thank you. We offer a couple of services. The
first service is that we provide data sources to agencies so
they can do a single online search, like a Google search. They
can do--if they have more searches they need to do for
prepayment or preeligibility, they can send over a file of
those information that we can match against data sources. And
then before they make a payment, they can send that file again
to match--to make sure nothing has changed from when they
looked the first time on their validation.
We also, through IPERIA, have entered where payments go
across to data sources before they go out the door, to provide
information back to the agencies on if those payments are
proper and they can adjudicate them. And then our last piece is
we offer analytic services to agencies so that--because we have
most of the payment data that Treasury disburses, we can look
at payments within an agency, within agency--within programs
within an agency and even across agencies.
Mr. Clay. And how many agencies have signed up with the Do
Not Pay Center?
Mr. Schramek. So we have 57 agencies that are currently
signed up with the do-not-pay program.
Mr. Clay. And have these services been effective at
stopping improper payments?
Mr. Schramek. They have been, as we've got more and more
agencies onboard. So just this year, we had accumulatively
identified $25 million, and this is significantly higher,
almost more than double, than we did last year because of the
use of this program. Partially because agencies, when we give
them the information back to determine if a payment is proper
or improper, they--we gave them the ability to tell us how much
that back is. So that is helping us to more and more determine
how much of those payments are identified in the agency side.
Mr. Clay. And, Mr. Schramek, I'm pleased to hear that the
Do Not Pay Center has saved agencies millions of dollars in
improper payments. There are still billions of dollars in
improper payments that are spent every year.
How can the Do Not Pay Center use its resources to save
additional improper payment dollars?
Mr. Schramek. So it's very critical for us to continue to
work with the agencies and with OMB to do this process. So the
data sources we have, we will continue to provide the agencies
and talk to them about which ones are best for them and get
more agencies to use those data sources. We've also put--and we
agree with the President's budget for additional data sources.
So right now we only have the public version of the Death
Master File, and when we get the private version, that would
help us as well. And then access to the National Directory of
New Hires database would give us that information as another
tool to provide agencies.
Mr. Clay. And do some agencies prefer to use their own
methods to identify improper payments?
Mr. Schramek. Agencies do have other programs. Do Not Pay
is one of the tools the agencies get to use in identifying
improper payments. Treasury cannot make the decision of whether
a payment is improper or not. We provide the information to the
agencies and then we work with the agencies to determine if
it's improper or not.
Mr. Clay. All right. Thank you for that response.
And, Ms. LaCanfora, I heard you say that currently you
allow recipients to volunteer data to make a determination on a
monthly basis to determine how much they are paid. Isn't that
an easy way to game the system at SSI?
Ms. LaCanfora. You're right. What I said in my testimony
was that the Supplemental Security Income program, or the SSI
program, is our greatest challenge because we rely very heavily
on beneficiaries to tell us information. And the structure of
the program is such that we need to track lots of different
factors, your income, your resources, who you live with, all of
your living arrangements, lots of different data points that we
need that we rely on beneficiaries to tell us about. So one of
our greatest strategies that holds the most potential is to try
to move away from reliance on beneficiaries and move more
toward data.
And thank you to the Congress for giving us the Bipartisan
Budget Act. One of the most powerful provisions in there is our
ability to use third-party payroll data so that we do not need
to rely on IRS data, which oftentimes comes very late in the
process. We can get timely wage data from payroll providers,
and we are working to implement that now. So moving from self-
reporting to data is where we think we're going to get a
tremendous payoff in improper payment prevention going forward.
Mr. Clay. And how much, an estimate in savings, do you
think you'll be able to identify?
Ms. LaCanfora. I don't have an exact number, but I will say
it's in the billions, with a B----
Mr. Clay. Okay.
Ms. LaCanfora. --because wages or earnings are the
greatest--one of the greatest sources of improper payment at
our agency.
Mr. Clay. Thank you.
Mr. Chairman, I yield back. My time is up.
Mr. Palmer. [Presiding.] The gentleman yields back.
The chair now recognizes itself for questions.
To follow up on Mr. Clay's questions about the apparent
inability--or to identify people who have died, I mean, there
are companies in the private sector that can track everything,
I mean, from what laundry detergent we buy to what Web sites we
visit, I mean, what political party we affiliate with. How is
it--why is it so difficult to gather information when people
are deceased so that you stop the payments?
And that's to Ms. LaCanfora. I'm having trouble seeing over
this. I'm just average height, so----
Ms. LaCanfora. Thank you for the question. We actually
receive 2.5 million death reports each year. So our death data
is pretty comprehensive. We receive information from States and
from funeral directors and from a host of other places,
including families who report death records to us. We share
that data with nine Federal benefit-paying agencies directly so
they have access to that today.
We are restricted by law from sharing all of our death data
with Do Not Pay because the law specifically allows us only to
share that data with the Federal benefit paying agencies. So I
think Mr. Schramek mentioned a proposal in the President's
budget that would authorize us to share all of our death data
with Do Not Pay.
Mr. Palmer. Are they calling votes?
Okay. All right. I'm going to continue with this. You said
there were 2.5 million deaths reported to Social Security. Is
that correct? Do you have any idea how many deaths there were
nationwide?
Ms. LaCanfora. Yeah. That number is comparable to the CDC
estimates on the number of people who are actually deceased.
There's always going to be a few deaths that we don't get
because there's strange things happening, but by and large, our
death data is comprehensive. I will say, however, that
historically, it hasn't always been comprehensive, because our
death reporting processes have gotten much better over time and
there's something really important in the process that we have
called electronic death registration, otherwise known as EDR.
It's a very high-quality reporting process that makes our death
records virtually error free, but that is a relatively new
process for most States and it's not rolled out in every State.
So there's also a President's budget proposal to expand
electronic death registration to ensure that our death records
are complete.
Mr. Palmer. So over the last 2 or 3 years, and the last
report I saw was for 2014, and it was what, $3 billion,
something in that range, that went out in death benefits
improperly paid? Did that number decrease last year?
Ms. LaCanfora. For the Social Security Administration,
death is actually not a leading cause of improper payment. In
fact, we use our current set of death records to prevent----
Mr. Palmer. I understand that. I'm just asking you, because
you just said that--you lauded where you are on your death
reporting. And I come from a think-tank background prior to
that engineering degree. I'm very linear in my thinking. So if
you got from A to B and B is where you needed to be, there
should be some result. Okay.
So have we reduced the amount of improper payments related
to death benefits?
Ms. LaCanfora. Yes, but I want to just correct. So the $3
billion I think that you cited is not related to death. That's
our overall improper payment rate for the OASDI program. The
death-related overpayment amount for Social Security is much
smaller than that. It's actually less than 1 percent of all of
our improper payment. I think the broader concern is sharing
that data with other agencies that might use it. But improper
payments related to death are tiny at the Social Security
Administration.
Mr. Palmer. Well, going back on the report that I read last
year--actually, I'm on the Budget Committee and that's when I
brought this up--65 percent of the improper payments were
attributed to Medicare fee-for-service, Medicaid, and earned
income tax credit program. It is about $81 billion. And in
2014, I think we sent out about $125 billion in improper
payments. Last year, I think it was about $130 something
billion, and prior to 2014, it was a lower number. So it seems
to be getting worse, not better. And one of the things that I
found interesting was that the Treasury hasn't corrected the
issue with the earned income tax credit and it appears to be
getting progressively worse.
Can you address that? Are you qualified to address that,
Mr. Schramek?
Mr. Schramek. Yes, sir. At the Bureau of the Fiscal
Service, I don't have access to the information on the IRS side
of the tax information.
Mr. Palmer. Okay. Sounds like that the people I need to
talk to are not here, because I'd also like to know why--what
statutory limitations there are on Treasury that prevent us
from requiring States estimating improper payments in terms of
TANF benefits.
Can you answer that?
Mr. Schramek. Yes, sir. That would be at IRS.
Mr. Palmer. All right. Well, given that they've called
votes, let me ask that question to Health and Human Services on
the TANF benefits. Ms. Conley.
Ms. Conley. Sir, I'm sorry, could you repeat the question
about TANF?
Mr. Palmer. Well, in my doing my background on this, I
found that there's some statutory prohibition against the
States reporting improper payments for TANF benefits. And I
apologize, I was working on earned income tax credit with
Treasury and now I've switched to TANF, and this question
should have been directed to HHS.
What are the statutory limitations that keep the States
from reporting improper payments on TANF benefits?
Ms. Conley. Yeah. Thank you very much for your question and
for clarifying. With regard to TANF, the statutory framework
for TANF, this is the Temporary Assistance for Needy Families,
is set up such that we don't have the authority to either
request or compel States to calculate improper payments, nor do
we--are we authorized to compel them to provide us with the
information that would be necessary to develop an improper
payment rate for TANF.
And we--so even though we don't have an error rate
methodology because of the statutory constraints, we do still
execute program integrity activities with TANF. For instance,
the Single Audit Act Amendments of 1996, were recognized in the
TANF statute of 1996. And those--the single audit basically is
an annual audit process at the State level of the TANF funds
that are administered by the States, and they're subjected to
an annual audit process by either the State auditors or
independent audits. And we go through those audit findings and
resolve those findings and ensure that the States are following
up to strengthen the integrity of the TANF programs at the
State level.
Mr. Palmer. So do we know how much we paid out in improper
payments in TANF benefits?
Ms. Conley. So there is not a calculation of an error rate
for TANF, because of those statutory limitations that we have.
Mr. Palmer. Well, that doesn't make any sense to me that we
don't at least have an estimate from the States. I mean, is
there no concern of making improper payments using Federal
money? I mean, what do we need to do to correct that?
Ms. Conley. So perhaps we could reconsider, as TANF is
reauthorized, to think about an error-rate methodology process
and whether or not that makes sense given the statutory
framework for TANF.
As I mentioned, while we don't have an error rate, there
are other things that are going on in the TANF program, the
oversight of it, as well as the work that is happening at the
State levels to ensure we're complying with the program
requirements. TANF has very high level Federal requirements.
They're very broad and overarching, and so the States--the
State-administered program and the States develop the various
compliance requirements at a more detailed level.
Mr. Palmer. Well, here's my concern about this and the
whole issue of improper payments, is that being on the Budget
Committee we do everything in a 10-year window. And if we use
the last 3 years, say, for example, as an average, we're
sending out somewhere in the range of $110- to $120 billion a
year in improper payments. In that 10-year window, that's $1.1,
to $1.2 trillion. That's a lot of money. You know, it has a big
impact on our ability to do business, and I think particularly
considering that we're approaching $20 trillion in debt, it's
incumbent upon us to do everything that we can to make sure
that the money we spend is spent properly.
I want to shift back to Treasury, to Mr. Schramek, if I
can. Treasury was required to issue a report on the data
analytics performed at the Do Not Pay Center under the Federal
Improper Payments Coordination Act of 2015. It is my
understanding that the report has not been issued. When do you
expect to issue that report?
Mr. Schramek. Now that report has been issued.
Mr. Palmer. It has? When was it issued?
Mr. Schramek. This past week.
Mr. Palmer. Okay. We need to make sure the committee gets a
copy of that report.
Let me ask you this: What are the current data analytics
capabilities of Do Not Pay?
Mr. Schramek. So in the Do Not Pay program, our current
analytics come around a couple of different mechanisms. One, we
do data source matching and provide that information to
agencies. Two, because we have access to payment data that
agencies have provided us, we use that data to provide
information related to data-quality errors of the payments that
they provide to Treasury to make sure the data is better. We
look at if there's duplicate payments or if there have been
duplicate eligibility information and provide that to agencies
to validate. For example, if somebody paid something twice or
paid the same amount twice, is that proper or not? And we're
also looking across the Federal Government for agencies to look
at if similar payments went out on the same day.
So our analytics programs have grown. We've, as I
mentioned, we've got--we've done 21--22 analytics projects for
nine agencies just this year.
Mr. Palmer. Ms. Park, Social Security Administration and
HHS use third-party payroll data to verify payments and the VA
doesn't. Why doesn't the VA use third-party payroll data?
Ms. Park. So we use various methods to verify pay in the
program. Specifically, I can't talk to exactly what those are.
I would need our senior accountable official, so I'll have to
take that for the record. We are looking at opportunities to
partner with industry to get that information and we'll be
working on that in the coming year.
Mr. Palmer. Are you--do you know if the VA is considering
using additional data sources?
Ms. Park. Yes, we are, sir. I mean, just this year, we
awarded a new contract to support us in our IPERA efforts, and
we're hoping that the contractor will bring different methods
for us to use, and we're also exploring other areas.
Mr. Palmer. I'll switch over to OMB because I don't want
Mr. Mader to feel like he's being left out.
So Mr. Meadows has already asked him these questions, well,
then you haven't been left out.
I want to go back to Ms. Conley and HHS. And the Center for
Medicare & Medicaid Services failed to meet reduction targets
for Medicare Advantage, Medicaid, and the Children's Health
Insurance Program. Why weren't you able to meet those targets?
Ms. Conley. Thank you very much for your question. I think
maybe I'll start with the Medicaid program because this is an
important large, broad program. In 2014, we began implementing
new requirements of the Affordable Care Act as well as HIPAA,
to require States to do three basic things: One, to screen all
new enrollees into the program; and two, to reenroll all of
their providers; and the third thing is to have all electronic
claims include a national provider identification.
So these three efforts, which were very substantive and
challenging for agencies, has taken--excuse me, for States--it
has taken the States--they're adopting these new requirements
at different rates. This is an example--each of these three new
requirements is an example of where we're actually
strengthening the underlying integrity of the program by
knowing who we're doing business with with these--with the new
screening and the enrollment process, as well as being able to
identify and track payments. So we can reduce the likelihood of
fraud by knowing who we're doing business with and having
screened them, as well as reduce improper payments by
encouraging the States, assisting them, if you will, in
complying with these three requirements.
We measure Medicaid over a 3-year period, and so 2014 was
the first year that we measured against the first batch of
States in compliance with this requirement for 2014, second
batch in 2015, and the third and final batch would be captured
in our 2016 error rate measurement. So that is why you see that
error rate going up from 2014 to 2015 to 2016. We expect States
to be in compliance.
We're doing a lot of outreach. We're sharing with them
information about the enrollment process that we have
encountered at--or executed at CMS for fee-for-service. We're
doing a variety of outreach efforts and communication to assist
the States, and we expect those rates to go down.
Mr. Palmer. According to the inspector general, Medicare
Advantage did not report any recovery amount audits in 2015.
How does CMS justify not conducting recovery audits, given the
estimated improper payments report?
Ms. Conley. So with regard to Medicare part C, we have
taken action to begin the procurement process for recovery
audit contractors. That program, the Recovery Act, or the RAC,
rather----
Mr. Palmer. Wait a minute. I want to make sure that I
understand this. You have begun the process to----
Ms. Conley. To procure RACs for the part C program.
Mr. Palmer. But why have you just now started the process
when we've been losing billions of dollars?
Ms. Conley. So we started a while back. So we did a request
for information from the private sector to share with us ideas
and options for how we could actually carry out the recovery
audit contracts in a meaningful way. Information was provided
and we are now in the process of--we've done a Request for
Proposal and we're going through the procurement process at
this point in time.
Mr. Palmer. Well, see, here's the thing that I don't
understand. Private companies who have to make sure they don't
incur losses in order to stay in business require 100 percent
claims to be audited for accuracy in billing, I think. They may
be under legal requirements for that as well, and it just--I
don't quite understand why CMS doesn't do a better job
auditing, why they audit such a small percentage.
Ms. Conley. So one thing that I should mention is that with
regard to Medicare part C, we conduct what are called RADV
audits, risk adjustment data validation audits, of the various
plans; about 30 plans destined to go up to about 100 plans of
the total 600 eventually. And what happens is we conduct the
audit at that contract level so that the results of that
testing can be extrapolated out to that particular contractor.
These RADV audits have been executed for a period of time
and we're beginning to see the impact of that audit process,
not just on the entities subjected to that audit process
already, but also on some of the plans that have yet to be
audited.
In addition to that, we have implemented a new regulation
that requires these plans to submit back to CMS any
overpayments that they identify in the process. The combined
effect of those two activities has resulted in $650 million
being returned to CMS as a result of this collective work.
Mr. Palmer. Well, obviously, $650 million is a lot, but it
pales in comparison to the $125 billion that's been lost over
the last 3 years. And the thing that concerns me about this,
and again, the enormity of the improper payments over the last
3 years, is that the Medicare trustees estimate that Medicare,
the program will be bankrupt in 12 years. And I mean, this is
serious stuff.
They've called votes. I'm going to transition because I
have got to--I know Mr. Meadows asked the question, but just
for my own purposes, I'd like to know why OMB hasn't produced
an annual report to Congress, including these subjects.
Mr. Mader. Congressman, as I explained to Chairman Meadows,
my predecessor in 2010 made a decision that they would use this
paymentaccuracy.gov approach to satisfy, not only an executive
order, but also the legislative requirement from the annual
report to the Congress. I arrived in the summer of 2014. You
know, we're in, obviously, the fourth year of generating it,
and I assumed that this was meeting the statutory requirements,
until we had a call this summer from the staff saying, you
know, by the way, you're not. You're missing this and you're
missing that.
We had a good conversation with the staff at the time.
Immediately then, I took the action to actually start doing an
analysis of what was missing and what could we do to relaunch
the site going forward so that it was in compliance and totally
accurate. We have a project plan underway that would allow us
to relaunch the site in the January through March timeframe.
The exchange that I had with Chairman Meadows was, well,
maybe we should talk more about, you know, do we want a, you
know, a paper document report or do we want a, you know, a Web
site that would meet all of the requirements?
So my commitment to the committee is to get together with
the staff and sort of work through what, you know, what are the
interests, what are the requirements, and you know, come to a
decision on what makes sense. I mean, we're going to do the--
we're going to relaunch the Web site regardless. If the
committee wants a written report, we can do a written report.
Mr. Palmer. Well, I'll discuss that with Chairman Meadows,
but I do appreciate the fact that there's been some initiative
taken to address this.
I tell you what we're going to do. I'm going to recess the
hearing, so you need to hang around, and I'll get with Chairman
Meadows on the floor to determine if we need to come back. I
don't want to adjourn the hearing without talking to the
chairman. And----
He's okay with it?
Apparently, someone has talked to the chairman. This is
like at home. I'm the last one to know. So I'm very comfortable
in the situation.
But anyway, if there's no further business, our hearing is
adjourned.
[Whereupon, at 4:31 p.m., the subcommittee was adjourned.]
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