[Congressional Record Volume 148, Number 91 (Tuesday, July 9, 2002)]
[House]
[Pages H4378-H4380]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




               IMPROPER PAYMENTS INFORMATION ACT OF 2002

  Mr. HORN. Mr. Speaker, I move to suspend the rules and pass the bill 
(H.R. 4878) to provide for reduction of improper payments by Federal 
agencies, as amended.
  The Clerk read as follows:

                               H.R. 4878

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Improper Payments 
     Information Act of 2002''.

[[Page H4379]]

     SEC. 2. ESTIMATES OF IMPROPER PAYMENTS AND REPORTS ON ACTIONS 
                   TO REDUCE THEM.

       (a) Identification of Susceptible Programs and 
     Activities.--The head of each agency shall, in accordance 
     with guidance prescribed by the Director of the Office of 
     Management and Budget, annually review all programs and 
     activities that it administers and identify all such programs 
     and activities that may be susceptible to significant 
     improper payments.
       (b) Estimation of Improper Payment.--With respect to each 
     program and activity identified under subsection (a), the 
     head of the agency concerned shall--
       (1) estimate the annual amount of improper payments; and
       (2) include that estimate in its annual budget submission.
       (c) Reports on Actions to Reduce Improper Payments.--With 
     respect to any program or activity of an agency with 
     estimated improper payments under subsection (b) that exceed 
     one percent of the total program or activity budget or 
     $1,000,000 annually (whichever is less), the head of the 
     agency shall provide with the estimate under subsection (b) a 
     report on what actions the agency is taking to reduce the 
     improper payments, including--
       (1) a statement of whether the agency has the information 
     systems and other infrastructure it needs in order to reduce 
     improper payments to minimal cost-effective levels;
       (2) if the agency does not have such systems and 
     infrastructure, a description of the resources the agency has 
     requested in its budget submission to obtain the necessary 
     information systems and infrastructure; and
       (3) a description of the steps the agency has taken to 
     ensure that agency managers (including the agency head) are 
     held accountable for reducing improper payments.
       (d) Definitions.--For the purposes of this section:
       (1) Agency.--The term ``agency'' means an executive agency, 
     as that term is defined in section 102 of title 31, United 
     States Code.
       (2) Improper payment.--The term ``improper payment''--
       (A) means any payment that should not have been made or 
     that was made in an incorrect amount (including overpayments 
     and underpayments) under statutory, contractual, 
     administrative, or other legally applicable requirements; and
       (B) includes any payment to an ineligible recipient, any 
     payment for an ineligible service, any duplicate payment, 
     payments for services not received, and any payment that does 
     not account for credit for applicable discounts.
       (3) Payment.--The term ``payment'' means any payment 
     (including a commitment for future payment, such as a loan 
     guarantee) that is--
       (A) made by a Federal agency, a Federal contractor, or a 
     governmental or other organization administering a Federal 
     program or activity; and
       (B) derived from Federal funds or other Federal resources 
     or that will be reimbursed from Federal funds or other 
     Federal resources.
       (e) Application.--This section--
       (1) applies with respect to the administration of programs, 
     and improper payments under programs, in fiscal years after 
     fiscal year 2002; and
       (2) requires the inclusion of estimates under subsection 
     (b)(2) only in annual budget submissions for fiscal years 
     after fiscal year 2003.
       (f) Guidance by the Office of Management and Budget.--The 
     Director of the Office of Management and Budget shall 
     prescribe guidance to implement the requirements of this 
     section.

  The SPEAKER pro tempore. Pursuant to the rule, the gentleman from 
California (Mr. Horn) and the gentlewoman from Illinois (Ms. 
Schakowsky) will each control 20 minutes.
  The Chair recognizes the gentleman from California (Mr. Horn).


                             General Leave

  Mr. HORN. Mr. Speaker, I ask unanimous consent that all Members may 
have 5 legislative days within which to revise and extend their remarks 
and to include extraneous material on H.R. 4878.
  The SPEAKER pro tempore. Is there objection to the request of the 
gentleman from California?
  There was no objection.
  Mr. HORN. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, H.R. 4878, the proposed Improper Payments Information 
Act of 2002, is intended to get a handle on the vexing problem of 
improper payments made by Federal agencies. The few agencies that do 
make estimates for some of their programs report improper payments of 
about $20 billion.
  Each year, the Federal Government wastes countless billions of 
taxpayer funds on improper payments. Some of these payments result from 
fraud or abuse. Many others represent simple mistakes. What all of 
these improper payments have in common is that they should never have 
been made.
  I refer to countless billions of dollars in improper payments because 
no one really knows the magnitude of the problem. Incredible as it may 
seem, Federal agencies are not required on any kind of government-wide 
or systematic basis to estimate how much money they spend improperly. 
Therefore, most do not even try. The few agencies that do make 
estimates for some of their programs report improper payments of about 
$20 billion annually, and I will say that again, $20 billion, not 
million dollars, billion dollars, every single year in just a handful 
of Federal programs.
  Staggering as that figure is, it represents the tip of a very large 
iceberg. For example, during fiscal year 2000, the Department of Health 
and Human Services estimated it made more than $12 billion in improper 
payments in its Medicare fee-for-service program, but the figure did 
not include any improper payments that might have been made in the 
Medicaid. No one, including the General Accounting Office, has 
estimated that figure.
  The obvious starting point toward reducing improper payments made by 
the Federal Government is to understand the nature and extent of the 
problem. The agencies and Congress must find out which programs are at 
risk and what causes those risks. Only then can we find effective 
remedies.
  The President's Management Agenda for fiscal year 2002 has made the 
reduction of improper payments a real priority. H.R. 4878 builds upon 
that very first step by the Bush administration by requiring Federal 
agencies to identify the programs that are vulnerable to significant 
improper payments.
  Currently, only eight agencies report on improper payments made in 13 
programs out of hundreds of Federal agencies and programs. This bill 
would require all agencies to include in their budget submissions an 
estimate of improper payments for each program that might be 
susceptible to significant improper payments. If an agency estimates 
that improper payments in a program exceed $1 million a year, or 1 
percent of the total program budget, whichever is lower, the agency 
would also have to explain what it is doing to reduce them.
  Since the 104th Congress, the subcommittees I have chaired have held 
approximately 100 hearings on wasteful spending within the Federal 
Government. Time and again witnesses from the General Accounting Office 
and agency inspectors general have told the subcommittee that poor 
accounting systems and procedures have contributed to the government's 
serious and long-term problems involving improper payments. These 
hearings have clearly demonstrated the need for H.R. 4878.
  In fact, at a recent subcommittee hearing, General Accounting Office 
witnesses stated that this legislation is critically important. Based 
on these hearings, the subcommittee marked up H.R. 4878 on June 18, 
2002.
  H.R. 4878 is a bipartisan and common-sense bill. I am pleased that 
the ranking member of the subcommittee, the gentlewoman from Illinois 
(Mr. Schakowsky), and our full committee chairman, the gentleman from 
Indiana (Mr. Burton), and the gentlewoman from New York (Mrs. Maloney) 
are among those cosponsoring the bill, and I urge all my colleagues to 
support this important bill.
  Mr. Speaker, I reserve the balance of my time.
  Ms. SCHAKOWSKY. Mr. Speaker, I yield myself such time as I may 
consume.
  I am pleased to be on the floor today with the gentleman from 
California to support passage of this bill. I thank the chairman for 
his willingness to work with the Democrats on the committee to produce 
a bill that we can all support.
  As the chairman pointed out, this is a bill to make agencies more 
keenly aware of the problem of improper payments and to get the 
agencies to address the problem at the front end. We have learned from 
our work on debt collection that collecting improper payments is more 
difficult than avoiding the mistakes in the first place. The problem is 
that there is no incentive for agencies either to collect debt or to 
avoid improper payments.
  Improper payments occur in a number of ways: Agencies pay invoices 
more than once, some unscrupulous merchants bill agency credit cards 
when no purchase has been made, and

[[Page H4380]]

the agency does not adequately monitor the bills.
  Medicare is a large source of improper payments because of the 
conflict between the deadline for making payments and the length of 
time it takes to determine if the patient has private insurance. 
Medicaid is also a source of improper payments, in part from 
unscrupulous providers. However, Medicaid has yet to estimate the 
extent of the problem.
  It is also the case that improper payments are made to individuals. 
These cases often arise because of difficulties in determining 
eligibility for a program like food stamps or Social Security 
disability. Often those problems are not the fault of the recipient, 
but come from errors in administering the program.
  These programs serve the weak and downtrodden. The program rules are 
such that most tax accountants would have a difficult time figuring 
them out. It is especially important in these cases that we make sure 
the agency gets it right the first time. If it does not, then months or 
years later the agency discovers the error and tries to recapture the 
mispayments from the individual. This is an extreme hardship on those 
individuals. We must not let agency mistakes become another burden on 
the poor.
  I hope this bill will help those agencies develop a better 
understanding of how these mistakes come about and correct the mistakes 
before they happen.
  Again, Mr. Speaker, I thank the chairman for working with us to bring 
this bill to the floor.
  Mr. Speaker, I reserve the balance of my time.
  Mr. HORN. Mr. Speaker, I yield 5 minutes to the gentleman from 
Oklahoma (Mr. Sullivan), who is a hardworking member of the 
subcommittee and who we are delighted to have; and before he begins, I 
wish to thank the gentlewoman for her kind comments and her work on 
this particular bill.
  Mr. SULLIVAN. Mr. Speaker, I thank the gentleman from California (Mr. 
Horn) for all his hard work in making this bill possible and making the 
government accountable to the people in America.
  This bill is extremely important. When we talk about accountability 
from the Federal Government, this is exactly the kind of bill that 
America thinks of. An improper payment, as defined by the bill, 
includes overpayments, underpayments, duplicate payments, payments to 
ineligible recipients, payments for ineligible services, and payments 
for services not received.
  Countless billions of dollars of taxpayer funds are wasted each year 
through improper payments. However, the extent of improper payments in 
the Federal Government is unknown since Federal agencies are not 
required by law to estimate or report them.
  In 1990 and 1994, Congress passed important pieces of legislation to 
make government more transparent to its stockholders, the American 
people. Twenty-four agencies are required to prepare audited financial 
statements, and several agencies voluntarily prepare such statements. 
H.R. 4878 will require executive agencies to identify all spending 
programs that may be vulnerable to significant improper payments and to 
annually estimate the amount of improper payments involving those 
programs.
  This is an extremely important topic, given the tightening of the 
Federal belt of late and the need to keep our country strong during 
this time of war and economic concern.
  Ms. SCHAKOWSKY. Mr. Speaker, I yield myself such time as I may 
consume.
  Mr. Speaker, I just really want to end with this. H.R. 4878 tightens 
up the Federal Government's accounting practices. This is a good thing. 
We need to be sure that the way we do business is on the up-and-up, and 
we clearly need to do more to require corporate America to do the same.
  We are asking government agencies to improve the management and 
accountability of the agencies. We must ask the same of corporate 
leaders. They must be accountable for the company's financial health, 
be honest with the public, and there must be consequences for breaching 
those trusts. For years, we have asked government to act more like a 
business. We need to turn that around and ask businesses to be as 
accountable as the government.
  H.R. 4878 is based on the principle that making information publicly 
available will change the way people and agencies behave. This is 
underscored by the activities of Enron and WorldCom. They knew that if 
the public was aware of what they were doing, the company would falter, 
and so they tried to spin their way out of trouble.
  I think the steps that we are taking today in terms of government 
accountability are important, and that we should seek unanimous support 
from our colleagues, but also we need to think about ways that we can 
extend these practices and make sure that corporate America abides by 
these same government rules.
  Mr. Speaker, I reserve the balance of my time.

                              {time}  1415

  Mr. HORN. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, I would like to thank the staff that worked very hard, 
night and day, on this particular bill. That is staff director Russell 
George; deputy staff director Bonnie Heald; senior counsel Henry Wray; 
and we are proud to have a very fine young lady from the General 
Accounting Office, Rosa Harris, who is a detailee to our subcommittee, 
and she has done a great job on all things related to financial 
management.
  I also thank David McMillian, the professional staff member for the 
gentlewoman from Illinois (Ms. Schakowsky). We also are delighted with 
his ideas. This is a bipartisan bill.
  Mr. Speaker, I yield back the balance of my time.
  Ms. SCHAKOWSKY. Mr. Speaker, I yield myself such time as I may 
consume.
  Mr. Speaker, once again I would like to thank the chairman for his 
willingness and openness and cooperation with the Democrats, and I 
would also like to take a moment of personal privilege to commend the 
chairman for always thanking the hard-working staff of both parties for 
the hard work that they do, both in committee and on the floor. I think 
it is a wonderful thing to acknowledge that work. I would like to join 
him and associate myself with his appreciation and congratulations for 
the hard work of our staff.
  Mr. Speaker, I yield back the balance of my time.
  The SPEAKER pro tempore (Mr. Walden of Oregon). The question is on 
the motion offered by the gentleman from California (Mr. Horn) that the 
House suspend the rules and pass the bill, H.R. 4878, as amended.
  The question was taken; and (two-thirds having voted in favor 
thereof) the rules were suspended and the bill, as amended, was passed.
  The title of the bill was amended so as to read: ``A bill to provide 
for estimates and reports of improper payments by Federal agencies.''.
  A motion to reconsider was laid on the table.

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